LEVICK Weekly - Dec 14 2012

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Executive Communications with Allan Grafman

U.S. Fiscal Policy with Micah Green
Our Strongest Answer to Terrorism Funding

CNOOC & Nexen: Is Canada's Energy Sector Fertile Ground for Foreign Investment?

NACD BoardVision: Analyzing Lost Say on Pay Votes

North Carolina Regulators Find Fault with Duke Energy's Bait & Switch

Blogs Worth Following

LEVICK in the News

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LEVICK Weekly - Dec 14 2012

  1. 1. EDITION 20Weekly December 14, 2012 Our Strongest — answer to — Terrorism Funding
  2. 2. 03 Contents 04 EXECUTIVE COMMUNICATIONS with Allan Grafman 05 U.S. FISCAL POLICY with Micah Green 06 OUR STRONGEST answer to Terrorism Funding 14 CNOOC & Nexen: Is Canada’s Energy Sector Fertile Ground for Foreign Investment? 17 NACD Boardvision Analyzing Lost Say on Pay Votes 18 North Carolina Regulators Find Fault with Duke Energy’s Bait & Switch 20 Blogs to Follow 22 LEVICK in the NewsCOVER Image: The Corniche Beirut is a seaside promenade in Beirut, Lebanon. Lined with palm trees, the waterfrontesplanade offers visitors a magnificent view of the Mediterranean and the summits of Mount Lebanon to the east. CornicheBeirut has its foundation in the Avenue des Français, which was built during the period of the French Mandate of Syria andLebanon along the seafront that extended from the old town.
  3. 3. Weekly Executive Communications U.S. Fiscal Policy with Micah Green with Allan Grafman In this LEVICK Daily video interview, we discuss executive communications with Allan Grafman, CEO In this LEVICK Daily video interview, we discuss U.S. fiscal policy and its impact on financial of All Media Ventures. As social media continue to wrestle message control from executives and the services providers with Micah Green, a partner at Patton Boggs. With the fiscal cliff, tax reform, companies they run, C-Suiters need to focus more of their time and energy on generating content—not and Dodd-Frank implementation converging to create widespread uncertainty, important just advertising—that influences stakeholder conversations across myriad digital channels. questions linger about how best to structure credit markets and large financial organizations.4
  4. 4. Our Strongest answer to Terrorism Funding Richard S. Levick, Esq. Originally Published on Forbes.comAs the world grapples with the latest Middle East crises,it is an ironic and sobering fact that the Lebanesebanking community—one of the region’s strongestbulwarks of Western interest—now faces pressure tofurther reaffirm that its policies and practices are fullycompliant with international standards.
  5. 5. Weekly Ironic, because no financial entities in the financial standards in support of our mutual conditions under which the Assad regime op- intelligence unit.” All banks in Lebanon are region have done more than the Lebanese interest in fighting terrorism financing. erates, which directly supports the imputed specially audited or assessed on a regular basis to ensure compliance with international goals of the Obama administration. by the SIC, and by external internationally Lebanon, in fact, has an insignificant trading anti-money laundering standards. Sobering, reputable firms such as Ernst & Young, Pricewa- relationship with Iran, while Lebanese banks Some background on the banks themselves because, if we weaken these institutions, we terhouseCoopers, Deloitte, and KPMG. The SIC are abiding by all U.S. sanctions on designated is helpful in this context. First and most only loosen our grip on terrorist funding; fur- has the power to review any bank account and Iranian parties and products. It’s likewise important, Lebanese banks follow an unusu- ther destabilize the entire region; and, in sum, empower the disclosure of information. noteworthy that there is only one Iranian bank ally prudent approach to risk assessment defeat our own vital short- and long-range branch in Lebanon, Bank Saderat Iran, which and reputational issues, with an emphasis on The impact of these and other measures is political objectives. is reportedly a mere shell operation, as it is sound banking practice uninfluenced by poli- clearly seen in the officially acknowledged It’s not hard to understand why these banks simply prohibited by the Lebanese from nego- tics and partisanship—and keenly focused on progress achieved since June 2000. That year, should have become sources of controversy tiating international wire