CRIMINAL CAPITALI$M

Credit Suisse chief faces early test in $800m Singapore trial

 

Ulrich Körner has his hands full as he steers Credit Suisse through troubled waters. 

Keystone / Salvatore Di Nolfi

Ulrich Körner faces his first test as Credit Suisse chief executive as the bank goes on trial in Singapore over its past relationship with Georgia’s former prime minister Bidzina Ivanishvili.

This content was published on September 5, 2022 - 
Owen Walker, Stephen Morris, Mercedes Ruehl, Financial Times

Billionaire Ivanishvili, who is Georgia’s richest person, is pursuing the Swiss lender for up to $800 million in damages, having already been awarded $607.5m from the bank in a related case in Bermuda this year.

Körner — Credit Suisse’s fourth chief executive since 2005, who last month replaced Thomas Gottstein — is grappling with a major overhaul of the lender’s investment bank, which analysts have estimated could lead to billions of dollars in restructuring costs and require an additional capital raise.
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The Ivanishvili case is also an early challenge for Credit Suisse’s recently installed general counsel Markus Diethelm. Both Körner and Diethelm are former UBS executives who spent more than a decade fighting legal battles at the bank following the financial crisis.

Credit Suisse can ill-afford another nine-figure loss after setting aside a total of SFr3.9bn ($4bn) in net provisions for litigation since the start of 2020.

The bank’s executive board has been holed up in meetings this week — coincidentally also taking place in Singapore — thrashing out the future of the group’s investment bank. Analysts at Deutsche Bank said the costs of paring back the unit — outlined as a priority by Körner, dubbed “Uli the Knife” — would leave a SFr4bn hole in the bank’s capital position.

Changes too late?

“Running down other parts of the investment bank and selling smaller businesses across divisions could help over time, but this would likely come too late to avoid an equity raise,” wrote Deutsche analysts Benjamin Goy and Sharath Kumar Ramanathan.

Such a move would prove unpopular with shareholders after Credit Suisse was forced to raise $1.9bn last year. Its share price dropped below SFr5 for the first time in more than three decades this week, having halved since the start of last year.

The Singapore trial, which is expected to take three weeks, will start on Monday morning at the country’s Supreme Court and be heard before Justice Patricia Bergin. The closing arguments are expected in December, with a verdict due early next year.

Ivanishvili’s dispute with Credit Suisse goes back to 2011 when he was a private banking client of the group.

It was then that details emerged that, for more than a decade, Credit Suisse private banker Patrice Lescaudron defrauded some of the Swiss bank’s most sensitive accounts — including those held by Ivanishvili and Russian oligarch Vitaly Malkin — funding a lavish lifestyle of luxury houses, sports cars, Rolex watches and gifts of Chanel jewellery.

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A damning report into the affair by the Swiss regulator Finma, which was inadvertently made public in February last year, found repeated warning signs, evidence of hundreds of suspicious transactions and four formal disciplinary proceedings that were not acted upon by Credit Suisse.
Rogue banker blamed

The bank has long maintained that Lescaudron — who was criminally convicted in 2018 and died by suicide in 2020 after an early release — was a highly successful rogue operator who worked tirelessly to hide his illegal activity from superiors and colleagues. The Swiss criminal case against Lescaudron found the bank to have been a wronged party.

Ivanishvili tried to sue Credit Suisse in New Zealand, one of the countries — alongside Singapore and Bermuda — where the bank set up investment vehicles for wealthy clients. But the country’s High Court ruled in 2018 that the case should be heard in Switzerland.

He is expected to give video evidence from Georgia in the trial. His lawyers, Drew & Napier, are expected to argue that Credit Suisse’s Singaporean subsidiary, Credit Suisse Trust, failed to review the investments, did not protect the assets and did not accurately account for them.

However, a person briefed on Credit Suisse’s legal defence said the case would rest on whether staff in the Singapore subsidiary were party to the fraud with Lescaudron, which the bank denies, or acted in good faith.

They added that it was too early for the bank to take provisions or inform the market about potential losses.

Expensive tree hobby

Neither side has proposed settling the case so far, according to people briefed on the process.

Credit Suisse said it “does not comment on ongoing litigation matters”, while Ivanishvili declined to comment.

Ivanishvili, who served as Georgia’s prime minister between 2012 and 2013, amassed an estimated $4.8bn fortune in metals and banking, according to Forbes.

In recent years, he has spent millions collecting giant trees and transporting them by barge to his private garden on the Black Sea shoreline, which is partly open to the public. A documentary about the billionaire’s latest hobby, , premiered at the Sundance Film Festival last year.

Copyright The Financial Times Limited 2022

BlackRock hits back at Republican AGs’ ESG qualms

By International Affairs

September 9, 2022

BlackRock is refuting what it calls ‘inaccurate’ claims by a coalition of Republican attorneys general that the money manager’s ESG investing policies sacrifice investor returns and violate the firm’s fiduciary duty.

