Bank Boardroom Battles Put Powerful Chairmen in Spotlight


Nicholas Comfort and Steven Arons Bloomberg March 5, 2020

(Bloomberg) -- First was the stunning power struggle atop Credit Suisse Group AG. Then cross-town rival UBS Group AG named a new chief out of the blue. Now Standard Chartered Plc is quietly looking for one.

Barely a week passes these days without a European bank chairman ousting a chief executive officer or seeking potential new ones. The turmoil has engulfed the boardrooms of almost all of the region’s top firms, from Germany’s troubled lenders to Switzerland’s large wealth managers, France’s investment banking powerhouses and London’s financial giants.

The turnover speaks to the dire state of European finance more than a decade after the financial crisis and almost six years into the region’s controversial experiment with negative interest rates. But the frequency and the speed at which top executives are being swapped out, at times over the vocal opposition of large shareholders, underscore another key difference with Wall Street: The powerful role of chairmen.

“There’s been a quite a lot of churn,” said Stilpon Nestor, who advises companies on governance at Nestor Advisors. The chairmen “are playing a more active role. The big governance changes after the crisis aimed at exactly that: giving more power to the board.”

Unlike their peers on Wall Street, where CEOs frequently also hold the position of chairman, European banks separate the two roles fairly strictly. Regulators made that a legal requirement after the financial crisis showed the need for more checks and balances, although there are exceptions. The European Central Bank built on that by telling boards that it expects them to challenge management on the implementation of strategy and culture.

Today, about two-thirds of CEOs at U.S. financial companies are also chairman of the board, most prominently Jamie Dimon, who has run the biggest Wall Street firm for the past 14 years. In Europe, that number is just 1%, according to data from the responsible investment arm of Institutional Shareholder Services.

The strengthening of the board has encouraged chairmen to take a more active role and move more decisively to replace top executives when needed. At Deutsche Bank AG, supervisory board chairman Paul Achleitner is on his fourth CEO in eight years at the lender during which he has overseen a long series of unsuccessful turnaround efforts. Credit Suisse has the third CEO since Rohner took over in 2011.

Achleitner’s Backseat

However, in a sign that a backlash may be brewing, both chairmen are facing mounting opposition from key shareholders unhappy with their performance. Achleitner has become a lightning rod for many long-time Deutsche Bank investors after overseeing a long decline in the stock. Several stakeholders were debating last year whether to push the Austrian out.

Now Achleitner -- one of the best-connected executives in Germany -- is taking a backseat in discussions with some shareholders in an effort to defuse tensions, according to people familiar with the matter. He’s been making fewer public appearances, with CEO Sewing taking a more active role in communicating with backers, the people said, asking for anonymity to discuss private meetings.

Deutsche Bank declined to comment.

“A lot of people actually wonder whether the pendulum has gone too far with the board assuming more and more executive decision-making responsibilities and the CEO becoming less and less responsible,” said Nestor. “This is a real concern in some banks.”

At Credit Suisse, Rohner has draw the ire of David Herro, a major shareholder who supported Thiam and said it was a mistake to replace a CEO over a spying scandal, given that he had just completed a successful turnaround of the lender.

“We think there is great potential in Credit Suisse and we would hate to see it ruined by a chairman who is not on the same page of shareholder value creation as we are,” he said last month. “If he really loved the company, he should step down and resign.”

At UBS Group AG, Chairman Axel Weber recently poached the CEO of Dutch lender ING Groep NV to replace Sergio Ermotti, one of the longest-serving European bank CEOs, as shareholders look for new ideas to maintain the bank’s edge in wealth management. But tensions had been brewing for some time at UBS as well, with Weber saying more than a year ago that the bank was starting to look at potential CEO candidates.


Ermotti’s Move

Weber, who has been chairman of UBS since 2012, has said the search for his own successor will start next year. That search became more complicated after Ermotti, who was seen as a potential candidate for the chairman role, on Tuesday agreed to join reinsurer Swiss Re AG instead -- a move that suggests he wasn’t entirely happy about his departure from UBS.

At Standard Chartered, Chairman Jose Vinals has informally approached banking executives this year to gauge their interest in taking over from Chief Executive Officer Bill Winters, according to people familiar with the plans who asked not to be identified. His search is not currently part of any formal selection process, the people said.

Winters had a public spat with investors last year after some opposed the bank’s compensation policy, saying that shareholders’ criticism of his pension award was “immature.” While Standard Chartered eventually cut his retirement allowance, the chairman was not happy with Winters’s public handling of the situation, some of the people said.

‘Increasingly Complex’

HSBC Holdings Plc, meanwhile, removed CEO John Flint last year, citing an “increasingly complex” environment. Chairman Mark Tucker and Flint clashed over style, with Flint focused on cultural issues at the firm and Tucker taking a more data-driven approach, people familiar with the matter have said.

Tucker named Noel Quinn interim CEO, but he has yet to find on a long-term replacement, a task complicated after UniCredit SpA’s Jean Pierre Mustier dropped out of consideration for the role. Now pressure on the chairman -- the first outsider ever hired for the role at the 165-year-old institution -- is ramping up after a steep share price decline following a Feb. 18 strategy overhaul that failed to impress investors.

The bank chairmen “know that investors are increasingly prepared to vote against them, so there’s a lot of explaining they have to do on the management changes,” said Ingo Speich, head of sustainability and corporate governance at Deka Investment, which holds stakes in European banks.

Whether chairmen are ousted ahead of time or not, the wave of change ultimately won’t stop at the CEO level. At Deutsche Bank, Achleitner’s second five-year term ends in 2022. The current term of HSBC’s Tucker will expire at the bank’s shareholder meeting in 2021.

