Sotheby’s to pay $6.25 mln in tax fraud case
By AFP
November 14, 2024
The headquarters of the auction house Sotheby's in New York as seen on June 17, 2019 - Copyright GETTY IMAGES NORTH AMERICA/AFP Joe Buglewicz
The auction house Sotheby’s will pay $6.25 million to settle charges that it helped art buyers avoid paying taxes.
The office of New York state attorney general Letitia James said Sotheby’s, whose headquarters is in New York, helped collectors dodge taxes of tens of millions of dollars in art from 2010 to 2020.
It said the auction house encouraged buyers to state fraudulently that they were acquiring works for resale later. Such acquisitions can be tax-exempt whereas works bought for private use are in fact subject to tax.
Sotheby’s defended itself saying these transactions happened “many years ago” and the auction house actually provided evidence that James used to obtain the settlement now being announced.
“Sotheby’s admitted no wrongdoing in connection with today’s settlement,” it said in a statement seen by AFP.
James, who brought the case in 2020, said the tax-dodging clients included one identified as the “Collector” who bought $27 million of artwork from Sotheby’s between 2010 and 2015 using tax exemption forms known as resale certificates.
These papers certify that a buyer is exempt from paying sales tax because the purchase is only for resale, not for private enjoyment.
Sotheby’s accepted resale certificates from this person even though it knew the works were for private use and in some cases Sotheby’s staff even helped this collector display the works in their home, James said in a statement.
“Sotheby’s intentionally broke the law to help its clients dodge millions of dollars in taxes, and now they are going to pay for it,” James said.
EU fines Meta $840 million for ‘abusive’ Facebook ad practices
By AFP
November 14, 2024
The fine is the latest in a string of hefty penalties the European Commission, the regulator for the 27-nation European Union, has imposed against Big Tech companies over their practices in recent years -- and ranks among the 10 largest antitrust fines - Copyright AFP/File Fabrice COFFRINI
Daniel ARONSSOHN, Umberto BACCHI
The EU fined online giant Meta almost 800 million euros on Thursday for breaching antitrust rules by giving users of its Facebook social network automatic access to classified ads service Facebook Marketplace.
The European Commission said the US tech titan also abused its dominant position by imposing unfair trading conditions on other online classified ads service providers that advertise on its platforms.
“This is illegal under EU antitrust rules. Meta must now stop this behaviour,” the bloc’s competition chief, Margrethe Vestager, said in a statement.
Meta said it would appeal, alleging the decision ignored “the realities of the thriving European market for online classified listing services.
“Facebook users can choose whether or not to engage with Marketplace, and many don’t. The reality is that people use Facebook Marketplace because they want to, not because they have to,” the firm said in a statement.
Among the 10 largest antitrust fines ever imposed by the 27-nation European Union, it is the latest in a string of hefty penalties slapped on Big Tech companies in recent years by the commission, the regulator for the bloc.
– ‘Abusive practices’ –
Detailing what it termed “abusive practices” by Meta, the commission said that because Facebook Marketplace was tied to Facebook, the former enjoyed a “substantial distribution advantage which competitors cannot match.”
“All Facebook users automatically have access and get regularly exposed to Facebook Marketplace whether they want it or not,” it said.
Additionally Meta imposed unfair conditions on competitors in the classified ads service who advertised on Facebook and Instagram, the commission said.
This allowed it to “use ads-related data generated by other advertisers for the sole benefit of Facebook Marketplace”, it said.
Meta, which also owns WhatsApp and Instagram, contended it did not “use advertisers’ data for this purpose” and has “built systems and controls to ensure that”.
“It is disappointing that the Commission has chosen to take regulatory action against a free and innovative service built to meet consumer demand,” the company said.
Meta’s dominant position in the market for personal social networks comes with a special responsibility not to abuse it by restricting competition, according to the EU.
– ‘Duration and gravity’ –
The commission opened formal proceedings into possible anticompetitive conduct by Facebook in June 2021, communicating its concerns to Meta in December 2022 — and receiving the firm’s response in June 2023.
The EU fined the company 797.72 million euros ($840 million), a sum the commission said took into account the “duration and gravity of the infringement”, as well as the turnover of Meta and Facebook Marketplace.
Meta’s total revenue last year stood at around $135 billion.
