ADR and Governance News from Jim Reiman

October/November, 2017

Friends and colleaguesThis year seems to be slipping by faster than most.  Time got away from me, my October issue of this Newsletter slipped to November, we’ve had our first sustained snow in Chicago, and its nearly Thanksgiving in the US.  Given the speed with which the new year is approaching, let me be the first to wish all happy holidays and a healthy and joyous new year.

As regular readers of this Newsletter know, in each issue I present a summary of recent research reports, legal decisions and news articles that I hope my readers will find of interest and worthy of their time to peruse and perhaps download and read in their entirety.  I focus on two areas:  corporate governance and alternative dispute resolution (“ADR”).  Additionally, I almost always include two to three articles concerning matters of general interest in my “Interesting Cases/Articles of the Month” section.

Beginning with Governance, this month I present two articles.  First, a piece appearing in the New York Times regarding the proxy fight between Aristeia Capital, a hedge fund based in Connecticut, and Sina, one of China’s largest and most successful US listed (NASDAQ) internet companies.  Significantly, share price performance, while an issue, was not the only issue (Sina’s shares are up from $57 on Jan 3 to $113 on Nov 1), and from an investment community perspective was not the most important issue.  The greater issue was governance and the growing discomfort of many Western investors with the governance practices of many US listed Chinese companies.

Also for my governance readers, I present a report issued jointly by the Center for Audit Quality and Audit Analytics, the Audit Committee Transparency Barometer.  The Barometer provides year-over-year comparisons of key audit committee disclosures, and this year’s report reveals enhanced transparency around audit committees’ oversight of their external auditors and broadly increased disclosure.

For my ADR readers, I present two cases.  The first is a case decided in the US District Court for the District of Columbia addressing arbitration privacy.  The prevailing party, seeking to enforce the award, sought leave to file its pleadings under seal referencing the parties’ confidentiality agreement.  The Court, noting that “courts are not intended to be, nor should they be, secretive places for the resolution of secret disputes,” refused to honor the parties’ agreement and ruled that it would not permit a seal unless the parties demonstrated grounds for sealing the record using accepted court criteria for sealing court records.

The second case presented considers the issue of precedent in arbitrations, and the “obligation” of a tribunal to rule consistently with prior rulings.  At issue was whether an award may be rejected because “the arbitrator’s construction of [a rule] ‘[d]eviated [f]rom’ his reasoning in a different arbitration.”

Lastly, I present articles of general interest in my “Interesting Cases/Articles of the Month” section.  This month, I present three pieces.  First, an editorial/analysis of mass shootings in the US and a comparison of the US numbers to those of other countries.  The second piece appeared in KelloggInsight magazine and its title describes its subject:  “When Should Leaders Own a Decision and When Should They Delegate?”  Finally, in my continuing effort to be non-political but informed, I’ve presented a piece from Just Securitywhich re-visits and examines the “Steele Dossier” on Donald Trump written by John Sipher, a former member of the CIA’s Senior Intelligence Service.

This Month’s Articles

Corporate Governance

  • Sina proxy battle with Aristeia:  The US hedge fund Aristeia, the 4th largest shareholder of Sina, sought to add two independent directors to Sina’s board in an effort to enhance shareholder returns and improve Sina’s corporate governance.  Sina prevailed, and then “doubled down,” changing its share structure to make future shareholder actions impossible to win.
  • Audit Committee Transparency Barometer The Barometer is the 4th survey conducted by the Center for Audit Quality and Audit Analytics.  It identifies and quantifies trends in how public company audit committees approach the public communication of their external auditor oversight activities.  The 2017 survey reveals a trend to greater transparency and more robust disclosures.  It also includes samples of disclosures the authors deem especially robust.


