Thursday, October 12, 2023

Mercenary hackers stole data that Exxon later cited in climate lawsuits -US prosecutors


By Raphael Satter and Christopher Bing

WASHINGTON (Reuters) -U.S. prosecutors say an Israeli private investigator used hackers to steal emails from climate activists who were campaigning against American energy giant ExxonMobil Corp.

In a sentencing memo filed on Thursday, U.S. Attorney Damian Williams, for the Southern District of New York, said Exxon's lawyers cited media articles based on the stolen emails to parry investigations by U.S. state attorneys general.

Prosecutors stopped short of stating a connection between the Israeli private eye – former policeman Aviram Azari – and Exxon, and the memo did not identify any of his clients. Victims say that leaves a key question unanswered.

“While it's satisfying to see Azari sentenced for these crimes committed many years ago, we would still love to know who paid him to target me and my climate activist and lawyer colleagues,” said Kert Davies, one of Azari’s victims and the director of investigations at the Center for Climate Integrity.

Exxon has previously denied having any connection to the Israeli or his hacking campaign.

The company, which has come under increased scrutiny following its just-announced $60 billion deal to buy competitor Pioneer Natural Resources, did not immediately respond to a message seeking comment. Exxon's lawyers in the case, Paul Weiss, also did not respond to an email seeking comment.


Related video: Why Exxon and Pioneer Agreed to $59.5 Billion Deal (Bloomberg)
Duration 9:01   View on Watch


Seven years ago, attorneys general in New York and Massachusetts were probing Exxon for documents and other evidence showing the company had hidden its knowledge concerning the impact of fossil fuel usage on climate change. A cohort of environmental activists backed the investigations and helped organize a media campaign dubbed #ExxonKnew.

The Massachusetts investigation eventually turned into a lawsuit, which is ongoing.

Exxon pushed back, filing lawsuits that cited press articles, which suggested the activists were using underhanded tactics. Thursday’s filing is the first time that Azari’s hacking activities have been directly connected to those media leaks, which showcased private email exchanges and other non-public communications.

Bradley Campbell, president of the Conservation Law Foundation, another of Azari's victims, said the only common thread between all the victims was "advocacy to hold ExxonMobil accountable for lying."

Williams' memo was filed ahead of next week's expected sentencing of Azari, who pleaded guilty last year to hiring mercenary hackers to target his clients' enemies.

Williams alleged that Azari, who has been in American custody since 2019, made an average of just under $1 million a year by hiring digital spies to carry out "a massive computer hacking campaign that targeted thousands of victims worldwide."

(Reporting by Raphael Satter and Christopher Bing; Editing by Leslie Adler and Richard Chang)
Japan moves to strip Unification Church of government recognition

Agence France-Presse
October 12, 2023 

Shinzo Abe (Official White House photo by Shealah Craighead)

The Japanese government said Thursday it was seeking to strip official recognition from the Unification Church, the influential sect under intense scrutiny since the assassination of former prime minister Shinzo Abe.

Prime Minister Fumio Kishida last year ordered a probe into the church after it emerged that Abe's alleged killer was motivated by resentment against the group.

It has been accused of pressuring its followers into making hefty donations and blamed for child neglect among its members.

If granted, the court dissolution order sought by the government would see the church lose its tax-exempt status, among other legal privileges, but still be allowed to continue its religious practices.

"In view of the extensive damage caused, we find that it falls under the grounds for ordering dissolution as stated in the religious corporations law," Education Minister Masahito Moriyama told reporters after a panel of experts unanimously agreed with the decision.

The church "forced a number of people to contribute donations and buy items... in a way that restricted their free decision-making and sabotaged their sound judgement", he added.

The minister said the request would be filed to the Tokyo District Court as early as Friday, once "preparations are complete".

Kishida said separately that the government's plan was based on facts and a careful review of the matter.

"Based on the law and in accordance with the objective facts, careful work was done and the Minister of Education made the decision," he told reporters at his office.

Abe was gunned down in broad daylight last year while giving a campaign speech in the western Nara region.

The suspect, Tetsuya Yamagami, is said to have resented the sect over large donations his mother made that bankrupted his family.

He could face the death penalty if convicted.

Investigations after Abe's death revealed close ties between the church and many conservative ruling lawmakers in Japan.

Four of Kishida's ministers have since stepped down over allegations of financial irregularities or links to the church.

- Loss of credibility -


Hajime Tajika, a law professor at Kindai University, explained there would be both social and legal impacts should the religious corporation status be revoked.


The Unification Church would "lose credibility" as a religious group, he said, which could in turn lead members to leave the church.

Aside from losing their tax exemption, they would also be banned from owning property in the church's name, he explained, though they could transfer titles to individuals before the dissolution order is finalized.

However, "not all problems will be solved just because the court issues a dissolution order", he warned.

For instance, they could legally continue the controversial practice of selling high-priced religious items they tout as granting forgiveness from sins, so-called spiritual sales.

Only two religious groups in Japan have ever received such an order -- one was the Aum Shinrikyo cult that carried out the 1995 sarin attack on the Tokyo metro.

But as there is no Japanese law under which religious groups may be banned entirely, Aum's two successor groups continue to operate and recruit members.


Tajika expects it will take "at least a year" until the order is finalised, as the Unification Church will likely take the case to a higher court.

On its website Thursday, the sect called the government's decision "extremely regrettable".

- 'Excessive' donations -

Abe, Japan's longest-serving leader, was not a member of the church but had addressed an affiliated group, as have other well-known speakers including Donald Trump.

The former prime minister died on July 8, 2022, after being shot with a homemade gun as he spoke to supporters near a train station in Nara.

Yamagami, who faces murder and weapons charges, was apprehended on the spot.


He reportedly targeted Abe over his ties to the sect, of which Yamagami's mother was a follower.

The suspect's uncle told local media his nephew sometimes called him for help when his mother left her children alone and without food while attending church.

She donated 100 million yen (then around $1 million) to the group before declaring bankruptcy, he added.

While the church has confirmed his mother's membership, it has refused to reveal how much she donated over the years.

Known officially as the Family Federation for World Peace and Unification, the sect has denied any wrongdoing and pledged to prevent "excessive" donations from members.

Founded in South Korea in 1954 by Sun Myung Moon, the church, whose members are colloquially known as "Moonies", rose to global prominence in the 1970s and '80s.

Japan has since become a key financial hub for the church, which teaches Japanese believers they need to atone for their country's wartime occupation of Korea.
Mike Flynn holds MAGA 'doomsday prophecy' gathering: 'Everything you believe in is right'
Matthew Chapman
October 12, 2023 

Michael Flynn addresses the Republican National Convention in 2016. (Shutterstock.com)

The far-right conspiracy theory retreat headlined by a former Donald Trump official in the Nevada desert called for executions of Trump supporters' enemies and proclaimed the former president to have been anointed by God to cleanse the land, reported the Los Angeles Times on Thursday.

