All posts by Nicole Rutherford

Immigrants in Ottawa hold lowest incomes

Data Assignment_Three_2015
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By Nicole Rutherford

Moving to a different country can be life-saving, offering a fresh start for immigrants or refugees, but it can also erase a lifetime of work.

Throughout Ottawa, it is evident from the analysis of Ottawa’s National Household Survey of 2011 that the wards with the most immigrants per capita are also the wards with the lowest incomes. While language and networking barriers play a big part in this, another factor is the stunted recognition of education and credentials from foreign countries.

Click on the above image to see an interactive map of immigrants per capita in Ottawa wards
Click on the above image to see an interactive map of the number of immigrants per capita living in Ottawa wards

This is what associate professor at Carleton University and previous advisor of refugee policies to the United Nations, James Milner, refers to as “The age-old adage of brain surgeons driving taxis.”

Foreign education regulations are a big debate in Canada, especially surrounding careers in the education and medical fields.

“This is the age-old adage of brain surgeons driving taxis.”

-James Milner

“For the last five, six years there’s been a real emphasis on what’s called the recognition of foreign credentials,” said Milner. “The challenge is how do you ensure that there are retraining opportunities or verification or certification opportunities where these individuals can practice these much-needed skills in Canada?”

In the immigration process, certain careers allow for applicants to enter an express entry pool—a procedure that tallies points based on education credentials in conjunction with an applicant’s age and marital status. This helps expedite the acceptance of some candidates, but deters others if they don’t have experience in specific fields.

ImmigrantsOttawa2
Click here to see an interactive version of this infographic

Another hurdle is coming into a new country without any professional networks. This is where Jasmine Qi, the project coordinator of the Ottawa Connector Program at Ottawa Community Immigrant Services Organization (OCISO) comes into play.

“We match newcomers with local employers based on experience and expertise,” Said Qi. “They meet one time for an information meeting, and then these local professionals will provide three additional references to the newcomer. This continues and helps newcomers build a new network.”

While the Connector Program does not focus on candidates being hired, Qi believes that the project’s initiatives are just as important.

“For us, we just want to try our best to help newcomers, because we know they are struggling from a lack of network and information.” said Qi, noting that the most common network seekers are foreign engineers.

Mohammad Shaa, a former dental technician, embodies these career challenges. He ran his own laboratory in his hometown of Homs, Syria, before the war broke out.

“I was one of the best,” said Shaa with a proud grin over a Skype conversation.

Shaa even moved and opened a second successful, but short-lived, laboratory in Damascus when things got too violent in Homs. The violence followed him.

“I had a good life. A great life,” Shaa said. “If I wanted something, I’d buy it. If I wanted a vacation I’d go. Now it’s all changed.”

Shaa, whose name has been changed for fear of threats to his relatives in Syria, escaped to the Netherlands after hiring a smuggler in Egypt. Now settled in the Netherlands, his degree, luckily, still counts—but he must learn Dutch before he can practice. He then must upgrade his education to a higher level so he can compete with Dutch contenders.

“I had a good life. A great life. If I wanted something, I’d buy it. If I wanted a vacation I’d go. Now it’s all changed.”

-Mohammad Shaa

“I need to get a diploma in my field in the Netherlands,” said Shaa. “Otherwise I won’t find a job in my field. You can find a job as a cleaner or a cashier, but I don’t have any experience in this kind of job. I want to do my job, this is what I’m good at.”

While centres exist throughout Ottawa for immigrant integration, recognizing that immigrants and refugees are new Canadians and not simply a low-class workforce is something the new Liberal government will have to struggle with.

“Being able to engage with these kinds of programs would be one of the ways that Canada, to be frank, could derive the greatest benefit of resettlement programs,” said Milner. “[This way] the individuals who are resettled in Canada are able to more fully contribute to the needs of Canada once they’re here.”

Tim Hortons Food Inspection Failures Drop Significantly

Data Assignment_Two_2015
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By Nicole Rutherford

 

A_Tim_Hortons_sign

Ottawa Tim Hortons food inspection infractions dropped by over 1,000 failures since 2009.