Alternative Dispute Resolution

  • Arbitral Confidentiality v Open Courts – XPO Intermodal, Inc. v. American President Lines, Ltd. This case addresses the innate conflict between arbitral privacy and court openness.  XPO sought to enforce an arbitral award in which it prevailed and which was subject to a confidentiality agreement.  All parties asked the court to seal the record based upon the confidentiality agreement.  The court held the public policy of open and transparent courts to be paramount, hence it ignored the confidentiality agreement and instead applied a standard test for sealing court records.
  • Arbitrator Duty to Rule Consistent with Prior Arbitral Awards – Rite Aid of New York, Inc. v. 1199 SEIU United Healthcare Workers East:  This otherwise “ordinary” decision regarding the confirmation of an arbitral award in a labor dispute is noteworthy because of its discussion of the obligation of arbitrators to rule consistent with prior arbitral awards.  That question is reviewed and explored in the discussion presented.


Interesting Articles/Cases of the Month

  • What Explains U.S. Mass Shootings? International Comparisons Suggest an Answer:   This piece, by two New York Times columnists, explores the question:  why does the US suffer such a disproportionately high percentage of the world’s mass shootings?   Their answer lies in the numbers, as evidenced by comparing US events to the rest of the world.
  • When Should Leaders Own a Decision and When Should They Delegate?:  Northwestern Kellogg School professor Victoria Medvec discusses effective decision-making, and offers a risk analysis process to help determine when a CEO or senior manager should delegate a decision or make it him/herself.
  • A Second Look at the Steele Dossier—Knowing What We Know Now:  Just Security, a “forum for the rigorous analysis of U.S. national security law and policy” asked a highly regarded former member of the CIA’s Senior Intelligence Service to examine the Steele Dossier using methods that an intelligence officer would to try to validate such information. His report is presented

I hope you find one or more of the below articles of interest and worthy of your inbox’s space.

Warm regards,

Jim Reiman


Articles / Corporate Governance

U.S. Investor Tries to Shake Up Sina, a Pillar of China’s Internet

In late October, Connecticut based hedge fund Aristeia Capital ($3 billion under management) concluded its proxy battle with Sina, one of China’s largest and most successful internet companies.  Sina has over 100 million registered users worldwide and a market cap of US$7.5+ Billion.  It has also enjoyed an enviable rise in its stock price – up from US$ 57 on January 3 to US$ 113 on Nov. 1.  Listed on NASDAQ, by most metrics Sina is a great success story.

Nonetheless, Aristeia believed Sina’s share price was depressed and commenced a proxy fight in an effort to place two candidates on the company’s board and “shake up Sina’s business and give shareholders fatter returns.”  Of greater significance to the general investing public, Aristeia accused Sina of “failing to hold itself to the standards expected of U.S.-listed public company boards.”

The background and the governance issue:  Aristeia owned 4+% of Sina, making it Sina’s 4th largest shareholder according to FactSet and published reports.  Per a Wall Street Journal article, Aristeia believed that Sina’s ownership of Chinese Twitter-like site Weibo could be better exploited to increase shareholder value.  Thus, it sought private meetings with Sina’s CEO, Charles Chao, to discuss options.  Per the Journal, Sina initially “denied access to Mr. Chao,” however a private meeting was ultimately arranged in Hong Kong during which Aristeia “proposed two nominees for election to the company’s board as independent directors.”  Also per the Journal, the Aristeia representatives left that meeting “frustrated” by “Mr. Chao’s dismissiveness of their positions.”

The heart of the issue:  notwithstanding Sina’s robust stock performance, Aristeia believed that it was actually underperforming but being propped up by its stake in Weibo.  The below chart seems to support Aristeia’s contention:

The greater issue is the concern of many Western investors that Chinese companies whose shares are listed on US and other Western exchanges do not follow the same governance standards as US and other Western companies.  Indeed, per the New York Times,

Chinese companies that list shares in the United States are not necessarily subject to American rules.  Most are incorporated in light regulatory jurisdictions like the Cayman Islands.

