CRIMINAL CAPITALI$M; I SPY

Amazon’s Ring doorbell was used to spy on customers, FTC says in privacy case

In the agency’s latest effort to hold big tech accountable, the company agreed to settle the privacy violations for $5.8m

Reuters
Thu 1 Jun 2023

 
A former employee of Amazon’s Ring doorbell camera unit spied on female customers for months in 2017 with cameras placed in bedrooms and bathrooms, the Federal Trade Commission said in a court filing on Wednesday when it announced a $5.8m settlement with the company over privacy violations.

Amazon also agreed to pay $25m to settle allegations it violated children’s privacy rights when it failed to delete Alexa recordings at the request of parents and kept them longer than necessary, according to a court filing in federal court in Seattle that outlined a separate settlement.



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The FTC settlements are the agency’s latest effort to hold big tech accountable for policies that critics say place profits ahead of privacy.

Amazon, which purchased Ring in April 2018, pledged to make some changes in its practices.

“While we disagree with the FTC’s claims regarding both Alexa and Ring, and deny violating the law, these settlements put these matters behind us,” Amazon said in a statement.

Alvaro Bedoya, the FTC Commissioner, told Reuters the settlements should send a message to tech companies that their need to collect data was not an excuse to break the law. “This is a very clear signal to them,” he said.

The fines, totaling $30.8m, represent a fraction of Amazon’s $3.2bn first-quarter profit.

In its complaint against Amazon filed in Washington state, the FTC said that it violated rules protecting children’s privacy and rules against deceiving consumers who used Alexa. For example, the FTC complaint says that Amazon told users it would delete voice transcripts and location information upon request, but then failed to do so.

Amazon’s Ring cameras were used to spy on customers for months in 2017, the Federal Trade Commission said. Photograph: Jessica Hill/AP

In one instance in 2017, employees of Ring viewed videos made by at least 81 female customers and Ring employees using Ring products. “Undetected by Ring, the employee continued spying for months,” the FTC said.

A colleague noticed the misconduct and the employee was eventually terminated.

The FTC also said Ring gave employees unrestricted access to customers’ sensitive video data said “as a result of this dangerously overbroad access and lax attitude toward privacy and security, employees and third-party contractors were able to view, download and transfer customers’ sensitive video data for their own purposes”.

As part of the FTC agreement with Ring, which spans 20 years, Ring is required to disclose to customers how much access to their data the company and its contractors have.

In February 2019, Ring changed its policies so that most Ring employees or contractors could only access a customer’s private video with that person’s consent.

Amazon’s main UK division pays no corporation tax for second year in a row

Amazon UK Services received tax credit of £7.7m for investment in infrastructure under Rishi Sunak’s super-deduction scheme

Pretax profits at Amazon UK Services rose 9% to almost £222m in 2022 as sales rose nearly 8% to £6.56bn.

 Photograph: Nick Ansell/PA

Sarah Butler
Guardian
Thu 1 Jun 2023 

Amazon’s main UK division has paid no corporation tax for the second year in a row after benefiting from tax credits on a chunk of its £1.6bn of investment in infrastructure, including robotic equipment at its warehouses.

Amazon UK Services, which employs more than half of the group’s UK workers, received a tax credit of £7.7m in the year to the end of December, according to accounts filed at Companies House, advance details of which were shared by Amazon with the Guardian.

The government’s “super-deduction” scheme for businesses that invest in infrastructure was introduced by Rishi Sunak when he was chancellor. It allowed companies to offset 130% of investment spending on plant and machinery against profits for two years from April 2021. Amazon booked a credit of £1.13m in 2021 under the scheme.

It is understood that as a result, Amazon’s main UK division paid no corporation tax but other parts of the group’s UK business did pay an undisclosed amount.

Pretax profits at the main division rose about 9% to almost £222m in 2022 as sales rose by nearly 8% to £6.56bn.

Paul Monaghan, the chief executive of the Fair Tax Foundation, criticised Amazon for failing to disclose its total profits in the UK and the corporation tax paid on that despite calls for more transparency from tax justice campaigners and shareholders.

He said: “Over the last decade, Amazon has grown its market domination across the globe on the back of income that is largely untaxed – allowing it to unfairly undercut local businesses that take a more responsible approach.

“We now have a situation where Amazon UK Services is not only not paying tax, but is being handed tax credits for investment that almost certainly would have happened anyway. Tax credits for old rope, if you will. These super-deductions have not only wiped out the corporation charge for the last two years but will likely do so again in 2023 and possibly 2024.”

An Amazon spokesperson said: “Amazon UK Services is only a small part of our business, and when you look across all our UK companies we paid corporation tax last year. The reduction in tax for Amazon UK Services specifically is a result of our significant capital investments in the UK.”

Amazon’s UK fulfilment centre in Peterborough: the online retailer invested £1.6bn in infrastucture in 2022. Photograph: Chris Radburn/PA

Details of Amazon’s tax benefits emerged as the online retailer and digital services provider said that its employee numbers had stalled at 75,000 in 2022, having almost tripled from about 27,500 in 2018 after adding 10,000 new roles a year in 2021 and 2020.

Amazon and other digital players have been making cuts as spending online has shrunk since the height of the pandemic, after high streets reopened and restrictions on socialising and office working eased.

In January the business announced plans to shut three of its 30-plus UK warehouses and seven small delivery sites, affecting more than 1,300 jobs. It closed the Book Depository online bookseller in April as part of those efforts.

However, Amazon said it had invested £12bn in the UK last year, spending £1.6bn on infrastructure including more robotics for its warehouses and a software development centre in Swansea for its Veeqo division, which provides online tools for sellers.

Sales across the group’s entire UK network rose £1bn over the year, more than 4%, to £24bn last year, making it bigger than Asda, the UK’s third-largest supermarket, and about twice the size of Marks & Spencer, according to group’s US filings

Amazon said it paid £781m in total taxes in the UK, including business rates, employer’s national insurance contributions and corporation tax, up from £648m a year before.

The UK tax credit at Amazon UK Services was part of €937m (£805m) of tax credits across Europe last year, according to accounts for the group’s Luxembourg-based retail division published in March, after just over €1bn of benefits the year before.