The European commissions has had several run-ins with Meta as part of a broader clampdown on abusive Big Tech practices.
Its policy arsenal has been beefed up over the past two years with major twin laws, the Digital Services Act and the Digital Markets Act, that carry massive financial penalties in the event of infringements.
In July the EU accused Meta of breaching the digital rules with its new “pay or consent” system. It meant users had to pay to avoid data collection, or agree to share their data with Facebook and Instagram to keep using the platforms for free.
Bowing to pressure from EU regulators, Meta announced this week it was offering non-paying users in the bloc the option of receiving less targeted ads, as well as cutting subscription rates for entirely ad-free services.
By AFP
November 14, 2024
The fine is the latest in a string of hefty penalties the European Commission, the regulator for the 27-nation European Union, has imposed against Big Tech companies over their practices in recent years -- and ranks among the 10 largest antitrust fines - Copyright AFP/File Fabrice COFFRINI
Daniel ARONSSOHN, Umberto BACCHI
The EU fined online giant Meta almost 800 million euros on Thursday for breaching antitrust rules by giving users of its Facebook social network automatic access to classified ads service Facebook Marketplace.
The European Commission said the US tech titan also abused its dominant position by imposing unfair trading conditions on other online classified ads service providers that advertise on its platforms.
“This is illegal under EU antitrust rules. Meta must now stop this behaviour,” the bloc’s competition chief, Margrethe Vestager, said in a statement.
Meta said it would appeal, alleging the decision ignored “the realities of the thriving European market for online classified listing services.
“Facebook users can choose whether or not to engage with Marketplace, and many don’t. The reality is that people use Facebook Marketplace because they want to, not because they have to,” the firm said in a statement.
Among the 10 largest antitrust fines ever imposed by the 27-nation European Union, it is the latest in a string of hefty penalties slapped on Big Tech companies in recent years by the commission, the regulator for the bloc.
– ‘Abusive practices’ –
Detailing what it termed “abusive practices” by Meta, the commission said that because Facebook Marketplace was tied to Facebook, the former enjoyed a “substantial distribution advantage which competitors cannot match.”
“All Facebook users automatically have access and get regularly exposed to Facebook Marketplace whether they want it or not,” it said.
Additionally Meta imposed unfair conditions on competitors in the classified ads service who advertised on Facebook and Instagram, the commission said.
This allowed it to “use ads-related data generated by other advertisers for the sole benefit of Facebook Marketplace”, it said.
Meta, which also owns WhatsApp and Instagram, contended it did not “use advertisers’ data for this purpose” and has “built systems and controls to ensure that”.
“It is disappointing that the Commission has chosen to take regulatory action against a free and innovative service built to meet consumer demand,” the company said.
Meta’s dominant position in the market for personal social networks comes with a special responsibility not to abuse it by restricting competition, according to the EU.
– ‘Duration and gravity’ –
The commission opened formal proceedings into possible anticompetitive conduct by Facebook in June 2021, communicating its concerns to Meta in December 2022 — and receiving the firm’s response in June 2023.
The EU fined the company 797.72 million euros ($840 million), a sum the commission said took into account the “duration and gravity of the infringement”, as well as the turnover of Meta and Facebook Marketplace.
Meta’s total revenue last year stood at around $135 billion.
The European commissions has had several run-ins with Meta as part of a broader clampdown on abusive Big Tech practices.
Its policy arsenal has been beefed up over the past two years with major twin laws, the Digital Services Act and the Digital Markets Act, that carry massive financial penalties in the event of infringements.
In July the EU accused Meta of breaching the digital rules with its new “pay or consent” system. It meant users had to pay to avoid data collection, or agree to share their data with Facebook and Instagram to keep using the platforms for free.
Bowing to pressure from EU regulators, Meta announced this week it was offering non-paying users in the bloc the option of receiving less targeted ads, as well as cutting subscription rates for entirely ad-free services.
Corruption overshadows Ukraine’s multi-billion reconstruction program
By AFP
November 14, 2024
War reconstruction in Ukraine has provided new opportunities for corruption and personal enrichment - Copyright AFP DALE DE LA REY
Léa DAUPLE
When Bart Gruyaert agreed to help rebuild destroyed apartment blocks outside Kyiv, he hoped to be one cog in Ukraine’s vast reconstruction programme, repairing just some of the damage wrought by Russia’s invasion.