As a result, Chinese companies often behave differently. While Sina holds a regular annual meeting, some of its peers do not, a standard for the United States.  Baidu, the search engine giant, has not held an annual shareholder meeting since 2008., the online retailer, has never held one.

Aristeia wanted US standard governance practices put into place at Sina, and at least one of its two proposed independent directors (Tom Manning) is a governance expert, teaching governance at the University of Chicago Law School.

Unsurprisingly, proxy advisory firms Glass Lewis and I.S.S. (Institutional Shareholder Services) both supported the Aristeia proxy.  “Glass Lewis recommended that Sina expand its board to allow Aristeia’s nominees, and I.S.S. recommended that Sina shareholders support one of the two nominees, Tom Manning.  Per I.S.S., “[a]n examination of the arguments reveals compelling reasons for shareholders to seek change at the company.”

The proxy vote occurred on October 31, and the two proposed Aristeia directors were defeated.  Per one commentator:

I did a bit of math based on the difficult-to-interpret results that Sina published, almost certainly with an aim of confusing the situation. My calculations showed that one of Aristeia’s candidates, Thomas Manning, actually got more approval votes from independent shareholders than Sina’s own candidate at the annual meeting (English article).   But after receiving support from [Sina’s CEO’s] large shareholding, Sina’s own candidate comfortably won the election.  

Sina initially sounded a conciliatory note, stating that it would “consider additional independent candidates for its board, implying it might listen to Aristeia and others who want to reform the company.”  Two days later, however, it changed its shareholder structure “effectively giving majority control to Charles Chao, its chairman and chief executive.”  The company “issued a new class of shares with super voting rights that have been transferred to a holding company controlled by Mr. Chao. The changes will give him a 55.5 percent voting stake in Sina and could prevent future attempts to introduce new board members or force votes on business strategy.”

The saga continues.  Stay tuned. . . . . . . .

Jacky Wang, The Wall Street Journal, “Sina Shows Its Disregard for Shareholders,” November 9, 2017


Doug Young, Seeking Alpha, “Sina Pledges Change, But Then Disses Shareholders,” November 9, 2017


 Amie Tsang, New York Times, “Sina Doubles Down to Ward Off Activists After Proxy Fight,” November 7, 2017


 Alexandra Stevenson, New York Times, “U.S. Investor Tries to Shake Up Sina, a Pillar of China’s Internet,” October 31, 2017


Julie Steinberg, The Wall Street Journal, “Hedge Fund Launches Proxy Fight Against China’s Sina,” September 19, 2017


2017 Audit Committee Transparency Barometer:

On November 1, the Center for Audit Quality and Audit Analytics released their 4th annual “Audit Committee Transparency Barometer,” a survey which “measures the robustness of proxy disclosures among companies in the S&P Composite 1500.”  The study comprised companies included in the S&P 500 (large-cap companies), the S&P MidCap 400, and the S&P SmallCap 600.  The goal of the study:  to “gauge how public company audit committees approach the public communication of their external auditor oversight activities by measuring the robustness of proxy disclosures. . .”.

The 2017 study, the fourth conducted, “[o]bserve[d] encouraging trends with respect to voluntary, enhanced disclosure around external auditor oversight, an important facet of the audit committee’s broader financial reporting oversight role.”  Each of the three S&P indices tracked (the “500,” “400” and “600”) “showed increases in many disclosures related to external auditor oversight,” including the following results from the S&P 500:

  • An increase from 31% in 2016 to 37% in 2017 in disclosing audit committee considerations in appointing the audit firm
  • An increase from 59% in 2016 to 63% in 2017 in disclosure of length of audit firm engagement
  • An increase from 34% in 2016 to 38% in 2017 in discussing criteria considered when evaluating the audit firm
  • An increase from 43% in 2016 to 49% in 2017 in explicitly stating the audit committee is involved in the selection of the audit engagement partner
  • An increase from 39% in 2016 to 46% in 2017 in stating the engagement partner rotates every five years

One “key area” tracked either decreased or remained flat across the S&P 1500 indices from 2016 to 2017– an explanation for a change in fees paid to the external auditor.