Each time a food inspector goes into a restaurant, he or she can fail the restaurant in several different categories; from poorly-sanitized surfaces to noting incorrect food temperatures.

For Tim Hortons, both the number of inspections and category failures have decreased significantly since 2009.

That year, inspectors gave Ottawa Tim Hortons restaurants 1,301 category failures. In 2015 they received 260. That’s what you call a double-double decrease.

TIM HORTONS PIC3

This can largely be attributed to a change of policy in Ottawa Provincial Health’s (OPH) inspection tools. These outlines were once individual to the city, but in 2014 the City of Ottawa changed their policies to one that is consistent throughout Ontario.

“Internally we were more stringent,” said Franco Pagani, a supervisor in OPH’s Environmental Health Protection Branch. “It was more subjective to the health unit going in. Now there’s one consistent tool used throughout the province.”

Pagani insists, however, that there is no loss of safety when it comes to the declining numbers.

“It is still safe, but now we are on par with the rest of the province,” Pagani said. “We are still meeting our accountability agreements. We still go in regularly and if there are complaints we go in.”

He also noted that if a restaurant consistently performed well, it would typically see fewer inspections in the coming years.

One example of this is the Tim Hortons at number six Edgewater Street, which had had the highest number of food inspection infractions for Ottawa Tim Hortons since 2009—504 in total. However, for 2014 and 2015 the restaurant passed beautifully, with only two infractions in total.

Screen Shot 2015-11-16 at 9.52.50 PM
Click the image to see the full Document Cloud piece

 

When asked if it was the change in policy that had affected her restaurant, Edgewater Tim Hortons Assistant Manager Renee Pelletier was adamant.

“I can say with great confidence that we have not seen one single change,” Pelletier said. “We even have the same inspection guy come in.”

She noted that the inspector might come in less often, but she attributed this to a change in management, internal training and company policy.

“We are doing a lot more in-depth training and cross-training—that is, taking people who work at the storefront and training them in the back so they better understand how the business runs,” Pelletier said.

Additionally, the company has upgraded its tracking system to a digital version, switching from paper notes to iPad logging systems.

Maintenance logs, equipment logs, bathroom checks, manager walk-throughs and eye-flush and sanitization stations have alarms that go off and are noted digitally.

“It’s better than having people stare at a piece of paper,” Pelletier said. “At first it is pretty in-depth, but soon you start to notice a big difference.”

Despite this clock-work accuracy, Pagani noted that at the end of the day, all Tim Hortons restaurants are considered low-risk restaurants for food inspection—that is they are less likely to have problems that would make people ill.

Inspectors assess the restaurants and the minimum number of visits they require per year based on their risk level: high risk restaurants such as a full-menu restaurant that serve raw food, such as a sushi restaurant, would require a minimum of three visits per year. Medium risk requires two, and low risk, one.

This would also explain Pelletier’s elusive inspector.

“Bottom line, we are meeting the accountability agreement with the restaurants that need inspecting,” Said Pagani. “Now we have a consistency with all other cities and health units in Ontario.”

In either case, it looks like your Canadian coffee experience is still safe.

 

 

Numbers Don’t Talk for Fleeing Radicalists

Data Assignment One_2015
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By Nicole Rutherford

There is a great disparity between Statistics Canada and the Canadian Security and Intelligence Services (CSIS) for the record of how many people have fled Canada to participate in terrorist activity—and that calls into question whether anyone really knows the numbers.

Since 2012 Statistics Canada had been keeping track, and country-wide they have found a total of 14 people. In contrast, a CSIS announcement this February claimed that they’re aware of approximately 130 people leaving the country for terrorist purposes (no one at CSIS could confirm when this started).

While Statistics Canada representative Anthony Ertl explained via email that the “leaving Canada to participate in activity of terrorist group” is a relatively new violation that is tracked from submitted police records, the difference is still quite alarming.

Former CSIS agent Mubin Shaikh, who is famous for unraveling the Toronto 18 plot while working as an undercover agent, suggested some reasons behind this.

“CSIS is not a police agency, their mandate is to collect information related to the security of Canada,” Said Shaikh. He said if information is indicative of a crime, it then goes to the RCMP.