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The credits came after Amazon EU Sarl – an entity that includes the group’s UK, German, Spanish, Italian and other EU retail interests – more than doubled losses to €4.3bn, from €2.1bn a year before, as sales slipped back to €50.9bn from €51.3bn a year before.

Monaghan said income was being “shunted to Luxembourg” where the subsidiary was “generating enormous tax reliefs year after year that will be used in the future to ensure that little or no tax continues to be paid there either.”

However, Amazon said that revenues, profits and taxes for the bulk of its UK business were recorded and paid in the UK.

“Our retail and AWS [Amazon Web Services] revenues – the bulk of our business – are part of Amazon EU Sarl and AWS EMEA Sarl, both of which have a UK branch. Our UK revenues, associated expenses, profits and taxes are recorded here in the UK and reported directly to HMRC,” the company said in a statement.

Amazon has previously said it pays hundreds of millions of euros in corporation tax across Europe.

‘Loss for Iran’s wildlife’: woman jailed in Tehran calls for environmentalists’ release

Seven environmentalists from the Persian Wildlife Heritage Foundation remain in jail in Iran. Photograph: Handout

Aras Amiri, a British Council employee, was held in Evin prison with seven members of the Persian Wildlife Heritage Foundation

Patrick Wintour, Diplomatic editor

THE GUARDIAN

Thu 1 Jun 2023 00.01 BST

Aras Amiri has kept a low profile since she was released from Iranian detention two years ago, avoiding interview requests after returning to the UK. But now, the British Council employee, who spent three years in Tehran’s notorious Evin prison, wants to speak. An injustice has compelled her: the detention of seven friends and environmentalists she left behind.

Kept in solitary confinement for 69 days, Amiri was allowed to return to Britain after serving just under a third of a 10-year prison sentence. In the women’s ward, she not only met fellow British-Iranian Nazanin Zaghari-Ratcliffe, but Niloufar Bayani and Sepideh Kashani, two of the seven members of the Persian Wildlife Heritage Foundation in jail since 2018. Of the nine originally jailed, one has been released after serving his two-year sentence and another, the founder of the group, Kavous Seyed Emami, died in his prison cell only two weeks after his arrest. The authorities called it suicide, but produced no autopsy.

Aras Amiri spent three years in prison in Tehran, where she was confined with the group of environmentalists. Photograph: Family photo.

Amiri said she had previously turned down interview requests because she finds newspaper framing of Iranian prisoners reductionist and populist. But the only crime of her environmentalist friends, she said, had been to try to save nature from extinction.

“They are so close to my heart,” she said. “Can you imagine these people were always under the sky and now, for such a long time, being in a confined space? Lack of freedom is very difficult for anyone, but maybe for those that are used to living in nature, it is made harder.”

Amiri said she learned about Iran’s environment and wildlife through conversations with them in prison, where they held informal workshops for the detainees. “They made prison a better place just by their presence,” she said.

“They always taught if you want to do conservation in a sustainable way, you need local people to trust you so that they continue to support the work, and that applies to conserving the Asiatic cheetah, or dolphins in Qeshm Island, or wild sheep in Larestan, or the Iranian leopard in Golestan national park,” said Amiri. “What makes it more appalling is that the more their imprisonment is prolonged, the greater there is an irreversible loss for Iran’s wildlife, and Iran’s wildlife is also the world’s wildlife.”

For World Environment Day on 5 June, Amiri has helped organise an event at which leading environmentalists will pay tribute to the importance of the group’s work, and again call for their release.

Dr Christian Walzer, now director of health at the Wildlife Conservation Society in New York, who has worked with members of the Iranian group since 2007, said they were “really instrumental” in work to get the near-extinct Asiatic cheetahs defined as a distinct subspecies and to get collars on the animals to track their movement across huge areas.

Unfenced roads, drought, the decreasing population of the prey species, and habitat loss have all led to the decline to as few as 12 Asiatic cheetahs, although Walzer said the precise data was unclear. In March, a female cheetah pregnant with three cubs was killed by a car. Walzer said since the group’s arrest, international cooperation with Iran had withered.

Asked why this group was targeted, he said: “It is incomprehensible. … Putting up camera traps [treated as espionage by their accusers] is standard practice all over the world. We might talk about politics, but just as normal chit-chat. They would talk about rock climbing or fixing Land Cruisers so we could chase animals.”

The imprisoned environmentalists were involved in work to save the endangered Asiatic cheetah. 

Photograph: Houman Jowkar

If there was anything distinctive about the group, it was that some members, such as Morad Tahbaz, a British-Iranian-American trinational, had international connections.

Asked why they were arrested, Amiri said: “Everyone has their own reading. Often stopping the exploitation of nature conflicts with those in power, including governments and big corporations. This is true in Iran and elsewhere ... It is hard to find a direct logic. Sometimes it can be random: perhaps it is to create fear.”

Homan Jowkar, one of the group of seven members of the Persian Wildlife Heritage Foundation imprisoned in Iran, with a Persian leopard. Photograph: Houman Jowkar

But Amiri cannot understand why the group has been treated so harshly, even by the standards of the Islamic Revolutionary Guard Corps. Two weeks of solitary confinement is difficult, she knows from her own experience, so two years is unimaginable. One of the prisoners, Bayani, sent a letter detailing the interrogation techniques used against her, including sexual threats and warnings that she would end up dead.

Amiri was arrested after she had flown to see her grandmother, who was in a coma in Tehran. She was charged with forming a group to subvert the regime. She said all her work at the British Council had focused on fostering knowledge of Iranian art and artists in the UK. “It was transparent, and agreed with the foreign ministry.” Despite living in the UK since the late 80s, she had an Iranian passport, and chose not to campaign for her release in the UK, hoping discreet lobbying by her family would make the judiciary grant her appeal.

“The principle for me was not to collaborate if I could tolerate the pressure. It is hard if the threats are to your life and people that you know and love,” she said. “The interrogators know their job very well.”

Undaunted: the untold story of women in American journalism

Charlotte Curtis in the New York Times newsroom. Photograph: Penguin Random House

Brooke Kroeger’s eye-opening new book looks back at the many women in journalism who fought to have their voices heard in a male-dominated industry

Veronica Esposito

THE GUARDIAN

Wed 31 May 2023

“Getting the cold call email from him was crazy,” said author and journalist Brooke Kroeger, telling me about how her latest project, Undaunted – which recounts the two-century-long story of women in journalism – originated with a phone call from a male editor. “I had some idea of who he was, I was aware of him. I knew he was senior, and I looked him up pretty quick.”

