# Corporate Fraud: The Cases of Barings Bank, Volkswagen, and HIH Insurance

ISBN: 978-1-78973-418-8, eISBN: 978-1-78973-417-1

Publication date: 9 October 2020

## Citation

Sarkar, S. and Spieler, A.C. (2020), "Corporate Fraud: The Cases of Barings Bank, Volkswagen, and HIH Insurance", Baker, H.K., Purda-Heeler, L. and Saadi, S. (Ed.) Corporate Fraud Exposed, Emerald Publishing Limited, Bingley, pp. 421-437. https://doi.org/10.1108/978-1-78973-417-120201026

## Publisher

:

Emerald Publishing Limited

Corporate fraud is not an isolated incident. The number of fraudulent events across industries and countries belies a systemic problem. For example, a recent study identified fraud in 125 countries in 23 industry categories amounting to $7 billion in total losses (Association of Certified Fraud Examiners 2018). The increasing frequency of corporate fraud results from a perfect storm of technological advancement and more sophisticated schemes. As a result, international organizations such as the World Bank and the Group of 20 (G20) have increased their enforcement and cooperation to curb corporate fraud globally and across borders. The increased awareness about corporate fraud forces big multinationals to be more transparent about their business dealings. As a result, common standards are emerging to reduce corporate fraud. According to PricewaterhouseCoopers' (PwC's) Global Economic Crime and Fraud Survey (PwC 2018), 49% of the respondents claimed that corporate fraud has affected their companies. This recognition of corporate fraud was the highest for the preceding 10 years. For 2018, every major territory in the world reported a drastic increase in corporate fraud. In today's world, with so many technological advancements, finding that corporate fraud is more complex and common than ever is not surprising. As companies increasingly rely on digital platforms, safeguarding data has become more difficult. Data breaches have plagued almost every industry. Even some of the largest international corporations such as Sony, Staples, JPMorganChase, and Facebook have been victims of data breaches. The good news is that Ernst and Young (2018) find one-third of business leaders globally acknowledge fraud as a major risk factor. Regulators want companies to develop and monitor efficient fraud measures as companies may face strict scrutiny from the regulators in the absence of such measures. With the rampant increase of corporate fraud, companies are dedicating more resources to fraud prevention (PwC 2018). In particular, companies are focusing on reporting, detection, and whistle-blowing programs. Irrespective of industries, the three major corporate fraud risks that companies face are asset misappropriation, consumer fraud, and cybercrime (PwC 2018). Even though asset misappropriation constituted 83% of the cases, the median loss of the fraud was a relatively small$125,000. On the other hand, financial statement fraud consisted of less than 10% of the cases, but the median loss was much larger at $975,000 (Association of Certified Fraud Examiners 2016). Further, the distribution is skewed as the largest losses resulted from asset misappropriation, check tampering, and billing schemes. Further, PwC (2018) reveals that the biggest threat of fraud is not internal but from external actors including vendors, shared service providers, and customers. Although the incidence and severity of fraud is increasing, the report offers some positive news. Specifically, the internal controls and corporate governance processes relayed the fraudulent behavior to senior management nearly 90% of the time. The chapter has the following organization. It begins by discussing the implications and regulations involving corporate fraud. The chapter also provides a brief summary of how international agencies are working together to fight fraud around the world. Next, the chapter explores three major corporate fraud cases outside of the United States: Barings Bank, Volkswagen (VW), and HIH Insurance. It details these cases – and discusses the causes and ramification of these corporate scandals. Although each fraud occurred in one country, its extent and consequences were felt globally. The chapter ends with a brief summary and conclusions. ## International Implications and Regulations The implicit and explicit cost of corporate fraud is substantial. Corporate fraud has an explicit cost of$380 billion annually (Dyck, Morse, and Zingales 2013). After considering the implicit factors such as the loss of public trust in financial markets, the cost is even larger (Giannetti and Wang 2016). Hail, Tahoun, and Wang (2018), who examine corporate scandals and regulations for 26 countries between 1800 and 2015, find that regulations are ineffective from the public interest viewpoint. “Effective” regulation not only ex ante mitigates agency conflicts between corporate insiders and outsiders but also prevents corporate misbehavior from occurring or quickly corrects transgressions. However, regulators are also self-interested entities and may be captured by the industries they oversee. Regulators must balance the needs of the consumer, government, and industry, which reduce their effectiveness. Their findings show that even after imposing regulations, corporate fraud increases. Overall, the findings of Hail et al. cast doubt on the effectiveness of corporate regulations. Thus, examining the worldwide standards for regulation and fraud prevention is important. Does any commonality exist across countries or regions? Do the regulations curb fraud activity or provide disincentives?