‘Next Transformation’

Rohner, who has been on Credit Suisse’s board since 2009, will see his term end in April next year. The bank on Thursday denied a report in the Financial Times that he is seeking to extend his tenure, saying there is an orderly succession plan for a replacement.

The chairmen have accompanied banks through far-reaching overhauls but their successors will face another set of challenges. That’s especially true for the necessity to adapt their business to higher environmental, societal and governance standards, a paradigm shift similar to that of the automotive industry, says Speich at Dekabank.

“European bank chairmen have been an anchor of stability in recent years, but they’re getting older and asking themselves about where the journey’s going,” said Speich. “We need to see that generational change in order for banks to manage their next transformation.”

Bankers Are Staring Into the Abyss, Again

AND THE ABYSS STARES BACK AT THEM

Marcus Ashworth and Elisa Martinuzzi Bloomberg March 5, 2020


(Bloomberg Opinion) -- Europe’s lenders are staring at yet another possible crisis, this time not of their own making, and the brutal reality is that the European Central Bank can do very little to help them. That’s bad news for the real economy too.

The economic hit from the rapid spread of the coronavirus will probably mean another spate of loans turning bad, a slump in demand for new borrowing, and falling income from trading and commission. The banking industry has been among the hardest hit in the recent stock-market rout. Little wonder.

There are some minor measures that ECB President Christine Lagarde could try to mitigate the pain, especially if she decides to cut the benchmark deposit rate deeper into negative territory (a nightmare for banks trying to squeeze a profit from lending).

At the very least, the ECB should protect lenders from any increased cost of depositing their excess reserves at the central bank by sweetening the terms of the “tiering” regime that it adopted in September. That change lifted about 800 billion euros ($892 billion) of commercial bank reserves at the ECB out of the -0.50% deposit rate tier — where banks are paying for the privilege of storing their money — and toward a slightly less punishing zero rate.

Separately, the ECB is already considering whether to offer banks even more super-cheap loans — known as targeted long-term repurchase operations, or TLTROs. This is wise. It will be vital for maintaining the liquidity of cash-strapped corporates; about three-quarters of European company borrowing comes via bank loans.

But there are justified doubts about the effectiveness of TLTROs in getting money to the neediest firms. In the fourth quarter of last year, companies’ demand for loans dropped in the euro zone. Even more laser-focused funding is needed specifically for small and medium-sized companies to prevent a credit crunch in the backbone of the region's economy — with even more attractive rates to encourage banks to participate. TLTROs are no magic wand if there’s no demand and banks are hesitant to lend.

A more controversial measure would be to adapt the ECB’s 190 billion-euro ($211 billion) corporate bond-buying program to allow the purchase of bank debt too. That might lower banks’ funding costs, which have risen since the virus hit Europe.

Unfortunately, there are huge conflicts of interest in directly financing banks, which are regulated by the ECB. Germany would certainly balk. Last decade’s euro crisis was exacerbated by the doom loop, where certain banks held too many of their nation’s bonds — intensifying the riskiness of the sovereign debt and the country’s banking system. A move that established new ties between a supranational authority and large lenders would bring its own fears.

In the wake of the virus outbreak, the Italian lenders’ association is already pleading for forbearance to allow the nation’s banks not to record past bad loans. But the ECB should stand firm. Such a move might help shield the lenders’ profit and capital in the short term but it would undermine confidence in an industry that’s still trying to win back investor trust. It never works to let banks sweep bad debt under the carpet.

European lenders are only recently emerging from a post-crisis cleanup that took years, getting bad debt levels back to more manageable levels (they’ve dropped by almost half to 543 billion euros). Banks have also steadily built capital buffers. Regulators could let them eat into these ratios, but such hard-fought improvements mustn’t be reversed lightly.

The continent’s banks were already in for an unhappy time before the virus hit, given the euro-area economy’s struggles. Now the industrial heartland of Italy has ground to a halt, the bloc’s frailties will be more exposed. A Europe Commission briefing note, seen by Bloomberg News, has warned that the virus could plunge Italy and France into recession. The paper spoke specifically of a possible increase in bad loans “to leveraged companies operating on a tight cash flow” and a decline in the bank asset values that “may trigger a vicious sovereign-bank loop.”

There’s no easy fix and the ECB has limited ammunition. The most dangerous temptation will be to unwind the progress made on improving banks’ resilience.

Canada’s LNG Dreams Fade as Blockades Add New Costs to Industry

Kevin Orland Bloomberg March 6, 2020

(Bloomberg) -- Hopes that Canada could turn into a gas export powerhouse seem to be waning fast.

The current climate for energy investments in the country and the global market for liquefied natural gas are a far cry from October 2018, when a Royal Dutch Shell Plc-led group announced plans to build a massive LNG terminal on British Columbia’s coast and Prime Minister Justin Trudeau hailed the project as “a vote of confidence” in Canada.

The latest sign of disenchantment came this week as a C$9 billion ($6.7 billion) LNG project in Quebec lost a large potential investor, which the Canadian Broadcasting Corp. identified as Warren Buffett’s Berkshire Hathaway Inc. That follows announcements last year that Chevron Corp. is planning to sell its 50% stake in an LNG project in British Columbia, and its partner in the venture is seeking to trim its stake as well.

While LNG projects across the globe grapple with the outlook for an oversupplied market in the coming years, growing environmentalist opposition is adding insult to injury in Canada. An indigenous protest against a pipeline that will supply Shell’s LNG project not only delayed construction of the conduit but also spiraled into nationwide blockades of key economic infrastructure that have hampered the country’s economy.

“Delays like this add to the risk associated with projects,” said Jackie Forrest, senior director at the ARC Energy Research Institute in Calgary. “It adds a headwind for sure in terms of the economics.”