However, CSIS is not compelled to report to Statistics Canada. Shaikh also noted that while CSIS is often aware of people leaving the country, it’s hard to determine their actions if they come back in a way that would hold up in the Canadian courts.

“I can guarantee people are coming back saying they did humanitarian work and we have no evidence of the contrary,” said Shaikh.

Shaikh said that people also have to be aware of the interpretation of the numbers—130 for example, speaks to all known and charged terrorists leaving Canada to anywhere in the world: Syria, Iraq, Somalia or elsewhere.

“The number of people who have been charged to Syria is very low—maybe 18 or 20. You can’t charge dead guys, right?” Said Shaikh.

Shaikh himself turned to radicalization in his teenage years, travelling to Iraq to witness the rise of the Taliban, as well as returning to Syria for a couple of years to study the Islamic religion before de-radicalizing and being contracted by CSIS. Still a practicing Muslim, he speaks from experience when he says that a bigger problem in Western culture is the ideology that people need to be stopped through aggressive enforcement, rather than preventative measures known as counter-radicalization.

University of Calgary professor of political science specializing in terrorism studies, Michael Zekulin, agreed.

“We need counter-radicalization strategies that involve a community partnership between law-enforcement, religious leaders and local groups,” said Zekulin. “This is a multi-faceted problem that require multiple strategies.”

Zekulin pointed towards the Calgary Police’s ‘Redirect Program’ as a good example of counter-radicalization. The program was launched after there were a series of charged extremists out of Calgary including Farah Mohamed Shirdon and the Gordon Brothers
(Statistics Canada only notes one terrorism flight out of Calgary).

Shaikh spoke highly of the Calgary program, but said it was the only effective program in Canada.

“What we’re seeing is the failing on the RCMP in particular,” Said Shaikh. “Their outreach sucks.”
He said that a top-down, authoritarian approach from police makes most Muslim communities feel under siege rather than safe.

As far as numbers go, Shaikh says perspective is what should be noted, with 4000 radicalists from all westernized countries amongst several million Muslims.

“You can’t stop everybody, let’s be realistic,” Shaikh said. “You’re gonna have these people. I mean God has been telling people ‘thou shalt not kill’ for however long but here you have it, people killing each other.”

3D-Printable Weapons: Should They Be A Concern?

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By Nicole Rutherford

Colour Photo Credit: Forbes Magazine. The Liberator’s 15 functional parts plus a .380 bullet
Colour Photo Credit: Forbes Magazine. The Liberator’s 15 functional parts plus a .380 bullet

Transport Canada is worried about terrorists using 3D-printed weaponry to hijack airplanes. Documents obtained through access to information show that since 2013 government officials have been tracking an American website, Defense Distributed, for crafting the first entirely 3D-printable gun and then uploading the digital instructions online.

“On May 8th, 2013 Defense Distributed successfully trialed [a gun called] ‘The Liberator’ in Texas,” reads the report. “‘The Liberator’ was fabricated using a 3D printer… there was reportedly no damage to the shooter of the gun, aside from a small crack in a pin used to secure the barrel.”

A YouTube Video of the First Handheld firing of the Liberator:

 

The gun is a single-shot weapon and fires regular .380 handgun bullets—though the accuracy of the gun is contestable. After the gun’s creator, Cody Wilson, posted the weapon’s schematics for free it was downloaded over 100,000 times before being pulled by the State Department. Some of these downloaders may have included people who posted on a radicalized jihadist forum, linking to Wilson’s website and saying that the “plastic weapons” would be useful in “hijacking a plane.”

When asked for a comment or update since 2013, Transport Canada only replied via email saying that “3D printing technology continues to develop rapidly. Transport Canada continues to work with Public Safety Canada, the RCMP, CATSA and other authorities to monitor the situation.”

However, some 3D-printing experts believe that any form of 3D weaponry should not be of concern simply because they are unreliable, bulky and expensive compared to other resources that could easily be brought aboard a plane.

“A sharp piece of obsidian would be easier to conceal, cheaper and considerably more dangerous than a 3D printed knife,” said Stephen Burke, the executive accountant of Envirolaser Ltd. 3D printing shop, via email.  “Ever see what a BIC pen can do when jammed hard up someone’s nose?  It kills them.  My point is that 3D-printed knives and similar weapons don’t make sense.”