The man in question was Jonathan Segal, a vice-president at Knopf who has published seven books that went on to receive Pulitzer prizes. He was offering Kroeger the assignment of a lifetime. Segal had determined that there was no good trade book available covering the history of women in journalism in the United States, and he was hoping Kroeger would be willing to write it.

“He was looking for a history of women in journalism but couldn’t find one, and he thought this book should exist,” said Kroeger. “You don’t get invitations like that all the time. I mean, this is just not my karma at all.”

Kroeger shared that the only comparable non-academic title she could find was 1936’s Ladies of the Press by Ishbel Ross, a novelist and author of non-fiction books known for bringing to prominence unsung women like Elizabeth Blackwell, who is remembered as the first woman in the US to receive a medical degree. For nearly 100 years, no new book for a wide audience had been published documenting the contributions of women to journalism. It was certainly time for an update, especially considering that, while Ross’s Ladies as a substantial accomplishment, the work can be critiqued for, among other things, not including a single Black woman among the 300 journalists that it celebrates.

With the invitation from Segal, Kroeger prepared to put off her plans for retirement and take on a major new project. She noted that the substantial work on what would eventually become Undaunted was somewhat lightened by her 40-year career as a journalist. “I’ve been working on this material in one way or another for a long time, so I was prepared in a way to write this. And also, I’ve lived a lot of it in its own right, and a lot of my work has traced these avenues. So it wasn’t altogether new.”

Starting in the 1840s with pioneering journalist Margaret Fuller, Undaunted aims to document how women have changed American journalism. This includes, for instance, how women transformed war reporting during the second world war, when they were mostly only permitted to cover the home front. “Most were confined to the civilian story, so, once confined, they made the most of that,” said Kroeger. “They showed initiative and helped create a form, because now I think that’s become as important a part of war reporting as any other, which I don’t think was the case then. That’s a balance that’s tipped.” Kroeger went on to explain how women have also created change in news organizations, transforming how media institutions “change the way you care for the people who do the work”.

Margaret Fuller circa 1840. Photograph: Hulton Archive/Getty Images

As Kroeger makes clear in the book’s preface, Undaunted is not an attempt to create a new canon so much as it wants to relate how women have managed to succeed in a field that “men have dominated in the 180 years since mass media began”. Guided by questions like “Which stories best illustrated what women were up against in their professional lives?” and “Assuming talent and hard work, how much did background, privilege, strategy, charisma, style, looks, advocacy, connections, or luck figure in their ascent?” the book focuses heavily on stories of transformation and innovation.

“My goal to make present the extent to which a women’s point of view changes institutions,” said Kroeger. “I think I make a pretty good case for how they have changed American journalism. It’s the experiences of women in the field: what they overcame, what they did, what they brought. Those would be the three goals. Not to canonize new people – although it would be great if people get their due. It’s a satellite view, not a helicopter view.”

Another thing that Undaunted demonstrates is that, while a certain number of truly gifted women were able to find a way to succeed in a male-dominated field, it is only recently that the nature of journalism has changed, granting greater equality and access beyond those fortunate few. According to Kroeger, this is something that has only really come about in the past few decades, where women have become less and less of token figures or individuals relegated to certain undesirable beats, instead becoming central players in the field.

“I did an analysis of the Pulitzer prizes won every year – I’m really a nerd, you know, a super nerd,” said Kroeger. “So it takes 20 years for the first woman to win a Pulitzer prize – Anne O’Hare McCormick, 1937 – and then 14 more until Marguerite Higgins wins it for her coverage of the Korean war. Contrast that to analysis I did of the 10 best stories of the year – for 2000 to 2009, four of 10 were by women, and for the next group up to 2020, seven of the 10 were by women. How impressive is that?”

In addition to getting into major transformation in the field of journalism, Undaunted is also a delight for the many personal stories it relates. Kroeger shared how one theme she discovered was that “women are flowering after 40, which I loved about this book!” She was also impressed by the degree to which women were able to make the most of their people skills to succeed despite incredible amounts of bias and sexism. “People like Margaret Fuller, and so many of these women, are master networkers. I feel like that’s really great career advice. I mean, who gets to do that in 1840?!”

Ultimately, Kroeger told me she’s inspired by her own female journalism students, whom she believes represent incredible new talent that will continue to transform journalism in coming decades. And she’s also mindful that the nature of journalism is that it’s mostly meant to disappear – meaning that maybe one of those students will eventually succeed her in writing the next chapter of the story. “Journalism is ephemera, we are meant to disappear, it’s OK, that’s the nature of the work. You can’t feel bad about that, because it’s all about the work today. When someone survives that, it’s really extraordinary.”

Undaunted is out now

How a Mexican state siphoned off millions – and a reporter risked her life to expose it

María Teresa Montaño Delgado was kidnapped while investigating suspicious contracts worth $300m awarded by the state of Mexico

María Teresa Montaño Delgado was kidnapped while investigating suspicious government contracts in the state of Mexico. Composite: Guardian Design/Alamy

LONG READ

by Nina Lakhani in Mexico City
THE GUARDIAN

Wed 31 May 2023

It was a muggy summer day when the veteran reporter María Teresa Montaño Delgado drove almost 450 miles from Toluca, capital of the state of Mexico (Edomex), to a rundown neighbourhood in Coatzacoalcos, an oil city on the Gulf coast.

Montaño carried with her a $35m contract for “specialist human capital management” with the government of Edomex – the last bastion of power for the Institutional Revolutionary Party (PRI) which has ruled the state uninterrupted for almost a century.

She double-checked the company address, which turned out to be a second-floor apartment in a pastel-pink residential building, on an unremarkable street with boarded-up bars and empty lots.

The company, one half of a consortium with contracts with three agencies worth about $55m – existed on paper, but there was no sign of any business operations or employees.

“I was shocked by the crumbling building, but it confirmed my suspicions: the contract was completely illogical,” said Montaño, founder and editor-in-chief of the independent news website the Observer. “This was a fake company, part of a scheme to embezzle huge amounts of public money … That’s why they tried to silence me.”