The pipeline that sparked the recent blockades -- TC Energy Corp.’s Coastal Gaslink -- had previously been a non-controversial project, hailed as a model for engagement with indigenous communities because it had garnered the approval of all 20 First Nations along its route, including the elected leadership of the Wet’suwet’en indigenous group behind the recent protests. The opposition from that group is coming from some of its hereditary chiefs.

More broadly, opponents of liquefied natural gas projects point to the industry’s emissions of methane, a more potent greenhouse gas than carbon dioxide, and say that locking in dependence on any fossil fuel will thwart efforts to avoid catastrophic global warming. Proponents of Canadian natural gas in particular say that exporting the fuel to markets in Asia could reduce global emissions by displacing dirtier fuels, such as China’s use of coal for electricity generation.

Canada is the world’s fourth-largest natural gas producer and already is the fifth-largest exporter of the fuel. While the country only ranks 17th globally in natural gas reserves, that’s still enough to maintain current production levels for as many as 300 years.

An advantage the country has in the development of an LNG industry is that its gas is relatively cheap. Natural gas traded at Alberta’s AECO hub has declined for four out of the past six years and ended 2019 at $1.62 per million British thermal units, down from a record $12.92 in 2000.

Those lower prices, along with short shipping distance to Asia, help make Shell’s LNG Canada project a potentially cheaper supplier to Asian markets than similar projects in the U.S. and Australia, Forrest said. While LNG Canada’s supplies would be slightly more expensive than projects in Russia and Egypt, the added benefits of energy security keep Canadian projects competitive, she said in a February 2019 analysis.

The industry seemed poised to capitalize on those advantages when LNG Canada’s investors, which also include Malaysia’s Petroliam Nasional Bhd., Mitsubishi Corp., PetroChina Co. and Korea Gas Corp., announced they’d proceed with the project. The C$40 billion ($29.8 billion) facility in Kitimat, B.C., represented the largest private-sector investment in the country’s history, and, given the support that it had received from all levels of government, the decision sparked optimism that more facilities may follow.

Canadian Natural Resources Ltd. vice chairman Steve Laut, whose company is the country’s largest gas producer, said at the time that LNG Canada’s decision gave “confidence to other proponents” and made it more likely other plants would be built in British Columbia. In an interview on Thursday, he struck a more cautious tone.

Other projects “still could happen,” Laut said. “But LNG prices are quite depressed, so companies are taking a pause and reevaluating. Canada has another disadvantage, and that’s our regulatory environment, which makes it harder for projects to go through.”



Canadian Natural has been reducing its own gas output because of the recent low prices, and other producers may follow suit. The Canada Energy Regulator expects production to fall 1.8% this year to 15.95 billion cubic feet a day and to keep declining until hitting a low of 14.99 billion in 2023.

The global market for oil and gas investments is facing challenges as well, with the coronavirus outbreak dealing the latest blow to demand forecasts. Several LNG shipments are being canceled worldwide, and U.S. developers are being hammered in the equity and bond markets. The glut is poised to worsen, with BloombergNEF estimating that 71 million tons of new annual LNG production was sanctioned last year, with all of it scheduled to come online between 2023 and 2026.

But Michel Potvin, a councilor in Saguenay, Quebec, who leads the town’s promotion agency, blamed the investor pullout there on Canada’s handling of the rail blockades after the Wet’suwet’en protests, saying that “if this project doesn’t happen in Saguenay, it will happen in Massachusetts, in Texas or wherever.”

ARC’s Forrest said she wouldn’t be surprised if Canada falls out of favor for similar projects in the future.

“Now that an investor looks at the situation and the potential for delay, they may apply a higher cost of capital, which may make our projects more expensive,” ARC’s Forreset said. “That is one of my concerns. Certainty is very important.”

Sovereign Bond Yield Collapse Shows 

the World Is in Crisis Mode

Stephen Spratt, Ruth Carson and John Ainger Bloomberg March 6, 2020

(Bloomberg) -- Sovereign bonds are emphatically demonstrating their appeal as a last refuge for investors spooked by another global crisis, this time sparked by the economic fallout of the coronavirus.

Government debt racked up further historic milestones on Friday, with 30-year U.S. yields sliding through 1.3% for the first time and China’s 10-year rates falling to the lowest since the country was battling deflation in 2002. German yields closed in on record lows and those on short-dated U.K. debt neared 0% as the market braces for more stimulus from central banks.

The moves were so powerful they risk stoking alarm in other markets, from equities to credit. The unusually large swing in Treasuries sent S&P 500 Index futures tumbling, and pulled down equity benchmarks across Asia and Europe. Where yields bottom from here is anyone’s guess.

“Zero percent yields are no barrier to any bond market in the developed world right now,” said Shaun Roache, chief Asia-Pacific economist at S&P Global Ratings. “It’s an insane market -- investors are re-defining the idea of risk distribution.”

News on the coronavirus epidemic and policy makers’ responses -- including the Federal Reserve’s emergency 50-basis-point interest-rate cut Tuesday -- have swung stocks one way and the other. But for bonds it’s essentially been a one-way street.

Ten-year Treasury yields, arguably the single most powerful global financial-market metric, have cratered in the past three weeks, down about 80 basis points. That’s a scale unprecedented since the aftermath of the bankruptcy of Lehman Brothers Holdings Inc. in 2008.

They were at 0.73% as of 9:58 a.m. in London, with 30-year Treasuries at 1.31%. China’s 10-year notes yielded 2.63%, against about 3.15% at the start of the year. Australian 10-year bonds have lost about half the nominal yield they had just weeks ago, as that market anticipates the introduction of quantitative easing.