Traditionally, the United States and the United Kingdom followed a more “outsider” regulatory system of corporate governance. In contrast, continental Europe and Asia employ a more internal approach that relies more on the incentives from concentrated ownership structures and less on capital market discipline. In recent years, two waves of corporate law reform have emerged (Hill 2005). In the first wave, countries that followed more of an internal approach started to institute more legal aspects in corporate regulation. The fall of Enron and WorldCom initiated the second reform. The sudden demise of such corporate giants was startling for some developed countries including the United States, the United Kingdom, and Australia. This collapse led to one of the major changes in US business practices with the enactment of the Sarbanes–Oxley (SOX) Act in 2002. A major element of SOX is the requirement for external auditors to assess the firm's internal controls. This requirement exemplifies a major shift in regulatory policy.

US banking regulations were perhaps operating in a blind spot during the financial crisis of 2007–2008. After the tech bubble of the early 2000s, authorities imposed tougher regulations. Nevertheless, the first decade of the new century experienced more corporate scandals such as option backdating, LIBOR fixing, and mutual fund trading scandals. A mixed reaction occurred with respect to the effectiveness of SOX during the financial crisis. The Big 4 accounting firms' (KPMG, Ernst & Young, Deloitte, and PwC) auditors audited some of the biggest companies that failed during the crisis such as Bear Stearns, Thornburg, and US Bancorp and gave them a clean report before entering into bankruptcy. As Desai, Rajgopal, and Yu (2016) note, these auditors failed to assess the bank risk of the companies that went under during the financial crisis. On the other hand, studies reveal that banks' independent audit committees performed better during the crisis (Yeh, Chung, and Liu 2011). Additionally, when specialized banking sector auditors audited US banks, these banks were less likely to fail (Jin, Kanagaretnam, and Lobo 2011).

Looking at SOX from a global perspective, skeptics view SOX as a deterrent for global companies to list on US exchanges. SOX may drive companies to countries having fewer regulations. But shortly after the passage of SOX, advanced countries such as Japan and the European Union adopted SOX-like regulations (Kim and Lu 2013; Srinivasan and Coates 2014). In 2006, Japan enabled J-SOX and the European Union adopted the Eighth Directive on securities disclosure both of which have similarities with SOX. With respect to cross listing, evidence suggests that fewer foreign firms are now likely to cross list in the US stock market and that the London Stock Exchange is a better alternative to cross list (Piotroski and Srinivasan 2008; Srinivasan and Coates 2014).

