Mobster and drug gang killer ordered released by federal judge: ‘I am letting two murderers sentenced to life out of prison’
John Annese, New York Daily News
Wed, November 2, 2022
Two convicted killers — including mob capo Anthony Russo, who ordered murders during the bloody Colombo crime family civil war — are being released from prison by a federal judge.
Russo and Paul Moore, a drug trafficker who fatally shot a rival, were given reduced sentences Wednesday by Judge Frederic Block under the First Step Act.
The felons applied for compassionate release under the criminal justice reform bill, which was signed into law by Donald Trump in 2018.
Block noted that Russo and Moore were model prisoners, and that they were punished with life sentences for exercising their right to trial.
“I am letting two murderers sentenced to life out of prison,” Block wrote Wednesday. “But I have painstakingly endeavored to explain why it is the appropriate thing to do under the First Step Act.”
The two men won’t be sprung immediately, but Block cut both their prison terms to 35 years.
That means Russo, 70, still owes six years of his sentence, while Moore, 56, has about three years to go, though both could potentially get credit for good time.
Russo and two others were convicted in 1994 of conspiring to murder John Minerva and Michael Imbergamo during the battle between Colombo boss Victor Orena and Alphonse Persico — the son of jailed Colombo head Carmine “The Snake” Persico. A dozen killings have been linked to the bloody conflict.
Russo served as a captain under Orena, but when the war broke out in 1991, he sided with Persico. On March 25, 1992, Russo’s subordinates stalked Minerva and Imbergamo — who sided with Orena — to a cafe Minerva owned on Long Island, and shot them dead as they walked to their cars.
In his memo, Block praised the First Step Act, which has led to the reduction of more than 4,000 prison sentences. Russo and Moore’s cases “reflect the broad range of issues” that Block believes judges should look at while weighing compassionate release requests,” he wrote.
“The Act was a remarkable piece of bipartisan legislation by an otherwise divided Congress and reflected the realization by lawyers on both sides of the aisle that sentencing reform of the judicial system was sorely needed,” Block said.
Block, 88, has served on the federal bench since his appointment by President Clinton in 1994.
Prior to that, at the retrial in the slaying of a Hasidic man during the 1991 Crown Heights riot, Block asked a Black witness to define the slang term “‘chillin’ for somebody who is not a brother.”
He has a reputation for shooting from the hip, and was ripped on the front page of the Daily News in 2007 with the headline “Judge Blockhead” after he ridiculed prosecutors for seeking the death penalty against a drug kingpin during a racketeering murder trial.
Russo “has clearly demonstrated that he has achieved extraordinary rehabilitation” when he applied for compassionate release in April and pointed to his health problems and his risk of catching COVID-19, Block wrote.
He also contends that Russo shouldn’t be penalized for choosing to go to trial.
“Russo exercised his constitutional right to trial. Of Russo’s 14 co-defendants, seven went to trial. Six received mandatory life sentences under the then-mandatory sentencing guidelines. The seventh was acquitted,” he wrote. “In contrast, the remaining co-defendants received sentences ranging from time-served, equating to approximately four years, to 270 months.”
Those other defendants were accused of actions “no less violent or destructive than those who received life sentences,” he said.
Federal prosecutors opposed Russo’s early release, arguing that he showed a “disregard for the law and human life,” and that he could still become a player in the Colombo crime family.
“Russo rose through the ranks to serve as a captain of the Colombo crime family, a position from which he gave direction to the ‘made men’ who reported to him,” Assistant U.S. Attorney Devon Lash wrote to the judge. “His risk he poses (even at an advanced age) comes from the influence he has over others in the enterprise.”
The judge made similar arguments about Moore, a Jamaican immigrant who served as an enforcer for drug boss Eric Vassell, and was tasked with expanding his gang’s influence from Brooklyn to Texas. Moore and an accomplice shot and killed a rival drug dealer in 1991, and he shot one of his own gang members in the leg to discipline him for disrespecting Vassell, Block wrote.
“Like Russo, Moore has also been the victim of sentencing disparities. Only Moore and one of his 46 co-defendants are serving life sentences,” Block said. “Eric Vassell, who accepted a plea deal, murdered two people and ordered the murders of several others. He is scheduled to be released from prison in December after serving approximately 25 years.”
Moore, who applied for compassionate release last November, has agreed not to fight deportation after he’s freed.
A spokesman for Eastern District of New York U.S. Attorney Breon Peace declined comment.
Lawyers for Russo and Moore did not return messages seeking comment.
Friday, November 04, 2022
Sevastopol "drone attack": first satellite images are published
Ukrainska Pravda
Wed, November 2, 2022
The first satellite images of Sevastopol Bay have appeared since the so-called "drone attack" on warships of Russia’s Black Sea Fleet in temporarily occupied Crimea on 29 October.
Source: Ukrainian military blog Militarnyi, citing OSINT analyst Benjamin Pittet
Details: The pictures were taken on 1 November at 05:35 and 11:06. The satellite recorded an Admiral Grigorovich-class frigate in tow on the high seas. Five hours later, the ship was at the mooring wall of Striletska Bay in Sevastopol.
According to Militarynyi, it is possible that the photo recorded the movement of the Admiral Makarov frigate. The nature of the alleged damage from the "drone attack" cannot be established from the photo.
Background:
On 29 October, explosions were reported in the Russian-occupied city of Sevastopol on the Crimean peninsula; Russian ships were allegedly "repelling a drone attack".
The Russian Ministry of Defence claimed that the Armed Forces of Ukraine had attacked Sevastopol with drones at 04:00 on 29 October. The Russian Defence Ministry confirmed that the Ivan Golubets minesweeper had been damaged. It claimed that preparations for the "attack" on Sevastopol were carried out under the guidance of members of the British Navy, who are allegedly currently in the Ukrainian city of Ochakiv.
Ukraine’s southern defence forces suspect that failed launches of air defence missiles by the Russian invaders could be the reason for the explosions in Sevastopol on Saturday.
GeoConfirmed investigators reported that at least three ships of the Russian Black Sea Fleet, including the flagship Admiral Makarov, were damaged as a result of the unmanned surface vessel (USV) attack on 29 October.
The Institute for the Study of War has suggested that the attack was carried out by Ukrainian forces.
Ukrainska Pravda
Wed, November 2, 2022
The first satellite images of Sevastopol Bay have appeared since the so-called "drone attack" on warships of Russia’s Black Sea Fleet in temporarily occupied Crimea on 29 October.
Source: Ukrainian military blog Militarnyi, citing OSINT analyst Benjamin Pittet
Details: The pictures were taken on 1 November at 05:35 and 11:06. The satellite recorded an Admiral Grigorovich-class frigate in tow on the high seas. Five hours later, the ship was at the mooring wall of Striletska Bay in Sevastopol.
According to Militarynyi, it is possible that the photo recorded the movement of the Admiral Makarov frigate. The nature of the alleged damage from the "drone attack" cannot be established from the photo.
Background:
On 29 October, explosions were reported in the Russian-occupied city of Sevastopol on the Crimean peninsula; Russian ships were allegedly "repelling a drone attack".
The Russian Ministry of Defence claimed that the Armed Forces of Ukraine had attacked Sevastopol with drones at 04:00 on 29 October. The Russian Defence Ministry confirmed that the Ivan Golubets minesweeper had been damaged. It claimed that preparations for the "attack" on Sevastopol were carried out under the guidance of members of the British Navy, who are allegedly currently in the Ukrainian city of Ochakiv.
Ukraine’s southern defence forces suspect that failed launches of air defence missiles by the Russian invaders could be the reason for the explosions in Sevastopol on Saturday.
GeoConfirmed investigators reported that at least three ships of the Russian Black Sea Fleet, including the flagship Admiral Makarov, were damaged as a result of the unmanned surface vessel (USV) attack on 29 October.
The Institute for the Study of War has suggested that the attack was carried out by Ukrainian forces.
MANSPLAINING
Women get fewer chances to speak on CNN, Fox News and MSNBC, according to an AI-powered, large-scale analysis of interruptions
Ashique KhudaBukhsh, Assistant Professor of Computing and Information Sciences, Rochester Institute of Technology
Wed, November 2, 2022
There are gender differences in who gets to speak and who interrupts on cable news discussions. CNN
The Research Brief is a short take about interesting academic work.
