Mexico Business Intelligence Report
May 2009
H1N1 Swine Influenza Outbreak in Mexico:
The outbreak of a new swine flu epidemic apparently originating in Mexico has compelled companies to activate their crisis management and business continuity plans, starting with:
- Convoke your crisis management team
- Update and test your calling tree (names and phone numbers of your personnel).
- Verify operability of your IT and communications system.
- Test your company and employees ability to telework, i.e., work from remote locations including their homes.
- Cross train employees, particularly those responsible for key applications and responsibilities so there is some redundancy.
- Develop and test a degradation plan, specifically consider what applications and responsibilities are less necessary for the temporary functioning of more important company functions and operations.
- Remember your employees are your most important company asset – make sure they are safe first, then worry about resuming business.
- And now that the worst is over, conduct an evaluation at the conclusion of the crisis – to improve your contingency planning for the next time!
Family Crisis Management:
We were fortunate in Mexico City that there was no panic nor runs on food supplies during the recent state of emergency. Again a useful reminder to be better prepared for the next crisis, namely:
- Maintain a current telephone and email list of important contacts and family members, especially their cell phone numbers.
- Maintain a stock of non-perishable food stocks, i.e., cans, drinking water, etc., for a minimum duration of one week.
- Review your inventory of prescription drugs and basic medical supplies.
- Conduct an inventory and safe storage of important documents, like passports, birth certificates, etc.
- Inspection of your vehicle whose gasoline tank should be full.
- Surely from the minor flu crisis we experienced there are more items you can also add to this list.
Crime Trends: The Good News:
The Federal Chamber of Deputies passed a law converting the Federal Preventative Police into the Federal Police under the Secretariat of Public Safety, but with expanded investigative and intelligence gathering capabilities. The Federal Investigative Agency (AFI) will remain under the Attorney General’s Office. (The News, 24 April 2009).
Comment: Eventually the Federal Police will assume all responsibility over the military in the war against organized crime and the drug cartels.
The Fraud Corner by Der Hurley of Sullivan & Miranda, SC:
Conspiracy Theories
Bernard L. Madoff pleaded guilty to eleven charges of fraud, money laundering, theft and perjury. He defrauded investors in what he himself described as a $50 billion dollar Ponzi scheme. A Ponzi scheme occurs when new investors are used to pay off earlier investors. It works along the following lines: A Ponzi operator offers a simple interest return of 20% on an investment by A of $10,000. Before the end of the first year, the Ponzi operator persuades B and C to invest. By the end of the first year, the total income to the Ponzi scheme is $30,000 and the total payout is $12,000. The Ponzi operator has at least $18,000 available, probably more as A is likely to reinvest some or all of his $12,000. The scheme collapses when the Ponzi operator cannot find new investors and fails to persuade old investors to reinvest.
Mr. Madoff´s house of cards began to fall late 2008 in the midst of the worst U.S. stock market plunge since the Great Depression. Investigators now quantify the total fraud at around $80 billion. This tends to confirm a general rule of thumb for fraud examiners; fraudsters confess a lower than actual damage quantity. When Bernie Madoff’s scheme came to light, defrauded investors and the public at large looked around for others to blame. His wife, brother and two sons were involved in the Madoff company. The firm had two divisions. Investigators apparently, now conclude that the other Madoff family members were only involved in the legitimate stock brokerage side of the business. The investment management division which we all now know as a Ponzi scheme, was closely controlled and run by Bernie Madoff himself. This tends to confirm another rule of thumb for fraud examiners; roughly 75% of all frauds are lone ranger operations. It is highly likely that the Madoff fraud falls into the 25% category. It is inconceivable that one person alone could undertake such a large and lengthy operation. Having said that, it is likely that Bernie Madoff had at most two or three accomplices. The less people involved, the less division of the spoils and the greater the probability of keeping the fraud to themselves. That is not to say family members, close employees and investors suspected something was going on. It is likely that all investors in high interest rendering investments must have suspicions about the source of their income. In the back of their minds they must feel that one day the whole thing will come crashing down. Their hope is that they manage to get out beforehand. However, turning a blind eye and active involvement are two different things. The moral of the Madoff story is that victims and the public at large tend to spread the net wide as far as blame is concerned. We should not be hasty in coming to conclusions. The FBI has top class investigators on the case. Let them do their job.