The Organization for Economic Co-operation and Development (OECD) has been a strong proponent for greater cooperation between different government agencies to fight financial crimes. According to the OECD, financial crimes are on the rise. In a recent OECD document (OEDC 2017), the dollar amount from transactional crime from 2000 to 2009 is estimated at $870 billion, about 1.5% of global GDP. The Group of 7 created the Financial Action Task Force (FATF) in 1989 to fight money laundering. In 2001, FATF added financing terrorism as one of its priorities. The G20 finance ministers also recognized the importance of interagency cooperation (OECD 2017). To create a platform where interagency cooperation can be more effective and can deal with financial crimes in a timely manner, the OECD organized the first international forum for tax and crime in Oslo, Norway, in 2011. To date, the OECD has conducted five forums on this topic. The main agenda of these forums is to examine how agencies can work together to fight financial crimes in a timely manner and reduce cost. A key aspect to combating financial crimes is to share information among different agencies. A recent OECD report points out several key models for interagency cooperation including joint investigative teams, interagency centers of intelligence, and shared databases (OECD 2017). Another international agency, which is a global watchdog, is the International Criminal Police Organization (INTERPOL). INTERPOL plays an important role by supporting its member countries with targeted operations and also conducting joint investigations. INTERPOL helps in updating its member nations' police as well as various law enforcement agencies with the latest crime tools. INTERPOL along with other law enforcement agencies hosts global conferences on money laundering and other financial crimes. Similarly, the World Bank and the United Nations Office on Drugs and Crime jointly developed the Stolen Assets Recovery Initiative. This joint venture is a coordinated effort to detect and eliminate the financial safe havens for corrupt funds. ## Global Corporate Scandals Literally thousands of scandals and fraudulent activities occur around the world. Usually the impact of these activities is limited to the domestic or regional boundary, but some scandals go beyond domestic boundaries and have a global impact. This section analyzes some of the most egregious and impactful corporate scandals in the world. In all three cases, their uniqueness and magnitude stand out by any measure. ### Barings Bank (UK) Barings Bank is the quintessential example of extreme operational risk. A rogue trader named Nick Leeson literally caused the collapse of Barings Bank by hiding losses and falsifying trades. Barings was the most prestigious UK bank since its founding in 1762. Barings' client list even included the Queen of England and financed the Louisiana Purchase. Nicholas William “Nick” Leeson landed a bank job despite lacking a higher education degree. Before his employment at Barings, he worked at Coutts and Company and Morgan Stanley. At Morgan Stanley, Leeson was an operations assistant and gained some knowledge about financial markets, particularly back office activities related to settlement and clearing. Shortly after joining Barings, Leeson's superiors quickly promoted him to the trading floor. Soon after joining Barings' Singapore office, he would oversee the future market of the Singapore International Monetary Exchange (SIMEX). Initially, whether by luck or skill, Leeson booked huge profits for the bank (Samuelson 1996). In 1993, he personally generated around 10% of the bank's profits (Monthe 2007). Because of this unprecedented success, he gained the trust of senior management. However, his luck ran out and he started to lose massive amounts of money. Leeson created false accounts to hide his losses hoping to reverse his poor performance. At the same time, he started hiding important documents from auditors of Barings, which brings into question the effectiveness of the bank's internal controls. In early 1995, Leeson lost$7 billion by taking a long position on the Nikkei Stock Exchange in Japan. To recoup earlier losses, he made even riskier trades. His long positions generated huge losses after the Kyoto earthquake of 1995. At this point, Baring's capital was insufficient to cover the losses because of Leeson's trades. The storied bank crumbled. Later ING bought Barings for 1 pound sterling, avoiding technical bankruptcy (Ipsen 1995). Leeson fled Singapore, but authorities eventually arrested him in Germany and sentenced him to six and a half years in Changi Prison in Singapore (Webb 2013).

The Barings debacle was clearly a unique scenario where an extremely young and inexperienced trader literally bankrupted this famed institution single-handedly. An important reason for Baring's demise is the unchecked independence that Leeson enjoyed while working in the Singapore office. By working in both the back and the front office, he had the power to confirm and settle trades and to hide transactions in dummy accounts. Additionally, other stakeholders including the internal audit team, Tony Hawes (Treasurer of Barings Investment Bank), and Ian Hopkins (Head of Treasury and Risk at Barings Bank) had a difficult relationship not only with Leeson but also with other key executives. The executives did not want to be bothered with different reports and due diligence (Drummond 2002; Greener 2006). Even the external auditors, Coopers and Lybrand, did not aggressively push Leeson for necessary paperwork because they were afraid of losing Barings as a client (Greener 2006). Barings faced added external pressure by entering the Singapore market when the SIMEX was relatively new. According to Greener (2006), SIMEX was afraid that too much scrutiny would lead Barings to leave for one of the rival exchanges.

A major reason that no whistleblowers emerged in this whole fiasco was because Baring's Singapore employees were loyal to Leeson. He would cover the mistakes of employees working under him. Leeson's managerial style dominated subordinate employees. Most employees working in the Singapore operations were young females and were fiercely loyal to their boss. Leeson approved huge bonuses when they did well. He also had the full support of the other traders in SIMEX. On the SIMEX trading floor, Leeson was a star because of the huge trades he executed for his clients, which in reality never existed. In his biography, Leeson felt that the other traders saw him as the barometer (Leeson 1996).

