Nepotism – transactions and hiring decisions based in favouritism – is very common in business. While nepotism itself is not illegal, it is certainly problematic. As this article will reveal, it is a major complicating factor in the potential seismic bombing of the Arctic seabed.
According to the magazine World Finance, 50% of all global transactions now occur between related parties. This has led to tax authorities worldwide tightening the rules governing transfer pricing to ensure that international business is done at fair market value.
The arm’s length principle addresses the potential of deals being made between parties where there are biased relationships, such as within a family, between those who have shared interest, or when one party is controlled by the other. For example, a father may sell property to his son, but at a price below the true value of the property. This would not be an arm’s length transaction, and the property taxes paid on the sale would be artificially low.
Turning a blind eye to transactions that do not respect the arm’s length principle can enable questionable business practices that bypass competition and create opportunities only available to an elite few. Left unchecked, it feeds an inequitable system as documented in Velcrow Ripper’s film “Occupy Love”, which highlights how 99% of the wealth in the United States is owned by 1% of the population. It allows mega-corporations to get away with profiteering agendas that may benefit few while harming the whole.
This is shown all too starkly in the rush to exploit all possible oil reserves on the planet. As the Arctic ice shelves continue to collapse and the once impenetrable polar ice continues to melt, new areas of our earth become exposed for potential mining. Practices such as fracking, oil drilling and seismic bombing to gain access to Earth’s natural resources are not benign and have an impact on our sustainable future. Yet, companies choose to go ahead with these practices and exploit the earth for profit without considering the ramifications of their actions. Businesses must be accountable to a force greater than the drive for profit, if their activities have the potential to leave the world worse off than before they came along.
The first mission of the recently founded not-for-profit parvati.org is to stop the proposed bombing of the Arctic seabed by big oil consortiums. Volunteers with this organization have been researching the companies involved and have discovered that there seem to be suspicious connections between government and businesses, between board members of certain companies, that suggests nepotism.
For example, the company Petroleum Geo Services (PGS), is connected with Japan Oil, Gas and Metals National Corporation (JOGMEC). This company has just signed a memorandum of understanding with Greg Rickford, Canada’s minister of natural resources – the very minister who oversees the National Energy Board, which is granting permission to PGS and other companies to carry out seismic testing in the Arctic seabed over the objections of all the local communities and concerned scientists. This is just the tip of the proverbial iceberg, and research is ongoing.
Some of the companies tied to the top of the supply chain seem not to want to be identified at all. Some company names on the legal applications for permission to carry out this seismic testing have no web presence, and little can be found out about them.
This interconnection and secretiveness is not in keeping with the arm’s length principle and is ethically just as questionable as having board members of cancer research foundations being major tobacco stakeholders.
I am sure this will not be the first or last article you will read about big oil and its insatiable feeding on the planet’s resources at the cost of our future. I hope this article is the start towards bringing to light all those individuals and companies who seek to remain hidden as they engage in nepotism and environmentally destructive behaviors that have an impact on all of us.
Since 1994, Rishi Deva, founder and CEO of RishiVision and entrepreneurial coach, has empowered thousands of businesses. Rishi has an MBA in marketing and entrepreneurial studies and a BBA in accounting. He has spent nearly twenty years coaching, consulting, managing and supporting thousands of businesses from new startups to active global leaders.