Sharp gains in U.S. long-bond futures have caused circuit breakers to kick in on three separate occasions, briefly halting trading.

Roache said investors are now discounting a return of QE by the Fed and an expansion in Bank of Japan asset purchases. Money markets are pricing about a 90% possibility that the European Central Bank will lower its deposit rate by 10 basis points next week, or boost asset purchases.

But the trend has been as inexorable as the spread of the coronavirus itself, with new waves of infections and markdowns in growth forecasts driving fresh inflows to risk-free securities.

It’s driven the global supply of bonds with negative yields to $14.4 trillion, up by well over $3 trillion since mid-January, before the epidemic became apparent in central China.

Last August’s record -- almost $17 trillion amid a rough patch in the U.S.-China trade war -- stands to be blown away should a swathe of the Treasury market see nominal yields drop below zero for the first time. Two-year rates have less than half a percentage point remaining.


Race to Zero

In the U.K. too, two-year yields at one point Friday morning hovered just 10 basis points above 0%.

“The race to zero is just flying off the handle,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. “Trying to draw a line in the sand for 10-year yields when markets are slammed by fanatical hopes of Fed action and pandemic fears in turn may be a fool’s errand.”

It’s all been a dramatic showcase for the benefits of bonds as a hedge in portfolios, after that traditional allocation strategy faced questions less than two years ago. The Bloomberg Barclays Global Aggregate index of bonds has returned 3.3% since the year began, versus about minus 7% for the MSCI All Country World Index of stocks. Gold, another once-maligned hedge, is up 11%.

CRIMINAL CAPITALISM
Tea Boy to Tattooed Trader: A Secret Tipster’s Life and Death

Franz Wild, Gaspard Sebag and Alan Katz Bloomberg March 5, 2020


(Bloomberg) -- The coroner ruled it “death by misadventure.”

By the time the concierge reached James Harris last June, he was lying in the hallway outside his apartment, arms and legs shaking, gasping for air. Although an ambulance crew raced in and administered an antidote for opiate overdoses, Harris’s pulse returned only briefly. Three minutes later, the 42-year-old British trader was dead.

Harris had been troubled for months, behind on his rent, drinking and using copious amounts of cocaine in his apartment not far from London’s Buckingham Palace, witnesses said in statements read at his inquest. While searching his apartment, police found crack pipes, sedatives and a mobile phone. When they lifted his body to wheel it to the ambulance and drive it to the morgue, a second phone dropped out of the dead man’s pocket.

Mobile phones were Harris’s main work tools. The one that fell out of his pocket was one of probably dozens he had used over the years and then discarded to avoid being traced. Through calls, texts and encrypted messaging apps, Harris plugged into a loose network of day traders on two continents who cultivated sources at banks and companies to procure an edge on large deals. They exchanged secrets on corporate takeovers, profit warnings and medical trials, trading on the information to generate what prosecutors say were hundreds of millions of dollars in profit.

Since Harris’s death, more details about different parts of the network have emerged in court proceedings. A few days after he died, his friend Walid Choucair was convicted of insider trading in London. Marc Demane Debih, a Geneva-based trader arrested in Serbia and extradited to the U.S., pleaded guilty and testified in a New York court in January that he got tips from a Goldman Sachs Group Inc. banker and from other insiders via a French art dealer. Telemaque Lavidas, son of a pharmaceutical-company director who wasn’t implicated in the scheme, was convicted of leaking company secrets to one of Demane Debih’s trading partners, who prosecutors say was also part of the insider-trading network.

A reconstruction of Harris’s life, based on interviews with people who knew him, helps fill in some missing pieces of the puzzle. More than a trader, Harris was a middleman, trafficking in information for a slice of future profits. He jealously guarded his sources, often exaggerated and sometimes provided false information, the friends say.

Harris had been tripped up long before Choucair, Demane Debih and Lavidas. He was arrested in the U.S. in 2012, pleaded guilty to securities fraud and agreed to go back to the U.K. rather than face prison in New York. He promised the judge that his days of trafficking inside information were over. In his decision, the judge said he was sure Harris had changed his ways.

But it didn’t take long for Harris to fall back in with his old crowd. The lure of money and the things it could buy — a vintage red Ferrari, expensive cigars and cocaine — was apparently too hard to resist for an optician’s son who started out as a tea boy at the London Stock Exchange. It had been a wild ride from that lowly beginning to the high-flying trader’s life, according to people who knew Harris and requested anonymity to speak about their dead friend.

At some point, Harris started mingling with a group of traders who shared tips, made millions and partied at glamorous clubs or on yachts docked off Monaco. He enjoyed the life, his friends said, and had a magnetic personality. He also had a dark side: One trader described him as an aggressive lout. Covered in tattoos strategically placed to be hidden by a dress shirt and pants, he was an odd figure among the traders who frequented celebrity hangouts like the Chiltern Firehouse and members-only Tramp in London, or Les Caves du Roy in Saint Tropez, people who knew him said. While others talked about financial markets long into the night, Harris preferred to discuss music and art, introducing friends to hip-hop records produced by the Salazar Brothers and street artists Paul Insect and Banksy.

At his trial, Choucair described how the traders operated, and others in the group confirmed their methods. They were careful to avoid detection, speaking on burner phones that they replaced after a few months. They bought contracts for difference, or CFDs, a leveraged bet on a stock’s movement that meant gains and losses could be far higher than the initial investment. The group, a loose association more than a ring, became expert at ferreting out mergers and acquisitions.



Demane Debih’s testimony shed light on the value of intermediaries. He said he paid $12 million to French art dealer John Dodelande for tips from London investment bankers to insulate him from their source. Dodelande hasn’t been charged with any wrongdoing.