Nonetheless, two British journalists decided to see if concealing The Liberator was feasible. They successfully snuck the weapon through train yard security from London to Paris, though without certain parts of the gun.

In its entirety The Liberator consists of 16 parts—15 made of a flexible, printable fiber called polymer, and one non-functional metal part put on the gun in order to comply with the Undetectable Firearms Act to make the gun detectable in security scanners—but this part is removable.

Additionally, in order to make the gun actually fire two key parts are also missing from the printing schematics: the firing pin—which consists of a metal nail that anyone can pick up at a hardware store, and a bullet—both of which are detectable in an airport (or train yard) scanner. The British journalists did not include these parts or the optional non-functional metal piece.

So a bigger question to ask would be if 3D-printable ammunition is a possibility.

“Yes, but you’ve got to think it’d only be good if you were point blank,” said Michael Mackay Mclaren, a mechanical engineering student who helps run Carleton University’s 3D Printing Lab. “Hypothetically if you shoot a plastic bullet, it doesn’t have anything to keep it on track…it’s just too light for air resistance everything else it would just stop really quickly.”

Contrary to Burke’s opinion, Mackay Mclaren argued that 3D printing is becoming more accessible, with many manufacturers producing “desktop model” 3D printers starting at $500. These starter models would be capable of printing guns or knives. Additionally, 3D designing programs can be learned by anyone.

Photo Credit: Creative Commons. A Solidoodle 3D Printer, price range $500-600
Photo Credit: Creative Commons. A Solidoodle 3D Printer, price range $500-$600

“I would say it’s of concern,” said Mackay Mclaren. “Say you get only one shot off. The thing with 3D printers is you can just make five or six guns, stick them in your belt and go.”

 

 

Documents used for this Assignment:

The annotated ATIP document from Transport Canada with the relatable sections can be found here.

(*) What is the information?

The information is a debriefing of 2013 findings regarding an American website, known as Defense Distributed (defcad.org, now known as defdist.org), and their success of creating and distributing the schematics for a 3D printed gun. Of more concern with the government was the idea that radicalized jihadists had been posting links to this website and putting forward the idea of using it hijack planes.

(*) From which department and level of government did you obtain these pages?

This came from the federal level of government, specifically Transport Canada.

(*) Why was this information helpful?

This information was very helpful in that it gave me quite a lot of details in order to tell a coherent story. I knew from their perspective where the story started and how it continued to arch onward. The story doesn’t really end as it is an ongoing process as technology develops, but it is a very interesting narrative that enabled me to go out and speak to  people with varying perspectives.

I found that they left quite a lot of information in the file, including cellphone numbers of contacts who actually called me back. This was helpful in expediting my comment request (though I still received a very white-washed comment).

I also saw a lot of holes in the government’s arguments, not only in certain logic flaws, such as the need for ammunition, etc., but also in their record keeping there were inconsistencies (see my “inconsistencies” note on document cloud).

 

ATIPS I Wasn’t Able to Use/ Didn’t Receive

My original topic idea was to look into the discrepancy between human and animal lyme disease diagnosis and treatment. There has been a huge rise in lyme disease recently, which is a very debilitating disease, yet has no proper way to accurately diagnose it. My topic was going to surround this and my suspicions around this.  Following are my formal and informal requests and replies if I received any. I only received confirmation of requests and no actual information except for a publicly accessible, previously released ATIP from B.C. (which was more about camp sanitization where ticks could be, not specifically lyme disease).