Coatzacoalcos seemed an unlikely location for a human resources company with multimillion-dollar contracts on the other side of the country. All the contracts were signed on 29 December 2018, at a time when a vicious turf war between rival cartels had helped make the port city one of the most violent places in Mexico.

When the Guardian visited in January, the seafront boulevard was lined with burned-out hotels, abandoned shopping malls and decrepit housing blocks, and the streets patrolled by marines. A few courageous women were out selling seafood cocktails and coconuts, but it looked like a hurricane had swept through downtown.

The $55m contracts weren’t the only questionable deals that Montaño had uncovered while trawling through the government’s information portal. In early 2021, Montaño had noticed other contracts worth millions of dollars with companies and individuals across Mexico – many for vaguely defined products and services available locally such as cleaning, office furniture, construction and computer software.

On paper, the companies and contracts looked legitimate but there were multiple “red flags”, according to Muna Dora Buchahin Abulhosn, a forensic accountant who has led investigations into state-run embezzlement schemes.

A cursory search on Google Maps found companies awarded lucrative contracts were often located in residential streets, abandoned lots and shopping malls. Some addresses were linked to several companies – or didn’t exist; other companies had no functioning website despite multimillion dollar contracts.

Montaño’s reporting was potentially embarrassing for the PRI, which is desperate to hold on to the state in elections on 4 June. But investigating corruption can be deadly in Mexico, particularly for local reporters.

Last year 15 journalists were killed in Mexico, making it the most dangerous country for the media apart from Ukraine. The violence – and the impunity that fuels it – has a chilling effect, with reporters routinely silenced by threats, bribes and blacklists blocking access to jobs and information.

María Teresa Montaño writes on her computer. Photograph: Ginnette Riquelme/Ginnette Riquelme for The Guardian

“The contracts were signed with companies far away to make it almost impossible for local journalists to physically verify. The government has so much control but I kept asking questions and downloading documents,” said Montaño. “That’s why I think I was kidnapped.”

On 13 August 2021, Montaño’s car broke down en route to a medical appointment in Toluca. She left it parked at a convenience store and took a bus to the clinic, close to the state congress building which is surrounded by surveillance cameras.

By the time she was finished it was just after 7.30pm. A huge rainstorm had broken and Montaño was soaking wet, when a white car that looked like a shared taxi signalled for her to get in.

Almost immediately, a skinny man in the passenger seat pulled out a revolver. “Don’t scream and you won’t die,” he said. In the back, a second man covered her eyes with her Covid mask and pulled up her jersey to expose her stomach and chest.

The driver added: “You’re the journalist, aren’t you?”

Fearing for her life, Montaño denied she was a reporter, but the kidnappers knew where she lived and even where she’d left her car.

“Is your son home?” the driver asked as they pulled up at her gated housing complex.

A residential building in Coatzacoalcos, at the address on a $35m contract for ‘specialist human capital management’ signed by the government of the state of Mexico. Photograph: Nina Lakhani/The Guardian


The two assailants ransacked Montaño’s tiny home, before leaving her blindfolded on a dusty lot a few miles away at about 11pm. She had no phone and no money, but following a distant light, she found her way to a shopping mall and called her family.

She reported the kidnapping to the authorities immediately. It was only later that she realised the assailants had taken her laptops, phone, voice recorder, camera, notebooks and documents – but not the TV or other valuables.

“They stole my whole investigation. The message was clear, but I survived – and this information is too important to keep to myself. Before the people go to vote, they need to know.”

Over the past six months, the Guardian and Organized Crime and Corruption Reporting Project (OCCRP) have worked with Montaño as part of an initiative by the Paris-based non-profit Forbidden Stories to continue the work of threatened and murdered journalists.

The team analysed dozens of state contracts issued during the current administration led by Alfredo del Mazo Maza – whose family has governed Edomex for 29 years – visited every company address and consulted experts on corruption and politics in Mexico.

As Edomex prepares to go to the polls on 4 June, the investigation can reveal that the outgoing government issued at least 40 contracts involving at least 15 front and shell companies worth more than $300m.

In some cases there was no company at the listed address: no sign, no workers and no infrastructure. In others, real companies were contracted for goods or services they had no expertise in. Several companies shared the same address and/or legal representatives. Unusually, many were awarded at the end of the year when most government employees are on leave. Freedom of information requests for evidence on each procurement was ignored.

The Del Mazo government said that it complied with the law at all times and all contracts were awarded through competitive tender to the “best provider”; it said it respected press freedom and journalists, and had no prior knowledge of Montaño’s kidnap.

All the contracts were authorized by the department of finance, which coordinates the state’s procurement process. Approached by the consortium for comment, the department said it was obliged by law to open tenders to companies across the country, and provided a dossier of photocopies of undated photos and documents purporting to prove that all the contractors were legitimate.


But further investigation revealed multiple inconsistencies and irregularities in the government’s evidence, including offices which were apparently not in use, or addresses in use by seemingly unrelated companies.

Together, the contracts illustrate a pattern of “acts and omissions” that suggest an embezzlement scheme involving public officials and private individuals, according to Buchahin, the forensic accountant.

In Monterrey, a city 600 miles north of Toluca, the company Sevacom was contracted to provide materials for workshops – such as jewellery-making, balloon decorating and dressmaking – by six different government agencies, including the governor’s office and department of rural affairs. The consortium found 12 identical contracts worth almost $5.2m. There is a business called Sevacom at the address on the contract, but it is a retail store selling household cleaning products. The owner denied receiving any public contracts or any knowledge of workshops. A website for Sevacom was created after the first contracts were awarded, but telephone calls, letters and messages to the contact details it contains went unanswered.

In its dossier, the Edomex government provided photocopied photographs of an unidentified warehouse and women receiving boxes of government aid, as well as photocopies of a social security letter and documents provided by two commercial certification companies. It provided no evidence that any workshops had taken place.