Once they’d built their positions, Harris, Choucair, Demane Debih and others would call journalists, including some at Bloomberg News. They were betting that if the reporters wrote a story, the stock would move and the traders could cash out. Bloomberg’s policy is not to publish any information without confirming it with people who have direct knowledge of the matter. The policy also prohibits telling sources if or when a story will be published.

In 2011, Harris left London, flew to New York and took up residence at the swanky Mercer Hotel. Seeing him whiz off in a flashy car one day, a 22-year-old American woman named Michelle Gomolin slipped the doorman her number and asked him to pass it along. Six months later they married and moved into an apartment in SoHo, embarking on a roller-coaster ride that even then Harris said he wanted to turn into a movie, Gomolin wrote in an Instagram tribute after he died.

“You took me on this ride for years and years, a ride that I could never get off of,” Gomolin, who eventually divorced Harris, wrote. “You were the highest highs and the lowest lows. The best of times and the worst of them too. You were the most lavish, insane, larger than life human I have ever met. You walked as if you owned the world, and to me you were my entire existence. Your quirks and oddities never ceased to amaze me.”

Within a year of their marriage, Gomolin was posting $20,000 bail to get Harris out of jail. He had been arrested by FBI agents for securities fraud, but he’d also become entangled in an international scandal involving the son of a former president of Kyrgyzstan.

Harris had been providing trading tips to Eugene Gourevitch, who ran a $45 million securities account for the former leader’s son, Maksim Bakiyev. Gourevitch was arrested in 2011 and agreed to cooperate with the Justice Department to dismantle the insider-trading network.

Gourevitch said in an interview that he was introduced to Harris by friends who told him he had access to insider information. “Harris bragged he knew lawyers and bankers but never mentioned specific names to protect his source of income,” Gourevitch said. “Sometimes Harris’s information was spot on, at other times it was completely wrong.”

To help U.S. investigators, Gourevitch began recording conversations with suspects, including Harris and his friend Tayyib Ali Munir, then a trader at Brown Brothers Harriman & Co. During one conversation in early 2012, Munir told Gourevitch he could provide corporate earnings reports ahead of publication if Bakiyev agreed to pay $122,000 for previous tips, according to court documents. Munir also boasted that some of the information came from a former director of the New York Stock Exchange.

Munir didn’t supply the promised releases, and it’s unclear if he had a source at the exchange. But Harris came through a few weeks later. A day before Russian wireless company VimpelCom Ltd. reported a net loss, he gave Gourevitch the statement the company was planning to publish. He told Gourevitch to short VimpelCom and pay him half the profit, which would have netted Harris about $1 million. Gourevitch didn’t make the trade, but he paid Harris $50,000 anyway.

Harris and Munir were both arrested and pleaded guilty. Harris was sentenced to two years of supervised release, and Munir three. Harris was ordered to forfeit the $50,000 and a Ducati motorbike he bought with proceeds from the securities fraud. Gourevitch got five years. Charges against Bakiyev were dropped a few months later without explanation. Munir and a lawyer for Bakiyev didn't respond to requests for comment.

“No fines were imposed because the defendant does not have any assets, and it is unlikely that he will have any in the foreseeable future to pay a fine,” Judge Jack Weinstein wrote about Harris in his decision. “It is unlikely that the defendant will engage in further criminal activity in light of his sincere remorse.”

Harris returned to the U.K. and rented an apartment in St. James’s, an exclusive neighborhood between Buckingham Palace and Piccadilly Circus that is home to some of London’s finest tailors. Choucair testified during his trial that he was still exchanging tips with Harris in late 2013, and call logs between the two presented to the jury showed they spoke frequently before Choucair bought CFDs for property group BRE Properties Inc. The jury found Choucair’s friend Fabiana Abdel-Malek, a compliance officer at UBS Group AG at the time, guilty of leaking confidential information about an acquisition of BRE to Choucair. No one alleged Harris did anything wrong.

Harris resurfaced again in London’s day-trading scene in 2016, according to two people who interacted with him, then went silent during a spell in the Caribbean. He got back in touch early last year, touting stocks and asking old friends to invest on his behalf as a way of circumventing margin limits or disguising bets.

He claimed to have information about an alleged takeover of French chemical company Arkema SA, showing what turned out to be a forged offer document, one of them said. In what would turn out to be his last trade, in mid-May, he persuaded some of the same people to buy derivatives on his behalf linked to the share price of At Home Group Inc., a U.S. home-decor retail chain.

With At Home, Harris again showed what he said was a detailed copy of a takeover offer, according to one of the people. That document, too, turned out to be doctored, though it wouldn’t become apparent until a few days after Harris’s death, when the company slashed its profit outlook and shares lost more than half their value. Because the trades were done informally, Harris’s friends who suffered losses on his bet had no claim on his estate.

A few days after Harris died, his red Ferrari was parked outside the Greek Orthodox Saint Sophia’s Cathedral in London, where his family and friends gathered in a haze of incense. His body lay beneath a gold mosaic dome with an image of Jesus crouching before a rainbow. His coffin was decorated with images of skyscrapers. Friends and family filed past, leaning in to kiss him, hold his hand or caress his cheek. Those who spoke described a mischievous prankster, a restless soul filled with energy and tenderness, on a mission to sample the best the world had to offer.

“Only you, James, could live in a five-star hotel,” a former girlfriend, Olcay Gulsen, dressed in a broad-brimmed white hat and lace suit, said between sobs. “So lavish. The cool cars, the cigars, everything. But that’s not what made you so special. It was your heart, James.”