transfers. continuing trusted membership in the global the Financial Action Task Force (FATF), an to a few, however misguidedly. Hezbollah, of capital markets. This attitude is rooted in a international standard-setting body, named In Syria, according to some fairly objective me- course, has a formidable presence in Leba- conservative institutional culture given that Lebanon among those countries that had not dia coverage, Lebanese banks are described as non at a time when Syria is in chaos and Iran a preponderance of Lebanese banks began instituted sufficient anti-money laundering “quietly implementing multilateral sanctions… continues to advance its nuclear agenda. Yet as closely-held family enterprises. In some provisions. (Israel was listed as “uncoopera- motivated by a desire to avoid jeopardizing in- Hezbollah’s influence in Lebanon only un- cases, family members still serve as manag- tive.”) One month later, the U.S. Department ternational banking relationships.” By reduc- derscores the effective work that the nation’s ers. By nature averse to highly speculative, of Treasury’s Financial Crimes Enforcement ing lending operations in Syria, the Lebanese banks have done to comply with international much less illegal investments, they rely on de- Network (FinCEN) called on banks around have significantly degraded the overall credit posits as a primary source of funds, generally the world to ensure enhanced scrutiny of the eschewing credit markets in other countries. Lebanese, specifically noting that Lebanon’s 1956 Bank Secrecy Law was an impediment Second, Lebanon has exceeded other na- to progress. tions in the region in the volume of laws and regulations aimed at money laundering, and Just two years later, after the Lebanese had in resolutely enforcing those mandates. In passed a new law that buttressed existing anti- 2012, for example, Basic Circular No. 126 was money laundering initiatives, FATF announced issued, compelling Lebanese banks to imple- that Lebanon would be classified as compliant ment strict Know-Your-Customer practices, with its anti-money laundering standards even and requiring them to be fully informed of, as FinCEN advised global banks to relax scru- and comply with, the laws and regulations tiny of Lebanon. FinCEN praised the nation’s governing correspondent banks abroad. “significant reforms.” At the heart of the anti-money laundering In such oversight initiatives, it is very much regimen is the Special Investigation Commis- in our Western interests to be wholly sensi- sion (SIC), which is an independent “financial tive to the unique circumstances affecting the08 09
  6. 6. “ ...correspondent banks, including some of the world’s largest financial institutions, are being urged by fringe groups to sever ties with the Lebanese banks.”regulatory agenda, especially in a country like simply impracticable. Banks are banks, notLebanon that is hemmed in by hostile powers. enforcement agencies.A case in point is the aforementioned banking It’s of particular concern that some correspon-secrecy law that precludes disclosure of dent banks have been wrestling with their ownaccount information. Understood in its cul- reputational issues since 2004. A decade ago,tural context, the law was actually written to these global banks would have simply brushedprotect wealthy customers from undue public aside the fringe groups that are targeting Leba-attention, not to shield illegal activity. non. In this environment, however, it’s harderYet even here there are safeguards built in as to predict how they might respond.Lebanese law does not allow for confidential Any such response should be informed by ainternational wire transfers. Moreover, ex- sense of what’s been accomplished since theceptions have always been allowable in cases civil war. In the first decade of the 21st century,where judicial or law enforcement authorities the nation’s Western-styled economy grewhad demonstrable reasons for an investigation. impressively as real output increased by 5.3%The very factors that might ill-advisedly en- in the first half of the decade and by 8.25% incourage perceptions of widespread violation the second. Expansion was fueled by post-warthus provide, when viewed in context, strong reconstruction, oil, tourism, real estate—whileevidence of just how impressively this finan- the banks, which hold 40% of the public debt,cial system actually surpasses global stan- remain essential if Lebanon is to enjoy furtherdards. It’s an important point to emphasize at