The big idea
My colleagues and I used artificial intelligence to analyze hundreds of thousands of dialogues on cable news programs in order to better understand the nature of interruptions in political discussions. We found that women get substantially fewer opportunities to speak in those settings than men, and perhaps as a result they tend to interrupt more often than men.
Analyzing interruptions at this scale provides meaningful insights into subtle conversational dynamics and how they vary across race, gender, occupation and political orientation. In addition to gender differences, we found that across CNN, Fox News and MSNBC, conversations between people who hold opposite political beliefs are riddled with far more intrusive and unfriendly interruptions than those between people who share a political affiliation.
I’m a computer scientist who uses AI to study social science questions. In collaboration with student AI researchers from Carnegie Mellon University, we developed AI methods that reliably distinguish intrusive and unfriendly interruptions from those that are benign. Intrusive interruptions aim to take over a conversation or stifle the speaker, and benign interruptions aim to support the speaker with helpful information or indications of agreement.
Through a year-long effort, we analyzed 625,409 dialogues containing interruptions found in 275,420 transcripts from the three cable news networks spanning January 2000 and July 2021. We found that female speakers on the networks got out an average of 72.8 words per chance to speak compared to 81.4 for male speakers. We also found that female speakers interrupted in 39.4% of dialogues compared to 35.9% for male speakers. However, the women had a better ratio of benign to intrusive interruptions than the men did: 85.5% to 75.4%.
Why it matters
Our AI techniques could be used to provide real-time interruption analysis of talk shows, interviews and political debates. Post-debate analyses revealed that during the third U.S. Presidential debate in 2020, Donald Trump interrupted twice as much as Joe Biden. Real time analyses can be useful to call out serial interrupters, inform the audience during the debate and perhaps help in ensuring civil discourse.
We also studied the evolution of unfriendly interruptions over those two decades. This research reveals that the rate of unfriendly or intrusive interruptions has been gradually increasing, with the period during the Trump-Clinton 2016 campaign producing the sharpest spike in intrusive interruptions among commentators.
This result points to the deepening political divide in the U.S. previously documented in research on news consumption patterns, media portrayals of major issues such as policing, social media discussions of events and the language of partisan news audiences.
What other research is being done
Other researchers have been studying interruptions in political speech in other contexts than cable news broadcasts, including legislative speeches.
While interruptions have been extensively analyzed in social science literature for decades, our study used AI techniques to study interruptions at an unprecedented scale.
What still isn’t known
Interruptions could be categorized with more nuance than just considering them intrusive or benign. Our current methods are not robust enough to detect these nuances reliably.
Our analysis also suffers from selection bias because it only considers people who appeared in major news networks and thus probably wield considerable social influence. We do not know whether our results would generalize to broader groups, for example from male politicians to all men.
This article is republished from The Conversation, an independent nonprofit news site dedicated to sharing ideas from academic experts. It was written by: Ashique KhudaBukhsh, Rochester Institute of Technology.
Women get fewer chances to speak on CNN, Fox News and MSNBC, according to an AI-powered, large-scale analysis of interruptions
Ashique KhudaBukhsh, Assistant Professor of Computing and Information Sciences, Rochester Institute of Technology
Wed, November 2, 2022
There are gender differences in who gets to speak and who interrupts on cable news discussions. CNN
The Research Brief is a short take about interesting academic work.
The big idea
My colleagues and I used artificial intelligence to analyze hundreds of thousands of dialogues on cable news programs in order to better understand the nature of interruptions in political discussions. We found that women get substantially fewer opportunities to speak in those settings than men, and perhaps as a result they tend to interrupt more often than men.
Analyzing interruptions at this scale provides meaningful insights into subtle conversational dynamics and how they vary across race, gender, occupation and political orientation. In addition to gender differences, we found that across CNN, Fox News and MSNBC, conversations between people who hold opposite political beliefs are riddled with far more intrusive and unfriendly interruptions than those between people who share a political affiliation.
I’m a computer scientist who uses AI to study social science questions. In collaboration with student AI researchers from Carnegie Mellon University, we developed AI methods that reliably distinguish intrusive and unfriendly interruptions from those that are benign. Intrusive interruptions aim to take over a conversation or stifle the speaker, and benign interruptions aim to support the speaker with helpful information or indications of agreement.
Through a year-long effort, we analyzed 625,409 dialogues containing interruptions found in 275,420 transcripts from the three cable news networks spanning January 2000 and July 2021. We found that female speakers on the networks got out an average of 72.8 words per chance to speak compared to 81.4 for male speakers. We also found that female speakers interrupted in 39.4% of dialogues compared to 35.9% for male speakers. However, the women had a better ratio of benign to intrusive interruptions than the men did: 85.5% to 75.4%.
Why it matters
Our AI techniques could be used to provide real-time interruption analysis of talk shows, interviews and political debates. Post-debate analyses revealed that during the third U.S. Presidential debate in 2020, Donald Trump interrupted twice as much as Joe Biden. Real time analyses can be useful to call out serial interrupters, inform the audience during the debate and perhaps help in ensuring civil discourse.
We also studied the evolution of unfriendly interruptions over those two decades. This research reveals that the rate of unfriendly or intrusive interruptions has been gradually increasing, with the period during the Trump-Clinton 2016 campaign producing the sharpest spike in intrusive interruptions among commentators.
This result points to the deepening political divide in the U.S. previously documented in research on news consumption patterns, media portrayals of major issues such as policing, social media discussions of events and the language of partisan news audiences.
What other research is being done
Other researchers have been studying interruptions in political speech in other contexts than cable news broadcasts, including legislative speeches.
While interruptions have been extensively analyzed in social science literature for decades, our study used AI techniques to study interruptions at an unprecedented scale.
What still isn’t known
Interruptions could be categorized with more nuance than just considering them intrusive or benign. Our current methods are not robust enough to detect these nuances reliably.
Our analysis also suffers from selection bias because it only considers people who appeared in major news networks and thus probably wield considerable social influence. We do not know whether our results would generalize to broader groups, for example from male politicians to all men.
This article is republished from The Conversation, an independent nonprofit news site dedicated to sharing ideas from academic experts. It was written by: Ashique KhudaBukhsh, Rochester Institute of Technology.
END THE EMBARGO
UN votes overwhelmingly to condemn US embargo of Cuba
A Cuban and a U.S. flag hang from the windshield of a car parked in a garage in Havana, Cuba, Aug. 10, 2016. The U.N. General Assembly voted overwhelmingly on Nov. 3, 2022 to condemn the American economic embargo of Cuba for the 30th year.
(AP Photo/Ramon Espinosa, File)
EDITH M. LEDERER
Thu, November 3, 2022
UNITED NATIONS (AP) — The U.N. General Assembly voted overwhelmingly Thursday to condemn the American economic embargo of Cuba for the 30th year, with the Biden administration continuing former President Donald Trump’s opposition and refusing to return to the Obama administration’s 2016 abstention.
The vote in the 193-member General Assembly was 185 countries supporting the condemnation, the United States and Israel opposing it, and Brazil and Ukraine abstaining.
Cuban Foreign Minister Bruno Rodriguez said before the vote that since 2019, the U.S. government “has escalated the siege around our country, taking it to an even crueler and more humane dimension, with the purpose of deliberately inflicting the biggest possible damage on Cuban families.”
During the first 14 months of the Biden administration, the damage to the Cuban economy was estimated at $6.35 billion, equivalent to more than $15 million a day, Rodriguez said.
Rodriguez said the Biden administration is continuing Trump’s “maximum pressure” policy. He said that despite some positive but limited adjustments in recent months on U.S. flights to Cuba, remittances and consular proceedings, these in no way “modify American economic, commercial and financial measures.”
“The blockade, which has been tightened to the extreme, continues to be the central element that defines the U.S.-Cuba policy,” the foreign minister said.