In October, in a coroner’s court above a bustling food market in West London, authorities said they found nothing suspicious about Harris’s demise: He had been alone at home that Monday morning, and video surveillance footage showed no one coming or going. His sister Emily wept as the coroner found that an overdose had killed her brother. The coroner called it death by misadventure – not a suicide, not an accident, not at the hands of someone else, but the result of a risk taken voluntarily.

JAPAN
Steel Giant Mulls Plan for Aging Plants as Demand Fades

Masumi Suga Bloomberg March 5, 2020


(Bloomberg) -- JFE Holdings Inc., Japan’s second-biggest steelmaker, is reassessing production at its aging facilities at home as domestic demand shrinks and competition intensifies overseas.

In contrast to faster growing markets such as China and India, demand in Japan is set to fall over the next 10 to 20 years as the population shrinks, Chief Financial Officer Masashi Terahata said in an interview earlier this week. The company also faces stiffer competition in Southeast Asia, its top export market, as rival mills, especially from China, step up sales of cheaper steel.

“We must look ahead and make a judgment on the optimal structure of our production facilities for the mid- to long-term,” Terahata said at the company’s headquarters in Tokyo. “We will see a drastic change in the worldwide industrial map if Chinese mills build blast furnaces in Southeast Asia” as it could make Japanese steel less competitive, he said.

JFE is currently trying to estimate the pace of decline in domestic demand over the next couple of decades to determine the appropriate size of its production capacity, Terahata said, adding that the company will unveil its reorganization plans in the year starting April. It also intends to utilize or add more overseas manufacturing sites and move some production from Japan to faster-growing Asian economies to compete against foreign rivals, he said.

JFE currently ships more than 40% of its crude steel outside its home market. The plan to reorganize its facilities comes as margins are being squeezed by high production costs and low steel prices. JFE has forecast zero profit for the full-year at its steel unit, which contributes more than 60% of the company’s total sales.

Japan’s steelmakers were hit particularly hard by a downturn in both domestic and overseas demand, as well as disruptions to production caused by a typhoon last year. Nippon Steel Corp. last month announced a structural reform, including the unprecedented closure of all facilities at its Kure steelworks in southwestern Japan, as it warned it was heading for a record annual loss.

JFE collapsed 7.2% to close at 889 yen in Tokyo on Friday, the lowest since the company was formed by a merger in 2002. Nippon Steel tumbled 7.5% to the lowest in 40 years, while the Nikkei 225 stock index declined 2.7%.

In 2019, Japanese crude steel output fell 4.8% to 99.3 million tons, the first time in a decade production has fallen below 100 million tons. The figures contrast with a bumper year in China, which increased its crude steel output by 8.3% to a record 996 million tons. Japan is now the third biggest producer after being overtaken by India in 2018.

Coronavirus Concerns

“We have long spent money on renovation and maintenance for aging facilities in Japan, but the issue is we can’t spending the same way,” the executive said. JFE has said it will scale back its proposed 1 trillion yen ($9.3 billion) capital investment budget by 10% over the three years through March 2021.

The outbreak of the coronavirus is also a concern. While JFE has yet to see a major impact, Terahata says the virus will pose two risks. It could sap demand if customers in the manufacturing and construction industries are unable to secure enough parts or materials from China, halting activity. It also raises the risk that China would ship its record stockpiles of steel to other countries at a discount if it’s unable to consume it at home.

In a reflection of the growing turmoil, Japan’s top steel industry group last week urged mills in China to reduce output as demand falls.

Tesla Sent Incomplete Injury Reports, California Regulator Says

Josh Eidelson and Dana Hull

BloombergMar. 6, 2020, 4:00 a.m.

(Bloomberg) -- For years, Tesla Inc. has refuted concerns about worker safety at its main assembly plant by describing reviews from a California regulator as vindication.

But new documents and statements from the agency contradict those claims. Tesla omitted hundreds of injuries that the company listed in logs at its factory from annual summary data that the company sends to the government, according to a memorandum the state’s workplace-safety agency sent in December. California’s Division of Occupational Safety and Health, or Cal/OSHA, also hit Tesla with a citation that month for failing to properly record other injuries in its logs since 2015.

 The documents, some of which were obtained through a public-records request, undermine statements Tesla executives have made about its plant in Fremont, California. Chief Executive Officer Elon Musk dedicated a portion of an October 2018 earnings call to brief investors about workplace-safety efforts. He said Cal/OSHA had investigated the company and concluded it had not been underreporting injuries. Last month, Tesla said a review by the agency showed its record-keeping was 99% accurate.

But Cal/OSHA wasn’t focused on verifying the overall accuracy of Tesla’s injury record-keeping in the first place in 2018, according to Frank Polizzi, a spokesman. The agency also can’t verify the claim that Laurie Shelby, Tesla’s environmental, health and safety vice president, made in the February blog post. Tesla didn’t respond to requests for comment.

Tesla’s workplace safety faded from the headlines as the company emerged from “production hell,” Musk parlance for the period when he struggled to ramp up the Model 3 sedan. But the Cal/OSHA documents suggest the carmaker overstated the strides it was making in improving injury rates after reports by the Center for Investigative Reporting and others called attention to the issue.

Government officials rely on accurate summary data from companies to determine which workplaces need the closest scrutiny in the future, said Deborah Berkowitz, the former chief of staff for the U.S. Occupational Safety and Health Administration.

“If companies don’t report accurately, it has really an impact on where the agency ends up using its scarce resources,” said Berkowitz, who directs the worker safety and health program at the National Employment Law Project, a pro-labor non-profit. “It’s very important to the agency that the summary data be accurate so that it doesn’t portray a workplace that’s safer than it really is.”