progress, especially now that the economya time when correspondent banks, including has slowed.some of the world’s largest financial institu- The alternative to robust growth is a new under-tions, are being urged by fringe groups to ground economy fed on crime and black mar-sever ties with the Lebanese banks. kets. It’s an alternative that could only be benefi-Such action would be ruinous for Lebanon cial to terrorist-support groups and nations. Land disastrous for the rest of us as it would Richard S. Levick, Esq., President and CEO of LEVICK,additionally expose the dollar to depreciation represents countries and companies in the highest-stakesand impose enforcement burdens on banks global communications matters—from the Wall Street crisis and the Gulf oil spill to Guantanamo Bay and thethroughout the global marketplace that are Catholic Church. 11
  7. 7. 10:45am – 11:45am (2) Concurrent Macro Sessions Thriving in an Age of Innovation and Abundance Peter Diamandis ACG InterGrowth 2013 Richard Levick 10:45am – 12:00pm ACG Capital Connection® Preview hours (*NEW* exclusively for PEGs/iBankers/ 42nd Annual ACG InterGrowth® Conference Corporates/Franchise Owners) April 22 - 25, 2013 / Rosen Shingle Creek / Orlando, Florida 12:00pm – 1:45pm KEYNOTE & NETWORKING LUNCH 2:00pm – 5:00pm ACG Capital Connection® Open (new day/time) 6:00pm – 9:00pm ACG INTERGROWTH HAVANA NIGHTS RECEPTION (offsite – Cuba Libre & BB Kings Blues Club)NEW in 2013: Wednesday, April 24, 2013 (Day Two – Focus on Franchising and Focus on Florida)Through an alliance with the International Franchise Association (IFA) and 7:00am – 7:00pm InterGrowth 2013 Conference Registration OpenACG’s four Florida Chapters, ACG will feature new InterGrowth programming, 7:00am – 8:30am 5K Run @ Rosen / Yoga @ RosenFocus on Franchising and Focus on Florida. Franchise owners and operators 7:30am – 8:30am ACG Middle Market Leadership Forum / PE VIP Power Breakfastfrom around the U.S. as well as Florida business owners and executives will 7:30am – 4:00pm InterGrowth Lounge (expanded to include Focus on Franchising/Florida)participate. The programming expands the dealmakers attending InterGrowth 7:30am – 8:30am Attendee Networking & Attendee Breakfast in InterGrowth Loungeand provides PE firms and others involved in the M&A process an opportunity 8:30am – 9:30am KEYNOTE PANEL “Middle Market Update”to network and learn more about capital strategies supporting Franchise 9:00am – 12:00pm ACG DealSource® Open – SESSION 1growth as well as Florida’s unique investment opportunities. 10:00am – 10:45am (4) Concurrent Breakout/Track Sessions 11:00am – 11:45am (4) Concurrent Breakout/Track Sessions 12:00pm – 1:45pm KEYNOTE & NETWORKING LUNCH 1:00pm – 6:00pm ACG Deal Drive (*NEW* ACG Golf event for ACG Partners)ACG InterGrowth 2013 Agenda 2:00pm – 5:00pm ACG DealSource® Open – SESSION 2Monday, April 22, 2013 (Day: Zero) 2:00pm – 2:45pm (4) Concurrent Breakout/Track Sessions12:00pm – 7:00pm InterGrowth 2013 Conference Registration opens 3:00pm – 3:45pm (4) Concurrent Breakout/Track Sessions5:00pm – 7:00pm ACG “OPENING RECEPTION” (formerly known as Early Arrivals) 4:00pm InterGrowth Lounge Closes7:00pm ACG Sponsor Receptions/Dinners/Events (onsite and offsite) 4:00pm – 6:00pm Open Networking Time and Special ACG Receptions (4-5 events) 6:00pm – 8:00pm ACG Special Reception for Focus on Franchising and Focus on Florida Tuesday, April 23, 2013 (Day One) participants, ACG Board of Directors, ACG Partners, PEGs/iBankers7:00am – 2:00pm ACG Golf Tournament (Rosen Shingle Creek) Thursday, April 25, 2013 (Day Three – Focus on Franchising and Focus on Florida)7:00am – 7:00pm InterGrowth 2013 Conference Registration Open7:00am – 11:00am ACG Tennis Tournament (Hyatt Grand Cypress) 7:00am – 12:00pm InterGrowth 2013 Conference Registration8:00am – 5:00pm InterGrowth Lounge Open 7:30am – 8:30am Attendee Networking & Breakfast8:00am – 9:00am Attendee Networking & Breakfast in InterGrowth Lounge 8:30am – 9:30am (2) Concurrent Breakout/Track Sessions8:00am – 9:00am First-Time Attendee Breakfast and Orientation 9:45am – 10:45am (2) Concurrent Breakout/Track Sessions9:00am – 10:30am Opening Keynote 11:00am – 12:30pm ACG “FranchiseSource” (*NEW*) Forcasting Our Fiscal Future: Tax Implications on the Middle Market Doug Holtz-Eakin 12:30pm – 1:45pm Focus on Franchising and Focus on Florida CLOSING LUNCHEON