The address listed on a half-million-dollar outsourcing contract with a supposed construction company in Edomex was actually a tiny house belonging to a woman with a makeshift neighbourhood nail salon, who said she had never heard of the deal. In another case, a nearly $100,000 contract for elevator maintenance was awarded to an audiovisuals company. The mismatch between the firm’s specialism and the contract it won was another red flag, said Buchahin

The supposed HR company in Coatzacoalcos, Instituto C&A Intelligent, was awarded another three contracts worth $67m with an address in Edomex that doesn’t exist. The company was listed online at a different but nearby location - an office building on which the company logo has appeared and disappeared several times this year. A phone number listed for the company is out of service, emails to its address bounced back and the company website is defunct.

The Edomex government provided copies of photographs showing people standing outside the building. Consortium reporters visited the site four times over the past year, but saw no sign of activity in the building. On Monday, a neighbour said he saw workers reattaching the company sign to the building’s facade last week, adding that the building was mostly empty apart from a few residential renters.

The address for a company awarded four contracts for office furniture worth a total of $2.4m is an unattended office in a strip mall on the outskirts of the city of Querétaro, 120 miles north-west of Edomex, with no answering machine. The government provided photocopies of photos showing stacks of furniture ostensibly taken at a company warehouse in the state of Puebla. The consortium visited the address, and found a modest metal workshop, whose employees said they had no knowledge of the company.

The findings suggest a new version of an old embezzlement scheme.

María Teresa Montaño, smokes a cigarette while walking during a break. Photograph: Ginnette Riquelme/Ginnette Riquelme for The Guardian

In 2017, the Federal Audit Office (ASF) and investigative journalists uncovered an alleged multimillion-dollar embezzlement enterprise involving at least 11 federal government agencies, eight public universities and more than 120 fake companies registered in several states. The case, known as La estafa maestra or the master swindle, took place during the presidency of Enrique Peña Nieto, former governor of Edomex – and Del Mazo’s cousin.

No one was ever charged over the allegations, which implicated several institutions and PRI officials in Edomex. Peña Nieto has denied any wrongdoing.

Eric Sevilla. Photograph: Future Publishing/Getty Images

Such impunity has allowed the “modus operandi” to continue, said Buchahin, who previously led the ASF forensic accounting unit. Some of the companies implicated in the estafa maestra continue to receive government contracts, while officials suspected of wrongdoing were simply moved to new roles.

Alejandra del Moral. Photograph: Marco Ugarte/AP

Nine of the 40 contracts analysed by the Guardian involved the Edomex department of social development. Alejandra del Moral, who led the department in 2022, is running for governor. Eric Sevilla Montes de Oca, the 2018-2020 director, is currently president of the PRI in Edomex and running the governor’s election campaign. Neither Sevilla nor Del Moral responded to the allegations.

“This is a network of powerful senior officials who simulate contracts and payments which are supported by legal but unsupported invoices in order to get money out … It continues because they know nothing will happen, impunity is generalised. Everybody knows and nobody does anything. The state of Mexico is the most corrupt in the country, it’s where they get money for all the others,” said Buchahin.

Edomex is Mexico’s largest state by population, with 17 million people: a sprawling conurbation of dormitory communities, industrial sites and colonial pueblos wrapping around the capital city. It is home to members of the political, economic and criminal elites, but includes some of the country’s most dangerous municipalities – especially for women and girls.

Del Mazo Maza – whose grandfather, father and uncle have also governed the state – eked out an election victory in 2017 amid widespread allegations of fraud. Next week’s election matters because Edomex is the only state that the PRI – which ruled the country uninterrupted between 1929 and 2010 – has clung on to.

Governor Alfredo del Mazo Maza. Photograph: Mario Guzman/EPA

“The state of Mexico has both great political and symbolic value for the PRI – and their opponents,” said Rogelio Hernández, a political scientist at the College of Mexico. For the PRI, retaining the state would prove that it is still relevant as a party; for Morena – the party which is in government nationally but in opposition in the state – a victory would be a much-needed token of support for President Andrés Manuel López Obrador.

PRI’s success in Edomex is partly down to its control of the media. Most news outlets – and many journalists – depend on the state government for advertising and off-the-books monthly payments, known as chayotes, in exchange for non-critical coverage.

“Intimidating journalists has been a constant for many decades in the state of Mexico – just like chayotes. It’s how the PRI has been able to remain in power, and why there is virtually zero independent and investigative journalism in the state,” said Lenin Martell, media studies professor at the autonomous university of the state of Mexico.

Journalists who reject the status quo often pay a great personal and professional price.

Montaño has spent her whole career reporting on politics, crime and corruption in Edomex, mostly as a correspondent for national newspapers, and has a track record of irking powerful people.


But after refusing to accept an envelope of cash in early 2018, she started getting pressure from editors to send fewer freedom of information requests. Colleagues and sources cut her off and it became harder to make ends meet.

After the kidnap, she left Mexico for several months but returned determined to continue the investigation. Despite CCTV footage of at least one assailant withdrawing cash using her bank card, no one has been arrested. Prosecutors investigating the case have denied that the kidnapping was related to her journalism.

A spokesperson for the Del Mazo government said that it fully “complied with the law at all times with its transparency and accountability obligations” and that procurements for all goods and services had been consolidated under the finance department “to obtain technical and economic advantages”. The government did not respond to specific questions about the investigation’s conclusions, or the use of threats, publicity and payments to control the media.


Mexico media say president’s attacks on journalists are ‘invitation to violence’

The finance department said that all contracts were awarded through competitive tender to the “best provider” regardless of their location, taking into account factors including price, quality and financing, and that the process was supported by an oversight committee.

“It’s a miracle that María Teresa has continued reporting in a state totally controlled by mafia politicians, where government publicity is disguised as journalism and independent reporters are isolated and punished, leaving the public with a huge black information hole,” said Marcela Turati, co-founder of investigative news site Quinto Elemento Lab. “The violence continues because impunity is guaranteed.”

Reporting team, María Teresa Montaño Delgado (El Observador), Lilia Saúl Rodríguez (OCCRP) and Nina Lakhani. Additional reporting by Aïda Delpuech and Paloma Dupont de Dinechin (Forbidden Stories)

China’s 11.6m graduates face a jobs market with no jobs

With youth unemployment at a record high, the problem of overeducated young people is acute

Amy Hawkins Senior China correspondent
THE GUARDIAN

Thu 1 Jun 2023

With a master’s degree in applied linguistics from one of Australia’s top universities, Ingrid Xie did not expect to end up working in a grocery store. But that was where she ended up after graduating from the University of Queensland in July last year.