"Helmed by retired Lt. Gen. Michael Flynn — a supporter of the former president and a key figure in efforts to overturn the 2020 election — and Clay Clark, an Oklahoma entrepreneur and podcaster, the whirlwind event melds the MAGA movement, election denial, QAnon conspiracy theories and doomsday prophecy," reported Sarah D. Wire.

Held in August right near Las Vegas, the two-day festival, billed as a church revival, "featured nearly 70 speakers who preached that vaccines are poisonous and will bring about the end of the world, that a cabal of global leaders is engaged in child sex trafficking and that the 2020 election was stolen."

The gathering, known as the ReAwaken America Tour, featured a number of extremist speakers, with Gateway Pundit's Jim Hoft telling the crowd, "The No. 1 message I can share with you is you are right. Everything you believe is right," and radio host Stew Peters telling them, "When [Anthony Fauci] is convicted after a short and fast but thorough trial, he will hang up from a length of thick rope until he is dead. … When [Hunter Biden] is convicted … he will get … death!"

The QAnon movement, which makes up a core base of Flynn's event, believes America is controlled by a secret society of Satanic pedophiles who consume children's flesh, often linking in tropes that date back to the original Nazi movement.


The movement has several offshoots, with one influencer proclaiming herself the rightful Queen of Canada and converting an abandoned small-town school in Saskatchewan into a cult compound that has prompted action from the Royal Canadian Mounted Police.

Flynn, who recently got himself barred from fellow Trump conspiracy theorist Lin Wood's bed-and-breakfast in a bizarre incident, has been increasingly active in apocalyptic conspiracy circles ever since he was fired from the early days of the Trump administration.















Fears of 'QAnon Queen' group violence prompt action from Canadian police

Matthew Chapman
October 11, 2023 

YouTube CROSS DRESSING QUEEN

The Royal Canadian Mounted Police have set up a temporary detachment in the town of Richmound, Saskatchewan, as locals fear violence from the QAnon influencer and cult leader who recently moved into the area, reported Vice on Wednesday.

Romana Didulo, who recently took up residence in an abandoned school in the area, claims to be the rightful Queen of Canada — and to be fighting a secret society of pedophiles who rule the country. Roughly ten devoted followers travel with her and obey her orders.

RCMP officials assured the town at a meeting on Tuesday that Didulo's group poses no risk to the community, and that they are doing stops of vehicles that leave the school. The cult reacted angrily to the proceedings, with a nightly livestream denouncing local townspeople as "Nazis."

Per an earlier report, Didulo's cult sent threatening letters to locals in Richmound, saying, "failure to Cease and Desist, IMMEDIATELY, from your Rothchild/CCP based communistic, unfair, demoralizing, and immoral activities and behaviors while 'serving the (We the People)' and 'before the (We the People)' under the present Natural Law WILL surely bring forth judgment upon yourselves and if found guilty of ‘Crimes Against Humanity’ or ‘Treason’ you WILL face publicly broadcast executions upon yourselves, and underserved devastation upon your children, grandchildren and families."


Among other activities, Didulo has been
printing her own "interdimensional" currency for her followers.

The QAnon movement, which began under former President Donald Trump's administration and purported to be based on an intelligence officer predicting mass arrests of the true enemies of America, has splintered into a number of factions, including another group that gathered multiple times in Dallas in the hope that a still-living John F. Kennedy would reveal himself to take the mantle of their fight.

Cult of self-proclaimed 'Queen of Canada' threatens Sask. village with public executions  CBC  Fri, October 6, 2023 

Police seek to assure Sask. village residents that cult camped there poses no imminent danger QAnon 


BACKGROUNDER
QANONS ARE HARASSING PEOPLE AT THE WHIM OF A WOMAN THEY SAY IS CANADA’S QUEEN

‘Queen of Canada’ Wants Some American Subjects

QAnon Queen of Canada Now Claims to Be Queen of the World

The QAnon Queen Told Followers They Didn’t Need to Pay Bills. It Didn’t End Well.

Self-declared ‘Queen of Canada’ detained by RCMP after alleged threats to health-care workers

A QAnon leader in Canada told her 70,000 followers to 'shoot to kill' doctors 
vaccinating kids against COVID-19


The village at the end of the world

Agence France-Presse
October 11, 2023 

Ittoqqortoormiit (© Olivier MORIN / AFP)

The last Inuit hunters of Ittoqqortoormiit are a resilient bunch.

Surviving among the icebergs of Greenland's Scoresby Sound, one of the toughest and most remote places on the planet, has never been easy.

But their unique way of life is now in grave danger from galloping climate change.

The ice cut them off from the rest of the world for 11 months of the year, but it brought them the seals, musk ox, narwhals and polar bears that fed and clothed them through the long polar night.

The Greenland village of Ittoqqortoormiit has about 350 inhabitants 
© Olivier MORIN / AFP

All those old certainties are melting away with the glaciers as temperatures in the Arctic rise four times faster than elsewhere.

AFP photographer Olivier Morin captured life in Ittoqqortoormiit in the dying days of summer when young and old make the best of the few weeks when the living is easier.

The age-old and the latest fads rub shoulders in a surreal dance amid the quaint wooden houses painted in red, blue, yellow and ochre. Several have their own trampolines.

A young girl in a mermaid costume in the Inuit village of Ittoqqortoormiit, Greenland
 © Olivier MORIN / AFP

Hunters skin seals on the beach while a young girl dips the tail of her mermaid costume into the bracing waters of a swimming pool -- all under the curious gaze of white "Alice in Wonderland" Arctic hares that seem to be everywhere.


Old timers share a beer while polar bear hides that look like the beast has just slipped them off to go for a swim dry in the sun.

A polar bear's skin dries in Ittoqqortoormiit 
© Olivier MORIN / AFP

Quad bikes are stealing a march on dog teams as the ice melts and the Inuit too have been seduced by the beautiful game. In a place where no grass grows, Ittoqqortoormiit's only patch of green is the astroturf of its football pitch.


But behind the shy smiles, hunters say the cruise ships that are bringing more and more tourists to the fjords are scaring away the wildlife on which they depend, animals whose meat scientists warn is being dangerously polluted by "forever chemicals" from factories on the other side of the world.

© 2023 AFP
‘Almost diabolical’: Haley slammed for ‘ugly lies’ claiming left supports ‘the beheadings'


David Badash, The New Civil Rights Movement
October 12, 2023

Nikki Haleyt © AFP via Getty Images

Former Trump UN Ambassador Nikki Haley, now polling in third place for the Republican presidential nomination, is claiming that "the left" is supporting "the beheadings" of Israeli children and the "1200" Israelis slaughtered by Hamas terrorists.