  8. 8. L ast Friday, it was announced that the nate production in the Alberta oil sands repre- & Canadian government approved two sent 60 percent of all the oil production in theCNOOC major transactions that will signifi- world that is not state-controlled. As such, it is cantly impact the nations resource- no wonder that foreign energy companies are Nexen: rich energy sector. The first was CNOOCs seeking to leverage the takeover opportunities (CEO) (Chinese National Offshore Oil Corpo- still available in Alberta, British Columbia, and ration) $15.1 billion takeover of oil and gas other Canadian provinces. producer Nexen (NXY)—a deal that represents But what are the chances that the next suitor Chinas largest overseas energy acquisition to will find the Canadian government as recep- date. The second was Malaysian-owned Petro- tive as it was last week? There are two schools Is Canada’s Energy Sector Fertile nass $5.25 billion takeover of Alberta-based Progress Energy. of thought. Ground for Foreign Investment? Both deals were sources of heated debate The first is driven by Canadian Prime Min- ister Stephen Harpers announcement that Kathleen Wailes among Canadian lawmakers concerned about new guidelines are now in place to evaluate Originally Published on SeekingAlpha.com how much of the nations energy sector ought bids for Canadian energy companies made by to be controlled by foreign interests. For some state-controlled companies. Chief among those time now, CNOOC and other large, state- guidelines is a new emphasis on the level of owned Asian energy companies have been influence exerted over the bidding enterprise aggressively purchasing oil and gas assets in by its government. Even if the enterprise dem- the Americas as part of a global strategy to onstrates substantial independence, it looks gain access to the energy resources needed to as if future bids will only be approved under fuel their economies. In many of these cases, "extraordinary circumstances." foreign capital has been essential to develop- ing these domestic resources. But, these two When announcing the guidelines, Mr. Harper new deals notwithstanding, it seems that issued some tough talk as well—saying that the weve reached the tipping point at which CNOOC and Petronas deals "are not the begin- Canadians are asking themselves just how ning of a trend, but rather the end of a trend" much foreign-control is too much. and that "When we say Canada is open for business, we do not mean that Canada is for The answer to that question will have far- sale to foreign governments." reaching consequences for energy companies around the world. Right now, the Canadian There is also a chance that target companies province of Alberta is home to the worlds within Canada will leverage newfound nation- third-largest oil reserves behind Saudi Arabia alism among lawmakers as a pseudo poison and Venezuela. The 15 companies that domi- pill to ward off resource-hungry foreigners 15
  9. 9. Weekly NACD Boardvision Analyzing Lost Say on Pay Votes attempting a hostile takeover. When taken with energy company looking at Canada as fertile the Prime Ministers comments, it seems there ground for investment is going to have to make are both public and private sector obstacles a strong case that any proposed deal does in- that foreign state-owned companies will have deed represent a rising tide that lifts all ships. to surmount if they hope to access Canadian To win approval, the Canadian public is going resources in the future. to have to recognize the tangible benefits it will reap as a result of the transaction. At the same time, however, the approval of the In this weeks edition of NACD BoardVision, Steve Kalan, associate publisher of NACD Directorship, CNOOC and Petronas deals alone provide some The bar will be high; but not out of reach for and Jane Romweber of Meridian Compensation Partners, analyze recent say on pay votes, the reasons reason for optimism among those companies those potential acquirers willing to do whats why some have failed, and how companies can best articulate sound executive compensation policy seeking an energy foothold in Canada. CNOOC necessary to demonstrate that the deal is in moving forward. promised the Canadian government a number Canadas best interests. Disclosure: I have no of beneficial undertakings to help push approv- positions in any stocks mentioned, and no al of its deal through. Therefore, it seems that plans to initiate any positions within the next the door may still be slightly ajar for compa- 72 hours. I wrote this article myself, and it nies willing to make some significant conces- expresses my own opinions. I am not receiv- sions in return for Canadian access. ing compensation for it. I have no business relationship with any company whose stock is Financial Communications Just how many concessions will constitute "extraordinary circumstances" remains to be mentioned in this article. L Litigation seen; but what is clear is that any state-owned Kathleen Wailes is a Senior Vice President at LEVICK and Corporate & Reputation Chair of the firm’s Financial Communications Practice. She is Public Affairs Sign Up Today also a contributing author to LEVICK Daily. Crisis16 17