U.S. political counselor John Kelley told the assembly after the vote that the United States remains committed to the Cuban people’s pursuit of freedom and dignity, is focused on their political and economic well-being, and centers its efforts “on democracy and human rights and fundamental freedoms.”
He recalled that the Cuban government pursued a crackdown on demonstrators in response to July 2021 protests by tens of thousands of Cubans across the island demanding freedom.
He said Cuba's government also “has used harsh prison sentences, even against minors, intimidation, tactics, arrests, Internet disruptions, government-sponsored mobs, and horrendous prison conditions to try to prevent Cubans from exercising their human rights.”
While the United States holds the Cuban government responsible, Kelley said, “the people of the United States and U.S. organizations donate a significant amount of humanitarian goods to the Cuban people, and the United States is one of Cuba’s principal trading partners.”
Cuba’s deputy U.N. ambassador, Yuri Gala, responded: “If the United States government really did care for the well-being, human rights and self-determination of Cuban people, it could lift the embargo.”
The United States advocates for individual freedoms in Cuba, Gala said, “yet they have not reversed the restrictions that are having a direct impact on Cuban entrepreneurs in areas such as software development, hospitality and other areas.”
Rodriguez earlier told the assembly, “We do not blame the blockade for all the difficulties our country faces today.”
“But those who deny its very serious impacts or fail to recognize that it is the main cause of the deprivations, scarcities and hardships suffered by Cuban families would be failing to tell the truth,” he said.
Rodriguez accused the U.S. of using its powerful media and digital technology platforms “in a virulent disinformation and disparagement campaign against Cuba.” He said the U.S. is resorting to “the most diverse methods of non-conventional war, using our children, youths and artists as the targets of this political and media bombardment.”
Thursday’s 185-2 vote was similar to previous years.
The General Assembly’s vote in November 2019 was 187-3, with the U.S., Israel and Brazil voting “no” and Colombia and Ukraine abstaining.
The assembly’s 75th session began in September 2020, but because of the COVID-19 pandemic the vote on the Cuba resolution was postponed until June 2021, when the vote was 184-2 as the U.S. and Israel voted “no” and Brazil, Colombia and Ukraine abstained.
General Assembly resolutions are not legally binding and are unenforceable, but they reflect world opinion and the vote has given Cuba an annual stage to demonstrate the isolation of the U.S. in its decades-old efforts to isolate the Caribbean island nation.
The embargo was imposed in 1960 following the revolution led by Fidel Castro and the nationalization of properties belonging to U.S. citizens and corporations. Two years later it was strengthened.
Then Cuban President Raul Castro and President Barack Obama officially restored relations in July 2016, and that year the U.S. abstained on the resolution calling for an end to the embargo for the first time. But Obama’s successor, Donald Trump, sharply criticized Cuba’s human rights record, and in 2017 the U.S. again voted against the resolution..
EDITH M. LEDERER
Thu, November 3, 2022
UNITED NATIONS (AP) — The U.N. General Assembly voted overwhelmingly Thursday to condemn the American economic embargo of Cuba for the 30th year, with the Biden administration continuing former President Donald Trump’s opposition and refusing to return to the Obama administration’s 2016 abstention.
The vote in the 193-member General Assembly was 185 countries supporting the condemnation, the United States and Israel opposing it, and Brazil and Ukraine abstaining.
Cuban Foreign Minister Bruno Rodriguez said before the vote that since 2019, the U.S. government “has escalated the siege around our country, taking it to an even crueler and more humane dimension, with the purpose of deliberately inflicting the biggest possible damage on Cuban families.”
During the first 14 months of the Biden administration, the damage to the Cuban economy was estimated at $6.35 billion, equivalent to more than $15 million a day, Rodriguez said.
Rodriguez said the Biden administration is continuing Trump’s “maximum pressure” policy. He said that despite some positive but limited adjustments in recent months on U.S. flights to Cuba, remittances and consular proceedings, these in no way “modify American economic, commercial and financial measures.”
“The blockade, which has been tightened to the extreme, continues to be the central element that defines the U.S.-Cuba policy,” the foreign minister said.
U.S. political counselor John Kelley told the assembly after the vote that the United States remains committed to the Cuban people’s pursuit of freedom and dignity, is focused on their political and economic well-being, and centers its efforts “on democracy and human rights and fundamental freedoms.”
He recalled that the Cuban government pursued a crackdown on demonstrators in response to July 2021 protests by tens of thousands of Cubans across the island demanding freedom.
He said Cuba's government also “has used harsh prison sentences, even against minors, intimidation, tactics, arrests, Internet disruptions, government-sponsored mobs, and horrendous prison conditions to try to prevent Cubans from exercising their human rights.”
While the United States holds the Cuban government responsible, Kelley said, “the people of the United States and U.S. organizations donate a significant amount of humanitarian goods to the Cuban people, and the United States is one of Cuba’s principal trading partners.”
Cuba’s deputy U.N. ambassador, Yuri Gala, responded: “If the United States government really did care for the well-being, human rights and self-determination of Cuban people, it could lift the embargo.”
The United States advocates for individual freedoms in Cuba, Gala said, “yet they have not reversed the restrictions that are having a direct impact on Cuban entrepreneurs in areas such as software development, hospitality and other areas.”
Rodriguez earlier told the assembly, “We do not blame the blockade for all the difficulties our country faces today.”
“But those who deny its very serious impacts or fail to recognize that it is the main cause of the deprivations, scarcities and hardships suffered by Cuban families would be failing to tell the truth,” he said.
Rodriguez accused the U.S. of using its powerful media and digital technology platforms “in a virulent disinformation and disparagement campaign against Cuba.” He said the U.S. is resorting to “the most diverse methods of non-conventional war, using our children, youths and artists as the targets of this political and media bombardment.”
Thursday’s 185-2 vote was similar to previous years.
The General Assembly’s vote in November 2019 was 187-3, with the U.S., Israel and Brazil voting “no” and Colombia and Ukraine abstaining.
The assembly’s 75th session began in September 2020, but because of the COVID-19 pandemic the vote on the Cuba resolution was postponed until June 2021, when the vote was 184-2 as the U.S. and Israel voted “no” and Brazil, Colombia and Ukraine abstained.
General Assembly resolutions are not legally binding and are unenforceable, but they reflect world opinion and the vote has given Cuba an annual stage to demonstrate the isolation of the U.S. in its decades-old efforts to isolate the Caribbean island nation.
The embargo was imposed in 1960 following the revolution led by Fidel Castro and the nationalization of properties belonging to U.S. citizens and corporations. Two years later it was strengthened.
Then Cuban President Raul Castro and President Barack Obama officially restored relations in July 2016, and that year the U.S. abstained on the resolution calling for an end to the embargo for the first time. But Obama’s successor, Donald Trump, sharply criticized Cuba’s human rights record, and in 2017 the U.S. again voted against the resolution..
Turquoise Hill Surges as Rio Strikes Deal With Takeover Critics
Jacob Lorinc and Harry Brumpton
Wed, November 2, 2022
(Bloomberg) -- Turquoise Hill Resources Ltd. shares rose after two major investors struck a deal with Rio Tinto Group that paves the way for the London-based mining giant to advance its $3.1 billion takeover.
Shares of Turquoise Hill surged 6% to C$42.77 at 10 a.m. in Toronto, bringing it closer to Rio Tinto’s C$43-a-share offer for the Montreal-based mining company.
Rio Tinto said Tuesday afternoon that it struck a deal with Turquoise Hill shareholders critical of its offer. Pentwater Capital Management LP and SailingStone Capital Partners LLC agreed to withhold their votes in exchange for C$34.40 per share and they will enter into arbitration over a “remaining consideration” for their shares. Rio said its offer remains its best and final.
The two investors, which combined hold about 16% of Turquoise Hill’s outstanding stock, had publicly opposed Rio’s offer, arguing that it undervalued the company. Institutional Shareholder Services Inc. echoed that view, while advisory firm Glass Lewis & Co. recommended investors support the transaction in part due to “significant near-term financing risks” faced by Turquoise Hill.
Rio Tinto has sought the 49% of the Canadian miner it doesn’t already own, in a deal valued at about C$4.24 billion. At stake is Rio’s control of Mongolia’s massive Oyu Tolgoi project, which is expected to become the world’s fourth-largest copper mine.