In retrospect, Tesla’s handling of the workplace-safety scrutiny appears similar to how it dealt with a National Highway Traffic Safety Administration investigation into Autopilot in 2017. The agency concluded the controversial driver-assistance system wasn’t defective and didn’t need to be recalled partly based on a finding that Teslas with Autopilot installed were crashing 40% less than those without. But a study released last year said Tesla handed over data to NHTSA that was incomplete or contradictory. The agency has said it stands by the finding.

In its December memorandum, Cal/OSHA said the 2018 summary data Tesla provided to the government was missing roughly three dozen incidents that were listed in its logs, or 4% of the total. For 2016, 44% of the incidents weren’t included.

The $400 citation Cal/OSHA issued that month was for 14 injuries or illnesses the agency said the company failed to properly record in its logs. Four of those occurred in 2019, and the others were between 2015 and 2018. Tesla is appealing the citation, and the agency said it’s reviewing additional evidence the company has provided.

Cal/OSHA said in its December memorandum that disparities sometime arise when companies learn about incidents and add them to their injury logs after they’ve sent their summary to the government. But the agency said that when there are “significant numerical disparities,” a company should consider whether its processes are “adequate to verify accuracy.”

The government uses the annual summary logs to calculate total work-related injury and illness rates, measured as the number of incidents per year per hundred full-time employees. For 2018, the Bureau of Labor Statistics said the overall rate for automobile manufacturing was 6.1. The figures Tesla reported on its summary log for 2018 add up to a rate of 6.2; including the additional 36 incidents that Cal/OSHA says were omitted would raise Tesla’s rate to 6.5.

Tesla’s Fremont plant produces the Model S, X and 3 and is just starting to build Model Y, a new crossover slated to begin customer deliveries this month. The company began making the Model 3 at a new factory near Shanghai in December and aims to begin construction of a plant near Berlin this year.

LINE 5
Enbridge hires companies to design, build Great Lakes tunnel

The Canadian Press March 6, 2020


Enbridge hires companies to design, build Great Lakes tunnelMore


TRAVERSE CITY, Mich. — Enbridge Inc. said Friday it has hired companies to design and build a disputed oil pipeline tunnel beneath the channel linking Lakes Huron and Michigan, despite pending legal challenges.

The Canadian company is forging ahead with plans to begin construction work next year on the tunnel, which would replace twin pipes that have lain across the bottom of the Straits of Mackinac in northern Michigan since 1953.

State Attorney General Dana Nessel is appealing a Michigan Court of Claims ruling last October that upheld an agreement between Enbridge and former Republican Gov. Rick Snyder's administration to drill the tunnel through bedrock beneath the straits. The case is before the state Court of Appeals, which declined to put the lower court ruling on hold while considering the matter.

Nessel, a Democrat, also has filed a separate lawsuit seeking to shut down Enbridge's existing Line 5 pipes.

But the company believes its success in court thus far creates "a path forward," spokesman Ryan Duffy said.

“We feel like it's time now for Enbridge and the state to work together and keep the project moving," he said.

Enbridge, based in Calgary, Alberta, planned Friday to provide a status report to the Mackinac Straits Corridor Authority during a meeting in St. Ignace, Michigan. The panel was established by the law that approved the tunnel agreement.

Great Lakes Tunnel Constructors, a partnership between Jay Dee Contractors Inc. of Livonia, Michigan, and the U.S. affiliate of Japan-based Obayashi Corp., will build the tunnel. Arup, a multinational engineering company based in London, will design it, Enbridge said in a statement.

Line 5 each day carries 23 million gallons (87 million litres ) of crude oil and natural gas liquids used for propane between Superior, Wisconsin, and Sarnia, Ontario. A roughly 4-mile (6. 4-kilometre ) segment divides into two pipes that run beneath the Straits of Mackinac.

Environmental groups want the line decommissioned, contending the underwater pipes are aging and vulnerable to a rupture that could do catastrophic damage to the lakes and their shorelines. Enbridge says they're in good condition and sustained only minor damage from a tugboat anchor strike in 2018.

For Love of Water, an advocacy group, urged the corridor authority to halt further work on the tunnel plan. The Traverse City-based organization argued that Enbridge had failed to seek authorization for the project through the Great Lakes Submerged Lands Act as required under a common-law doctrine that holds navigable waters and soils beneath them in trust for public uses.

Bypassing those laws is "one of the most egregious attacks on citizens' rights and sovereign public trust interest in the Great Lakes in the history of the state of Michigan," said Jim Olsen, the group's president.

Duffy said Enbridge will seek construction permits from the Michigan Department of Environment, Great Lakes and Energy and the U.S. Army Corps of Engineers.

John Flesher, The Associated Press

ALBERTA to spend $100M on operating rooms to shorten wait times

CBC March 4, 2020

The Alberta government will spend $100 million constructing and renovating operating rooms in Edmonton, Calgary, Grande Prairie and elsewhere, Premier Jason Kenney says.

The investment is part of a re-organization of Alberta operating rooms to equip more urban hospitals to handle complex surgeries, Health Minister Tyler Shandro told reporters at Edmonton's Mazankowski Alberta Heart Institute on Wednesday.

"Albertans are going to get quicker access to surgeries they need closer to home," Shandro said.

Wait times for some essential surgeries rose between 2015 and 2019 to become unacceptably long, Kenney said on Wednesday.

"Albertans want, expect and deserve the highest quality health care that their tax dollars can buy," he said.

The money will cover upgrades of operating rooms in Edmonton's Royal Alexandra Hospital and the University of Alberta Hospital, including the addition of a new operating room.

Calgary's Foothills Medical Centre will see upgrades to 12 operating rooms. Surgical suites in Grande Prairie, Rocky Mountain House, Edson, Lethbridge and Medicine Hat will also be renovated.