  10. 10. Weekly Eighteen months later, the merger closed after top lieutenants as the company’s general coun- receiving approval from no less than six regula- sel; and that the search committee formed to tory entities, all of which expected Mr. Johnson select Mr. Rogers’ successor be equally com- to run the company. But just hours after the deal prised of four directors who sat on the Prog- was signed, the Duke Board ousted Mr. Johnson ress board before the merger and four direc- and put Mr. Rogers in charge. Mr. Rogers stated tors who sat on Duke’s. that the board had lost confidence in Mr. John- Meanwhile, in a clear sign that wronged ex- son, despite the obvious fact that he never got a ecutives do sometimes win, Mr. Johnson has North Carolina Regulators Find Fault real shot to prove himself in the new job. been named as the new CEO of the Tennessee It wasn’t long before the apparent bait and Valley Authority. switch got the attention of the State Utilities With Duke’s stock price down almost 10 per- Commission in North Carolina—and an in- with Duke Energy’s Bait & Switch cent from a high of $70 a share this summer, vestigation was initiated shortly thereafter to it’s clear that the uncertainty swirling around learn whether or not Duke had intentionally the investigation created even more headaches misled regulators to win approval of the deal. for the Duke board. At the same time, Duke’s Kathleen Wailes It is highly unusual for state regulators to in- actions have demonstrated to all potential Originally Published on LEVICK Daily ject themselves into board matters or demand merger candidates the importance of transpar- a say in who leads a utility company; but the ency throughout the process. Commission deemed Duke’s actions so egre- To make a deal work, regulators, employees, gious that it had to step in. Reports that down- shareholders, and a host of other stakeholders sizing efforts facilitated by the deal would fall need to know that the transaction is in their best primarily on the heads of North Carolina’s interests—but attempts to pull the wool over Progress employees certainly didn’t help their eyes won’t provide any long-term benefits, Duke’s situation. Last month, a settlement was even if they do generate initial support. reached that acknowledged “activities on this matter have fallen short of the Commission’s As Duke Energy’s experience shows, aggrieved understanding of Duke Energy’s obligations.” parties to a merger have a number of remedies available even after the ink has dried. As such, The concessions Duke must make as a result When Duke Energy first approached Prog- would run the combined company after the it is far better to be open and honest up front, include Mr. Rogers’ mandatory retirement ress Energy about a potential merger in $26 billion transaction was completed. The and willing to engage in frank discussions that at the end of 2013; a requirement that Duke early 2011, Duke CEO James E. Rogers deal was sold as merger-of-equals. As such, realistically weigh benefits and risks for all maintain at least 1,000 jobs in Raleigh for at assured Progress CEO William D. Johnson the Progress board approved a minimal pre- stakeholders involved. L least five years; the rehiring of several Prog- that he was willing to take the position of mium based on the assumption that their ress executives who were let ago after the deal Kathleen Wailes is a Senior Vice President at LEVICK and executive chairman and that Mr. Johnson CEO would lead the new enterprise. Chair of the firm’s Financial Communications Practice. She closed; the replacement of one of Mr. Rogers’ is also a contributing author to LEVICK Daily.18 19