Turquoise Hill rescheduled a shareholders’ meeting to vote on the takeover to Nov. 8 at the request of Rio Tinto.
The vote required two-thirds approval of all votes from Turquoise Hill shareholders, including Rio Tinto, and approval of a simple majority of votes from minority shareholders.
Turquoise Hill said in a Wednesday statement that Rio advised it on Oct. 30 of potential terms of an agreement with Pentwater and SailingStone, two days before a shareholder meeting in Montreal to vote on the transaction. Shareholders related to those firms hold about 32.6 million shares in Turquoise Hill, according to the statement.
Jacob Lorinc and Harry Brumpton
Wed, November 2, 2022
(Bloomberg) -- Turquoise Hill Resources Ltd. shares rose after two major investors struck a deal with Rio Tinto Group that paves the way for the London-based mining giant to advance its $3.1 billion takeover.
Shares of Turquoise Hill surged 6% to C$42.77 at 10 a.m. in Toronto, bringing it closer to Rio Tinto’s C$43-a-share offer for the Montreal-based mining company.
Rio Tinto said Tuesday afternoon that it struck a deal with Turquoise Hill shareholders critical of its offer. Pentwater Capital Management LP and SailingStone Capital Partners LLC agreed to withhold their votes in exchange for C$34.40 per share and they will enter into arbitration over a “remaining consideration” for their shares. Rio said its offer remains its best and final.
The two investors, which combined hold about 16% of Turquoise Hill’s outstanding stock, had publicly opposed Rio’s offer, arguing that it undervalued the company. Institutional Shareholder Services Inc. echoed that view, while advisory firm Glass Lewis & Co. recommended investors support the transaction in part due to “significant near-term financing risks” faced by Turquoise Hill.
Rio Tinto has sought the 49% of the Canadian miner it doesn’t already own, in a deal valued at about C$4.24 billion. At stake is Rio’s control of Mongolia’s massive Oyu Tolgoi project, which is expected to become the world’s fourth-largest copper mine.
Turquoise Hill rescheduled a shareholders’ meeting to vote on the takeover to Nov. 8 at the request of Rio Tinto.
The vote required two-thirds approval of all votes from Turquoise Hill shareholders, including Rio Tinto, and approval of a simple majority of votes from minority shareholders.
Turquoise Hill said in a Wednesday statement that Rio advised it on Oct. 30 of potential terms of an agreement with Pentwater and SailingStone, two days before a shareholder meeting in Montreal to vote on the transaction. Shareholders related to those firms hold about 32.6 million shares in Turquoise Hill, according to the statement.
POSTMODERN EDSEL
Chinese Tycoon Spent 8 Years, $3 Billion on EV That Went UnbuiltSean O'Kane
Thu, November 3, 2022
(Bloomberg) -- The image arrived in Susan Swenson’s inbox on a Wednesday evening. Her corporate headshot had been crudely crossed out in digital red ink, and the word “Kill” was written in the bottom left corner. In the hours that followed, some of her colleagues received similar threats, including messages that referenced the recent assassination of former Japanese prime minister Shinzo Abe.
The menacing emails marked the apex of a months-long fight for control over Faraday Future Intelligent Electric Inc., a Los Angeles, California-based publicly traded electric vehicle startup that once billed itself as the next Tesla. In September, after the death threats, persistent pressure from Faraday’s largest shareholders, and a surprising cameo from property giant China Evergrande Group, Swenson, the executive chair, and three others agreed to leave Faraday’s board of directors in a sweeping restructuring.
While it’s not known who sent the death threats -- the company has referred them to the FBI -- some leaders inside Faraday believe they were inspired by the boardroom fight recently waged by its largest shareholders, including a group that is partially managed by the startup’s founder, exiled Chinese tycoon Jia Yueting. (The group, FF Global Partners, denies any involvement in the threats.) Bloomberg News spoke to three people familiar with the situation who were granted anonymity to discuss sensitive matters, and reviewed dozens of public regulatory and court filings for this story. Faraday Future did not respond to a list of questions.
Seven months ago, Faraday’s board sidelined Jia, who goes by YT, following an internal probe that examined his influence over day-to-day operations, as well as a series of loans employees made to the startup over the years. Now, he stands to benefit greatly from the impending board shakeup, which will be completed when Faraday holds its delayed annual meeting. He has been named an adviser to the board, and FF Global will have input on all six new members. As Faraday put it in a recent SEC filing, “YT Jia and FF Global have strengthened their already significant influence over the Company.”
But as YT reclaims power, it is over a company that’s under investigation by the US Securities and Exchange Commission in relation to the findings of the internal probe -- information the Department of Justice has inquired about, too, according to Faraday. The startup also needs money, fast. After burning through more than $3 billion since it launched eight years ago, Faraday reported just $27 million in cash on Oct. 25th, and says it needs millions more if it hopes to finally ship its elusive SUV.
Debt Binge
YT ascended in China during the early 2010s, when a tsunami of cash flowed to founders with big visions. He started the “Netflix of China” and parlayed its success into a conglomerate called LeEco, which made everything from smartphones to Android-powered e-bikes. Its expansion was fueled by billions of dollars in debt, and YT personally guaranteed many of the loans. At one point, he pledged 97 percent of his shares in LeEco’s listed arm in exchange for nearly $2 billion, according to the New York Times.
Read more: Outspoken Billionaire Works to Salvage His Tech Empire in China
Meanwhile, Elon Musk was turning the auto industry on its head. Investors started placing big bets on finding the next Tesla Inc., and dozens of EV startups took root in China and the US. It was in this competitive environment that YT founded Faraday in California in 2014, betting he could beat Musk at his own game.
Eventually, LeEco crumbled under the weight of YT’s ambition. In 2017 it laid off hundreds of employees, abandoned a $2 billion acquisition of TV-maker Vizio, Inc., and halted a US expansion. Chinese creditors started pursuing LeEco, and YT. The tycoon landed on a government debtor blacklist and had some assets frozen. So he moved to the US and hunkered down with Faraday.
YT’s connection to Faraday was initially hard to discern. The company had no publicly named CEO, and early executives declined to say where the money came from. According to court filings, it was coming through YT -- some $900 million or so over its first few years. He spent much of it hoovering up talent from the likes of Tesla and General Motors Co. -- including a large swath of the team that created the EV1, the Detroit automaker’s first attempt at a mass-market EV.
Custody Battles
Faraday struggled to meet YT’s ambitions. He wanted an ultra-luxe EV packed with fancy technology. But by late 2017, months after revealing its first prototype, the company was running out of cash.
YT brought in a pair of former BMW executives, but when they proposed filing for Chapter 11 protection, the tycoon bucked. A restructuring would have jeopardized his control of the company, according to a person familiar with the matter, so he resisted. The executives resigned, and Faraday accused them of “dereliction of duty.”
At the end of 2017 YT found an unlikely savior in China Evergrande Group, which pledged to inject up to $2 billion into Faraday in exchange for a 45% stake. YT also officially took over as CEO. Faraday spent the first $800 million ahead of schedule. Evergrande agreed to advance another $700 million in mid-2018, according to filings from a Hong Kong arbitration case between the two companies, but on the condition that YT step aside and sacrifice his ownership.
Read more: The Chinese Developer That Reckons It Can Take on Tesla
YT obliged -- at least on paper. He transferred his stake to the daughter of a Faraday vice president, which the Chinese property giant argued was not far enough. The new money never came, and in late 2018 YT and Faraday sued Evergrande in US court, claiming the property giant was “deliberately starving” the EV startup. Evergrande accused YT of “acting as a shadow director controlling or directing the decisions of directors closely associated with him.” The property giant did not respond to a request for comment.
Faraday had to furlough and lay off hundreds of employees, and suppliers hounded the startup with lawsuits. Nick Sampson, a former Tesla executive and Faraday co-founder, walked away. “The company is effectively insolvent,” he said in his resignation letter.