FORMAL REQUEST: Public Health Agency of Canada
FORMAL REQUEST: Public Health Agency of Canada
FORMAL: Public Health Agency of Canada Reply
FORMAL REPLY: Public Health Agency of Canada
FORMAL: Public Health of Ontario
FORMAL: Public Health Ontario
FORMAL REPLY: Public Health Ontario
FORMAL REPLY: Public Health Ontario
FORMAL: City of Ottawa
FORMAL: City of Ottawa
FORMAL REPLY: City of Ottawa
FORMAL REPLY: City of Ottawa

INFORMAL: Public Health Agency of Canada 

INFORMAL: Health Canada 

INFORMAL:  BC Ministry of Health

 

 

 

 

 

 

 

Discarded Needles Double In Ottawa But Go Unnoticed

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By Nicole Rutherford

In 2014 the Rideau-Vanier ward’s number of discarded needles found by Ottawa’s Needle Hunters nearly doubled— yet residents didn’t seem to notice. This was indicated by a huge drop of 3-1-1 calls made in July and August between 2013 and 2014.

The number of improperly discarded needles collected in Rideau-Vanier rose from 6,695 to 12,167 between 2013 and 2014. Contrary to this, complaints about discarded needles in the ward fell by 80 per cent between 2013 and 2014. When asked about this discrepancy Rideau-Vanier’s Councillor Mathieu Fleury, was surprised but held some explanations.

“What we noticed was that our response time was too lengthy,” said Fleury. “So more funding was added to the 3-1-1 system a couple of years ago to ensure that when a call came in people could be dispatched more quickly.”

3-1-1 Calls for Discarded Needles in Ottawa for July and August 2013 and 2014 as Reported on Ottawa’s Open Data Web Source, 2015.

But the City of Ottawa staff members such as Parks and Recreational staff account for only a minority of the clean up work. Most of the sanitization is done through the collaboration of Public Health Ottawa and the hiring of the private company, Causeway, to hire Needle Hunters.

“We work with the city collaboratively,” said Ottawa Public Health Environmental Protection Branch Program Manager Craig Calder. “They hire people and we allocate people to the locations based upon city hotspots—both where city workers have found needles and where we have found needles.”

The city’s biggest hotspots for improperly discarded needles by far are the Rideau-Vanier and Somerset wards.

In 2013 the Rideau-Vanier ward held nearly 80 per cent of the needles collected by the Needle Hunters in Ottawa, and Somerset nearly 10 per cent. This was reflected in a majority of 3-1-1 calls. Rideau-Vanier received 38 per cent of the calls for 2013 and 2014, while Somerset received 31 per cent.

“It’s a complex problem in the downtown area,” said Fleury, “This isn’t a one-string approach; we have to work with different partners to support those with addictions, work with youth to prevent addictions, and try to help the homeless with Ottawa’s Community Housing.”

In an attempt to try to control this, in 2013 the Needle Hunters instilled a winter collection program solely in the Rideau-Vanier ward, targeting parking garages and other places sheltered from snow.

Yet when confronted with the doubling of needle finds from 2013 to 2014 Calder couldn’t account for it.

“We don’t have all the data to substantiate why the numbers have gone up,” said Calder. “I can attribute some of the numbers to some of the large caches—you know you’ll find a bag of 400 needles. But we can only attribute these sporadic group finds to two or three thousand more needles at the most.”

Despite the increase in finds, the number of complaints in Rideau-Vanier, at least during the summer months, went down significantly in 2014. In fact, it was Somerset who went up by 20 per cent in 3-1-1 complaints and took first place as the most-reported ward in Ottawa for 2014.

However, when asked how she felt about safety in her Somerset neighborhood, Dalhousie Parent’s Daycare worker Cindy MacLaughlin wasn’t too concerned.

“The daycare is locked behind locked gates, so we’re pretty secure,” said MacLaughlin. “We used to have a picnic table outside of the gates at the back of the school which was a cozy area for nefarious activity, but that’s taken away now. The police do frequent that area, and I guess we have the odd ‘lady of the night’ but overall we’re pretty safe.”

Similarly, Heart and Crown Pub General Manager Marty Pineault said that despite being the at the centre of Rideau-Vanier’s Byward Market, discarded needles have not been a problem for the business.

“It’s not something that we’ve encountered,” said Pineault. “Knock-on-wood, but so far we’ve been okay.”

While the Needle Hunters are made up of a group of only 40 people, it is clear they are doing well at keeping the city clean.

“Many of them are former addicts,” said Calder, “This gives them the ability to gain new skills and transition into new society through meaningful employment.”

Meaningful, powerful and yet quietly unnoticed by Ottawa residents.