The Report also notes that “[a]s considerations in appointing the external auditor and discussing criteria considered when evaluating the audit firm are increasingly disclosed, so too are discussions of audit quality indicators.”  The authors were “encouraged to see factors considered such as the auditor’s engagement team knowledge and experience, the audit firm’s system of quality control, results of Public Company Accounting Oversight Board (PCAOB) inspections, as well as the auditor’s historical performance discussed in the audit committee reports.”

High level take-away per Cindy Fornelli, executive director at the Center for Audit Quality:

“The change points to an effort among board directors to be more transparent about their oversight of the corporate financial reporting process.”

*     *     *

“Audit committees understand the value that investors place in their work and they’re heeding calls and demands that they share more about the important work that they do.” 

The Report also includes excerpts from several companies’ proxies as examples of “robust” disclosures.  The Report is a worthy read for audit committee directors and those who assist in the preparation of their companies’ proxy statements.

 The full report:  Center for Audit Quality and Audit Analytics, “2017 Audit Committee Transparency Barometer”, November, 2017

 Tatyana Shumsky, The Wall Street Journal, “Audit Committees Tell Investors More About Their Work,” November 1, 2017

Articles / Alternative Dispute Resolution

Sealing Court Proceedings to Enforce an Arbitral Award:  XPO Intermodal, Inc. v. American President Lines, Ltd. 

It is generally accepted in the arbitral community that one of the great advantages of arbitration over court litigation, and one of the principal reasons for its use, is privacy.  Arbitration proceedings are private, and if also subject to a confidentiality agreement (which is common), they are confidential as well.  That advantage is challenged, however, when a prevailing party goes to court to enforce its award.

Court records and proceedings, unlike arbitrations’, are open and public.  Moreover, in many countries (and the US in particular) there is a strong public policy in favor of openness and full disclosure to the public of all court records.  Thus, how does one protect the privacy/confidentiality of an arbitral award if forced to utilize the courts to enforce its determination.  This is the issue in XPO Intermodal, a case pending in the US District Court, District of Columbia and reported in mid-October.

The proceeding was commenced by XPO Intermodal to enforce an arbitral award that it had secured.  XPO, apparently concurrent with the filing of its action, petitioned the court to seal the court record generally and specifically its Petition to Confirm Arbitration Award and two exhibits attached to the Petition.

Per the Court,

“In support of its motion, [XPO] directs the Court to the confidentiality terms of the parties’ Services Agreement and represents that ‘[b]oth parties have strong property and privacy interests in maintaining the confidentiality of these documents, as they contain highly sensitive propriety [sic] commercial information,’ including information regarding the parties’ ‘rates and business practices’.  Beyond these general assertions, however, [XPO’s] motion proffers little to justify sealing what, in effect, amounts to the entire substantive record in this case.”

In ruling upon XPO’s motion, the Court initially noted that “[t]his country has a ‘strong tradition of access to judicial proceedings.’ [citation omitted] [and that a]s a general rule, the courts are not intended to be, nor should they be, secretive places for the resolution of secret disputes.”

Thus, the Court commenced its analysis by examining the historical factors looked to by courts when deciding whether to seal a record.  It identified a 6 point balancing test:

(1) the need for public access to the documents at issue;

(2) the extent of previous public access to the documents;

(3) the fact that someone has objected to disclosure, and the identity of that person;

(4) the strength of any property and privacy interests asserted;

(5) the possibility of prejudice in those opposing disclosure; and

(6) the purposes for which the documents were introduced during the judicial proceedings.

The Court also noted the August, 2017 DC Court of Appeals decision in Metlife v Financial Stability Oversight Council which held:

The right of public access is a fundamental element of the rule of law, important to maintaining the integrity and legitimacy of an independent Judicial Branch.  Although the right is not absolute, there is a strong presumption in its favor, which courts must weigh against any competing interests.