On the final day of 2018, Faraday and Evergrande struck a truce. Evergrande agreed to reduce its stake to roughly 33%, and allowed Faraday to seek other investors. The property giant gave Faraday a $10 million bridge loan, and YT’s startup survived with him at the helm.
Creative Fundraising
These bitter disputes -- each centered around YT’s control of the company -- made it hard for Faraday to raise money. In 2019, the company made some moves that appeared to dilute the founder’s power: it set up a management group called FF Global Partners, that received a chunk of YT’s ownership. (It now owns around 30% of Faraday.) YT was also replaced as CEO by a different former BMW executive, Carsten Breitfeld.
By October, YT filed for personal bankruptcy in the US to settle billions of LeEco debt he’d guaranteed. Creditors exchanged their claims for slices of a trust that owned Faraday Future shares, allowing some repayment if the startup was acquired or went public -- giving many of YT’s foes a tangible interest in his company’s success.
What kept Faraday afloat during all of this was a series of more than a dozen loans made to the company by employees or parties related to YT, according to SEC filings.
In April 2019, the company received a $9 million loan from an employee in Faraday’s Global Capital Markets department, funded by Ocean View Drive, Inc., a California corporation YT established in 2014 in order to buy three mansions on the Pacific coastline. (YT no longer controls it, according to Faraday’s SEC filings, though the current owner is the spouse of his nephew, Ruokun Jia, who also worked at Faraday.) In July, another employee from the same department loaned Faraday $16.5 million. That loan was funded by FF Global Partners LLC, whose members borrowed the money from a Delaware LLC called “Dream Sunrise,” which in turn borrowed its funding from an LLC owned by Ruokun Jia’s spouse.
Asked about these loans, a spokesperson for FF Global said Faraday was “unable to obtain significant third-party financing” at the time, and so it instead had to rely on “numerous smaller-scale financings that YT Jia helped facilitate,” which the group said is a “typical financing approach for founder-led startups.”
“Over the past several years, YT Jia and FF Global Partners have rescued FFIE many times,” the spokesperson said.
Read more: EV Startups are Wilting in Harsh Light of Public Eye
Even after this series of multi-layered transactions, Faraday still needed a $9.2 million loan from the Paycheck Protection Program to ride out the pandemic downturn. With just $1.8 million in the bank at the end of the year, Faraday tapped into the sudden boom of special purpose acquisition company mergers, which helped turn peers like Nikola Corp, Canoo Inc., and Fisker Inc. into public companies. The startup partnered with a SPAC run by a New York City real estate investor, Jordan Vogel. Not only did he see promise in Faraday’s EV tech, according to two of the people familiar with the matter, but he was told -- and believed -- YT was no longer in control.
That deal came together in early 2021. By July, Faraday netted $1 billion and started trading on the Nasdaq, with institutional backing from Citadel Advisors, China’s largest private automaker Geely, and data company Palantir Technologies Inc. Breitfeld promised to start building the SUV within 12 months.
Board Fight
Vogel joined Faraday’s board following the merger, along with his brother Scott, and Swenson. Within three months the board opened a probe into YT, run by a special committee spearheaded by Swenson. The committee hired Kirkland & Ellis and forensic accounting firm Alvarez and Marsal to examine his interpersonal and financial influence on the company.
The committee concluded that senior managers had misled investors about how much day-to-day control YT maintained over Faraday, according to an April filing with the SEC. They also found senior managers did not properly disclose “certain relationships, arrangements, and transactions” involving YT. YT was officially sidelined and stripped of his executive status. Ruokun Jia was “terminated for conduct during the Special Committee’s investigation.” (Jia did not respond to a message seeking comment.)
Faraday has said that FF Global began pushing back on the disciplinary actions as far back as February. By June, FF Global started issuing public filings agitating to replace one of Faraday’s directors, Brian Krolicki. The public spillover disrupted a funding round with Citi, according to the people familiar, and in July, Faraday once again delayed the launch of its EV, saying it needed more money to start production.
Meanwhile, the company started getting peppered with emails from “self-described ‘employee whistleblowers’” that painted these members of the board as villains. A group of employees who work closely with YT circulated a letter, seen by Bloomberg, that claimed Swenson had “conducted a series of unfair and improper investigations and remediation to the company and its core executives.” Swenson, Krolicki, and the Vogels declined to comment for this story.
FF Global agrees, saying to Bloomberg News that the group “does not believe that the Special Committee investigation was performed fairly,” and that the probe “unfairly targeted for punishment people associated with FFGP.”
This fight culminated with FF Global suing Faraday in Delaware Chancery Court on Sept. 19, accusing the board of breaching its fiduciary duty. FF Global pushed for Swenson’s removal, and cited a key bit of leverage: that Evergrande, which still holds about 20.5% of Faraday following the 2021 merger, supported FF Global’s efforts to remake the board.
That’s when the death threats surfaced. Krolicki received a similar image to the one that arrived in Swenson’s inbox, and other directors including the Vogels were flooded with hateful messages in the days that followed.
Who’s the Boss
On Sept. 26, Faraday announced a truce. FF Global agreed to drop the lawsuit and arrange for roughly $100 million in near-term financing. In exchange, Swenson, Krolicki, and the Vogels agreed to leave the board at the next shareholder meeting. A week later, Swenson and the Vogels resigned early citing “threats and their fear that their continued association with the company might heighten the risk to themselves and their respective families,” according to Faraday. Krolicki resigned earlier this week.
Whenever that next shareholder meeting happens -- Faraday has yet to set a date -- the startup has agreed to completely overhaul the board from 10 members to just seven. FF Global will choose three. Three more will be chosen by a panel made up of Breitfeld, FF Global’s replacement for Swenson, and a current manager of FF Global. Breitfeld is also the seventh board member.
Breitfeld’s name didn’t come up much in FF Global’s battle for the board, and the people familiar with the fight say his alliances can be hard to parse. He was a manager of FF Global until this past May. He lived in one of the California mansions that used to be owned by YT. He has also been a force in pitch meetings, the people say, which is maybe why his contract -- set to expire in September -- was recently extended to March 2023. Breitfeld did not respond to a request for comment.
However instrumental Breitfeld has been to Faraday’s survival, or its failures, he has spent the last few years with YT looking over his shoulder -- literally, at times. In some meetings, one of the people recalled, as Breitfeld took his place at the head of a conference table, YT would pull a chair up next to him. The implication was clear, this person said. In good times, and especially in bad ones, this is always going to be YT’s company.
Yes, some Republican senators really are talking openly about Social Security cuts
Published: Nov. 4, 2022
By Brett Arend
Sen. Mike Lee has said in the past that he wanted to “get rid of” Social Security
By Brett Arend
Sen. Mike Lee has said in the past that he wanted to “get rid of” Social Security
AP PHOTO/RICK BOWMER
If a Republican-controlled Congress comes for your Social Security benefits in the next few years, don’t say they didn’t warn you.
They did.
Sen. Mike Lee of Utah brings to a round dozen the number of sitting GOP senators who have said, quite openly, that they want to put Social Security on the chopping block one way or another.
As Social Security benefits are looking at a 20% cut without new taxes, we may be talking about major changes to America’s retirement plan.
‘I vaguely remember a time in 2010 when we were talking about a bunch of things.’— Sen. Mike Lee of Utah
Meanwhile, according to the latest numbers at Predictit.org, the online betting market, the Republicans are cruising toward control of the House after next week’s midterms and have a growing chance of also winning the Senate. Which means they would have the means and opportunity as well as the motive to start taking the pruning shears, or an ax, to America’s retirement plan.
Make of that what you will.
Lee this week refused to disavow or deny his past remarks that he wanted “to phase out Social Security, to pull it up by the roots and get rid of it.” He made those remarks in 2010, and an audio recording just resurfaced — and is appearing in a (video) attack ad in Utah, where Lee is up for re-election.
See: Senate election in Utah emerges as referendum on direction Trump has taken Republican Party
Also: Sen. Mike Lee tries to distance himself from Trump in Utah debate vs. independent Evan McMullin
Challenged about the remarks, Lee told an interviewer late last month, “I don’t recall ever having advocated for dismantling those [programs]. … I don’t recall advocating for dismantling them.” He added, “I vaguely remember a time in 2010 when we were talking about a bunch of things.”