No elected Democrat has endorsed the terror attack on Israel, and Democrats have strongly supported Israel in the wake of the attacks. Republican 2024 presidential frontrunner Donald Trump Wednesday night "appeared to mock Israel," and "launched personal attacks against" Israeli Prime Minister Benjamin Netanyahu and Defense Minister Yoav Gallant, according to The Times of Israel.

In social media posts on her personal Facebook and X accounts promoting her Wednesday interview on Fox News, Haley wrote:

"I don’t know how the Left justifies the beheadings. I don’t know how the Left justifies 1,200 people dead. I don’t know how the Left justifies the torture. That’s between them and God. I don’t understand it and I don’t want to understand it."

Those words largely mirror her remarks to Fox News' Steve Doocy, who had targeted U.S. Rep. Rashida Tlaib (D-MI) for, he alleged, not answering a question a Fox News reporter asked her. Congresswoman Tlaib has denounced the Hamas terror attacks as "war crimes," and has also said, "the collective punishment of Palestinians right now is a war crime," according to the Detroit Free Press.

In her remarks to Fox News, Haley used the words "progressives," and "the far left" in place of "the left," which she wrote on social media hours after her interview.

Haley is being criticized for her remarks.

Transgender residents in North Carolina, Montana file lawsuits challenging new state restrictions




RALEIGH, N.C. (AP) — Transgender residents of North Carolina and Montana added Wednesday to a growing list of lawsuits challenging the recent onslaught of Republican state laws aimed at transgender individuals.

The family of a transgender boy in North Carolina is suing state health officials to block implementation of gender-affirming care restrictions that they say will force their son to undergo a traumatic wrong-gender puberty.

A federal lawsuit filed Wednesday in U.S. District Court alleges the new North Carolina law violates the Equal Protection Clause of the 14th Amendment by denying treatment access to transgender youths and undercuts parents' rights to make medical decisions for their children.

In Montana state court, transgender, nonbinary, intersex and other plaintiffs are challenging a new state law defining the term “sex” as meaning only male or female, which they argue denies legal recognition and protections to people who are gender-nonconforming.

The complaint argues the law violates the plaintiffs’ constitutional rights to equal protection, individual privacy and freedom of speech and expression. Kansas and Tennessee have similar laws.

People who are intersex are born with genitalia, reproductive organs, chromosomes or hormone levels that don’t fit typical definitions for male or female.


The North Carolina lawsuit closely follows the playbook of other successful court challenges to gender-affirming care bans that have swept Republican-controlled states this year. At least 22 states have enacted laws restricting or banning common treatments for transgender minors, and legal challenges have delivered mixed results. But court victories in states like Arkansas, where a federal judge struck down a state ban as unconstitutional, mapped out what Lambda Legal attorney Omar Gonzalez-Pagan views as a winning strategy for North Carolina plaintiffs.

Transgender youth in the Tar Heel State immediately lost access to gender-affirming medical treatments on Aug. 16 when Republican supermajorities in the General Assembly overrode a veto of the ban by the Democratic governor. State law now bars medical professionals from providing hormone therapy, puberty-blocking drugs and surgical gender-transition procedures to anyone under 18, with limited exceptions.

Minors who had begun a course of treatment before Aug. 1 are able to continue receiving that care under the new law if their doctors deem it medically necessary and their parents consent. But providers say it remains unclear whether they could face retribution for transitioning a minor patient from puberty-blocking drugs to cross-sex hormones because the law does not specify whether that would constitute a different course of treatment.

Representatives from Lambda Legal and the National Health Law Program say they also plan to file a motion for a preliminary injunction to block enforcement of the law while the court challenge proceeds. Other plaintiffs include a North Carolina family physician who serves transgender patients and several local and national LGBTQ+ advocacy organizations. The family of the 9-year-old transgender boy is listed pseudonymously to protect their privacy, attorneys said.

The complaint alleges the law discriminates against transgender patients because it does not create a blanket ban on hormone therapies and other treatments, but rather prohibits them only when performed "for the purpose of ‘gender transition.’”

“There is not one treatment that is offered to transgender patients in North Carolina that is not also offered to the rest of the patients in their care, and yet that very same care would remain perfectly legal for all other patients,” said Alex Sheldon, executive director of GLMA: Health Professionals Advancing LGBTQ Equality, an organization involved in the lawsuit.

The offices of Republican General Assembly leaders did not immediately respond to emails seeking comment.

Jean Fischer Brinkley, a spokesperson for the North Carolina Medical Board, declined a request for comment. Board CEO Thomas Mansfield is named as a defendant for his role overseeing licensing for medical professionals in the state.

The lawsuit filed in Montana state court similarly alleges the new state law redefining “sex” creates the potential for discrimination. The suit says the law requires the plaintiffs to misrepresent themselves or reveal private medical information when applying for a driver’s license or marriage license.

The law also ignores the Native American cultural significance of Two Spirit people, according to the complaint. Two Spirit is an umbrella term that refers to different and tribally distinct genders and gender roles that defy the binary concept of gender, the complaint states.

The lawsuit names Republican Gov. Greg Gianforte and Republican Attorney General Austin Knudsen as defendants.

The national debate over transgender rights came to a head this year in Montana when a group of state legislators deliberately misgendered transgender lawmaker Zooey Zephyr and called for the Democrat to be disciplined for chastising Republicans who supported a ban on gender-affirming medical care for minors. The state’s gender-affirming care law is temporarily on hold.

North Carolina law prohibits using state funds to support the provision of gender-affirming care. This prohibition excludes the North Carolina State Health Plan for government employees and their families, which is under a court order to cover those procedures while a federal appeals court considers a related case.

Medical professionals like Dr. Riley Smith, the physician who is a plaintiff in the lawsuit filed Wednesday, would have their licenses revoked if they violate the law. Families of minor patients who receive the banned treatments would also have a right to sue the doctors who perform those procedures.

Smith said the law interferes with his ability to follow evidence-based protocols at the expense of his most vulnerable patients.

Gender-affirming care is considered safe and medically necessary by the American Academy of Pediatrics, the American Medical Association and the Endocrine Society. While trans minors very rarely receive surgical interventions, they are commonly prescribed drugs to delay puberty and sometimes begin taking hormones before reaching adulthood.

Proponents of the North Carolina law such as Tami Fitzgerald, executive director of the conservative North Carolina Values Coalition, said Wednesday that the lawsuit constitutes “an attack on the people of North Carolina who have passed a law protecting children" from procedures she warned could cause a lifetime of medical and mental problems.

Hannah Schoenbaum, The Associated Press




Social media is awash in misinformation about Israel-Gaza war, but Musk's X is the most egregious 


While Twitter has always struggled with combating misinformation about major news events, it was still the go-to place to find out what’s happening in the world. But the Israel-Hamas war has underscored how the platform now transformed into X has become not only unreliable but is actively promoting falsehoods.

Experts say that under Elon Musk the platform has deteriorated to the point that it's not just failing to clamp down on misinformation but is favoring posts by accounts that pay for its blue-check subscription service, regardless of who runs them.