On August 4, Arizona Attorney General Mark Brnovich and 18 other conservative attorneys general sent a letter to BlackRock chief executive Larry Fink accusing him and his firm of ‘putting leftist politics above investors’ interests and returns.’

A letter released Wednesday by BlackRock’s head of external affairs Dalia Blass responds to that accusation and explains that BlackRock’s motivation for participating in ‘various ESG-related initiatives’ is not driven by politics, but in fact by financial performance.

‘We believe investors and companies that take a forward-looking position with respect to climate risk and its implications for the energy transition will generate better long-term financial outcomes,’ BlackRock’s letter states, noting that governments comprising more than 90% of global GDP have committed to shifting to net zero energy policies in the future.

Among BlackRock’s ESG-related policies is its participation in the Taskforce on Climate-Related Financial Disclosures, which asks companies to submit detailed disclosures on the environmental impact of their operations. BlackRock argues this is an effort to enhance transparency for risk assessment purposes, and denies that it dictates emissions targets or political lobbying strategies for companies it invests in.

Ironically, BlackRock’s statements seem to align perfectly with Attorney General Brnovich’s statement in a news release that ‘a fiduciary responsibility requires putting your client’s best interests ahead of any political agendas.’ The disconnect, it would seem, is that ESG critics including the aforementioned attorneys general appear to believe that climate change is not a pecuniary issue. BlackRock disagrees, but argues it has not limited clients, including pension fund clients, from investing in legacy oil and gas companies if they so choose.

‘BlackRock’s belief that climate risk poses investment risk is backed by our publicly-available research,’ the firm wrote. ‘We also understand, however, that these views are not universal. For this reason, we offer clients a broad choice of investment products … that allow clients to gain broad market exposure, including to energy companies, and to make energy-specific investments.’

BlackRock’s letter further states that firm leadership is ‘disturbed’ by the emerging trend of red states politicizing pension plans and ‘troubled’ by their efforts to use anti-boycott statutes to limit what kinds of strategies retirees can invest in.

Last month, Texas Comptroller Glenn Hegar banned BlackRock and nine other asset managers from handling pension funds for the state after determining that the firms ‘boycott’ oil and gas companies – West Virginia previously did something similar – and ordered state pension funds to divest from about 350 ETFs and mutual funds found to have an ESG tilt.

In its letter, BlackRock once again categorically denied that it boycotts oil and gas companies, or companies in any sector, and asserted that it currently has roughly $170bn invested in US energy companies, including in states that have been hostile to the firm. Texas Attorney General Ken Paxton was among the 19 signatories of Brnovich’s August 4 letter.

Wall Street Giants Set to Smash Profit Records Off Global Hunger, Energy Crisis



By International Affairs

September 9, 2022

Russia’s war on Ukraine has wreaked havoc on global commodity markets, driving up energy and food prices and exacerbating hunger emergencies around the world.

“We’re in a market where speculators are driving prices up.”

But while disastrous for the global poor—millions of whom are living on the brink of famine—the chaos has been a major boon for Wall Street giants, according to new data showing that the world’s 100 largest banks are on pace to smash commodity trading profit records this year.

“The 100 biggest banks by revenue are set to make $18 billion from commodities trading in 2022,” Bloomberg reported Friday, citing figures from the London-based firm Vali Analytics. “That would be the highest in the data, which goes back 14 years, and exceed the previous high watermark in 2009.”

“The prediction is the latest evidence that the wild swings in energy prices triggered by the war in Ukraine are delivering a boon to commodity traders, even as they push European nations into crisis,” Bloomberg added. “Vali, an analytics firm that tracks trading business, compiled data that includes the leading five banks in commodity trading: Macquarie Group Ltd., Goldman Sachs Group Inc., JPMorgan Chase & Co., Citigroup Inc., and Morgan Stanley.”

Though the prices of wheat and other food staples have fallen from their peak in recent months, they remain significantly elevated compared to last year, according to the United Nations’ Food and Agriculture Organization, leaving millions vulnerable to hunger and starvation.

The World Food Program estimates that “as many as 828 million people go to bed hungry every night” and “the number of those facing acute food insecurity has soared—from 135 million to 345 million—since 2019.”

Energy prices have also eased but remain high, contributing to cost-of-living crises throughout Europe and other parts of the globe.

“People’s misery makes capitalists’ superprofit,” Salvatore De Rosa, a researcher at the Lund University Center for Sustainability Studies, tweeted in response to Bloomberg‘s reporting. “How do you reform this?”

Wall Street banks have not just benefited from the commodity price increases—they’ve actively helped fuel them, experts say.