The Court next looked to the parties’ petition to seal the record and found it wanting under the balancing test described and public policy in favor of openness:

[T]he parties’ mutual desire for confidentiality, without more, does not justify the sealing of the entire substantive record of the case.

*     *     *

[E]ven if disclosure would violate the terms of the parties’ settlement and confidentiality agreements, such agreements between private parties “do not dictate whether documents can be filed under seal”

*     *     *

Given the strong presumption in favor of public access and the ease with which confidential information may be redacted from documents before they are publicly filed, the Court concludes that this matter can and should be open to the public to the greatest extent possible. The Court sees no reason to seal the entire Petition or any portion of this Memorandum Opinion and Order. It is also unnecessary to seal the exhibits in their entirety simply because they contain or refer to confidential information. First, generalized business interests in confidentiality simply “do[] not rise to the level of the privacy and property interests that courts have permitted to outweigh the public’s right of access.” [citation omitted]  This is particularly so where trade secrets, pricing, and other sensitive information regarding business practices or strategies may be redacted.

Accordingly, the Court ordered the parties to engage in a “more rigorous examination undertaken in good faith” and present “a more tailored and appropriate proposal for redaction.”

This author’s take-away:  if the parties really want to keep their dispute confidential, then the losing party should think long and hard about failing to abide by the terms of an arbitral award, thus avoiding the enforcement process.  Parties might also agree to a simple award or some other form of award that will be enforceable but silent on the matters that they wish to be kept confidential.


The full Court opinion:  XPO Intermodal, Inc. v. American President Lines, Ltd., Civil Action No. 17-2015, United States District Court, District of Columbia, October 16, 2017.

The full Court of Appeal opinion:  Metlife v Financial Stability Oversight Council, Metlife Inc. v. Fin. Stability Oversight Council, 865 F.3d 661 (2017)


Arbitral Consistency:  Is An Award Reversible When An Arbitrator Rules Differently On The Same Legal Principle In Different Matters?

The case presented, Rite Aid of New York, Inc. v. 1199 SEIU United Healthcare Workers East, is a Second Circuit decision affirming a District Court’s denial of a petition to vacate an arbitral award.  The case concerned a dispute regarding an “arbitral award of benefits contributions owed by Rite Aid under a 2009 collective bargaining agreement (“CBA”) and [Rite Aid’s] motion for an award of attorneys’ fees.”  Rite Aid disputed the tribunal’s award and sought to have it set aside by the trial court.  That court denied the petition, and Rite Aid appealed.

The Appellate Court affirmed, stating the well recognized and well entrenched law regarding reversals of arbitral decisions generally and those rendered under the Labor Management Relations Act in particular.  While not new, the Court’s reasoning bears repeating if for no other reason than the simplicity and clarity of its statements:

“A federal court’s review of labor arbitration awards is ‘among the most deferential in the law.’ [citation omitted]  We may not ourselves ‘weigh[] the merits of [the] grievance.’ [citation omitted]  ‘We must simply ensure that the arbitrator was ‘even arguably construing or applying the contract and acting within the scope of his authority’ and did not ‘ignore the plain language of the contract.’  [citation omitted]  ‘[E]ven if an arbitrator makes mistakes of fact or law, we may not disturb an award so long as he acted within the bounds of his bargained-for authority.”  [citation omitted]   An arbitrator acts within that authority if the award ‘draws its essence from the collective bargaining agreement,’ [citation omitted] and is supported by at least a ‘barely colorable’ interpretation of the contract, [citation omitted] rather than the arbitrator’s ‘own brand of industrial justice’ [citation omitted].”  

For those versed in the law of arbitration, this is standard stuff.  The reason the case is presented is an unusual argument made by Rite Aid – that the arbitrator “[d]eviated [f]rom his reasoning in a different arbitration.”  Restated, Rite Aid sought reversal because it believed the arbitrator ruled differently in a prior matter and was bound to rule consist with his prior ruling.