The changes will allow Alberta Health Services to shuffle more routine procedures to smaller hospitals in Fort Saskatchewan, Edmonton's Grey Nuns Hospital, and the Sturgeon Community Hospital in St. Albert.

Tweaking where surgeries are performed

The changes are part of a new provincial surgical care initiative, which aims to shorten wait lists by spending $500 million in the next three years. The approach is similar to a Saskatchewan program that ran between 2010 and 2014 to whittle down wait times.

Dr. Verna Yiu, CEO of Alberta Health Services, said Alberta will need more doctors and other health professionals working in the province to tackle the growing number of planned surgeries. That news comes at a time when family doctors are in an uproar about the government's changes to how they are paid.

The government had already announced in last week's budget it intends to double the number of surgeries performed in private clinics. By 2023, 30 per cent of Alberta surgeries would be done outside of hospitals, if the government achieves this goal.

In its 2019 election platform, the United Conservative Party pledged to reduce surgery wait times to no more than four months within four years of taking office. Its goal was to reduce the number of people waiting more than three months by 75 per cent by the end of government's first term.

According to the Canadian Institute for Health Information, wait times for non-emergency coronary bypass surgery, hip replacements, knee replacements and cataract repair all rose between 2014 and 2018. For cataract repair, in 2014, 71 per cent of Alberta patients had surgery within 112 days of referral. By 2018, only 49 per cent were in the operating room within that 112-day goal.

Alberta did improve access to urgent hip fracture repair surgeries during that time. In 2018, 94 per cent of patients were under the knife within 48 hours.

Critics question privatization plan

NDP health critic David Shepherd said Wednesday the government will have trouble staffing more operating rooms when its policy decisions could drive health-care workers out of the province.

 no money in the budget for raises to nurses and other public sector workers.Many family doctors are upset about government changes to doctor pay and the finance minister has said there's

"(Shandro) is making enemies of the very doctors and physicians that need to perform these surgeries, not to mention the nurses and the other people that provide support, as they look to reduce the number of nurses across the province," Shepherd said.

Sandra Azocar, executive director of Friends of Medicare, questioned how the government intends to spend the rest of the $500 million it has budgeted to improve surgery wait times. Although she welcomed a $100-million investment in public hospitals, she questioned how much funding will go to for-profit surgical centres.

She said rejigging where surgeries are offered could force some patients and families to travel and incur extra costs out of pocket.

Outsourcing more surgeries to private clinics was a supposedly cost-saving option recommended by both a blue ribbon report on provincial spending and an Ernst and Young review of Alberta Health Services.

SCHADENFREUDE Environmental groups criticize public hearings set to study massive Saguenay LNG project

QUEBEC LIKE BC OPPOSES ALBERTA OIL PIPELINES BUT WANTS LNG

CBC March 4, 2020
A coalition of environmental groups is asking Quebec's environmental review agency to widen the scope of its hearings into a $9.5-billion project to build a natural gas facility in the Saguenay.

As it stands, the agency, known as the BAPE, will begin public hearings later this month in the Saguenay. The hearings will focus only on GNL Quebec's plans to build a liquefaction plant by a port, roughly 230 kilometres northeast of Quebec City.

But in an open letter, 42 environmental and community groups say the BAPE should study the proposed Saguenay facility alongside plans to build a 780-kilometre pipeline, which would feed the facility natural gas from Western Canada.

They also want additional hearings held in Quebec City and Montreal, so local concerns aren't drowned out in the process.

"We fear that if there are public hearings only in Saguenay, people from all across Quebec will go there, and then it will be less equitable for people in Saguenay," said Alice-Anne Simard, director of Nature Quebec, one of the groups behind the letter.

"We know that many people all across Quebec want to take part in this process because this is such an important project for the future of this whole province."

View photos

Priscilla Plamondon Lalancette/Radio-CanadaMore

In addition, the groups are expressing concern about the impartiality of the environmental review process.

It was revealed recently that one of the two BAPE commissioners in charge of the review, Denis Bergeron, worked for 16 years as a consultant in the chemical industry.

The environmental groups are proposing that a third commissioner be appointed.

Their demands, however, failed to convince the BAPE to change course, at least for the time being.

The agency defended the impartiality of its commissioners in a statement released Wednesday. It also said it is rule-bound to hold public hearings in the community where a project is slated to be built.

"The BAPE has a lot of respect for host communities," the statement said.

Long list of environmental concerns

The project — both the port facility and the pipeline — has divided many in the region, and the province as a whole.

Premier François Legault has been vocal in his support of the project, claiming it will help reduce emissions globally by facilitating exports of LNG, which emits fewer emissions than coal.

But environmental groups argue the project will actually increase greenhouse gas emissions. And their concerns don't end there.

"There are, in addition, concerns about local environmental and social impacts of the project along the pipeline route, on endangered species such as the caribou, as well as impacts on the Saguenay River and the Gulf of Saint Lawrence, where ships would transport the gas liquefied by the plant," said Caroline Brouillette, a researcher with the environmental lobby group Équiterre.

View photos Julia Page/CBC

For its part, GNL Quebec maintains its plant will be carbon neutral, and will emit 85 per cent fewer greenhouse gas emissions than similar projects because it will be powered by hydroelectricity.

"The Project aims to support the fight against climate change in Europe, Asia, and other parts of the globe by offering transition energy that is cleaner than those currently in use, such as coal and fuel oil," GNL Quebec said in a statement.

Brouillette said that argument is not good enough.

"Rather than reduce emissions from coal, it is likely to slow down the transition to renewables," Brouilette said, referring to solar and wind energy.

The BAPE's public hearings begin March 16.