But when the French company he works for, Neo-Eco, applied for building permits in the town of Gostomel, the local military administration asked the company to transfer the funds for the multimillion-dollar project to its bank account, under the pretence that it would run the project directly.
Officials told Gruyaert, “it’s better if you transfer the money you received to our account,” he recalled.
“But it doesn’t work like that,” he told AFP.
The company refused, and progress on the initiative, which had secured 20 million euros in private funding, immediately slowed.
It marked the latest example of the endemic corruption that has plagued Ukraine since it became independent after the fall of the Soviet Union in 1991.
After Neo-Eco’s refusal on the bank transfer, the local administration started dragging things out, adding new requirements to the contract and trying to incentivise the company to “give envelopes” to the right people, Gruyaert alleged.
The company reluctantly decided to abandon the project in September 2023, saying it was “impossible” to work under such conditions.
Following the saga, Ukrainian investigators said they had uncovered a system of “embezzlement” in the Gostomel military administration and accused its head Sergiy Borysiuk of appropriating around 21 million hryvnia ($470,000) meant for the reconstruction of houses and apartments.
In June 2023, after the allegations surfaced, Borysiuk was dismissed by President Volodymyr Zelensky.
He had pre-empted his removal with a press conference several days earlier in which he said he had done “everything possible” to ensure reconstruction efforts.
“It seems to me that you are looking for the enemy in the wrong place,” he said.
– Deep corruption –
The case is far from isolated.
Even though Ukraine has stepped up its anti-graft measures over the past decade to advance its ambition of joining the European Union, corruption scandals are still rife.
Transparency International ranked Ukraine 104 out of 180 countries in its “corruption perceptions index,” up from 144 in 2013.
For some officials, Russia’s invasion has provided new opportunities for personal enrichment.
Several high-profile cases of alleged embezzlement of reconstruction funds, as well as the arrest of officials for selling army exemption certificates, have emerged throughout the war.
While a potential embarrassment for Ukraine, which relies on billions of dollars in Western financial support, Transparency International Ukraine’s director Andriy Borovyk said attention to the cases showed the problem was not being “forgotten”.
And authorities also tout the uncovering of such schemes as a sign of “effective” enforcement.
Just 10 years ago, “who could have thought that senior officials could be accused of crimes?” said Viktor Pavlushchyk, head of the National Agency on Corruption Prevention.
“Now we have some very good examples,” he said.
Around 500 corruption cases have been opened this year and 60 convictions secured, according to the National Anti-Corruption Bureau.
– Anti-corruption ‘DREAM’ –
But there are lingering fears the persistent problem will hamper Ukraine’s massive reconstruction agenda, deterring international partners from putting up funds.
The total cost of reconstructing Ukraine stands is estimated at $486 billion, according to a joint study by the World Bank, UN, EU and Ukrainian government.
Gruyaert has not been deterred by his experience in Gostomel, which was occupied by Russian forces in the first weeks of the February 2022 invasion.
Ukraine is “making a lot of progress” on corruption, Gruyaert said, adding that Neo-Eco has had to learn how to “zigzag between the various obstacles”.
The company is still working on several other projects and encourages other foreign investors to get involved.
But, bruised by the Gostomel experience, it now prioritises working with cities where it has confidence it will not be asked for kickbacks.
Most concede that much remains to be done in Ukraine’s anti-corruption fight, especially when it comes to reconstruction.
It is still common for local officials to have stakes in construction companies through their relatives, several figures told AFP.
Ukraine is trying to weed out such conflicts of interest and make the whole process more transparent.
Last year, the country launched a platform listing all open projects.
Called “DREAM”, the aim is to enable investors, journalists and Ukrainians to track the progress of construction projects, said its head Viktor Nestulia.
A commitment to such openness will be key to reassuring foreign investors, said Mustafa Nayyem, an activist and journalist who headed the reconstruction agency until earlier this year.
“The war is not an excuse not to fight corruption,” he told AFP.
Corruption, “is not in Ukrainian DNA, it’s simply a question of will.”