Another clip exists showing Lee making other alarming remarks about what he would like to do to Social Security if he ever got his hands on it. “We have to start making some very difficult, some very drastic decisions about Social Security,” he said (also back in 2010). While he said those already receiving benefits should have those benefits left intact, “those who have not yet retired but will be retiring in the next 10 to 20 years need to be told right now, so they can start planning ahead, you have to start making some changes.”
Changes, he said, should include raising the age at which those who have paid into Social Security become eligible for benefits. That’s a cut in benefits for each future beneficiary, no matter what people call it.
(To be clear, Lee has said he doesn’t want to cut benefits for Americans who have already retired.)
See: Democrats in Utah want to beat Mike Lee so badly they’re backing a (former) Republican for U.S. Senate
Lee is not alone in wanting changes to Social Security. Fellow Senate Republican Ron Johnson of Wisconsin, one of his party’s ardent fans of anarcho-capitalist author Ayn Rand, is on record as wanting the program turned into “discretionary” federal spending.
Sen. Rick Scott of Florida, who as a private–sector businessman once oversaw the biggest fraud against Medicare in history, is on record as wanting to introduce an automatic five-year “sunset” on all federal programs, including Social Security and Medicare. “If a law is worth keeping, Congress can pass it again,” Scott said.
Meanwhile eight other GOP senators say they want to “rescue” America’s retirement program with unspecified, er, measures … to be decided upon behind closed doors.
That proposal, put forward by Lee’s fellow Utah senator Mitt Romney, is also being championed by occasional Republican maverick Lindsey Graham, who earlier year spoke out for lower Social Security benefits for some to help “save” the program.
Among the other senators supporting Romney’s bill is Kyrsten Sinema, the Arizona Democrat who recently used her pivotal vote to save those important special tax breaks America offers to private-equity honchos, hedge-fund tycoons and venture capitalists. (The carried-interest loophole, designed just for them, cuts their top rate of income tax nearly in half.)
Naturally if you give billionaires a near-50% cut in their tax rates, the money has got to come from somewhere. And why not Grandma?
There is, actually, no reason to cut Social Security benefits unless you want to. The program can be maintained through other changes, such as ending the payroll-tax cap; investing the trust fund at least in part in stocks, as every other pension plan does; levying a wealth tax on all assets; increasing high-skilled immigration; or issuing bonds.
It will be interesting if, instead, the next Congress chooses to start cutting benefits. And if the voters who were perfectly well-informed in advance suddenly squeal with shock.
If a Republican-controlled Congress comes for your Social Security benefits in the next few years, don’t say they didn’t warn you.
They did.
Sen. Mike Lee of Utah brings to a round dozen the number of sitting GOP senators who have said, quite openly, that they want to put Social Security on the chopping block one way or another.
As Social Security benefits are looking at a 20% cut without new taxes, we may be talking about major changes to America’s retirement plan.
‘I vaguely remember a time in 2010 when we were talking about a bunch of things.’— Sen. Mike Lee of Utah
Meanwhile, according to the latest numbers at Predictit.org, the online betting market, the Republicans are cruising toward control of the House after next week’s midterms and have a growing chance of also winning the Senate. Which means they would have the means and opportunity as well as the motive to start taking the pruning shears, or an ax, to America’s retirement plan.
Make of that what you will.
Lee this week refused to disavow or deny his past remarks that he wanted “to phase out Social Security, to pull it up by the roots and get rid of it.” He made those remarks in 2010, and an audio recording just resurfaced — and is appearing in a (video) attack ad in Utah, where Lee is up for re-election.
See: Senate election in Utah emerges as referendum on direction Trump has taken Republican Party
Also: Sen. Mike Lee tries to distance himself from Trump in Utah debate vs. independent Evan McMullin
Challenged about the remarks, Lee told an interviewer late last month, “I don’t recall ever having advocated for dismantling those [programs]. … I don’t recall advocating for dismantling them.” He added, “I vaguely remember a time in 2010 when we were talking about a bunch of things.”
Another clip exists showing Lee making other alarming remarks about what he would like to do to Social Security if he ever got his hands on it. “We have to start making some very difficult, some very drastic decisions about Social Security,” he said (also back in 2010). While he said those already receiving benefits should have those benefits left intact, “those who have not yet retired but will be retiring in the next 10 to 20 years need to be told right now, so they can start planning ahead, you have to start making some changes.”
Changes, he said, should include raising the age at which those who have paid into Social Security become eligible for benefits. That’s a cut in benefits for each future beneficiary, no matter what people call it.
(To be clear, Lee has said he doesn’t want to cut benefits for Americans who have already retired.)
See: Democrats in Utah want to beat Mike Lee so badly they’re backing a (former) Republican for U.S. Senate
Lee is not alone in wanting changes to Social Security. Fellow Senate Republican Ron Johnson of Wisconsin, one of his party’s ardent fans of anarcho-capitalist author Ayn Rand, is on record as wanting the program turned into “discretionary” federal spending.
Sen. Rick Scott of Florida, who as a private–sector businessman once oversaw the biggest fraud against Medicare in history, is on record as wanting to introduce an automatic five-year “sunset” on all federal programs, including Social Security and Medicare. “If a law is worth keeping, Congress can pass it again,” Scott said.
Meanwhile eight other GOP senators say they want to “rescue” America’s retirement program with unspecified, er, measures … to be decided upon behind closed doors.
That proposal, put forward by Lee’s fellow Utah senator Mitt Romney, is also being championed by occasional Republican maverick Lindsey Graham, who earlier year spoke out for lower Social Security benefits for some to help “save” the program.
Among the other senators supporting Romney’s bill is Kyrsten Sinema, the Arizona Democrat who recently used her pivotal vote to save those important special tax breaks America offers to private-equity honchos, hedge-fund tycoons and venture capitalists. (The carried-interest loophole, designed just for them, cuts their top rate of income tax nearly in half.)
Naturally if you give billionaires a near-50% cut in their tax rates, the money has got to come from somewhere. And why not Grandma?
There is, actually, no reason to cut Social Security benefits unless you want to. The program can be maintained through other changes, such as ending the payroll-tax cap; investing the trust fund at least in part in stocks, as every other pension plan does; levying a wealth tax on all assets; increasing high-skilled immigration; or issuing bonds.
It will be interesting if, instead, the next Congress chooses to start cutting benefits. And if the voters who were perfectly well-informed in advance suddenly squeal with shock.
BRAZIL
Petrobras Set for Political Uproar as Board Approves $8.5 Billion Dividend
Mariana Durao and VinÃcius Andrade
Thu, November 3, 2022
(Bloomberg) -- Petrobras announced another blockbuster dividend payment, rewarding shareholders at a moment of growing concern that Luiz Inacio Lula da Silva’s return to power in Brazil will bring the bonanza to a halt.
The state-run oil company’s board approved dividends of 3.3489 reais per share, totaling 43.7 billion reais ($8.5 billion), according to a regulatory filing Thursday. It also reported 46.1 billion reais in net income for the third quarter, down from the previous quarter but higher than a year ago, it said in a separate filing.
Politicians from Washington to London have been lashing out at oil companies for funneling windfall profits to investors while consumers suffer from higher energy prices. In Brazil, Rio de Janeiro-based Petrobras has come under attack from across the political spectrum for failing to contain fuel price inflation. Lula has vowed to invest more in domestic refining to avoid relying on imported fuel, and have the company focus more on national development.
While the dividends represent a slowdown from the colossal $17 billion payout in the previous quarter, it means the total for 2022 stands at around 180 billion reais, well above last year’s record dividends of 101.4 billion reais.
“It’s almost impossible for Petrobras to sustain payouts to holders at these levels,” said Leonardo Rufino, a portfolio manager at Mantaro Capital in Rio de Janeiro. “Now the focus will shift to Lula’s nominations and, if a reasonable name is chosen, we could start ruling out the worst case.”
Shares have plunged 8% so far this week after Lula’s narrow victory on Oct. 30.