25 Years Later: One Less Disorder, But Is There More Acceptance?

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By Nicole Rutherford

Canada shows its pride. Photo credit © Nicole Rutherford.
Canada shows its pride. Photo credit © Nicole Rutherford.

Some people compare love to a sickness, but once it was literally considered a disease. That’s because before May 17, 1990 the World Health Organization held homosexuality on its list of mental and behavioural disorders.

While May 17 is now annually celebrated as the International Day Against Homophobia most people in the West don’t regard it as a day of significance.

“I’ve never even heard of that day,” Jason Gilbert said with a laugh. Gilbert has been engaged to his partner for 17 years and is active in the gay community of Victoria, B.C.

Canadian Pride associations, campus clubs, gay-straight alliances and gay-rights movement boards across Canada had no comments on this day either.

Dr. Aaron H. Devor, a sociology professor specializing in gender, sexuality and transgender studies at the University of Victoria says that for western society this is likely due to an earlier validation of homosexual mental clarity from the American Psychological Association.

“More significant in my memory was when homosexuality was removed from the [The Diagnostic and Statistical Manual of Mental Disorders] DSM in 1974.” Said Devor via email, “Gay people throughout North America were tremendously relieved and saw this as a huge step forward. It did not mean that rights were guaranteed, or that abuse would stop right away. But it did mean that a lot more progress suddenly became possible.”

However, this progress has been slow. It was not until 2003 that gay marriage was legal in Ontario, and until 2005 that it was legal nation-wide in Canada.

For the rest of the globe, the World Health Organization’s 1990 announcement was as notable as it was in The West.

In 2014 Uganda tried to pass a stronger anti-homosexuality law that would make being gay punishable by death. The bill was annulled by the Ugandan constitutional court due to incorrect technical procedures surrounding its passing though homosexuality is still illegal and can lead to imprisonment.

According to a 2013 report there are seven countries globally where homosexuality is punishable by death, and 76 countries where it is clearly illegal.

Amnesty International representatives march at the Pride 2014 parade in Ottawa, Canada. Photo Credit © Nicole Rutherford
Amnesty International representatives march at the Pride 2014 parade in Ottawa, Canada. Photo Credit © Nicole Rutherford

A more publically noted law was passed surrounding the 2014 Sochi Olympic Games. In June 2013 President Vladimir Putin passed a law banning the “propaganda of nontraditional sexual relations to minors.” Any protests against this were also punishable.This law received protests globally and throughout the Olympics from athletes, politicians and citizens.

However Josh Bernal, a Demi Chef de Partie at the Athlete’s Village for the Sochi Olympic Games said that the media was blowing things out of proportion.

“I didn’t witness anything regarding protests or activists,” he said via email, “ I was even surprised to know there were a few gay bars, you would think they would be banned. I also saw a few gay couples walking around holding hands. Not a lot, maybe one or two. It didn’t seem to bother anyone.”

This could have been due to the fact that technically homosexuality itself isn’t illegal in Russia, just the blatant promotion of it.

However there is progress to be noted. The same 2013 report states that there are 114 countries where homosexuality is legal, and same-sex marriage is legal in 14 countries. Every year the rainbow pride flag is raised a little higher and the Lesbian-Gay-Bisexual-Trans-Queer/Question acronym seems to get a bit longer in an attempt to include more people.

Regardless of this umbrella grouping, according to World Health Organization’s 2015 report anything to do with gender identity including cross-dressing—which is practiced by some gay men and women—to a full transsexual hormone therapy and corrective surgery is still considered a mental disorder.

“I don’t think it’s necessarily a scientific disorder,” said transsexual woman Brae Carnes, “More-so I think it’s a societal disorder and not being able to think outside the box of defining ‘this is boy, this is girl, these are gender norms.”

In the end it seems inclusivity isn’t the problem, but simply acceptance—regardless of whether accepting gender or sexuality.

“I think in the future when gender roles are eventually abolished people will be able to express their personalities in full,” said Carnes, “They would not be forced to change their bodies by society.”