If such posts go viral, their blue-checked creators can be eligible for payments from X, creating a financial incentive to post whatever gets the most reaction — including misinformation.

Ian Bremmer, a prominent foreign policy expert, posted on X that the level of disinformation on the Israel-Hamas war “being algorithmically promoted" on the platform "is unlike anything I've ever been exposed to in my career as a political scientist.”

And the European Union’s digital enforcer wrote to Musk about misinformation and “potentially illegal content” on X, in what’s shaping up to be one of the first major tests for the 27-nation bloc’s new digital rules aimed at cleaning up social media platforms. He later sent a similar, though toned-down, version of the letter to CEO Mark Zuckerberg of Meta, which owns Facebook and Instagram.While Musk's social media site is awash in chaos, rivals such as TikTok, YouTube and Facebook are also coping with a flood of unsubstantiated rumors and falsehoods about the conflict, playing the usual whack-a-mole that emerges every time a news event captivates the world's attention.

“People are desperate for information and social media context may actively interfere with people’s ability to distinguish fact from fiction,” said Gordon Pennycook, an associate professor of psychology at Cornell University who studies misinformation.

For instance, instead of asking whether something is true, people might focus on whether something is surprising, interesting or even likely to make people angry — the sorts of posts more likely to elicit strong reactions and go viral.

The liberal advocacy group Media Matters found that since Saturday, subscribers to X's premium service shared at least six misleading videos about the war. This included out-of-context videos and old ones purporting to be recent — that earned millions of views.

TikTok, meanwhile, is “almost as bad” as X, said Kolina Koltai, a researcher at the investigative collective Bellingcat. She previously worked at Twitter on Community Notes, its crowd-sourced fact-checking service.

But unlike X, TikTok has never been known as the No. 1 source for real-time information about current events.

“I think everyone knows to take TikTok with a grain of salt," Koltai said. But on X "you see people actively profiteering off of misinformation because of the incentives they have to spread the content that goes viral — and misinformation tends to go viral.”

Emerging platforms, meanwhile, are still finding their footing in the global information ecosystem, so while they might not yet be targets for large-scale disinformation campaigns, they also don't have the sway of larger, more established rivals.

Meta's Threads, for instance, is gaining traction among users fleeing X, but the company has so far tried to de-emphasize news and politics in favor of more “friendly” topics.

“One of the reasons why you're not hearing a lot about Facebook is because they have something called demotions,” said Alexis Crews, a resident fellow at the Integrity Institute who worked at Meta until this spring. If something is labeled as misinformation, the system will demote it and send it to independent fact-checkers for assessment. Crews cautioned that if Meta — which has been cutting costs and laid off thousands of workers — deprioritizes its fact-checking program, misinformation could flood its platforms once again. The Associated Press is part of Meta’s fact-checking program.

Meta and X did not immediately respond to AP requests for comment. TikTok said in a statement that it has dedicated resources to help prevent violent, hateful or misleading content, “including increased moderation resources in Hebrew and Arabic.” The company said it also works with independent fact-checkers to help assess the accuracy of material posted to its platform.

post late Monday from X’s safety team said: “In the past couple of days, we’ve seen an increase in daily active users on @X in the conflict area, plus there have been more than 50 million posts globally focusing on the weekend’s terrorist attack on Israel by Hamas. As the events continue to unfold rapidly, a cross-company leadership group has assessed this moment as a crisis requiring the highest level of response.”

While plenty of real imagery and accounts of the carnage have emerged, they have been intermingled with social media users pushing false claims and misrepresenting videos from other events.

Among the fabrications are false claims that a top Israeli commander was kidnapped, a doctored White House memo purporting to show U.S. President Joe Biden announcing billions in aid for Israel, and old unrelated videos of Russian President Vladimir Putin with inaccurate English captions. Even a clip from a video game was passed on as footage from the conflict.

“Every time there is some major event and information is at a premium, we see misinformation spread like wildfire,” Pennycook said. “There is now a very consistent pattern, but every time it happens there's a sudden surge of concern about misinformation that tends to fade away once the moment passes."

"We need tools that help build resistance toward misinformation prior to events such as this,” he said.

For now, those looking for a central hub to find reliable, real time information online might be out of luck. Imperfect as Twitter was, there’s no clear replacement for it. This means anyone looking for accurate information online needs to exercise vigilance.

In times of big breaking news such as the current conflict, Koltai recommended, “going to your traditional name brands and news media outlets like AP, Reuters, who are doing things like fact checking” and active reporting on the ground.

Meanwhile, in Europe, major social media platforms are facing stricter scrutiny over the war.

Britain’s Technology Secretary Michelle Donelan summoned the U.K. bosses of X, TikTok, Snapchat Google and Meta for a meeting Wednesday to discuss “the proliferation of antisemitism and extremely violent content” following the Hamas attack.

She demanded they outline the actions they’re taking to quickly remove content that breaches the U.K.’s online safety law or their terms and conditions.

European Commissioner Thierry Breton warned in his letter to Musk of penalties for not complying with the EU’s new Digital Services Act, which puts the biggest online platforms like X, under extra scrutiny and requires them to make it easier for users to flag illegal content and take steps to reduce disinformation — or face fines up to 6% of annual global revenue.

Musk responded by touting the platform’s approach using crowdsourced factchecking labels, an apparent reference to Community Notes.

“Our policy is that everything is open source and transparent, an approach that I know the EU supports,” Musk wrote on X. “Please list the violations you allude to on X, so that the public can see them.”

Breton replied that Musk is “well aware” of the reports on “fake content and glorification of violence.”

“Up to you to demonstrate that you walk the talk,” he said.

___

Kelvin Chan in London contributed to this report.

Barbara Ortutay, The Associated Press

Egypt warned Israel three days before Hamas massacre - US congressman

Story by By JERUSALEM POST STAFF •

Rep. Michael McCaul speaks when US Secretary of State Antony Blinken testifies before the House Committee on Foreign Affairs on The Biden Administration
 (photo credit: KEN CEDENO/POOL VIA REUTERS)

US House Foreign Affairs Committee Chair Michael McCaul told reporters on Wednesday that Egypt had warned Israel three days before Hamas's assault on southern Israel that "an event like this could happen," according to US media.

"There seems to have been a failure of intelligence. We're not quite sure how we missed it. We're not quite sure how Israel missed it," said McCaul after a classified briefing about the war.

"We know that Egypt had warned the Israelis three days prior that an event like this could happen. We know this event was planned perhaps as long as a year ago," added the House Foreign Affair chair.
Series of reports claim Egypt warned Israel ahead of assault

McCaul's statements come after a series of reports that Egyptian intelligence officials had sent warnings to Israel ahead of Hamas's assault over the weekend.