Brazil’s main oil union, known as FUP, and an association of oil workers who are also shareholders, Anapetro, pledged to contest the massive dividends in court even before it was announced. They argue that dividends are much bigger than investments by the state-controlled company, and that they undermine its long-term plans. Petrobras has invested $7 billion so far this year, it said.
“The bloodshed has returned to Petrobras,” Gleisi Hoffmann, a prominent lawmaker and the president of Lula’s Workers’s Party, said earlier on Thursday. “We don’t agree with this policy that takes away the company’s capacity to invest and only enriches shareholders.”
The dividends are compatible with the company’s financial sustainability in the short, medium and long terms and in line with the commitment to create value for society and shareholders, Petrobras said in a statement. Sales remained in line with the second quarter despite lower oil prices, which were compensated by higher demand for refined products in Brazil.
Petroleo Brasileiro SA, as it is formally known, was at the center of Brazil’s presidential elections this year. Its robust profits and payouts were slammed by both Lula and President Jair Bolsonaro during the campaign.
According to JPMorgan Chase & Co., which downgraded Petrobras shares to neutral from overweight following Bolsonaro’s defeat, the change in power brings uncertainties, including what will happen with the existing dividend policy.
“The dividend bonanza could be starting to peak if we assume the new administration will focus on building new refining capacity,” said Fernando Valle, an analyst at Bloomberg Intelligence, adding that the next government could take steps to curb fuel inflation.
Petrobras Set for Political Uproar as Board Approves $8.5 Billion Dividend
Mariana Durao and VinÃcius Andrade
Thu, November 3, 2022
(Bloomberg) -- Petrobras announced another blockbuster dividend payment, rewarding shareholders at a moment of growing concern that Luiz Inacio Lula da Silva’s return to power in Brazil will bring the bonanza to a halt.
The state-run oil company’s board approved dividends of 3.3489 reais per share, totaling 43.7 billion reais ($8.5 billion), according to a regulatory filing Thursday. It also reported 46.1 billion reais in net income for the third quarter, down from the previous quarter but higher than a year ago, it said in a separate filing.
Politicians from Washington to London have been lashing out at oil companies for funneling windfall profits to investors while consumers suffer from higher energy prices. In Brazil, Rio de Janeiro-based Petrobras has come under attack from across the political spectrum for failing to contain fuel price inflation. Lula has vowed to invest more in domestic refining to avoid relying on imported fuel, and have the company focus more on national development.
Read more: Big Oil Lambasted for Handing Record Profits to Investors
While the dividends represent a slowdown from the colossal $17 billion payout in the previous quarter, it means the total for 2022 stands at around 180 billion reais, well above last year’s record dividends of 101.4 billion reais.
“It’s almost impossible for Petrobras to sustain payouts to holders at these levels,” said Leonardo Rufino, a portfolio manager at Mantaro Capital in Rio de Janeiro. “Now the focus will shift to Lula’s nominations and, if a reasonable name is chosen, we could start ruling out the worst case.”
Shares have plunged 8% so far this week after Lula’s narrow victory on Oct. 30.
Brazil’s main oil union, known as FUP, and an association of oil workers who are also shareholders, Anapetro, pledged to contest the massive dividends in court even before it was announced. They argue that dividends are much bigger than investments by the state-controlled company, and that they undermine its long-term plans. Petrobras has invested $7 billion so far this year, it said.
“The bloodshed has returned to Petrobras,” Gleisi Hoffmann, a prominent lawmaker and the president of Lula’s Workers’s Party, said earlier on Thursday. “We don’t agree with this policy that takes away the company’s capacity to invest and only enriches shareholders.”
The dividends are compatible with the company’s financial sustainability in the short, medium and long terms and in line with the commitment to create value for society and shareholders, Petrobras said in a statement. Sales remained in line with the second quarter despite lower oil prices, which were compensated by higher demand for refined products in Brazil.
Petroleo Brasileiro SA, as it is formally known, was at the center of Brazil’s presidential elections this year. Its robust profits and payouts were slammed by both Lula and President Jair Bolsonaro during the campaign.
According to JPMorgan Chase & Co., which downgraded Petrobras shares to neutral from overweight following Bolsonaro’s defeat, the change in power brings uncertainties, including what will happen with the existing dividend policy.
“The dividend bonanza could be starting to peak if we assume the new administration will focus on building new refining capacity,” said Fernando Valle, an analyst at Bloomberg Intelligence, adding that the next government could take steps to curb fuel inflation.
A major hedge fund just warned that hyperinflation could lead to ‘global societal collapse’—and it blames the central bank
Tristan Bove
Thu, November 3, 2022
The world’s worst financial crisis in decades may be right on our doorstep.
Rising inflation and the largest interest rate hikes globally in two decades have set the stage for the biggest economic upheaval since World War II, according to Elliott Management, a major hedge fund that manages nearly $56 billion in assets.
A unique and “extraordinary” set of economic conditions is steering the globe toward a crisis worse than any of the stock market crashes or energy shocks of the past 70 years, Elliott warned in a recent letter to clients, the Financial Times reported Wednesday.
The letter acknowledged, however, that the dire situation isn’t guaranteed. But some degree of economic downturn beginning next year is looking increasingly likely as central banks, including the U.S. Federal Reserve, have responded to rising inflation with aggressive interest rate hikes that international institutions including the World Bank and the UN have warned could trigger a global recession.
But the outcome could be even worse than that, according to Elliott, which claimed central banks sparked the inflation crisis when they loosened monetary policy in the early days of the COVID-19 pandemic.
The result of this looming economic spiral could even lead to “global societal collapse and civil or international strife,” according to Elliott.
Elliott declined Fortune’s request for comment.
Central banks in the spotlight
In its letter, Elliott accused policymakers of being “dishonest” about the real cause behind rising inflation, and of not taking responsibility for the part central banks played in creating it.
In 2020, many central banks—including the Fed, the U.K.’s Bank of England, and the European Central Bank—all lowered their interest rates to record lows of near-zero in an attempt to spur growth, after interest rates had already spent a decade at historical lows following the 2008 financial crisis.
That ultra-loose monetary policy countered the economic drag created by stay-at-home orders and business closures. But interest rates staying too low for too long can create additional economic risks if they ignite excessive growth and uncontrolled inflation.
The long-term consequence of the low-rate era could set the world on a “path to hyperinflation,” Elliott wrote, a rate of inflation that is rapid, self-sustaining, and largely uncontrolled, commonly defined as a monthly inflation rate of at least 50%.
Hyperinflation is extremely rare globally, as a monthly 50% inflation rate would translate to an annual rate of 12,875%, well above the current annual U.S. inflation rate of 8.2%.
High-profile economists including Mohamed El-Erian, president of Queens’ College, Cambridge, criticized the Federal Reserve last year in a Washington Post op-ed for keeping interest rates at near-zero for too long.
Low interest rates were “once needed and effective,” El-Erian wrote, but by the middle of 2021 they risked becoming “increasingly counterproductive for the economy” and could fuel a “perfect storm” of high inflation, slow growth, and financial instability.
Former Treasury Secretary Larry Summers has also criticized the Fed’s monetary stance, warning last year that the central bank was at risk of “dangerous complacency” over inflation owing to the protracted period of record-low rates.
Both El-Erian and Summers warned that if rates were kept low for long enough, runaway inflation could force the Fed into a knee-jerk monetary tightening stance that could severely hurt the economy.
Tristan Bove
Thu, November 3, 2022
The world’s worst financial crisis in decades may be right on our doorstep.
Rising inflation and the largest interest rate hikes globally in two decades have set the stage for the biggest economic upheaval since World War II, according to Elliott Management, a major hedge fund that manages nearly $56 billion in assets.
A unique and “extraordinary” set of economic conditions is steering the globe toward a crisis worse than any of the stock market crashes or energy shocks of the past 70 years, Elliott warned in a recent letter to clients, the Financial Times reported Wednesday.
The letter acknowledged, however, that the dire situation isn’t guaranteed. But some degree of economic downturn beginning next year is looking increasingly likely as central banks, including the U.S. Federal Reserve, have responded to rising inflation with aggressive interest rate hikes that international institutions including the World Bank and the UN have warned could trigger a global recession.