“We’re in a market where speculators are driving prices up,” Michael Greenberger, former head of the Division of Trading and Markets at the U.S. Commodity Futures Trading Commission, told Mongabay in July.

“Commodity markets are supposed to be hedging markets for people who are dealing with the commodity involved,” Greenberger said. “In the case of wheat, it would be farmers and people buying wheat. But if we looked at it, there would be banks in there with no interest in what the price of wheat is, writing swaps and controlling this price.”

“It’s too easy to say the war in Ukraine has unbalanced all these markets, [or that] supply chains and the ports are shot, and that there’s a supply and demand reason for these prices going up,” Greenberger added. “My own best guess is anywhere from 10% to 25% of the price, at least, is dictated by deregulated speculative activity.”

COVID-19 drugs persist in wastewater, may pose risk to aquatic organisms

Treated wastewater effluent is sprayed at Penn State’s beneficial reuse site, the “Living Filter.” This diverts the wastewater from Spring Creek and allows the soil to act as a natural filter for any chemical residuals that remain in the wastewater.

 Credit: Heather Preisendanz, Penn State

By International Affairs

September 9, 2022

Certain drugs used to treat COVID-19 patients—including remdesivir, dexamethasone and antibiotics for associated bacterial infections—persist through wastewater treatment and may occur in waterways at levels high enough to negatively affect aquatic organisms, according to a new study led by researchers at Penn State. The findings highlight the broad utility of wastewater surveillance as a tool for monitoring the effects of human health on water quality and ecosystem health.

According to Heather Preisendanz, associate professor of agricultural and biological engineering, Penn State, over-the counter and prescription-strength pharmaceuticals, including antibiotics and pain relievers, are excreted by humans, and many are known to persist through wastewater treatment plants and into nearby waterways, where they can negatively affect aquatic organisms.

“This knowledge spurred concerns that increased use of pharmaceuticals during the pandemic could also lead to increased concentrations of these drugs in wastewater treatment plant effluent and potentially harm aquatic life,” said Preisendanz.

The team—which included scientists from the U.S. Department of Agriculture—collected weekly influent (incoming) and effluent (outgoing) samples from two wastewater treatment plants in central Pennsylvania between May 2020 and May 2021. One of the sites includes a hospital in its service area.

The researchers analyzed the influent at both wastewater treatment plants for the virus SARS-CoV-2, as well as the influent and effluent for a variety of medications that may have been used to treat COVID-19. Their findings published in the Journal of Environmental Quality.

“People experiencing mild COVID-19 symptoms, but who are not severely ill to the point of needing hospitalization, have generally been recommended to treat their symptoms with pain relievers such as naproxen and acetaminophen,” said Preisendanz. “Meanwhile, antibiotics have been prescribed for patients who have COVID-19 complications leading to bacterial infections, and some hospitalized patients have been treated with remdesivir and dexamethasone.”

In their study, the researchers examined two over-the-counter fever reducer/pain relievers (acetaminophen and naproxen); five antibiotics (ampicillin, doxycycline, ofloxacin, sulfamethoxazole, and trimethoprim); two COVID-19 therapeutic agents (remdesivir and dexamethasone, which is used to reduce severe upper respiratory inflammation in patients on ventilators); and hydroxychloroquine, a malaria drug that was ultimately shown in clinical trials to be ineffective for treating COVID-19.

Credit: Heather Preisendanz, Penn State

“It’s possible that the detection of these pharmaceuticals may increase with increasing detection of SARS-CoV-2,” said Preisendanz. “By analyzing wastewater for SARS-CoV-2 and various medications, valuable information regarding the well-being of entire communities may be gained without the need to interview, survey or test individuals.”

The team found that remdesivir concentrations were correlated with the number of hospitalized COVID-19 patients, while dexamethasone concentrations were associated with the number of hospitalized patients on ventilators. Specifically, influent to the wastewater treatment plant servicing the hospital had concentrations of remdesivir and dexamethasone of 28% and 31%, respectively, while the average removal efficiencies by the wastewater treatment plant for these drugs were 39% and 56%, respectively. Hydroxychloroquine was not detected at any of the influent samples collected at either treatment plant.

“The virus concentrations, alone, couldn’t tell us whether we would see those medications; rather, it was really tied back to who was in the hospital and who was on ventilators,” said Preisendanz.

According to Preisendanz, although risk to aquatic organisms from remdesivir could not be calculated, as no research has yet been done to determine the concentrations that could pose a risk, dexamethasone was detected in quantities that could pose a low acute risk to fish.

Among the antibiotics tested, the team found that trimethoprim concentrations could pose a low-to-medium risk to aquatic life, while sulfamethoxazole could pose a high risk, specifically to algae, which is a food source for many organisms.