Placing the blame solely on Leeson and Barings would be incorrect. The Bank of England also played a critical role in this disaster. After the debacle at Barings, the Bank of England, the chief banking regulator in the United Kingdom, ordered an inquiry. This de facto self-examination received a clean sheet from the inquiry (Board of Banking Supervision 1995). According to Lim and Tan (2015), the Singapore Ministry of Finance Report offered a different story. Based on its investigation, the Bank of England allowed Barings to transfer all its capital outside of the United Kingdom, which violated its rules. This action highlights the favored relation between the Bank of England and Barings. Thus, the Bank of England played an indirect role in the bankruptcy of Barings (Hogan 1997). Leeson needed large sums of capital to undertake risky trades and the Bank of England's relaxed rules for Barings allowing him to gain access to the capital he needed.

Although Leeson is undoubtedly the architect for Barings' collapse, the story is incomplete without the complicity of the auditors, employees, senior management, and regulatory bodies. Each of these parties played a part to help Leeson bring down Barings. This catastrophic situation had a worldwide effect. An important regulatory change from the fallout of this event was creating a compliance officer in banks and separation of duties, which was evidently missing. Clearly, this situation is one of the unique cases of corporate fraud where a single individual brought a financial institution that had existed for 223 years to the brink of collapse.

### Volkswagen

The VW Group is a household name and German auto giant. In 2015, it surpassed Toyota Motor Corporation as the largest automobile manufacturer. VW's chief executive officer (CEO) had established some ambitious goals, including the goal that by 2018, VW would become the world's most profitable company, sell 10 million vehicles each year, and be rated the best company for employees and customer satisfaction (Muller 2013; Rhodes 2016). In fact, the VW group was well on its way to achieving some of these targets. In particular, the VW group received the Ethics in Business Award in 2012 because of its work in environmental management and corporate social responsibility. According to CSR Europe (2013), VW exemplifies universal values such as integrity, responsibility, and respect for people and the environment.

By September 2015, the outlook for VW had changed. The US Environmental Protection Agency (EPA) notified VW of concerns about the installation of a defeat device in its diesel vehicles. The scandal unfolded when the International Council on Clean Transportation (ICCT) published its report (Siano, Vollero, Conte, and Amabile 2017). The ICCT is a nonprofit organization that works for environmental regulators providing scientific analyses. The defeat device switched on when driving under an emission test but was generally switched off generating 40 times more nitrous oxide. This news was a devastating revelation for Martin Winterkorn, then CEO, who resigned within days. The VW group had clearly violated the Clean Air Act, and in early 2016, the Department of Justice filed a formal case against VW (US Environmental Protection Agency 2015). Since then, authorities indicted Winterkorn. The prosecutors also investigated a member of VW's legal team for destroying evidence. As the emission scandal also involved Audi, authorities also indicted former Audi CEO Stadler on fraud charges (Boston, 2019). The sources later revealed that 11 million VW vehicles had the defeat device installed. The bottom line for VW was clear – the vehicles cannot meet the emission standards and the company cheated and violated the Clean Air Act. Lawrence, Elgin, and Silver (2015) and Cavico and Mujtaba (2016) report that the initial blame inside VW went to lower-level engineers, but senior management was likely aware of the defeat device's installation. According to Michael Horn, the head of VW in the United States, the scandal resulted from a few software engineers who put this together for unspecified reasons (Lawrence et al. 2015; Spector and Harder 2015).

After the CEO's resignation, the VW board of directors put Matthias Muller the head of VW's Porsche unit in charge (Moulson and Pylas 2015; Cavico and Mujtaba 2016). In the aftermath, the VW group took some drastic steps to improve its image and for damage control. For example, the company set aside an estimated $7.4 billion for recalls and lawsuits. It also stopped selling some vehicles in the United States. According to Bomey (2015), related fines may eventually top$8 billion. As already noted, this scandal also affected VW group's premier brand Audi (Thompson and Kottasova 2015).

Not surprisingly, this egregious scandal dramatically influenced VW's share price. In one day, VW stock fell by a staggering 22% (Siano et al. 2017). The scandal hit hardest in Germany and the United Kingdom with 2.8 million and 1.2 million cars recalled, respectively. About 11 million vehicles worldwide had defective device software. The question lingers: Why did this happen in a corporate giant like VW? The answer lies in its corporate culture. Ferdinand Piëch, the former CEO and the then supervisory board chairman, cultivated an autocratic culture in the VW group. Marin Winterkorn, Piëch's protégé, insulted his subordinates and discouraged open communication in the hierarchy. Winterkorn decided to push diesel vehicles to increase US sales rather than focusing on hybrid or electric vehicles as some of its competitors were doing (Hakim, Kessler and, Ewing 2015; Jung and Park 2017).