Xie did her undergraduate degree in China, studying English in the shade of palm trees at Hainan Tropical Ocean University. She went abroad for her master’s because she thought that would help her find a better job.

‘The last generation’: the young Chinese people vowing not to have children

But after working at a Korean supermarket in Brisbane for several months after graduating, in February she decided to return to her home city of Kunming, in the south-west province of Yunnan, to find a job as an English teacher.

Xie soon discovered that “a lot of people studied abroad and want the same thing”. She says a friend in the same city recently sat an English teacher recruitment test, along with about 100 other people. Her friend did not get the job.

Youth unemployment in China hit a record high in April, with 20.4% of 16- to 24-year-old jobseekers unable to find work. Xie is 26 and has not managed to find a job in China since leaving higher education. “It makes me really frustrated,” she says.

Nearly 11.6 million students are set to graduate in June, facing a labour market that looks increasingly hostile.

The problem of overeducated unemployed youths has become so acute that people have started comparing themselves to Kong Yiji, a fictional character from a story by Lu Xun, one of the greats of Chinese literature. Kong is a scholar turned beggar who is mocked by the locals at a tavern he drinks at for his pretentious airs.

Graduates look for work at a jobs fair in Haikou, Hainan province. Photograph: Shutterstock

State media has criticised these memes, accusing them of being self-indulgent. In March a commentary in state media said youths were “unwilling to engage in jobs that are lower than their expectations”.

China’s economy is suffering from a mismatch between the jobs available and the qualifications of jobseekers. Between 2018 and 2021 the number of graduates majoring in sports and education increased by more than 20%, according to Goldman Sachs.

But in 2021 the government suddenly banned for-profit tutoring, decimating an industry that had previously been worth $150bn. That eased the homework burden for schoolchildren but torpedoed jobs for young graduates, including Xie, who had previously looked at tutoring as a way of getting teaching experience.

The country is also struggling to fill jobs in the right places. Xie has seen job advertisements that require the teacher to work in a rural school for a year. “I don’t like [the idea of] teaching in a rural area as it is hard to survive in that environment, especially for girls,” she says.

A queue at a graduate jobs fair at Jianghan University in Wuhan, Hubei province, China, in April. Photograph: Shutterstock

Eric Fish, the author of a book about Chinese millennials, says the value of an international degree has diminished in China’s jobs markets. “Some recruiters think that students might have inflated expectations or are too westernised.”


China overtakes US in contributions to nature and science journals

The government is aware of the problem. In April it published details of a set of policies designed to stimulate the jobs market, including subsidies for companies that hire unemployed university graduates. The government wants state-owned enterprises to recruit 1 million trainees in 2023, and has set an overall target of creating 12m urban jobs this year, up from 11m in 2022.

This year the government also abandoned the use of the employment and registration certificate, a document that was used for decades to approve a graduate’s transfer from a university to an employer.

Although the certificate was mostly a bureaucratic relic, its cancellation would “make it more convenient for college graduates to seek employment”, the ministry of human resources and social security said in a notice on 12 May.

China is not alone in struggling to rebalance its economy after being battered by the Covid pandemic. Researchers at Goldman Sachs noted that in 2021 youth unemployment in several European countries was more than 20%, while in the US it was close to 10%.

But the dearth of opportunities also creates pressure to take any job regardless of interest, says Xie. “You don’t even know what you want to do when you’re 25.” For now she is resigned to spending a long time with her parents and looking after her cat, Shrimp. “What I’m looking for is enough private time and a job with work-life balance but I can’t find that.”

Additional research by Chi Hui Lin

ANOTHER STUPID SELFIE STORY

Indian official fined after draining reservoir in search of mobile phone

Rajesh Vishwas dropped phone into Paraklot reservoir in Chhattisgarh state while taking a selfie

Hannah Ellis-Petersen in Delhi

THE GUARDIAN

Wed 31 May 2023 

An Indian official who drained a reservoir to retrieve a mobile he dropped while taking a selfie has been fined 53,092 rupees (£520) by the government.

Rajesh Vishwas, a food inspector, had dropped his new phone worth about £1,000 into the Paralkot reservoir in Chhattisgarh state while taking a selfie during a picnic and swim with friends.

Local people spent two days attempting to dive down and retrieve the phone from the water, but their efforts proved futile. So Vishwas hired a diesel pump and emptied the reservoir of millions of litres of water.

Vishwas claimed his phone contained sensitive government information, which was why it needed to be retrieved, and alleged he had been given “verbal permission” to pump out the water into a nearby canal by the water resources department.

The water resources department later stated it had given permission for a few feet to be drained but “not that much”.


Indian official suspended after draining reservoir to retrieve phone

Though Vishwas eventually did manage to find the phone, his efforts made local headlines and then gradually went viral. He was accused of misusing his position and triggered outrage at the scale of wasted water, which is a scarce and valuable resource in India during the hot summer months and was used locally from the reservoir by farmers to irrigate their fields.

His actions landed him in hot water with government officials. Vishwas claimed they had been “overblown”, but he was suspended from his job and put under investigation by the state authorities.

This week he was given a total fine of 53,092 rupees by the state’s irrigation department, which accused him of wasting 4.1m litres of water. His actions were described as illegal and he was told to pay a fine of 10,000 rupees as well as an additional 43,092 rupees to cover the cost of the wasted water.

Meanwhile, after three days at the bottom of the reservoir, Vishwas’s phone proved broken beyond repair.

HOLLOYWOOD BABALON;SCIENTOLOGY
Danny Masterson, star of That ’70s Show, found guilty of rape

The charges against Danny Masterson date to a period when he was at the height of his fame, starring from 1998 until 2006 as Steven Hyde on Fox’s That ‘70s Show. Photograph: Chris Delmas/AFP/Getty Images

47-year-old actor, who allegedly drugged women’s drinks, faces up to 30 years in prison after jury finds him guilty

Associated Press

Wed 31 May 2023 

Danny Masterson, the actor best known for his role in That ’70s Show, was found guilty of two counts of rape on Wednesday in a Los Angeles retrial in which the Church of Scientology played a central role.

The jury of seven women and five men reached the verdict after deliberating for seven days spread over two weeks. They could not reach a verdict on the third count, that alleged Masterson raped a longtime girlfriend. They had voted 8-4 in favor of conviction.