Egyptian President Abdel Fattah al-Sisi attends a meeting with French Foreign Minister Catherine Colonna in Cairo, Egypt on September 14, 2023. (credit: KHALED DESOUKI/POOL VIA REUTERS)© Provided by The Jerusalem PostEgyptian President Abdel Fattah al-Sisi attends a meeting with French Foreign Minister Catherine Colonna in Cairo, Egypt on September 14, 2023.
(credit: KHALED DESOUKI/POOL VIA REUTERS)

On Monday, the Associated Press reported that an Egyptian intelligence official had said that Egypt had warned Israel repeatedly about “something big," but that this warning was downplayed as Israeli officials were focusing on the West Bank.

“We have warned them an explosion of the situation is coming, and very soon, and it would be big. But they underestimated such warnings,” said the official to the AP.

Related video: Israel puts horrors of Hamas attack on display (cbc.ca)
Duration 3:15  View on Watch

On Tuesday, Al-Monitor reported as well that senior Egyptian officials had warned Israel of an impending attack from Gaza, but that these warnings were not specific and not brought to Prime Minister Benjamin Netanyahu's attention.

On Wednesday, the Financial Times cited two unnamed officials as stating that Egyptian intelligence repeatedly warned Israel that the situation in the Gaza Strip could "explode." The officials added that there was no hard intelligence about a specific attack and this was only a "general warning."

The Prime Minister's Office has denied the reports, calling them "absolutely false" and stressing that "No message in advance has arrived from Egypt and the prime minister has neither spoken, nor met, with the head of Egyptian intelligence since the formation of the government, neither directly nor indirectly."
Trapped in Gaza: Thai Workers’ Struggle for Survival Amid Hamas Attacks

By Priti Naik


In a grim turn of events, fourteen Thai workers are believed to have been taken captive by Hamas in Gaza, with another 20 feared dead. The workers, mostly from Thailand’s poorest regions, had traveled to Israel to provide for their families back home. They found themselves in the line of fire when deadly attacks by Hamas fighters began.

From Poverty to Peril: The Thai Workers’ Plight

These Thai workers mostly hail from Thailand’s poorest regions where earning potential is limited. The opportunity to work overseas, particularly in Israel, offers them a chance to build a nest egg for their families. However, they found themselves caught in the crossfire when violence erupted between Israel and Hamas.

Thailand has reported the highest death toll from the attack by Hamas fighters, with at least 20 Thai migrant workers feared dead. Families back home are desperately seeking news of their loved ones who are missing or presumed dead. Despite the dangers, some poor Thais feel that the opportunity to work overseas is worth the risks, as poverty in their home region is even scarier.

Caught in the Crossfire: The Tragedy of Migrant Workers

The plight of these Thai workers highlights the harsh realities faced by migrant workers worldwide. Often, they are willing to take on high-risk jobs in volatile regions, driven by the dire economic conditions in their hometowns. In a bitter twist of fate, their quest for a better life abroad often exposes them to life-threatening situations and human rights abuses.

International Response and Future Ramifications

The international community has expressed concern over the situation, urging both sides to cease hostilities and ensure the safety of civilians and migrant workers. However, it is unclear how the situation will unfold and what impact it will have on the Thai workers and their families.

“The plight of these Thai workers in Gaza paints a distressing picture of the risks that migrant workers often face,” said an expert on migration. “It’s a sobering reminder that our global economy is built on the backs of these vulnerable individuals. We need stronger protections for migrant workers to prevent such tragedies in the future.”
NASA’s Bennu Asteroid Sample Shows High Carbon and Water Content in Initial Studies
By Geetha Pillai



NASA's OSIRIS-REx Mission Sheds New Light on Asteroids, Signaling Potential Life Origins

US space agency NASA has revealed fascinating insights from an analysis of a pristine asteroid sample collected by the OSIRIS-REx mission. The sample not only contains water but also a significant amount of carbon. This discovery suggests that asteroids like Bennu might have been instrumental in delivering the building blocks of life to Earth.

A Historic Space Expedition


The OSIRIS-REx mission, which stands for Origins, Spectral Interpretation, Resource Identification, Security, Regolith Explorer, was launched by NASA in 2016. Its goal was to explore Bennu, a carbon-rich asteroid that has been circling the sun for more than 4.5 billion years. The spacecraft successfully gathered a sample from the asteroid in October 2020 and returned to Earth in 2021, marking a significant milestone in space exploration.

Unveiling the Secrets of the Universe

The sample is the largest carbon-rich asteroid sample ever returned to Earth. Scientists will study the material to understand the formation and evolution of the asteroid and its overall composition. The studies could provide insight into the early solar system and possibly the origins of life. The presence of significant amounts of carbon and water is particularly intriguing, as these are critical components of life as we know it.

Preparing for the Future

The findings could also help NASA determine how to deflect the asteroid if it poses a future threat to Earth. Bennu is classified as a Potentially Hazardous Asteroid (PHA) due to its size and proximity to Earth’s orbit. However, NASA has stressed that the chances of Bennu impacting Earth in the next century are minimal.

Preserving Knowledge for Future Generations

The sample will be analyzed for the next two years and will be divided and sent to laboratories worldwide. In line with NASA’s philosophy of preserving knowledge for future generations, the majority of the sample will be stored for future generations to study with better technology.

Exclusive-Miners seek partners for copper assets as M&A heats up

Story by By Clara Denina, Divya Rajagopal and Julian Luk •

FILE PHOTO: Used copper wires are seen in a recycling company in Thoerishaus near Bern July 3, 2011. REUTERS/Ruben Sprich/File Photo© Thomson Reuters

By Clara Denina, Divya Rajagopal and Julian Luk

LONDON (Reuters) - A flurry of copper mining deals are being lined up for the next six to 12 months, industry sources said, as producers seek to spread the soaring cost of new projects for the metal key to the energy transition.

The capital needed to develop new mines has shot up some 50% to between $3 billion-$4 billion on average in recent years, fuelled by declining ore grades, stricter environmental requirements and rising labour costs.

Copper producers increasingly want to share the risk and costs of projects, and the sector has already seen a jump in M&A activity, which more than doubled year-on-year to $14.24 billion in 2022.

But big-ticket M&A is not the only solution to rising costs, and partnership deals are also being mooted, five sources familiar with the matter said.

For investors interested in the green transition, that would allow them to own a portion of existing assets and revenues at a time when large reserves of top-grade material are hard to find.

Miner and trader Glencore has been approached by potential investors in its Argentine copper projects Minera Agua Rica Alumbrera (Mara) and El Pachon, two sources said.


Japan's Sumitomo Metal Mining is among interested parties, one said. According to Argentine government data, the projects could produce a combined 435,000 tonnes of copper a year.

Glencore declined to comment, while Sumitomo did not respond to a request for comment for this story. Both sources declined to be named because the information is not public.

Canada's Lundin Mining is also in talks with Japanese trading houses and large miners to offer a 40% to 50% stake in Argentina's Josemaria mine, incoming CEO Jack Lundin told Reuters this month.