But the outcome could be even worse than that, according to Elliott, which claimed central banks sparked the inflation crisis when they loosened monetary policy in the early days of the COVID-19 pandemic.
The result of this looming economic spiral could even lead to “global societal collapse and civil or international strife,” according to Elliott.
Elliott declined Fortune’s request for comment.
Central banks in the spotlight
In its letter, Elliott accused policymakers of being “dishonest” about the real cause behind rising inflation, and of not taking responsibility for the part central banks played in creating it.
In 2020, many central banks—including the Fed, the U.K.’s Bank of England, and the European Central Bank—all lowered their interest rates to record lows of near-zero in an attempt to spur growth, after interest rates had already spent a decade at historical lows following the 2008 financial crisis.
That ultra-loose monetary policy countered the economic drag created by stay-at-home orders and business closures. But interest rates staying too low for too long can create additional economic risks if they ignite excessive growth and uncontrolled inflation.
The long-term consequence of the low-rate era could set the world on a “path to hyperinflation,” Elliott wrote, a rate of inflation that is rapid, self-sustaining, and largely uncontrolled, commonly defined as a monthly inflation rate of at least 50%.
Hyperinflation is extremely rare globally, as a monthly 50% inflation rate would translate to an annual rate of 12,875%, well above the current annual U.S. inflation rate of 8.2%.
High-profile economists including Mohamed El-Erian, president of Queens’ College, Cambridge, criticized the Federal Reserve last year in a Washington Post op-ed for keeping interest rates at near-zero for too long.
Low interest rates were “once needed and effective,” El-Erian wrote, but by the middle of 2021 they risked becoming “increasingly counterproductive for the economy” and could fuel a “perfect storm” of high inflation, slow growth, and financial instability.
Former Treasury Secretary Larry Summers has also criticized the Fed’s monetary stance, warning last year that the central bank was at risk of “dangerous complacency” over inflation owing to the protracted period of record-low rates.
Both El-Erian and Summers warned that if rates were kept low for long enough, runaway inflation could force the Fed into a knee-jerk monetary tightening stance that could severely hurt the economy.
Tesla’s Elon Musk faces trial, again—this time over his $56 billion paycheck that’s the ‘largest in human history’
Christiaan Hetzner
Wed, November 2, 2022
Elon Musk’s takeover of Twitter is already off to a rocky start, and his decision to bring in Tesla employees could come back to haunt him.
The multitasking CEO faces yet another trial before the very Delaware judge who forced him to honor his contract with Twitter’s board to purchase the social media company. This time, however, it’s about something much more personal: his own pay.
Starting Nov. 14, Elon Musk as well as present and former directors must stand before the state’s Court of Chancery’s Kathaleen McCormick to defend a mammoth compensation package handed out in 2018 that entitled him to up to $55.8 billion in stock options.
Unlike the Twitter case, it is expected this will not likely result in a prior settlement.
Plaintiff Richard Tornetta is arguing in a 96-page legal brief that the board failed to perform its fiduciary duty to minority investors by green-lighting “the largest compensation grant in human history”—even though the grant was put to a shareholder vote and approved.
At its heart is the issue whether Elon Musk can be considered a controlling shareholder on both sides of the transaction—as chairman of the board owning a 22% stake at the time, as well as the beneficiary of the package. If he were, the deal would be considered a conflicted transaction subject to different governance rules.
Close ties
“Musk’s problem is that he has close ties to a lot of directors,” said Tulane University law professor Ann Lipton. “If you are deemed to be a controller, conflicted transactions cannot be cleansed with a shareholder vote alone. You also need a disinterested and independent board committee, and a more formalized process, which wasn’t followed here.”
Toretta argues Musk was furthermore not truly incentivized, since the milestone payments set out also happened to align with goals already baked into the company’s projected business plan.
While a ruling rests on decisions that took place four years ago, recent events at Twitter could play a role. Musk has commandeered a staff of reportedly 50 Tesla employees including senior managers like Ashok Elluswamy as his own personal aides-de-camp in restructuring Twitter’s operations.
According to CNBC, workers at the electric carmaker are pressured to help with projects at Musk’s other companies for no additional pay because it is seen as good for their careers or because the work is regarded as helping a related transaction or project.
While indicative of a complete lack of trust in Twitter's personnel, it may also establish a pattern of behavior in which Musk can simply divert Tesla resources at whim and no one on Tesla’s “supine” board, as Tornetta calls it, will stand up to it.
“It will help,” argued Lipton. “It just shows how conflicted he is.”
Nevertheless the Tulane professor said she liked Musk's chances on the case a lot better than when Twitter sued him, demanding he honor his contractual word to purchase the company for $44 billion.
The Tornetta trial arose after the court’s vice chancellor, Joseph Slights, back in September 2019 ruled against Tesla’s attempt to dismiss the case and ordered it to proceed.
He cited the sheer size of the pay package as well as the risk minority investors were railroaded by a pliant company board that feared retribution from Musk, a hungry “800-pound gorilla,” if he did not get its way.
“This has the potential to be a very important case from an executive compensation standpoint,” University of Pennsylvania law professor Jill Fisch told Bloomberg.
This story was originally featured on Fortune.com
Christiaan Hetzner
Wed, November 2, 2022
Elon Musk’s takeover of Twitter is already off to a rocky start, and his decision to bring in Tesla employees could come back to haunt him.
The multitasking CEO faces yet another trial before the very Delaware judge who forced him to honor his contract with Twitter’s board to purchase the social media company. This time, however, it’s about something much more personal: his own pay.
Starting Nov. 14, Elon Musk as well as present and former directors must stand before the state’s Court of Chancery’s Kathaleen McCormick to defend a mammoth compensation package handed out in 2018 that entitled him to up to $55.8 billion in stock options.
Unlike the Twitter case, it is expected this will not likely result in a prior settlement.
Plaintiff Richard Tornetta is arguing in a 96-page legal brief that the board failed to perform its fiduciary duty to minority investors by green-lighting “the largest compensation grant in human history”—even though the grant was put to a shareholder vote and approved.
At its heart is the issue whether Elon Musk can be considered a controlling shareholder on both sides of the transaction—as chairman of the board owning a 22% stake at the time, as well as the beneficiary of the package. If he were, the deal would be considered a conflicted transaction subject to different governance rules.
Close ties
“Musk’s problem is that he has close ties to a lot of directors,” said Tulane University law professor Ann Lipton. “If you are deemed to be a controller, conflicted transactions cannot be cleansed with a shareholder vote alone. You also need a disinterested and independent board committee, and a more formalized process, which wasn’t followed here.”
Toretta argues Musk was furthermore not truly incentivized, since the milestone payments set out also happened to align with goals already baked into the company’s projected business plan.
While a ruling rests on decisions that took place four years ago, recent events at Twitter could play a role. Musk has commandeered a staff of reportedly 50 Tesla employees including senior managers like Ashok Elluswamy as his own personal aides-de-camp in restructuring Twitter’s operations.
According to CNBC, workers at the electric carmaker are pressured to help with projects at Musk’s other companies for no additional pay because it is seen as good for their careers or because the work is regarded as helping a related transaction or project.
While indicative of a complete lack of trust in Twitter's personnel, it may also establish a pattern of behavior in which Musk can simply divert Tesla resources at whim and no one on Tesla’s “supine” board, as Tornetta calls it, will stand up to it.
“It will help,” argued Lipton. “It just shows how conflicted he is.”
Nevertheless the Tulane professor said she liked Musk's chances on the case a lot better than when Twitter sued him, demanding he honor his contractual word to purchase the company for $44 billion.
The Tornetta trial arose after the court’s vice chancellor, Joseph Slights, back in September 2019 ruled against Tesla’s attempt to dismiss the case and ordered it to proceed.
He cited the sheer size of the pay package as well as the risk minority investors were railroaded by a pliant company board that feared retribution from Musk, a hungry “800-pound gorilla,” if he did not get its way.
“This has the potential to be a very important case from an executive compensation standpoint,” University of Pennsylvania law professor Jill Fisch told Bloomberg.
This story was originally featured on Fortune.com
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