Masterson was led from the courtroom in handcuffs. The 47-year-old actor faces up to 30 years in prison.

His wife, actor and model Bijou Phillips, wept as he was led away. Other family and friends sat stone-faced.

Prosecutors, retrying Masterson after a deadlocked jury led to a mistrial in December, said he forcibly raped three women, including a longtime girlfriend, in his Hollywood Hills home between 2001 and 2003. They told jurors he drugged the women’s drinks so he could rape them. They said he used his prominence in the church – where all three women were also members at the time – to avoid consequences for decades.

Masterson did not testify, and his lawyers called no witnesses. The defense argued that the acts were consensual, and attempted to discredit the women’s stories by highlighting changes and inconsistencies over time, which they said showed signs of coordination between them.

“If you decide that a witness deliberately lied about something in this case,” defense attorney Philip Cohen told jurors, “you should consider not believing anything that witness says.”

The Church of Scientology played a significant role in the first trial but arguably an even larger one in the second. Judge Charlaine F Olmedo allowed expert testimony on church policy from a former official in Scientology leadership who has become a prominent opponent.

Tensions ran high in the courtroom between current and former Scientologists, and even leaked into testimony, with the accusers saying on the stand that they felt intimidated by some members in the room.

Actor Leah Remini, a former member who has become the church’s highest-profile critic, sat in on the trial at times, putting her arm around one of the accusers to comfort her during closing arguments.


Founded in 1953 by L Ron Hubbard, the Church of Scientology has many members who work in Hollywood. The judge kept limits on how much prosecutors could talk about the church, and primarily allowed it to explain why the women took so long to go to authorities.

The women testified that when they reported Masterson to church officials, they were told they were not raped, were put through ethics programs themselves, and were warned against going to law enforcement to report a member of such high standing.

“They were raped, they were punished for it, and they were retaliated against,” the deputy district attorney, Reinhold Mueller, told jurors in his closing argument. “Scientology told them there’s no justice for them. You have the opportunity to show them there is justice.”

The church vehemently denied having any policy that forbids members from going to secular authorities.

Testimony in this case was graphic and emotional. Two women, who knew Masterson from social circles in the church, said he gave them drinks and that they then became woozy or passed out before he violently raped them in 2003.

The third, Masterson’s then-girlfriend of five years, said she awoke to find him raping her, and had to pull his hair to stop him.

The issue of drugging also played a major role in the retrial. At the first, Olmedo only allowed prosecutors and accusers to describe their disorientation, and to imply that they were drugged. The second time, they were allowed to argue it directly, and the prosecution attempted to make it a major factor, to no avail.

“The defendant drugs his victims to gain control,” said the deputy district attorney, Ariel Anson, in her closing argument. “He does this to take away his victims’ ability to consent.”

Masterson was not charged with any counts of drugging, and there is no toxicology evidence to back up the assertion. His attorney asked for a mistrial over the issue’s inclusion. The motion was denied, but the issue is likely to be a major factor in any potential appeal.

These charges date to a period when Masterson was at the height of his fame, starring from 1998 until 2006 as Steven Hyde on Fox’s That ’70s Show – the show that made stars of Ashton Kutcher, Mila Kunis and Topher Grace.

Masterson had reunited with Kutcher on the 2016 Netflix comedy The Ranch, but was written off the show when an LAPD investigation was revealed in December 2017.

Information and support for anyone affected by rape or sexual abuse issues is available from the following organisations. In the US, Rainn offers support on 800-656-4673. In the UK, Rape Crisis offers support on 0808 500 2222. In Australia, support is available at 1800Respect (1800 737 732). Other international helplines can be found at ibiblio.org/rcip/internl.html

CRIMINAL CAPITALI$M

‘People wanted to believe the fairytale’: the downfall of Elizabeth Holmes

Elizabeth Holmes, founder and CEO of Theranos. Photograph: Jeff Chiu/AP

Disgraced founder of fraudulent blood-testing company Theranos begins prison sentence

Theranos founder Elizabeth Holmes begins 11-year sentence

Kari Paul in San Francisco

THE GUARDIAN

Tue 30 May 2023

Elizabeth Holmes has begun her prison sentence, in a remarkable fall for a startup founder who had become an icon known far outside Silicon Valley.

Holmes, 39, had once promised to revolutionize the medical world, but was convicted in January 2022 on four counts of defrauding investors in her blood-testing company, Theranos.


Theranos founder Elizabeth Holmes turns herself in for 11-year prison term

It was a stunning turn for an entrepreneur who had once riveted the tech world. Holmes dropped out of Stanford University in 2003 at the age of 19, set on developing a company that would turn upside down the field of medical diagnostics.

She had filed a patent for a technology that aimed to perform a wide range of tests on a small amount of blood, a development that would eliminate the need for large blood samples for diagnostics.

For years, Theranos operated in stealth mode. But by 2013, it started attracting widespread attention and Holmes became a media darling, easily recognizable with her distinctive blond hair, black turtlenecks and husky voice.

“Here was a photogenic, telegenic young woman posing as the female Steve Jobs,” Margaret O’Mara, a historian of Silicon Valley who holds a professorship at the University of Washington, said ahead of Holmes’s trial. “It was an incredibly alluring narrative that everyone wanted to believe.”

“Holmes was going to be the first woman who reached billionaire status and join the pantheon of tech leaders,” said John Carreyrou, the Wall Street Journal reporter whose investigation into the company was key to exposing its lies. “People were really rooting for her – young girls were writing her letters. A lot of people wanted to believe the fairytale, because it would have represented real progress in a very male-dominated world of Silicon Valley.”

Led by Holmes and her co-executive, and former romantic partner, Sunny Balwani, Theranos would end up raising hundreds of millions of dollars from investors. Big-name board members, including the former US secretary of defense James Mattis and former US secretaries of state George Shultz and Henry Kissinger, gave the company an air of legitimacy, even though behind the scenes it had little scientific proof to show for its claims. Theranos and Walgreens cut a major deal to distribute the company’s testing devices in pharmacies across the US.

At its height, Theranos was valued at more than $9bn and Holmes became the world’s youngest female self-made billionaire in 2015. That same year, however, the fairytale would start to fall apart.