In addition, the team found that although acetaminophen and naproxen were present at concentrations much higher than all the other pharmaceuticals of interest, no correlations were observed between virus concentrations and influent concentrations of either drug, suggesting that they are not indicators of the prevalence of COVID-19 in the community. However, naproxen concentrations detected in effluent were at levels that could pose a low-to-medium risk to aquatic organisms.

“While the concentrations we calculated considered the individual risks that each drug could pose on aquatic life, these calculations do not account for the potential risks that could come from the synergistic effects of these drugs in a mixture, which could be much higher,” said Preisendanz. “Importantly, our study highlights the opportunity that wastewater surveillance provides to understand the effects of human health on water quality and ecological health.”

Emerging organic contaminant levels greatly influenced by stream flows, seasons
More information:

Kathryn R. Hayden et al, Impacts of the COVID‐19 pandemic on pharmaceuticals in wastewater treated for beneficial reuse: Two case studies in central Pennsylvania, Journal of Environmental Quality (2022). DOI: 10.1002/jeq2.20398

Provided by
Pennsylvania State University

LA REVUE GAUCHE - Left Comment: Search results for WASTEWATER 

ZIONIST ETHNIC CLEANSING

Israeli forces kill Palestinian teenager in occupied West Bank


By International Affairs

September 5, 2022

Taher Mohammad Zakarneh, 19, was shot by Israeli forces during a raid near the northern West Bank city of Jenin.

Ramallah, occupied West Bank – Israeli forces have shot and killed a Palestinian teenager during a raid on the northern occupied West Bank city of Jenin and its outskirts, according to the Palestinian health ministry.

Taher Mohammad Zakarneh, 19, was killed on Monday in the village of Qabatiya, south of Jenin, after being shot in the head and legs.

Zakarneh was alive when he was taken to hospital in the morning, before succumbing to his injuries several hours later.

The Israeli raid on Jenin began at dawn and led to confrontations with Palestinians.

An Israeli army statement said its forces were conducting “counterterrorism activity” in Jenin and Qabatiya, and that “violent riots were instigated”.

“The rioters hurled rocks, explosive devices and Molotov cocktails at the forces and shots were heard in the area,” the statement said. “The soldiers responded with live fire, hits were identified.”

A funeral procession was held for Zakarneh in Qabatiya shortly after the killing.

[Translation: The martyrdom of the youth Taher Mohammad Zakarneh, 19 years old, after he was shot in the head by the [Israeli] occupation during a raid on Qabatiya, outside Jenin, this morning.]

The Israeli army said 17 Palestinians were arrested by Israeli forces across the occupied West Bank overnight. Palestinian prisoner groups said that at least five had been arrested in Jenin.
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The Israeli army raids Palestinian towns and villages on a near-daily basis, often resulting in confrontations and the killing or wounding of Palestinian residents.

According to the Palestinian health ministry, more than 140 Palestinians have been killed by Israeli forces in the occupied territories since the start of the year, including 49 during the recent three-day Israeli assault on the blockaded Gaza Strip.

Nineteen people have been killed in attacks carried out by Palestinians in Israel and the occupied West Bank in 2022.

On Sunday, six Israeli soldiers and a driver were injured after a bus they were travelling in was shot at by Palestinian fighters near Tubas, in the northern West Bank.

NO RIGHT TO PRIVACY

New rules make foreign visitors to West Bank declare romantic ties to Palestinians




By International Affairs

September 4, 2022

TEL AVIV — Foreign passport holders in the West Bank will be required to report their romantic relationships with Palestinians to Israeli authorities, according to new, hotly contested rules set to take effect on Monday.

Palestinian legal experts and human rights advocates say the move, which would also restrict Palestinians from visiting family members and sharply limit Palestinian academic exchanges with foreign universities, is an escalation of an already entrenched system of discrimination against Palestinians in the West Bank, which Israel captured in 1967.

The 97-page Israeli ordinance detailing the new restrictions requires foreign passport holders, including, in some cases, American Palestinian dual citizens, in a romantic relationship with a Palestinian resident of the West Bank to “inform” Israeli security authorities “in writing (at a special e-mail address) within 30 days of the relationship’s start.”

“The ‘starting date of the relationship’ shall be considered the day of the engagement ceremony, of the wedding, or of the start of cohabitation — whichever occurs first,” it said.

The new restrictions — which also ask applicants to declare if they have land or are inheriting land in the West Bank — would not apply to the Jewish settlements in the West Bank. The territory’s two-tiered legal structure treats Jewish Israelis as citizens living under civilian rule while Palestinians are treated as combatants under military rule, subject to nighttime military raids, detention and bans on visiting their ancestral lands or accessing certain roads.

Palestinian rights advocates condemned the updated, more stringent procedures on social media as another example of Israel stripping rights from Palestinians living under its 55-year occupation.