 

All About the Embedded Documents:

1) Document 1: World Health Organization’s ICD-10
What is it? The World Health Organization’s annual list of diseases and disorders
How did you find it? This was actually a bit tricky; I had been going through topic ideas and came across the idea of homosexuality being removed from a list of mental disorders relating to WHO, but the list itself was not named. Anytime I tried to look up list of disease or WHO I just came up with their vague, user-friendly web site. It wasn’t until I found a New York Times article that specifically used the phrase “list of mental and behavioural disorders” and I googled that the the ICD-10 list came up and I could go through the categories of that.
Why was it helpful? While I could not access as far back as 1989 or 1990, the 2015 once still has Gender Identity Disorder, transsexualism, and transvestitism noted as a mental disorder which I found very interesting and as a good comparison point to the different times.

 

2) Document 2: ILGA State-Sponsered Homophobia 2013 Report
What is it? The International Lesbian Gay Bisexual Trans and Intersex Association Annual Report of Global Rights
How did you find it?  I was trying to look up which countries had the death penalty for homosexual practices. The Washington Post had a great article with a colour-coded map for different kinds of law, and cited a report as their source of information. I clicked on it and it led to this report.
Why was it helpful? This report  illuminated human rights of the present time numerically alongside with some of the specific stories I have highlighted in my article.

MasterCard Inc. Takes on $1.5 Billion Debt as a Buffer for Legal Fees

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By Nicole Rutherford

                         Photo Source: Creative Commons

 

One of Canada’s biggest credit card companies has used an interesting strategy to raise its stock values, boosting its revenue to help pay off monstrous legal fees that continue to grow.

As of September 2014 MasterCard Incorporated took on a $1.5 billion debt in order to buy back their own stocks from the public share pool in hopes of increasing their income, all to assist in paying off some very large legal fees from multiple class-action lawsuits based in the United States.

MasterCard is a publicly traded company, so a large portion of its shares are sold to the average Joe or Jane and traded on the international stock market. However, by repurchasing some of these publicly available stocks, there is suddenly more competition for what is available.

“Because of this purchase there’s now less common stock on the market,” Said Spencer Briggs, an experienced associate auditor with PW&C LLP in Vancouver, British Columbia. “Now their earnings per share went up and consequently their stock price went up.”

However, while this is a strategic move for quick cash, most companies try to avoid such weighty debts.

“In this case it’s cheaper to have a debt than to have outstanding equity,” Briggs said.

In other words, it’s better to have a loan than to have potential money—in this case shares—dangling in front of you. However, for MasterCard Inc. there was more than just potential profit to their story: in this case a huge series of legal settlements from class action lawsuits raging on since 2006.

While legal battles are nothing new for a company, especially one as recognizable as MasterCard Inc., this series of tremendous lawsuits left them paying out over $1 billion dollars in settlement claims—and the court procedures are still ongoing. This has made the company set aside nearly $800 million in estimation of what they will still have to pay.

As a result MasterCard Inc. took on the debt from an internal “Credit Facility”, which according to financial statements, is made up of “customers or affiliates of customers of MasterCard Incorporated.” This Credit Facility offers a low interest rate on the long-term loan to the mega company, and even offered them $6 million dollars of interest-free cash.

While no company representative could be reached for comment, in a financial statement MasterCard Inc. described that they would use any “borrowings under the Credit Facility… for general corporate purposes, including providing liquidity in the event of one or more settlement failures by the company’s customers”

In other words, they are intending to buy back their goods, sell it high, make some money and get themselves out of the settlement hole they are currently standing in.

This led the company to use most of the loan to increase its stock ownership by 22 per cent.

 

 

Will this help them out in the long run? It’s not always easy to determine in the world of stocks, but as Associate Professor of Sustainable Management at Carleton University, Dr. Sujit Sur said via email, “Given the low interest rates and the tax benefits on the interest payment, taking on debt to reduce equity (total shares outstanding) [it] is a smart move.”

Briggs also agreed, “All they’re trying to do is manage their cost of capital.” In other words, balance out their debts and earnings. “There is never a simple answer in accounting; everything works in conjunction.”

For the otherwise healthy company this means the loan is acting as a slow-working buffer, simultaneously paying off their legal costs while regaining cash with the regained stocks.