It began with a 2015 article by Carreyrou that revealed Theranos’s revolutionary technology wasn’t exactly what it seemed. Over the succeeding months, Carreyrou exposed how the testing devices Holmes said could perform a variety of medical tests with just a drop of blood were not actually being used to perform most of the analyses.

After scrutiny from regulators, Theranos started to retract its tests and recall its machines. Holmes stepped down as CEO in June 2018, with the company dissolving that same year.

Holmes settled with the US Securities and Exchange Commission (SEC), which accused her of an “elaborate, years-long fraud”. But the US government charged Holmes and Balwani with defrauding both investors and patients, and making false claims about the effectiveness of the company’s technology.

Delayed by the pandemic and the birth of Holmes’s first child, the media-hyped trial kicked off in August 2021. It would last four months, with the jury in the San Jose courtroom hearing testimony from former employees, investors like Mattis and Holmes herself.

In her testimony, Holmes argued she understood Theranos’s technology to be more accurate than it was and her defense team portrayed her as under the influence of Balwani.

Still, the jury convicted her of four counts of defrauding investors, and in November 2022 she was sentenced to serve more than 11 years in prison.

Holmes’s conviction was a crucial moment in Silicon Valley, the central hub of an industry where the ethos of “fake it till you make it” has reigned for years.

The Silicon Valley investor Jason Calacanis, who was an early backer of major firms like Uber and Robinhood, said the verdict was a “reminder to founders”.

“Never lie, never bend the truth, always be honest about where you are at with your traction, especially when raising money,” he tweeted.

It was also an important moment for workers in the sector. Several former Theranos employees testified during the trial they had long suspected the company could not deliver on its promises, but felt they could not raise questions and risked being sued if they spoke out.

Holmes had been out on bail since she was indicted, and after her sentencing had unsuccessfully argued she should be able to remain out of custody while she sought a new trial.

In her last weeks of freedom, she broke her media silence with an extensive profile in the New York Times about her time at Theranos, her mistakes as an entrepreneur, and her life as a mother and partner to her husband, Billy Evans.

Holmes is serving her sentence at the federal prison camp Bryan, a minimum-security facility in Texas. Under federal law, she’s required to serve 85% of her sentence, even if it is reduced for good conduct. She faces three years of supervised release after her sentence ends and has been ordered to pay $452m in restitution to victims of the fraud.

Bryan prison houses primarily white-collar and non-violent female prisoners, and lacks the fencing and strict rules of higher-security prisons. It is a work-focused program that requires all inmates to hold a job for a minimum of 90 days.

30 YEARS LATER

Thelma and Louise review – punchier, bolder, hotter and sweatier than ever

Still has the power to stun … Susan Sarandon and Geena Davis in Thelma and Louise. Photograph: Snap/Rex Features

Callie Khouri’s feminist crime classic is a masterclass in narrative and character development and director Ridley Scott delivers pure action brio

Review

FIVE OUT OF FIVE STARS
Peter Bradshaw

THE GUARDIAN
Wed@ 31 May 2023

Screenwriter Callie Khouri’s desperada road-movie thriller Thelma & Louise is the classic whose Bechdel test credentials go all the way up to the title. Just over 30 years later, it looks punchier, bolder, hotter and sweatier than ever. This is a masterclass in narrative construction and character development and director Ridley Scott puts his pedal to the metal with pure action brio; I always particularly love the shot where the camera lovingly counter-swooshes back along the flank of the Thunderbird while it barrels down the highway, for the pure hell of it. It is a feminist crime classic in the tradition of Gun Crazy and Bonnie and Clyde, whose two heroines, played by Geena Davis and Susan Sarandon, get the Polaroid camera out for the most famous selfie in film history. And that ending – although arguably a concession to the idea of crime not being allowed to pay – still has the power to stun.

The film is the story of two friends. Louise Sawyer (Sarandon) is a worldly wise woman waiting tables in a diner in Arkansas, whose supposed boyfriend, Jimmy (Michael Madsen) never seems to be around. Louise’s younger best friend is housewife Thelma Dickinson, a role in which Davis gave a wonderfully sweet-natured, innocent, vulnerable performance; it briefly made her an A-list star and we should have a twinge of regret thinking about the roles Davis should have been offered after this. Thelma is being bullied and cheated on by her boorish husband Darryl (Christopher McDonald) and longs for some escape. Then Louise offers her a special girls-only weekend break in a fishing cabin she’s managed to borrow – just the two of them, taking off for some fun in Louise’s sleek T-Bird.

The pair stop off for drinks at a roadhouse where Thelma dances and then goes outside with a creep who tries to rape her. Louise pulls a gun on him in the parking lot, and the chilling ruthlessness of the result, still startling even now, turns the two women into fugitives from the law. But the experience makes them more alive and wide-awake than they have been in their lives. Harvey Keitel is the kindly state cop who tries to get Thelma and Louise to turn themselves in peaceably, and Brad Pitt made his debut as the sweet-talking young rascal for whom Thelma briefly falls, but who turns out to be (almost) as bad as the rest of the menfolk.

Essentially Thelma & Louise is a rape-revenge film, and Khouri and Scott adroitly show you that the rape that it is a revenge for happened a long time before this story started: the gunshot discharges the backstory’s pent-up frustration and rage. Another writer might have given us a set-piece reminiscence making everything explicit, or even a flashback; Khouri gives us just a glancing line in the dialogue, a bitter joke about why Louise never goes to Texas any more. The movie gives us just motivation in the tank and keeps the momentum going.

There are so many great moments. Louise seeing what appears at first to be a freckle in the bathroom mirror – but is in fact blood, which she fiercely wipes away. We get some great comedy when Thelma tells Louise to shoot the cop’s radio, and poor innocent Louise thinks she means the radio he’s listening to music on. And then there’s the outrageous action-movie explosion provided by the two heroines symbolically shooting the odious truck-driver’s phallically shaped lorry by the roadside with its flammable load.

It all leads up to the Butch and Sundance finale in the Grand Canyon; perhaps tougher and more shocking than Butch and Sundance in that there is no escape into ambiguity. A warm welcome back to this great popular film.

Thelma and Louise is released on 2 June in UK cinemas, and is screening now in select Australian cinemas.