Interested parties include the world's largest listed mining company BHP Group and Sumitomo, one source said. BHP also declined to comment.

"I think the world understands that demand is increasing for copper. I don't think they understand the difficulty in the challenges of maintaining supply, or bringing new supply on," Lundin said.

"This is where we really have to dig deep, and look at bringing down costs."

COST INFLATION

In Chile, Canada's Capstone Copper is preparing to sell a 30% stake in its Santo Domingo copper-iron-gold-cobalt project, while Hudbay Minerals is seeking minority partners for its open-pit Copper World mine in Arizona, two sources familiar with the matter said.

A Capstone spokesperson said once the feasibility study for the project is completed this year, it will progress the financing plan, which could include a sale of a partnership stake. Hudbay did not respond to a request for comment.

First Quantum meanwhile has struck a deal to buy a majority stake in Rio Tinto's La Granja copper project in Peru for $105 million, and committed to invest up to $546 million in the joint venture.

It is also looking for investors at its Taca Taca copper-molybdenum and gold project in Argentina, two of the sources said. First Quantum declined to comment.


Professional services firm EY said a review of 132 development projects requiring more than $1 billion of capital investment showed nearly one in five faced cost overruns, with an average blowout of $500 million.

Recent volatility has exacerbated the problem of capital productivity that has long concerned the mining sector, its Global Mining & Metals Leader Paul Mitchell said. "As well as increased input costs, higher interest rates are pushing up the cost of capital," he added.

Most analysts expect the copper market to be in deficit from 2027 due to increased demand for electric vehicles and renewable infrastructure.

But that could take years to feed through into fatter margins for producers, said Farid Dadashev, head of EMEA metals & mining at RBC Capital Markets.

"One way to reduce project development risks and multi-billion dollar investments is through forming a joint venture with strategic or trading partners," he said. He declined to give details on the current deals pipeline.


(Reporting by Clara Denina, Divya Rajagopal and Julian Luk; Editing by Veronica Brown and Jan Harvey)
SHALE OIL PLAY
Exxon Mobil doubles down on fossil fuels with $59.5 billion deal for Pioneer Natural as prices surge




© Provided by The Canadian Press

Exxon Mobil is buying Pioneer Natural Resources in an all-stock deal valued at $59.5 billion, its largest buyout since acquiring Mobil two decades ago, creating a colossal fracking operator in West Texas.

Including debt, Exxon is committing about $64.5 billion to the acquisition, leaving no doubt of the Texas energy company's commitment to fossil fuels as energy prices surge.

Pioneer shareholders will receive 2.32 shares of Exxon for each Pioneer share they own.

“I think fossil fuels, as the world looks to transition and find lower sources of affordable energy with lower emissions, fossil fuels oil and gas are going to continue to play a role over time,” Exxon Mobil CEO Darren Woods said during an interview with CNBC. “That may diminish with time. The rate of that is, I think, not very clear at this stage. But it will be around for a long time.”

Woods explained that Exxon and Pioneer will be able to use their combined capabilities to drive down emissions and produce lower carbon intensity oil and gas.

Exxon purchased XTO Energy in 2009 for approximately $36 billion. In the late 1990s, the merger between Exxon and Mobil was valued around $80 billion.

The deal with Pioneer Natural vastly expands Exxon's presence in the Permian Basin, a massive oilfield that straddles the border between Texas and New Mexico. Drilling the Permian accounted for 18% of all U.S. natural gas production last year, according to the U.S. Energy Information Administration.


Related video: Exxon Mobil agrees to buy Pioneer Natural Resources for nearly $60 billion in all-stock merger (CNBC)
Duration 4:02


Pioneer's more than 850,000 net acres in the Midland Basin will be combined with Exxon’s 570,000 net acres in the Delaware and Midland Basin, nearly contiguous fields that will allow the combined company to trim costs.

Woods said in prepared remarks that the combined company will have an estimated Permian resource of 16 billion oil equivalent barrels, with 15 to 20 years of remaining inventory.

Natural gas rigs in operation have declined over 26% in the U.S. since the start of the year, according to government data, largely due to the rising costs for drilling materials and labor over the past two years.

“Their tier-one acreage is highly contiguous, allowing for greater opportunities to deploy our technologies, delivering operating and capital efficiency as well as significantly increasing production,” Woods said of Pioneer in a statement.

Once the deal closes, Exxon Permian production volume will more than double to 1.3 million barrels of oil equivalent per day, based on 2023 volumes. It's expected to climb to about 2 million barrels of oil equivalent per day in 2027.

Woods said that by 2027, about 60% of the combined company's production will come from low-cost, high-growth strategic assets, including the Permian, Guyana, Brazil, and LNG, with total production of more than 5 million oil equivalent barrels per day.

“The combination of ExxonMobil and Pioneer creates a diversified energy company with the largest footprint of high-return wells in the Permian Basin,” Pioneer CEO Scott Sheffield said in a prepared statement.

Citi's Alastair Syme wrote that the transaction could provide multiple benefits to Exxon.

“Across the industry, the logic of consolidation in the highly fragmented Permian shale remains compelling with significant gains to be achieved from economies of scale by minimizing facilities spend, optimizing drilling and reducing" general spending, Syme wrote.

Exxon is flush with cash. The company posted unprecedented profits last year of $55.7 billion, breezing past its previous record of $45.22 billion in 2008 when oil prices hit record highs.

Exxon Mobil Corp. has been using some of that cash on acquisitions. In July the company announced that it was buying pipeline operator Denbury in an all-stock deal valued at $4.9 billion.

Pioneer Natural has been making similar maneuvers. In 2020 the company said it was buying Parsley Energy in an all-stock deal valued at approximately $4.5 billion. It then purchased DoublePoint Energy in a cash-and-stock deal worth about $6.4 billion in 2021.

The boards of both companies have approved the transaction, which is expected to close in the first half of next year. It still needs approval from Pioneer shareholders.

Shares of Exxon fell more than 4% in afternoon trading on Wednesday.


Michelle Chapman, The Associated Press
Internet companies report biggest-ever denial of service operation

Story by By Raphael Satter •

A man types on a computer keyboard in front of the displayed cyber code. REUTERS/Kacper Pempel/Illustration© Thomson Reuters

WASHINGTON (Reuters) - Internet companies Google, Amazon and Cloudflare say they have weathered the internet's largest-known denial of service attack and are sounding the alarm over a new technique they warn could easily cause widespread disruption.

Alphabet Inc-owned Google said in a blog post published Tuesday that its cloud services had parried an avalanche of rogue traffic more than seven times the size of the previous record-breaking attack thwarted last year.

Internet protection company Cloudflare Inc said the attack was "three times larger than any previous attack we've observed." Amazon.com Inc's web services division also confirmed being targeted by "a new type of distributed denial of service (DDoS) event."