“One side of this is about control & isolation,” Salem Barahmeh, executive director of Rabet, the digital platform of the Palestine Institute for Public Diplomacy, wrote on Twitter Saturday. “The other is: if you can’t be together in Palestine then you will have [to] leave & to do so elsewhere. It’s about driving as many people as they can outside of Palestine to maintain supremacy.”

Fadi Quran, campaign director for activist group Avaaz, tweeted that the new rules signal that in the occupied West Bank, “love is dangerous.”

Foreigners visiting the West Bank already face intensive screening. One Palestinian woman, who lives in Germany and is married to a German man, said she worries that the rules will make it even more difficult for her and her husband — and their future children — to visit her relatives in the West Bank. The woman spoke on the condition of anonymity to avoid calling the attention of Israeli authorities to her case.

After learning of the new rules, the woman decided to bring her new husband to the West Bank to meet her family in May, before they took effect.

Even then, she said, Jordanian authorities at the border crossing advised the couple not to cross together and to scrub any evidence of their relationship from their phones, since Israeli officials had been turning back foreign spouses of Palestinians.

The couple took off their wedding rings, unlinked their Airbnb booking and deleted their WhatsApp conversations and photos together. Her husband told border guards he was visiting the West Bank for tourism. Still, he faced intense questioning from the Israeli police.

A spokeswoman from COGAT, Israel’s military agency responsible for coordinating with the Palestinians on civilian matters, declined to comment on the new restrictions, but said that a new version of the regulations would likely be published on Sunday.

The ordinance describes the “purpose of the procedure” as a way to codify norms that have already been in place for years for foreign passport holders entering the occupied territory. The goal is to “define the levels of authority and the manner of processing for applications from foreigners who wish to enter the Judea and Samaria area through the international crossings, in accordance with policy and in coordination with the appropriate offices,” said the document, referring to the biblical name Israel uses for the West Bank.

Since first announced in February, implementation of the new restrictions has been delayed repeatedly by Israel’s High Court.

In June, HaMoked, an Israeli human rights organization, along with 19 individuals, petitioned the High Court to halt the new rules, arguing that they set “extreme limitations on the duration of visas and visa extensions” that would impede foreigners’ ability to work or volunteer for Palestinian institutions for more than a few months, bar them from leaving the West Bank and returning during the visa period, and in some cases require people to remain abroad for a year after their visa expires before they can apply for another.

The rules would also “deny thousands of Palestinian families the ability to live together without interruption and lead a normal family life,” HaMoked said in a statement in June, as well as make it more difficult for foreign academics to work at Palestinian universities.

The new rules allow 100 professors and 150 students with foreign passports to stay in the West Bank — a substantial blow to Palestinian higher education institutions. They rely on academic collaborations and recruit hundreds of foreign passport-holding students every year. More than 350 European university students and staff studied or worked at Palestinian universities under the Erasmus program, an E.U. student exchange program, in 2020, up from just 51 five years earlier.

Mariya Gabriel, E.U. commissioner for Innovation, Research, Culture, Education and Youth, suggested in July that the development could also harm Israel-Europe academic ties.

“With Israel itself benefitting greatly from Erasmus+, the Commission considers that it should facilitate and not hinder access of students to Palestinian universities,” Gabriel said. She added that E.U. officials have expressed their concerns to Israeli authorities “including at the highest levels.”

Sam Bahour, an American-Palestinian economist, cited Israel’s High Court rulings to delay the new rules’ implementation as proof of their illegitimacy.

He said he has been fielding daily phone calls from Palestinian emigres throughout the world worried that the new procedures could make future visits difficult or impossible. He said the new protocols would be so “absurd” that they would be “impossible to implement.”

But, he said, they have delivered a decades-old message from Israel to the Palestinians: “Stay away.”

UK

Now is not the time to water down financial regulation



By International Affairs

September 4, 2022

The writer is director of Policy Research in Macroeconomics

The furore over Vladimir Putin’s closure of the already well-maintained Nord Stream 1 pipeline for further maintenance added to panic about rising energy prices. Yet the German benchmark power price halved in a week, revealing the real dynamic.

Despite Putin’s chest-thumping, wholesale providers of oil — autocratic leaders and chief executives of oil majors — lack the power to fix the price of their products.

This has not prevented widespread condemnation of oil majors in the current crisis. But such criticism is misdirected. Given global capital mobility and the nature of deregulated and financialised commodity markets, nationalisation of commodity producers and windfall taxes would not lower prices. Instead increased regulation of global markets is needed. But this week the British parliament proposes doing the very opposite — deregulating markets and worsening the cost of living crisis.

Real power over commodity prices lies in the “paper markets” — not with wholesalers. Wall Street and Chicago Mercantile Exchange investors deploy vast sums in speculation on movements in the price of both food and energy prices. It’s a profitable game. Net revenues at Wall Street banks rocketed in the first half of 2022.