The Court made short shrift of this argument:

“Even if we were to agree with Rite Aid’s understanding of the other arbitration, the argument is defeated by precedent rejecting the notion that ‘an arbitrator has a duty to follow arbitral precedent,” or that ‘failure to do so is reason to vacate’ an arbitration award.”

Notwithstanding the Court’s dismissive rejection of Rite Aid’s argument, I thought a deeper dive appropriate hence I reviewed the prior decisions relied upon by the Rite Aid court.  I set forth below two discussions of the issue, along with their citations for those who wish to further research the issue:

We reject [plaintiff’s] argument that an arbitrator has a duty to follow arbitral precedent and that failure to do so is reason to vacate an award. We note that prior statements of this and other circuit courts indicate that inconsistent awards will ordinarily be upheld where they are both grounded in the collective bargaining agreement. See Connecticut Light and Power Co. v. Local 420, International Brotherhood of Electrical Workers, 718 F.2d 14, 20-21 (2d Cir.1983) (discussing decisions of other circuits).

*     *     *

“Courts reviewing inconsistent arbitration awards have generally concluded that arbitrators are not bound by the rationale of earlier decisions and that inconsistency with another award is not enough by itself to justify vacating an award. Westinghouse Elevators of Puerto Rico, Inc. v. S.I.U. de Puerto Rico, 583 F.2d 1184, 1186-87 (1st Cir.1978). Principles of stare decisis and res judicata do not have the same doctrinal force in arbitration proceedings as they do in judicial proceedings, see Butler Armco Independent Union v. Armco Inc., 701 F.2d 253 (3d Cir.1983); Metropolitan Edison v. NLRB, 663 F.2d 478 (3d Cir.1981), cert. granted, 457 U.S. 1116, 102 S.Ct. 2926, 73 L.Ed.2d 1327 (1982); Riverboat Casino, Inc. v. Local Joint Executive Board of Las Vegas, 578 F.2d 250 (9th Cir.1978); and, while it is the usual practice of arbitrators to find prior awards final and binding, see Board of Education of Cook County, 73 Lab.Arb. 310 (1979); Todd Shipyards Corp., 69 Lab.Arb. 27 (1977), subsequent arbitrators may set aside or modify a previous award in certain circumstances.”


The full opinion:   Rite Aid of New York, Inc. v. 1199 SEIU United Healthcare Workers East, United States Court Of Appeals For The Second Circuit, 16-3342-cv, August 22, 2017 

The full opinion:  The Wackenhut Corporation v. Amalgamated Local 515 and International Union, United Plant Guard Workers of America (UPGWA), 126 F.3d 29 (1997)

 The full opinion:  Connecticut Light and Power Co. v. Local 420, International Brotherhood of Electrical Workers, 718 F.2d 14, 20-21 (2d Cir.1983


Articles / Interesting Case of the Month

What Explains U.S. Mass Shootings? International Comparisons Suggest an Answer:  

This article asks a simple question:  Why are there so many mass shootings in the US?

Perhaps, some speculate, it is because American society is unusually violent. Or its racial divisions have frayed the bonds of society. Or its citizens lack proper mental care under a health care system that draws frequent derision abroad.

These explanations share one thing in common: Though seemingly sensible, all have been debunked by research on shootings elsewhere in the world.  Instead, an ever-growing body of research consistently reaches the same conclusion.

That conclusion is seemingly obvious:  it’s because of the number of guns in this country.  Per the article’s authors, “the top-line numbers suggest a correlation that, on further investigation, grows only clearer.”

What are those “top line” numbers:

  • The United States has 270 million guns and had 90 mass shooters from 1966 to 2012
  • No other country has more than 46 million guns or 18 mass shooters
  • Americans make up about 4.4 percent of the global population but own 42 percent of the world’s guns
  • America’s gun homicide rate was 33 per million people in 2009, far exceeding the average among developed countries. In Canada and Britain, it was 5 per million and 0.7 per million, respectively, which also corresponds with differences in gun ownership.