Denial of service is among the web's most basic form of attack and it works by simply overwhelming targeted servers with a firehose of bogus requests for data, making it impossible for legitimate web traffic to get through.

As the online world has developed, so too has the power of denial of service operations, some of which can generate millions of bogus requests per second. The recent attacks measured by Google, Cloudflare and Amazon - which began in late August and which the tech giants say are ongoing - were capable of generating hundreds of millions of request per second.

Google said in its blog post that only two minutes of one such attack "generated more requests than the total number of article views reported by Wikipedia during the entire month of September 2023."

All three companies said the supersized attacks were enabled by a weakness in HTTP/2 - a newer version of the HTTP network protocol that underpins the World Wide Web - that makes servers particularly vulnerable to rogue requests.

The firms urged companies to update their web servers to ensure that they do not remain vulnerable.

None of the three companies said who was responsible for the denial of service attacks, which have historically been difficult to attribute.

(Reporting by Raphael Satter; Editing by Sandra Maler)
White House Blames Trump Tax Cuts for Helping 2023 Deficit Surge

Viktoria Dendrinou
Wed, October 11, 2023 



(Bloomberg) -- The White House has blamed President Donald Trump’s tax cuts for contributing to a surge in the US budget deficit this year, laying down political battle lines as Republicans call for sweeping spending cuts to reduce government borrowing.

In a blog post days before the expected release of full 2023 fiscal year budget data, the White House Council of Economic Advisers said Wednesday that a reduction in revenues from capital gains taxes has played a notable role in the widening deficit. For the 11 months through August, the deficit has soared more than 60%, to $1.52 trillion.

“The level of the deficit and of revenues this year is unusual given the strength of the economy, a development that we expect is related to the revenue-reducing impact of the Tax Cuts and Jobs Act,” the CEA said in its post. Trump signed that legislation in 2017, after it was passed by a Republican Congress.

A surging stock market prior to 2022 effectively masked the impact of the Trump tax cuts, because they juiced capital gains revenues, according to the CEA’s analysis. Last year’s tax take in particular was boosted by capital-gains realizations that were “historically high,” the post said.

More broadly, evidence is now mounting that Trump’s tax cuts have caused a major reshaping of the level of revenue to be expected from a given expansion of the economy, according to the CEA. While a stronger economy typically leads to higher incomes and stronger revenues, the passage of the tax reductions shifted this relationship, the CEA said.

Election Issue

“While deficits still tend to shrink as the unemployment rate falls, the deficit became higher for any given level of unemployment,” they wrote.

Trump’s package lowered individual and corporate tax rates. President Joe Biden sought unsuccessfully to boost many of those rates in signature legislation the past two years. Tax policy is likely to be a key feature of the 2024 election.

Bloomberg Businessweek

Deficit Rises to $1.7 Trillion in 2023: CBO

Michael Rainey
Tue, October 10, 2023 

The federal budget deficit totaled $1.7 trillion in fiscal year 2023, about $300 billion (23%) larger than the year before, according to a preliminary analysis released by the Congressional Budget Review on Tuesday.

The federal government received $4.4 trillion in revenues during the October 2022 to September 2023 period – $455 billion (9%) less than the year before. Outlays for the full fiscal year were $6.1 trillion, or $141 billion (2%) less than a year earlier.

As the CBO noted last month, the cancelation of the Biden administration’s plan to forgive billions of dollars in student loan debt distorted the data in both 2023 and 2022. If the recorded costs and savings for that plan – which never took effect – are excluded, the deficit in 2022 would shrink to about $900 billion, while the deficit in 2023 would increase to about $2 trillion.

“Thus, without the effects of debt cancellation (and excluding the effects of timing shifts), the deficit would have grown by nearly $1.1 trillion from 2022 to 2023,” CBO said.

The fiscal hawks at the Committee for a Responsible Federal Budget said the latest CBO numbers highlight the need to bring the federal debt and deficit under control. “After declining in recent years due to the pandemic ending, the deficit is now back on the rise, totaling $1.7 trillion in 2023 and more than double last year’s when you exclude the President’s now-overturned student debt cancellation and timing shifts,” CRFB's president Maya MacGuineas said in a statement. “With deficits doubling, interest rates surging, major trust funds on course to be exhausted in a decade, and new security threats emerging – everything is telling us it’s time to address the debt.”

The U.S. Treasury will provide the final, official numbers for the 2023 budget later this week.



CRIMINAL CAPITALI$M
Microsoft (MSFT) May Contest IRS Claim of $28.9B in Back Taxes



Zacks Equity Research
Thu, October 12, 2023

Microsoft MSFT is facing a demand for $28.9 billion in back taxes from the U.S. Internal Revenue Service (IRS), which marks a significant escalation in one of the largest corporate tax disputes in recent times.

Per a recent 8-K filing by the company, along with back taxes, this demand encompassed penalties and interest for late payment. The core of this dispute centers on Microsoft's use of transfer pricing, a practice that has been criticized for allowing companies, particularly in the tech sector, to shift profits to low-tax countries, thereby reducing their tax obligations.

Microsoft disclosed over a decade ago that it conducted its software production and distribution through regional centers in countries like Singapore, Dublin and Puerto Rico. By doing so, it was able to manage its profits in a manner that reduced its overall tax burden. This approach of allocating profits to different locations, based on where a portion of the costs and assets are situated, is commonly employed by multinational tech corporations.

Microsoft has expressed its disagreement with IRS's latest tax demand. It has indicated its intention to contest the claims vigorously through IRS's administrative appeals office, a process that could span several years. If necessary, MSFT is willing to take the matter to court. Additionally, the company stated that it would not set aside any additional reserves to cover the tax claim.

Microsoft Corporation Price and Consensus





Microsoft Corporation Price and Consensus

Microsoft Corporation price-consensus-chart | Microsoft Corporation Quote

Microsoft Among Other Tech Giants Facing Tax Disputes


Governments have accused companies such as Apple AAPL, Amazon AMZN and Microsoft of shifting revenues through low or zero-tax jurisdictions in order to escape taxation in their main markets and maximize profits.

This spurred a major international agreement among 140 countries, brokered by Organization for Economic Cooperation and Development (OECD), that is designed to better share and regulate tax revenues of the giants. Recently, OECD published a draft agreement, implementing a major part of that deal with hopes of having it ratified by the end of 2023.

In 2019, a US appeals court sided with AMZN in a similar transfer pricing case brought by IRS. That case revolved around whether Amazon had undervalued its IP when it transferred it to a subsidiary in Luxembourg in 2005. The appeals court determined that Amazon's actions were consistent with the transfer pricing rules in place at the time. However, it might have been deemed non-compliant with later regulations introduced in 2009.

In the European Union, authorities in 2016 ordered Apple to pay 13 billion euros ($14 billion) in back taxes over similar accounting practices. Yet, Brussels lost an appeal to Apple and is awaiting the outcome of a further appeal.