This scandal was not the first time VW had engaged in cheating emissions standards. In the 1970s, VW faced accusations of cheating existing standards (Hakim et al. 2015; Jung and Park 2017). A supervisory board, which includes the owner's family members, the Lower Saxony Government, and the unions, effectively control VW. A few powerful members of the supervisory board made all key decisions. A lack of responsibility coupled with autocratic leadership and centralized management contributed to VW repeating past errors (Ruddick 2015). The CEO and the supervisory board's singular goal was to increase sales growth and make VW the largest selling automotive brand. From the beginning, VW group ran as a family business. The Porsche and Piëch families controlled the business empire. Both families had different views on key issues and sometimes made decisions based on emotions rather than sound business judgments. Clearly, nepotism also crippled the VW group. Even with heavy criticism from stakeholders, Piëch appointed his fourth wife to the VW supervisory board (Ruddick 2015). VW's supervisory board and senior management played a huge role in the emission control scandal that took place for a sustained period.

When the scandal became public, VW vehicle sales dropped from 2.44 million in September 2014 to 2.35 million in September 2015 (Boston and Sahin 2015; Jung and Park 2017). The EPA aggressively pursued VW ordering it to recall all US cars affected by the defective device software. Regulatory bodies in several European countries also ordered VW to recall the cars affected by the faulty device. VW faced a herculean task given that it sold 9 million of the 11 million affected vehicles in Europe and the United States. VW's response used two approaches to address concerns given the different emissions standards. One approach was to install a pollution purification device for the affected US vehicles because the United States has stricter diesel emission rules than other countries. The second approach was to create a reserve of 6.5 billion euros or $7.3 billion to cover up the financial penalties. Also, several individual state Attorney Generals started joint investigations that led to settlement for the affected parties (Greene 2015). To survive the scandal, VW overhaul its management structure. The company's first step was to hire a new CEO and then revamp its accountability and sustainability by hiring two senior personnel from its competitors (Jung and Park 2017). VW also removed some key executives including the quality control chief (Boston 2015). The new CEO also decentralized management and gave division managers more freedom (Ruddick and Farrell 2015). Additionally, geographical restructuring resulted in combining the operations of the United States, Canada, and Mexico into a North America Branch. VW also announced monetary compensation in the form of loyalty cards and dealership cards to the affected customers (Sloat 2015). Despite these changes, critics expressed concerns about the new CEO, who was a product of one of VW's divisions, and the lack of diversity in the supervisory board. The scandal had a huge impact on the European car market. Many European countries started moving toward hybrid and electric vehicles and reduced subsidies for diesel engines to discourage auto manufacturers from producing diesel engines (Jung and Park 2017). The European Parliament's Environment Committee strengthened the pollution limit and increased fines for disobeying emission laws. With these new laws in place, VW and other auto makers decided to move toward electric and hybrid vehicles. Given the scale of the scandal, VW faces challenges to repair its tarnished image. The scandal imposed a huge financial and reputational cost on VW. After this scandal, a reshaping of the auto industry in general and VW in particular is needed. ### HIH Insurance HIH Insurance began in 1968 when Ray Williams and Michael Payne started MW Payne Underwriting Agency Pty. Ltd.. in Australia. In 1971, CE Health plc, a UK-based company, acquired Payne Underwriting Agency. In the following two decades, CE Health expanded its insurance business into other countries. In 1992, CE Health International Holdings listed on the Australian Stock Exchange. After going public, CE Health grew by aggressive acquisition of other companies, and in mid-1990s, it acquired CIC (Mirshekary, Yaftian, and Cross 2005). With the purchase of CIC, Winterthur, a large Swiss insurance company, became a major shareholder, and by 1996, the name became HIH Winterthur International Holdings Limited (HIH). In the following years, the company continued its acquisition strategy. In 1998, Winterthur sold its majority stake and the company became HIH Insurance. Also in 1998, HIH purchased FAI insurance without much due diligence. FAI assets were apparently overvalued and HIH had to write off AUD 400 million in the FAI investment. In early 2001, HIH stocks stopped trading on the Australian Stock Exchange and soon the Australian Security and Investment Commission ordered an investigation into HIH's disclosure policy. What led to the collapse of HIH insurance? A key factor was a lack of audit independence. In Australia, external auditors are tasked to