January 11, 2008 — The Senate is ordering a probe into sovereign wealth funds controlled by foreign governments, just as Citigroup and Merrill Lynch negotiate a new wave of overseas capital injections weeks after getting a first round of multibillion-dollar infusions.

The Government Accountability Office this week began an investigation into how much money the funds control, where they have been invested and how those investments have been treated.

The GAO is also examining what information these opaque funds, which are generally run by Asian and Middle Eastern governments, are required to disclose about their investments and what action can be taken to discipline them if they misuse their power.

“The sovereign wealth funds did not initially cause too much of a stir in Washington,” said David Walker, the comptroller general who heads the GAO. “But as the number of these kind of transactions rises, Congress is becoming interested.”

The review, which was ordered by the Senate Committee on Banking, Housing and Urban Affairs, comes as sovereign wealth funds in recent weeks have invested about $35 billion in Merrill, Citi, Bear Stearns and Morgan Stanley, among others.

Although the first round of investments raised some concerns in Washington and on Wall Street, it was largely welcomed because the banks desperately needed capital after suffering multibillion-dollar losses on mortgage-related investments.

But now there’s word that Citi is seeking as much as $10 billion more from sovereign wealth funds in Asia and the Middle East - not long after the Abu Dhabi government paid $7.5 billion for a 4.9 percent stake.

Further, Merrill is seeking an additional $3 billion to $4 billion from a Middle Eastern sovereign wealth fund, less than three weeks after selling a 10 percent stake to the Singapore government for about $5 billion.

Both deals have fueled concerns that the funds may use their stakes in the banks for political gain.

While these funds’ stakes aren’t expected to exceed 10 percent, a big fear is that two or more funds could join forces and coordinate their influence over a big Wall Street firm.

Times of London

The passports of two Britons alleged to have travelled to India to buy kidneys in an organ transplant racket have been confiscated by police in the Indian capital, investigators confirmed yesterday.

Police said “two British people have not been let out of the country” as part of their investigation. “We are holding their passports. They are helping with our investigation - [there] are allegations that they are part [of the buying ring]. We are cross-checking certain things. They have been apprehended but not yet charged,” said the deputy commissioner of Gurgaon police, Rakesh Arya. The police refused to divulge their names and the British High Commission said it had not been informed of the investigation.

After raiding a private hospital last week in Gurgaon, an upmarket suburb of Delhi, police found that poor labourers had had their kidneys removed, sometimes against their will, and sold to clients from around the world. Doctors charged 1.5m rupees (18,750) for a kidney transplant while the donor was paid just about 40,000 rupees (500).

The trade has shocked India, which banned the sale of kidneys for commercial gain in 1994 with jail terms of up to five years for those found guilty. However, the ring is believed to have seen more than 500 organs bought in the past nine years.

The police have seized computers and are decoding email accounts. Five labourers, three of whom had lost kidneys, were also rescued. A number of foreign nationals, who were caught waiting for transplants, have been questioned.

The masterminds behind the illegal trade, say officers, were two Indian brothers, neither of whom had any medical training but who apparently supervised the surgery. One of the brothers has been arrested in Mumbai but the kingpin, Amit Kumar, is believed to be on the run in Canada. Television channels reported that a nurse, a foreign national called Linda, has confessed to police about breaking the law.

The investigation has now spread to seven Indian states with doctors accused of operating across northern India.

India’s government has been spurred into action, with the country’s top investigating agency drafted in to lead the inquiry. The health minister, Anbumani Ramadoss, said he would make the existing organ trade regulations “more stringent”. According to a government estimate, more than 100,000 kidney transplants are required in India every year, but only 5,000 are performed legally.

Experts say the black market for kidneys is booming for two reasons. One is that western patients can pay a poor person a year’s salary for an organ. The second is that there is no affordable public healthcare system in India - hospital facilities for the storing and transporting of organs remain inadequate.

“This problem comes from the economic disparity between the western hemisphere and the poor here. Western patients can simply buy organs and in this country we have no national health service. Only 20% in the country can access any kind of medical care. We need a much bigger deterrence in terms of jail sentences,” said Sandeep Guleria, professor of medicine at Delhi’s All India Institute of Medical Sciences.