The economic downturn that exposed the Madoff fraud has more people than ever playing the blame game. The internet is awash with conspiracy theorists blaming collective others for the hard times. As long as the subjects of their wrath are spread wide, the conspiracy theorists ranting is pretty harmless. Most reasonable people find the conspiracy theories laughable. Everybody and their mother are blamed - the capitalist system, government, big business, police, all religions, lawyers, Wal-Mart, the rich, multinationals, globalism, the educated, accountants, democracy, central banks, Jews, the Catholic church, the U.S., the Masons, Israel, gays, the Vatican, the socialist system, the G20, tax collectors, the E.U., the west, the free market system, free trade agreements, international bankers, etc., etc., etc. To be continued next newsletter.
Der Hurley is a forensic auditor with Sullivan Miranda, S.C. http://www.smiranda.net
Provided by Specialized Consulting Services Network Affiliate Problem Solvers, S.A. de C.V. in Mexico City, Mexico.
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Travel Alert
U.S. DEPARTMENT OF STATE
Bureau of Consular Affairs
This information is current as of today,
Hurricane Season
The Department of State alerts U.S. citizens to the Hurricane Season in the Atlantic and Pacific Oceans, the Caribbean, and
the Gulf of Mexico. The official Atlantic Hurricane Season runs from June through November. This Travel Alert expires on
December 4, 2009.
National Weather Service officials at the National Oceanic and Atmospheric Administration (NOAA) predict a 50 percent chance
that activity during the 2009 Atlantic Hurricane Season will be near-normal this year, forecasting nine to fourteen named
storms, with four to seven becoming hurricanes and one to three becoming major hurricanes. NOAA recommends that those in
hurricane-prone regions begin preparations at this time for the upcoming season.
In the aftermath of some previous storms, U.S. citizens have encountered uncomfortable and often dangerous conditions that
have lasted for several days while awaiting transportation back to the United States. In the past, many U.S. citizens traveling
abroad to affected regions have been forced to delay their return to the United States due to infrastructure damage to airports
and limited flight availability. In many cases, flights were suspended and passengers faced long delays due to the need to
repair a damaged airport. Roads also were washed out or obstructed by debris, adversely affecting access to airports and
land routes out of affected areas. Reports of looting and sporadic violence in the aftermath of natural disasters are not
uncommon. Security personnel may not be readily available to assist at all times. In the event of a hurricane, travelers
should be aware that they may not be able to depart the area for 24-48 hours or more.
Should a situation require an evacuation from an overseas location, the State Department will work with commercial airlines
to ensure that U.S. citizens are repatriated as safely and efficiently as possible. Commercial airlines are the Department's
primary source of transportation in an evacuation; other means of transport are utilized only as a last resort. The Department
of State will not provide no-cost transportation, but does have the authority to provide repatriation loans to those in financial
need. U.S. citizens should obtain travel insurance to cover unexpected expenses during an emergency.
U.S. citizens living in or traveling to storm-prone regions overseas should prepare for hurricanes and tropical storms by
organizing a kit containing a supply of bottled water, non-perishable food items, a battery-powered or hand-crank radio, and
vital documents (especially passport and other identification) in a waterproof container. Emergency shelters often have access
only to basic resources and limited medical and food supplies.
U.S. citizens should monitor local radio, local media, and the National Weather Service to stay aware of any weather developments in their area. Minor tropical storms can develop into hurricanes very quickly,
limiting the time available for a safe evacuation. Travelers should apprise family and friends of their whereabouts and keep
in close contact with their tour operator, hotel staff, and local officials for evacuation instructions in the event of a
weather emergency.
U.S. citizens are strongly encouraged to register with the nearest U.S. Embassy or Consulate through the Department of State's travel registration website. By registering, American citizens can receive the Embassy's most recent security and safety updates during their trip.
Registration also ensures that U.S. citizens can be reached should an emergency arise either abroad or at home. While consular
officers will do their utmost to assist Americans in a crisis, travelers always should be aware that local authorities bear
primary responsibility for the welfare of people living or traveling in their jurisdictions.
Additional information on hurricanes and storm preparedness may be found on the Hurricane Season 2009 page of the Bureau of Consular Affairs' website or in the " Hurricane Season - Know Before You Go" pamphlet. Updated information on travel in the Caribbean may be obtained from the Department of State by calling 1-888-407-4747 within
the United States and Canada or, from outside the United States and Canada, 1-202-501-4444. Travelers to the region are encouraged
to check the Internet site of the U.S. Embassy or Consulate with consular responsibilities for the territory they will be
visiting (accessible via http://usembassy.state.gov/). For further information please consult the Country Specific Information
Sheet for the country or territory in question, available via the Internet at http://travel.state.gov.
Courtesy U.S. Department of State.
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