  11. 11. For immediate release BLOGS worth following Wednesday, December 12, 2012Steele, Davis nominate Simpson-Bowles for TIME Person of the Year Thought leaders Industry blogs This morning on a teleconference moderated Amber Naslund Holmes Report by LEVICK’s Michael W. Robinson, former White brasstackthinking.com holmesreport.com A source of news, knowledge, and career House special counsel Lanny Davis, and former Amber Naslund is a coauthor of The Now Revolution. The book discusses the impact of the social web information for public relations professionals. chairman of the Republican National Committee and how businesses need to “adapt to the new era Michael Steele nominated “Simpson-Bowles” to of instantaneous business." NACD Blog be TIME Magazine’s Person of The Year. blog.nacdonline.org Brian Halligan The National Association of Corporate Directors hubspot.com/company/management/brian-halligan (NACD) blog provides insight on corporate Michael stated, “It reflects the bipartisanship HubSpot CEO and Founder. governanceand leading board practices. the American people are looking for, and would hope will emerge in Washington. At least two Chris Brogan PR Week individuals put information in front of the Chrisbrogan.com prweekus.com American people that challenges the status Chris Brogan is an American author, journalist, PRWeek is a vital part of the PR and communications marketing consultant, and frequent speaker about industries in the US, providing timely news, reviews,quo. I highly support that and have been an advocate of the value that social media marketing. profiles, techniques, and ground-breaking research.Simpson-Bowles brings to the debate.” David Meerman Scott PR Daily NewsLanny added, “It is absolutely immoral to use credit cards to have our davidmeermanscott.com prdaily.com David Meerman Scott is an American online PR Daily provides public relations professionals,children pay for our debt. The one combination that won 60% in a bipartisan social media specialists and marketing marketing strategist, and author of several bookscommission is Simpson-Bowles. This is a purple bipartisan moment. No on marketing, most notably The New Rules of communicators with a daily news feed.political party has stepped up to the line. As TIME’S “Person of the Year,” Marketing and PR with over 250,000 copies inthis would be the moment to ask President Obama and Speaker Boehner to print in more than 25 languages.endorse this.” Guy Kawasaki BUSINESS Related guykawasaki.com FastCompanyPurple Nation Solutions is a D.C.-based strategic communications and public Guy Kawasaki is a Silicon Valley venture capitalist, fastcompany.comaffairs firm founded by former White House special counsel and legal crisis bestselling author, and Apple Fellow. He was one Fast Company is the world’s leading progressivemanagement expert Lanny J. Davis and former RNC chairman, Lt. Gov. of of the Apple employees originally responsible for business media brand, with a unique editorial marketing the Macintosh in 1984. focus on business, design, and technology.Maryland Michael Steele. Situated in the heart of downtown Washington D.C., inproximity to Capitol Hill, the White House and federal regulatory agencies, we Jay Baer Forbesare a bipartisan, global, one-stop shop where law, media, and politics intersect. jaybaer.com Forbes.com Jay Baer is coauthor of, “The Now Revolution: 7 Forbes is a leading source for reliable business Shifts to Make Your Business Faster, Smarter and news and financial information for the WorldsLEVICK is the leading strategic communications firm that establishes and More Social." business leaders.protects trust. LEVICK deploys uniquely qualified teams - armed withthe instincts, influence, and experience needed to win your battles in an Rachel Botsman Mashableincreasingly complex and challenging world. rachelbotsman.com mashable.com Rachel Botsman is a social innovator who writes, Social Media news blog covering cool new websites consults and speaks on the power of collaboration and social networks. and sharing through network technologies. Seth Godin Contact: sethgodin.typepad.com Seth Godin is an American entrepreneur, author Eleanor McManus | Purple Nation Solutions LLC and public speaker. Godin popularized the topic Eleanor@purplenationsolutions.com | 202.460.1451 of permission marketing.
  12. 12. IN THE NEWS ArticlesNACD Directorship | December 12, 201243 Words That Could Change Disclosure RulesKids Today | December 11, 20125 infant Deaths Prompt CPSC to Sue Manufacturer of Nap NannyMondaq | December 11, 201210 Minutes On Social Media with Richard Levick and Catherine BromilowBloomberg | December 7, 2012Rolls’s Potential Corruption Costs Will Depend on Timing THE URGENCY OF NOW.

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