By AFP
November 14, 2024
War reconstruction in Ukraine has provided new opportunities for corruption and personal enrichment - Copyright AFP DALE DE LA REY
Léa DAUPLE
When Bart Gruyaert agreed to help rebuild destroyed apartment blocks outside Kyiv, he hoped to be one cog in Ukraine’s vast reconstruction programme, repairing just some of the damage wrought by Russia’s invasion.
But when the French company he works for, Neo-Eco, applied for building permits in the town of Gostomel, the local military administration asked the company to transfer the funds for the multimillion-dollar project to its bank account, under the pretence that it would run the project directly.
Officials told Gruyaert, “it’s better if you transfer the money you received to our account,” he recalled.
“But it doesn’t work like that,” he told AFP.
The company refused, and progress on the initiative, which had secured 20 million euros in private funding, immediately slowed.
It marked the latest example of the endemic corruption that has plagued Ukraine since it became independent after the fall of the Soviet Union in 1991.
After Neo-Eco’s refusal on the bank transfer, the local administration started dragging things out, adding new requirements to the contract and trying to incentivise the company to “give envelopes” to the right people, Gruyaert alleged.
The company reluctantly decided to abandon the project in September 2023, saying it was “impossible” to work under such conditions.
Following the saga, Ukrainian investigators said they had uncovered a system of “embezzlement” in the Gostomel military administration and accused its head Sergiy Borysiuk of appropriating around 21 million hryvnia ($470,000) meant for the reconstruction of houses and apartments.
In June 2023, after the allegations surfaced, Borysiuk was dismissed by President Volodymyr Zelensky.
He had pre-empted his removal with a press conference several days earlier in which he said he had done “everything possible” to ensure reconstruction efforts.
“It seems to me that you are looking for the enemy in the wrong place,” he said.
– Deep corruption –
The case is far from isolated.
Even though Ukraine has stepped up its anti-graft measures over the past decade to advance its ambition of joining the European Union, corruption scandals are still rife.
Transparency International ranked Ukraine 104 out of 180 countries in its “corruption perceptions index,” up from 144 in 2013.
For some officials, Russia’s invasion has provided new opportunities for personal enrichment.
Several high-profile cases of alleged embezzlement of reconstruction funds, as well as the arrest of officials for selling army exemption certificates, have emerged throughout the war.
While a potential embarrassment for Ukraine, which relies on billions of dollars in Western financial support, Transparency International Ukraine’s director Andriy Borovyk said attention to the cases showed the problem was not being “forgotten”.
And authorities also tout the uncovering of such schemes as a sign of “effective” enforcement.
Just 10 years ago, “who could have thought that senior officials could be accused of crimes?” said Viktor Pavlushchyk, head of the National Agency on Corruption Prevention.
“Now we have some very good examples,” he said.
Around 500 corruption cases have been opened this year and 60 convictions secured, according to the National Anti-Corruption Bureau.
– Anti-corruption ‘DREAM’ –
But there are lingering fears the persistent problem will hamper Ukraine’s massive reconstruction agenda, deterring international partners from putting up funds.
The total cost of reconstructing Ukraine stands is estimated at $486 billion, according to a joint study by the World Bank, UN, EU and Ukrainian government.
Gruyaert has not been deterred by his experience in Gostomel, which was occupied by Russian forces in the first weeks of the February 2022 invasion.
Ukraine is “making a lot of progress” on corruption, Gruyaert said, adding that Neo-Eco has had to learn how to “zigzag between the various obstacles”.
The company is still working on several other projects and encourages other foreign investors to get involved.
But, bruised by the Gostomel experience, it now prioritises working with cities where it has confidence it will not be asked for kickbacks.
Most concede that much remains to be done in Ukraine’s anti-corruption fight, especially when it comes to reconstruction.
It is still common for local officials to have stakes in construction companies through their relatives, several figures told AFP.
Ukraine is trying to weed out such conflicts of interest and make the whole process more transparent.
Last year, the country launched a platform listing all open projects.
Called “DREAM”, the aim is to enable investors, journalists and Ukrainians to track the progress of construction projects, said its head Viktor Nestulia.
A commitment to such openness will be key to reassuring foreign investors, said Mustafa Nayyem, an activist and journalist who headed the reconstruction agency until earlier this year.
“The war is not an excuse not to fight corruption,” he told AFP.
Corruption, “is not in Ukrainian DNA, it’s simply a question of will.”
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