The executions of Australians Myuran Sukumaran and Andrew Chan in Indonesia are a tragedy with implications for investors.
The story of Filipina drug courier Mary Jane Veloso, who was scheduled to be executed but received a late minute reprieve after her alleged recruiter turned herself into police in Philippines, should concern everyone.
My own experience with Australian Customs occurred in when I travelled to South Korea for the UN Principles for Responsible Investment’s second annual conference in 2008.
At the time I had been working for the Secretariat of the PRI. Because the PRI was in its infancy and had very few resources, the PRI team stayed at a back packer hostel in Seoul.
When I checked into my room I was pleasantly surprised that it was a good size and had everything I needed. I saw some white powder on the floor and assumed it must be make-up from a previous occupant. I thought nothing more of it.
Over the next couple of days I ran around the PRI Conference, staying up late and only coming back to the room to sleep. I would throw my old clothes on the floor, gathering them all up in my bag at the end of my brief stay.
Flying back into Australia I was glad to be home. As the Customs dog sniffed my bag I didn’t blink an eyelid. I was then called across for a bag examination. The Customs official went through everything in my bag, pulling out toys I had bought for the kids and examining my note book for my scrawling.
After a while he said to me “you are probably wondering why we are doing this.” Actually to be honest I hadn’t, I just thought it was a standard check. He then told me that my bag had come up with drug traces.
At this news my heart raced and it was only then that the powder in the back packer hostel took on a new, more sinister meaning.
I am glad to say that Australian Customs accepted by explanations and I was able to head home – but what would have happened if I had been in another country?
In Australia we take for granted that we have a justice system and rule of law that provides us with protections. In the case of Mary Jane Veloso, her life was put at stake because she was duped by a drug courier, who only confessed when the guilt that her actions were going to be responsible for the taking of a life became too much to bear.
So what does this all have to do with investors?
Actually a lot.
One of the biggest conversations that is occurring in the investment world at the moment is how do we meet the needs of retirees in a low yield environment.
Investment returns are certainly likely to be lower in the coming years in the developed world, but the developing world offers great opportunities. The rise of Africa, South America and South East Asia are all mega-trends we have heard about, and they should create long term investment opportunities. For insurers in Europe whose business model is under threat due to low yielding bonds, developing countries offer a solution as they do for Australian investors seeking a comfortable retirement.
Standing in the way of these returns is the justice systems of developing countries. A lack of confidence in the rule of law is one of the major reasons why institutional investors baulk at investing in developing countries.
The tragic irony of the story of Myuran Sukumaran and Andrew Chan is that drugs were freely available in prison, and the local police continue to play a large role in drug trafficking. The lesson for investors out of this week’s tragic events is to highlight how important justice systems are to investment. They provide the foundation upon which investment can then be built with confidence.
The global need to find higher yielding investments should provide strong incentives for investors to support collaborations that are designed to increase the transparency of justice systems around the world. This is not just someone else’s problem, it is also our problem.