The numbers, and the article, are sobering.  I urge all to read the article.

 Max Fisher, Josh Keller, The New York Times, “What Explains U.S. Mass Shootings? International Comparisons Suggest an Answer,” November 7, 2017


When Should Leaders Own a Decision and When Should They Delegate?:

This piece, by Victoria Medvec, appeared in the October issue of KelloggInsight and addresses the critically important issues of effective decision making and delegation.  While I’m not a fan of the piece’s title (“When Should Leaders Own a Decision and When Should They Delegate?”) because I believe that good leaders “own” all decisions, whether delegated to another or made by him/herself, I liked its discussion and the risk analytical process advocated.

Medvec recommends that leaders “approach decisions by first considering the riskiness of a decision.”  That analysis, she continues, should determine

(1) who is involved in making the decision,

(2) how much time should be spent,

(3) how much certainty is required, and

(4) [the]. . . tolerance . . . for error.”

Basing her recommendation on the axiom that “a well-run company has the right people focused on the right risks,” Medvec notes that “too often, low-risk decisions get escalated up to the leadership team.”  This, she notes, often results in lengthy delays in the time taken to reach a decision, and more often than not decisions that are escalated are “more error-prone, as the people making the decision are further away from the data required to make the call.”

Regarding time, Medvec relates that in her “experience many organizations spend a disproportionate amount of time making low-risk decisions.”  She calls this “inverting the risk continuum,” and argues that “[i]nverting the risk continuum can lead a company to lose focus of core business questions.”

With respect to certainty, Medvec states –

Some leaders by nature tend to be more cautious than others—and there is nothing inherently wrong with caution. But it is easy to overanalyze mid-risk and low-risk decisions. To avoid paralysis by analysis, the level of risk should drive how much certainty is required: When is 70 percent enough? When is 50 percent sufficient? When should we just make the call based on our gut because the risk is so low that it would be better to revise the decision if needed later than to analyze it upfront? You want to save your analytic rigor for the important stuff.

Finally, risk tolerance.

Leaders have a choice when it comes to tolerating error. Some choose to punish errors and reward overanalysis. Others actually celebrate mistakes. At 3M, it was hard to get promoted without having made a highly visible mistake that was widely discussed. That is not because 3M loved mistakes, but because they valued risk-taking, which they knew was the spark for innovation.

Instead of being universally cautious, leaders should focus on “de-risking” decisions by actively working to push decisions down the risk continuum.

Concluding, Medvec states:

What you . . .want is a company that encourages innovation and empowers its people to make decisions appropriate to their position. No amount of analysis will ever completely eliminate risk. But when leaders learn to assess that risk and focus on what really matters, they are far more likely to succeed.

 Victoria Medvec, KelloggInsight, “When Should Leaders Own a Decision and When Should They Delegate?,” October, 2017

A Second Look at the Steele Dossier—Knowing What We Know Now:  

The so called “Steele Dossier” – that research report prepared by Orbis Business Intelligence, a London-based firm specializing in commercial intelligence for government and private-sector clients, and authored by former British intelligence officer Christopher Steele.  As you will likely recall, the Dossier “painted a picture of active collusion between the Kremlin and key Trump campaign officials based on years of Russian intelligence work against Trump and some of his associates.”  Its been in the news again lately, and most will remember the uproar it caused when originally published just 10 days before Trump’s inauguration.

Just Security, the “online forum for the rigorous analysis of U.S. national security law and policy,” based in the Center for Human Rights and Global Justice at New York University School of Law, took a fresh look at the Dossier and asked John Sipher, a “highly respected former member of the CIA’s Senior Intelligence Service” to review the documents and opine on their credibility.