It didn’t surprise me to find «investing.businessweek.com» on BusinessWeek’s «bwnt.businessweek.com» (BusinessWeek.com, 2/21/08). When I was researching inspiring leaders, I spent time with Ritz-Carlton President Simon Cooper, who discussed how his company strives to engage its staff to increase employee satisfaction and improve customer service. I saw his strategies in practice when I attended staff meetings run by managers at the San Francisco Ritz-Carlton and described a few of them in a «www.businessweek.com» (BusinessWeek.com, 2/13/07). Now, I’ve returned to my notes to expand on ways you can incorporate techniques from the upscale hotelier in your own company.

Share “wow stories.” Every day, employees of every department in every Ritz-Carlton hotel around the world gather for a 15-minute staff meeting where they share “wow stories.” These are true stories of employee heroics that go above and beyond conventional customer service expectations. In one, a hotel chef in Bali found special eggs and milk for a guest with food allergies in a small grocery store in another country and had them flown to the hotel. In another, a hotel’s laundry service failed to remove a stain on a guest’s suit before the guest left. The hotel manager flew to the guest’s house and personally delivered a reimbursement check for the cost of the suit.

Telling stories in these pep talks accomplishes two goals. It reinforces a customer service skill the hotel is trying to encourage. Most important, it gives an employee “local fame.” Employees want to be recognized in front of their peers. Giving them public recognition is a powerful motivator.

Demonstrate passion. Moods are contagious. Managers who walk around with a smile on their face and demonstrate passion for their jobs have an uplifting effect on others. I attended a staff meeting for housekeepers at the San Francisco Ritz-Carlton one morning and discovered a group of employees whose happiness rivaled higher-paid employees in other professions. I quickly learned the enthusiasm started at the top. The supervisor was dressed impeccably in a three-button blue suit, white shirt, purple tie, and shined black shoes. His wardrobe communicated respect. “Good morning, everyone,” he said enthusiastically. The housekeepers returned an energetic greeting. This manager was all smiles and showed respect for his team. He said they returned his commitment through their hard work.

Sell the benefit. In every daily staff meeting, Ritz-Carlton managers reinforce one of 12 service values all employees are expected to embody on the job. On the day I attended a meeting in San Francisco, the theme was service value No.2: “I am always responsive to the expressed and unexpressed wishes and needs of our guests.” The housekeepers were encouraged to discuss how this value applied to their daily tasks.

“What is an expressed wish?” the supervisor asked the group.

“If a guest asks for extra pillows,” a woman said.

“That’s exactly right,” he said. “But it’s the unexpressed wishes that create The Ritz-Carlton mystique,” he continued, offering the example of a housekeeper who notices a champagne bottle sitting in melted ice and replaces the ice before being asked to do so. The question was then asked: “Why do we do it? Why do we go the extra mile?”

One housekeeper volunteered: “It offers a personal touch that shows we care.”

“That’s exactly right,” another added. “It reflects our commitment to five-star service.”

Employees need to understand how their daily actions have an impact the customer. Use staff meetings to make the connection.

Ask for feedback. Employees are encouraged to speak up during staff meetings. During a housekeeping meeting, the employees were debating the benefit of one cleaner over another. It seemed as they preferred the old product over a new one. At first glance, it was a rather mundane discussion. But I noticed something about their supervisor. He was listening intently, as if the discussion were the most important thing in his life at the moment: nodding, maintaining eye contact, and asking questions. He showed genuine interest in the topic. If it is important to his staff, it is important to him. “Why do you think you have earned so much respect from your staff?” I later asked. “Because I listen to their concerns,” the supervisor said. “And they know I will follow up.”

Praise effectively. Ritz-Carlton managers don’t focus on what employees have done wrong but instead seek to help them improve on a given task. Supervisors use staff meetings to publicly praise employees. Criticism is done in private. One supervisor suggested sandwiching constructive criticism among the praise. “You did a great job this week cleaning the coffee pot,” he would say, “but you’re still struggling here. Let’s work together on improving it.” By offering the criticism in the middle of praise, he inspires his employees to exceed the expectations of the hotel’s guests.

I chose to attend housekeeping meetings to make a key point: Motivation can and should take place everywhere within an organization. Simon Cooper cannot personally motivate each of his 35,000 employees worldwide, so it’s up to his department managers to reinforce the brand and its values through daily interactions with their teams. Are your employees engaged? Are they inspired to follow your vision? Five-star service does not begin with them. It begins with you.