Wheat futures prices traded in Chicago jumped more than 50 per cent in March, to as high as $13.40 a bushel one Friday. At the same time the share of non-commercial speculators holding long positions in hard wheat and corn rose sharply to 50 per cent. And as Lighthouse Reports revealed in April 2022, investors pumped $1.2bn into two major agricultural exchange traded funds, compared with just $197mn for the whole of 2021.

Prices for food, oil and gas are determined independently of both wholesalers and costs. And despite standard economic theory, they are fixed independently of the supply and demand for oil — as the recent fall in German prices amply demonstrates.

The paper market has inflicted real losses on oil exporters and the oil and gas majors. Both suffered tremendous losses in 2014, 2015, and 2020. In 2020 the five integrated supermajors — ExxonMobil, BP, Shell, Chevron, and Total — lost $76bn. Oil prices plunged into negative territory in 2020. Saudi Arabian energy minister Prince Abdulaziz bin Salman had it right: “the paper and physical markets have become increasingly disconnected”.

Rocketing inflation and the rising burden of both food and energy prices have led to global economic and political chaos — especially in low-income countries. We can trace the problem back to Clinton-era deregulation that allowed new players and new derivatives to overwhelm the price stability and discovery functions. The 2008 financial crisis, which forced millions into economic hardship and poverty, can be laid at the door of those anarchic markets.

To deal with the crisis, the EU passed the Mifid 2 regulations and mandated limits on positions. Today’s chaos is largely a result of watering down those regulations. Global commodity markets are broken, no longer working for those who actually need them — the food and energy producers and consumers.

The UK government’s proposals in the Financial Services and Markets bill, which returns to the House of Commons on Wednesday, will foment global market volatility by weakening the financial stability mandate of the Bank of England. The bill proposes to give the Prudential Regulation Authority and Financial Conduct Authority roles as cheerleaders of volatile global markets, by adding secondary objectives for “economic growth and competitiveness”.

Rather than stabilising price volatility, the government will use this moment of market turmoil to exacerbate the crisis.

Alberta UCP leadership candidates unite to raise alarm on Alberta sovereignty bill

Yesterday 


EDMONTON — More than half the candidates in the race to replace Premier Jason Kenney are raising the alarm over a rival's plan to proclaim Alberta would reject federal laws and court decisions deemed against the province's interests.



The four say the Alberta sovereignty act proposal by candidate Danielle Smith is resonating with United Conservative Party members and they have a duty to speak out on it.

They call it a dangerous exploitation of latent anti-Ottawa anger and a backdoor separation bid that cannot succeed and would instead further inflame and divide the party and the province.

"The consequence will be (Smith) will have a caucus that will be standing up against the leader," candidate Leela Aheer told reporters Thursday in Calgary.

"If Danielle Smith wins this (race), I plan to stay on, and I plan to fight this.

"We could very, very easily end up in another leadership race again," she added.

The four UCP caucus members said they won't vote for Smith's proposed Alberta sovereignty act and questioned whether it would even gain enough votes to pass in the house.

"There would be extreme division within caucus. There could be a split in the party," said Rajan Sawhney.

Brian Jean equated Smith's plan to shouting "Freedom!" to rile up party members.

"It feeds on the anger but accomplishes absolutely nothing because there's no pathway except through negotiations and the Constitution being opened," said Jean.

"After the fantasy is over, and we've had our bedtime story — our fairy tale — then what? Because you're going to wake up in the morning and it's still going to be the same, except you're going to be a lot angrier."

Sawhney said if Smith wants to challenge Ottawa through the Constitution, she can do so now through the courts and through the Charter's notwithstanding clause.

"(Smith's plan) is flagrantly unconstitutional and it flirts with separatism," she said.

Recommended video: UCP leadership candidate Danielle Smith outlines her proposed Alberta Sovereignty Act

Duration 5:51   View on Watch

Travis Toews said the bill would create a legal vacuum, sending investors fleeing and stranding business owners between conflicting federal and provincial laws.

"Alberta must stand up to Ottawa and protect our interests, but the sovereignty act is not the way we win," said Toews.

Smith responded in a written statement.

"I entirely trust the judgment of our UCP membership to select the leader they feel will best defend them against Ottawa's continued unconstitutional attacks," she wrote.

"I will respect their decision when it is made. I would expect my future caucus colleagues to do the same."

All seven candidates have promised varying polices for Alberta to gain a better deal with the federal government when it comes to a range of grievances from energy policy to equalization payments.

Smith has been drawing large crowds at party events and is seen as a front-runner to replace Kenney. Ballots were issued last week and a winner is to be announced Oct. 6.

Candidate Todd Loewen's policy proposals have been similar to those of Smith.