Per Just Security’s editors:

[T]he dossier’s information on campaign collusion is generally credible when measured against standard Russian intelligence practices, events subsequent to Steele’s reporting, and information that has become available in the nine months since Steele’s final report.  The dossier, in Sipher’s view, is not without fault, including factual inaccuracies.  Those errors, however, do not detract from an overarching framework that has proven to be ever more reliable as new revelations about potential Trump campaign collusion with the Kremlin and its affiliates has come to light in the nine months since Steele submitted his final report.

A bit of background to refresh your memory:

[The Steele Dossier] is composed of a batch of short reports produced between June and December 2016 by Orbis Business Intelligence, a London-based firm specializing in commercial intelligence for government and private-sector clients.  The collection of Orbis reports caused an uproar when it was published online by the US website BuzzFeed, just ten days before Donald Trump’s inauguration.  

With that background, consider Sipher’s analysis:

Taken together, the series of reports [comprising the so called “Steele Dossier] painted a picture of active collusion between the Kremlin and key Trump campaign officials based on years of Russian intelligence work against Trump and some of his associates.  This seemed to complement general statements from US intelligence officials about Russia’s active efforts to undermine the US election.  

*     *     *

Almost immediately after the dossier was leaked, media outlets and commentators pointed out that the material was unproven. News editors affixed the terms “unverified” and “unsubstantiated” to all discussion of the issue in the responsible media.  Political supporters of President Trump simply tagged it as “fake news.”  Riding that wave, even legendary Washington Post reporte[r] Bob Woodward characterized the report as “garbage.”

For professional investigators, however, the dossier is by no means a useless document.  Although the reports were produced episodically, almost erratically, over a five-month period, they present a coherent narrative of collusion between the Kremlin and the Trump campaign.  As a result, they offer an overarching framework for what might have happened based on individuals on the Russian side who claimed to have insight into Moscow’s goals and operational tactics.  

*     *     *

Many of my former CIA colleagues have taken the Orbis reports seriously since they were first published.  This is not because they are not fond of Trump (and many admittedly are not), but because they understand the potential plausibility of the reports’ overall narrative based on their experienced understanding of both Russian methods, and the nature of raw intelligence reporting.  

*     *     *

[Sipher:]  Immediately following the BuzzFeed leak, one of my closest former CIA colleagues told me that he recognized the reports as the obvious product of a former Secret Intelligence Service (SIS) officer, since the format, structure, and language mirrored what he had seen over a career of reading SIS reports provided to CIA in liaison channels.  He and others withheld judgment about the veracity of the reports, but for the reasons I outline further below they did not reject them out of hand.  In fact, they were more inclined for professional reasons to put them in the “trust but verify” category.

I’ll leave it to each of you to decide whether to read the entire article, but I must confess that I found it fascinating.  Ignoring the Trump/campaign/collusion issues, the description of real world “spy-craft” – how it’s done; what’s considered important and why. . . . .well worth the read.  But how can one ignore the “Trump/campaign/collusion issues?!?”

Here’s Sipher’s conclusion:

“I think it is fair to say that the report is not “garbage” as several commentators claimed.  The Orbis sources certainly got some things right – details that they could not have known prior.  Steele and his company appear serious and credible.  Of course, the failure of the Trump team to report details that later leaked out and fit the narrative may make the Steele allegations appear more prescient than they otherwise might.  At the same time, the hesitancy to be honest about contacts with Russia is consistent with allegations of a conspiracy.

All that said, one large portion of the dossier is crystal clear, certain, consistent and corroborated.  Russia’s goal all along has been to do damage to America and our leadership role in the world.  Also, the methods described in the report fit the Russians to a tee.  If the remainder of the report is largely true, Russia has a powerful weapon to help achieve its goal.  Even if it is largely false, the Kremlin still benefits from the confusion, uncertainty and political churn created by the resulting fallout.

 John Sipher, Just Security, September 6, 2017