provide an independent opinion on whether companies have prepared their financial statements in accordance with Australian accounting and auditing standards. All Australian auditors must follow the Joint Code of Professional Conduct developed by the Society of Certified Practicing Accountants Australia and the Institute of Chartered Accountants Australia. The Joint Code of Professional Conduct states that auditors must be independent of mind and independent in appearance. Arthur Andersen was HIH's external auditor from 1971 until its collapse in 2001. At the time of the HIH liquidation, the HIH Royal Commission claimed that having three former Arthur Andersen partners serving on HIH's board of directors severely compromised the independence of the external auditor. The relationship was further jeopardized when the HIH Royal Commission, the counsel to the commission, claimed that Arthur Andersen decided to reduce its work on HIH as HIH management was reluctant to increase its fees. Another important breach of independence of the external auditor took place when former Arthur Andersen partner and current HIH Chairman Geoffrey Cohen received consultancy fees from Arthur Andersen amounting to AUD 190,877.60 over a nine-year period. Furthermore, Arthur Anderson allowed Cohen to use office space in an Andersen facility as well as services of a secretary. The HIH board had no knowledge of this additional compensation received by Cohen from Andersen due to a lack of disclosure. Thus, Cohen's independence of Cohen over this period was severely compromised. Another reason for HIH's collapse was the dominance of the long-term CEO Ray Williams. Although HIH was a public company since 1992, Williams ran it as his own fiefdom. For example, he controlled the board of directors by manipulating the agenda during board meetings. Basically, the company was running to serve the interests of the senior management rather than serving the shareholders. Having a dominant CEO can be a hurdle to proper corporate governance and can lead to corporate excess. Operating in the insurance business, risk management for HIH is an integral part of its decision-making. Despite having an investment committee, HHI kept making bad investment decisions. The acquisition of FAI in 1998 resulted in a huge loss for HHI. HHI also absorbed massive losses from its operations in both the United Kingdom and the United States. For example, the Royal Commission cited the losses from operation in both countries and the FAI acquisition as critical factors contributing to HHI's collapse (Report of the Royal Commission into HIH Insurance 2003). The HIH Royal Commission was set up to investigate the circumstances leading to the demise of HIH insurance group. Justice Owen presented the report on April 2003 and made some important recommendations to strengthen the system and avoid further collapses of big institutions (Mirshekary et al. 2005; Damiani, Bourne, and Foo 2015). An important factor leading to the collapse of HIH contained in Justice Owen's report was the cozy relation between HIH and Arthur Andersen. Justice Owen recommended audit partners who are directly involved with a client's audit not to accept any director position or senior management for four years since separating from the audit firm. He also recommended changes to the Corporation Act 2001 including a requirement that companies disclose all nonaudit services provided by their audit firms. When HIH Insurance collapsed, its total debt was AUD 5.3 billion. The auditor–client relationship came under severe scrutiny after the collapse. Authorities found that Arthur Andersen breached audit standards and misled HIH shareholders. In the aftermath, authorities enacted many regulatory changes because of Justice Owens' report. The HIH Insurance collapse remains the largest bankruptcy in corporate Australia. ## Summary and Conclusions Corporate fraud is clearly a global phenomenon and not isolated to just developed countries or particular industries. As a result, countries have taken steps to combat corporate fraud. SOX remains one of the most important and far-sweeping pieces of legislation in US corporate history, and the enactment of SOX-like regulations in other countries is also important. The continued and increased level of cooperation of multinational agencies and organizations such as the OECD, United Nations, and INTERPOL is clearly necessary to combat global fraud. The examination of the three cases − Barings Bank, VW, and HIH Insurance − illustrates the destruction corporate fraud can cause. Despite the corrective measures taken after each of these unfortunate events, fraud is still prevalent, ongoing, and evolving. In all three cases, the common denominator for the cause of fraud is greed and imperfect oversight. Despite regulators setting harsh penalties to the parties involved, the temptation to commit corporate fraud remains. ## Discussion Questions 1. Discuss the extent of global corporate fraud. 2. Discuss the international organizations and initiatives that prevent and deter fraud. 3. Describe the role the Bank of England played in the Barings demise. 4. List the implications from the VW emission scandal. 5. 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