Rebecca Schulz, the former children's services minister, did not join the others at Thursday's event.

In a statement, Schulz reiterated she is against the sovereignty act. She said if it's introduced, Smith's signature bill would be rejected by the UCP caucus, resulting in yet another party leadership race.

Political scientist Duane Bratt said having half the candidates jointly challenge a policy proposal is highly unusual for a race and speaks to the looming legal and political implications of Smith's plan.

Bratt also criticized Schulz's non-appearance.

He said Schulz appeared to be trying to position herself in safe political middle ground by criticizing Smith in print while avoiding being visually linked to the four by appearing at the event.

"There is no neutrality (on this issue)," said Bratt, with Mount Royal University in Calgary. "(Schulz) is playing leadership games with an issue that is too important."

Legal experts have criticized Smith's proposal as not only illegal but as a fundamental attack on the rule of law and the checks and balances that underpin a democracy.

Kenney has said he won't vote for the proposal and Lieut.-Gov. Salma Lakhani announced last week she is duty-bound to refuse to sign into law a bill that violates the Constitution.

Smith has promised her bill would challenge the Constitution in a constitutionally acceptable way, but she has not explained how.

This report by The Canadian Press was first published Sept. 8, 2022.

Dean Bennett, The Canadian Press

Restaurant finds itself in hot water with CRA over servers' electronic tips

Jamie Golombek - Financial Post

A recent tax case involved a popular, seaside restaurant 

in downtown Halifax that didn’t remit CPP and EI on part of its servers’ tips.

If you’re an employee who gets a regular paycheque, you’ll be very familiar with the concept of source withholdings, which reduces your take-home pay.

Put simply, your employer is legally required to withhold and remit federal and provincial income tax to the Canada Revenue Agency, as well as Canada Pension Plan (CPP) contributions and employment insurance (EI) premiums.

Failure to withhold any of these can land an employer in hot water with the CRA, as one Nova Scotia restaurant recently found out. But before delving into details of the case, let’s review the basic rules governing CPP and EI deductions.

Under the CPP, the employer’s contribution is determined by applying a contribution rate to the “contributory salary and wages of the employee … paid by the employer,” less certain deductions. For 2022, employee CPP/QPP contributions are 5.7 per cent of earnings between $3,500 and $64,900, so the maximum amount of contributions for this year is $3,500. Employers are required to match employee contributions.

For 2022, an employee’s EI premiums are 1.58 per cent of “insurable earnings” up to $60,300, so the maximum EI premium you may pay is $953. Insurable earnings are defined as “the total of all amounts, received or enjoyed by the insured person (i.e., employee) that are paid to the (employee) by the … employer in respect of that (insurable) employment.”

Under the EI Act, employers must contribute 1.4 times the employee premiums, or 2.21 per cent of insurable earnings, with a 2022 maximum premium of $1,334 per employee.

The recent case involved a popular, seaside restaurant in downtown Halifax that didn’t remit CPP and EI on part of its servers’ tips. Customers sometimes leave a tip in cash, which the servers are free to keep without advising their employer. Most customers, however, choose to pay their restaurant bills using a debit, credit or gift card, and include a tip in their electronic payment. The restaurant, in turn, shares these tips with its servers in a formalized, daily procedure.

At the end of each shift, each server prints a “summary of sales” from the restaurant’s point-of-sale system. That summary shows each server’s food sales, beverage sales, cash received from patrons who paid in cash, electronic payments received and electronic tips. This info is used to prepare a “cash out sheet.”

On that sheet, the server records their electronic tips, the cash received, a kitchen staff “tip-out” (equal to one per cent of food sales), and an amount equal to two per cent of the electronic tips (the processing charge). The restaurant retains the tip-out to pass along to its kitchen staff and the processing charge to cover its credit-card fees. The net amount is the server’s “net electronic tip.”

If none of the server’s customers happened to pay their restaurant bills in cash that day, the restaurant simply transfers an amount equal to the server’s net electronic tip to the server, typically the next business day, via direct bank deposit. This is known as the “due-back.”

In some circumstances, a server’s due-back is less than the server’s net electronic tip. This happens when a restaurant customer pays in cash, which the server retains and is taken into account in calculating the due-back. In these cases, the server’s net electronic tip is partially received in cash (from customers’ payment of their restaurant bills), and partly from the due-back received from the restaurant itself.

At the end of each shift, each server also prepares two envelopes in which they place cash to “tip out” the onsite restaurant manager and assistant manager — two per cent — and the support staff (bussers, hosts/hostesses and bartenders) at one per cent per support staff person (to a maximum of three per cent).

Each server delivers their summary of sales, their cash out sheet, and the two envelopes to the onsite manager at the end of their shift who later distributes the cash tip-outs to the restaurant managers and support staff. The sales summary and cash out sheet were set aside and picked up the next morning by someone from accounting to facilitate payment of the servers’ due-backs.