Apart from the investigation of Microsoft's tax payments between 2004 and 2013, the company is also undergoing an audit by IRS for its tax returns from 2014 to 2017.

In recent years, Microsoft has taken steps to reconfigure some of its tax arrangements, partly due to changes in US tax laws aimed at encouraging tech companies to bring their intellectual property (IP) back to the United States.

In 2021, Microsoft shifted certain IP from Puerto Rico to the United States, which allowed it to claim a $3.3 billion tax benefit. It reflected the impact of Global Intangible Low-Taxed Income tax implemented during the Trump administration.

The disclosure of IRS notices comes just under two weeks before Microsoft plans to announce its financial results for fiscal 2024's first quarter.

The Zacks Consensus Estimate for MSFT’s first-quarter fiscal 2024 revenues is pegged at $54.42 billion, indicating year-over-year growth of 8.57%. The consensus mark for earnings is pegged at $2.65 per share, suggesting a year-over-year increase of 12.77%.

Shares of this Zacks Rank #3 (Hold) company have gained 33.2% year to date compared with the Zacks Computer and Technology sector’s return of 33.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Microsoft is on the cusp of buying Activision Blizzard ATVI for $68.7 billion, ending its near two-year pursuit of the maker of Call of Duty, World of Warcraft and Candy Crush. The deal is expected to close on Oct 13.

However, despite the merger, popular titles such as Call of Duty: Modern Warfare 3 and Diablo 4 might not be made immediately available on Xbox Game Pass this year. Activision Blizzard plans to start bringing its games to the subscription service from 2024.


Microsoft says US has asked for $28.9 billion in audit dispute


Stephen Nellis
Wed, October 11, 2023 

A man stands inside the Microsoft Experience Center in New York City

By Stephen Nellis

(Reuters) -Microsoft said on Wednesday the U.S. Internal Revenue Service (IRS) in September notified the company that it is seeking an additional tax payment of $28.9 billion, plus penalties and interest for tax years from 2004 to 2013.

Microsoft said the IRS notices relate to an ongoing dispute between the company and the U.S. tax authority, which is auditing how Microsoft allocated its profit among different countries and jurisdictions.

The Redmond, Washington-based company said it has since changed its practices so that "issues raised by the IRS are relevant to the past but not to our current practices," according to a Microsoft blog.

Microsoft said it believes that any taxes owed after the audit would be reduced by up to $10 billion based on tax laws passed by former President Donald Trump.

The company said it disagrees with the IRS's findings and plans to dispute them, first in an internal IRS proceeding and then later, if necessary, in courts.

The IRS told Reuters it is prevented by U.S. law from confirming or denying whether it is auditing any taxpayer.

(Reporting by Samrhitha Arunasalam in Bengaluru and Stephen Nellis in San FranciscoEditing by Deepa Babington and Matthew Lewis)

The IRS says Microsoft may owe about $29 billion in back taxes. Microsoft disagrees

AP Finance
Wed, October 11, 2023

The Microsoft logo is pictured at the Mobile World Congress 2023 in Barcelona, Spain, on March 2, 2023. The Internal Revenue Service says Microsoft owes the U.S. Treasury $28.9 billion in back taxes, plus penalties and interest, the company revealed Wednesday, Oct. 11, in a securities filing.
 (AP Photo/Joan Mateu Parra, File)

SAN FRANCISCO (AP) — The Internal Revenue Service says Microsoft owes the U.S. Treasury $28.9 billion in back taxes, plus penalties and interest, the company revealed Wednesday in a securities filing.

That figure, which Microsoft disputes, stems from a long-running IRS probe into how Microsoft allocated its profits among countries and jurisdictions in the years 2004 to 2013. Critics of that practice, known as transfer pricing, argue that companies frequently use it to minimize their tax burden by reporting lower profits in high-tax countries and higher profits in lower-tax jurisdictions.

Microsoft, which is based in Redmond, Washington, said it followed IRS rules and will appeal the decision within the agency, a process expected to take several years. The company’s shares dropped slightly in aftermarket trading.

The IRS began an audit of Microsoft in 2007 that the agency described in federal court documents last year as “one of the largest in the Service’s history." Microsoft says it was recently notified by the IRS that the audit has ended, starting a new process to resolve a dispute over how much is owed.

Part of the long-running IRS investigation centered on how Microsoft structured a manufacturing facility starting in 2005 in the U.S. territory of Puerto Rico. The IRS has said Microsoft hired accounting firm KPMG to set up a cost-sharing arrangement with the Puerto Rican affiliate that shifted taxable revenue out of the U.S.

The IRS has also looked at other affiliates, including one that involved retail sales in Asia, according to court documents.

A blog post Wednesday from David Goff, Microsoft's corporate vice president for worldwide tax and customs, said the company has changed its corporate structure and practices since the years covered by the audit. But he said it's not uncommon for large multinationals to use cost-sharing arrangements, and that because Microsoft's subsidiaries shared in the costs of developing some intellectual property, they were also entitled to related profits.

Goff also said that the $28.9 billion sought by the IRS could be reduced by up to $10 billion because of taxes paid as a result of a 2017 tax law signed by then-President Donald Trump.

Microsoft Plans to Contest IRS Claim It Owes $28.9 Billion in Back Taxes


Jackie Davalos
Wed, October 11, 2023 


(Bloomberg) -- Microsoft Corp. will appeal a decision by the US Internal Revenue Service that the software maker owes at least $28.9 billion in taxes related to how it allocated income and expenses among global subsidiaries from 2004 to 2013.

The company said Wednesday in a regulatory filing that it disagreed with the “notices of proposed adjustment” to its federal tax filings and will appeal the decision.

The dispute centers on a 2012 IRS audit into transfer pricing, a method used by companies to shift profits to tax havens and avoid the US corporate tax rate. At the time, Microsoft had been moving billions of dollars in profits to such jurisdictions as Puerto Rico, a US territory that levies a much lower corporate rate.

The company has changed its corporate structure and practices since the years covered by the audit, so the issues raised by the IRS aren’t relevant to the way income is recorded currently, Daniel Goff, a Microsoft vice president, said in a blog post.

Goff wrote that Microsoft has been working with the IRS for almost a decade to address questions about how the company allocates income and expenses for tax purposes. The Redmond, Washington-based company said the proposed additional tax bill of $28.9 billion doesn’t include taxes paid under the Tax Cuts and Jobs Act of 2017, which could reduce the tally by as much as $10 billion.

“We strongly believe we have acted in accordance with IRS rules and regulations and that our position is supported by case law,” Goff said in the post. “We welcome the IRS’s conclusion of its audit phase which will provide us with the opportunity to work through these issues at IRS Appeals, a separate division of the IRS charged with resolving tax disputes.”

Microsoft shares were little changed in extended trading after closing at $332.42 in New York.