The restaurant took the general position that due-backs received by servers were not considered to be “pensionable salary and wages” for purposes of CPP rules, nor “insurable earnings” for purposes of the EI Act. As a result, when it calculated its CPP and EI liabilities for 2015, 2016 and 2017, it did not consider any portion of the electronic tips.

Needless to say, the CRA took a different view and assessed the restaurant on the basis that a portion of the servers’ electronic tips for 2015, 2016 and 2017 should have been considered. The taxpayer took the matter to Tax Court in 2020 and lost. It then appealed the decision to the Federal Court of Appeal (FCA), which heard the case earlier this year.

The key question the court had to decide was whether the due-backs were properly considered to be amounts paid by an employer to employees “in respect of” their employment. The restaurant argued the due-backs are not paid in respect of a server’s employment and are not insurable earnings because a server’s due-back bears “little or no relation to the server’s net tip. It is simply the difference between cash payments for meals and electronic tips owing.”

The three-judge appellate panel disagreed, citing a seminal 1983 decision of the Supreme Court of Canada, which stated that the words “in respect of” have “wide scope and import such meanings as ‘in relation to,’ ‘with reference to’ and ‘in connection with.’ In other words, “but for” their employment as servers by the restaurant, the servers would not receive any tips paid to them in the form of due-backs.

The FCA, in a written decision released last month, concurred with the lower court’s decision, and concluded the due-backs were “contributory salary and wages of the employee paid by the employer” for purposes of the CPP and “insurable earnings” for purposes of the EI Act.

Jamie Golombek, CPA, CA, CFP, CLU, TEP, is the managing director, Tax & Estate Planning with CIBC Private Wealth in Toronto. Jamie.Golombek@cibc.com

Ex Burger King workers get another bite at 'no-hire' conspiracy lawsuit

FILE PHOTO: Sgn on a Burger King restaurant is shown in Miami


By Barbara Grzincic

(Reuters) - A federal appeals court has revived a potential class action against Burger King over its prior use of a “no-hire” clause that blocked all franchisees from hiring each other’s employees.

The 11th U.S. Circuit Court of Appeals Wednesday reversed a ruling by a district court judge in Miami, who dismissed the workers’ claims that the no-hire clause was an unlawful conspiracy to suppress wages and employee turnover.

The 11th Circuit said the judge erred in finding that Miami-based Burger King Worldwide, its parent companies, and its franchisees had all operated as a “single economic enterprise” that was categorically incapable of conspiring with itself.

“(T)here’s just no question that Burger King and its franchisees compete against each other and have separate and different economic interests,” and that, “in the absence of the No-Hire Agreement,” each franchised restaurant “would pursue its own economic interests and therefore potentially and fully make its own hiring decisions, including about wages, hours, and positions,” Circuit Judge Robin Rosenbaum wrote for the panel.

“They might even attempt to entice stand-out employees to leave one restaurant and join their own. But the No-Hire Agreement removes that ability,” Rosenbaum wrote, joined by Circuit Judge Charles Wilson and Senior Circuit Judge Frank Mays Hull.

Dean Harvey of Lieff Cabraser Heimann & Bernstein, lead counsel for Jarvis Arrington, Sandra Munster and Geneva Blanchard, declined to comment on the pending litigation. The workers’ appeal drew amicus support from the U.S. Justice Department.

Burger King and its attorneys did not immediately respond to requests for comment.

The lawsuit was one of many filed by fast-food workers since 2016, when the U.S. Justice Department and the Washington state attorney general began targeting the industry's ubiquitous use of no-hire or “no-poach” agreements.

Burger King dropped the no-hire clause from its franchise agreements in 2018 as part of a settlement with the Washington attorney general. Several other fast-food chains did the same.

In lawsuits by pre-2018 workers, however, the chains have argued that there was no conspiracy or, in the alternative, that any restraint of trade was not unreasonable.

The judge in the Burger King case found it unnecessary to consider the latter argument, but Burger King urged the 11th Circuit to uphold the dismissal on that ground anyway. The International Franchise Association and the Florida Chamber of Commerce agreed in separate amicus briefs.

The panel declined, saying “those inquiries are best left to the district court” on remand.

The case is Arrington, et al. v. Burger King Worldwide Inc., Burger King Corp., and Restaurant Brands International Inc., 11th U.S. Circuit Court of Appeals, No. 20-13561.

For Arrington et al.: Dean Harvey of Lieff Cabraser Heimann & Bernstein, Yaman Salahi formerly of Lieff Cabraser, and Derek Brandt of McCune Wright Arevalo

For Burger King: Stuart Singer of Boies Schiller & Flexner; Luis Suarez of Heise Suarez Melville