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FILE PHOTO: Chief Executive of the Financial Conduct Authority Andrew Bailey speaks at a press conference at the Bank of England in London, Britain February 25, 2019. Kirsty O’Connor/Pool via REUTERS
April 23, 2019
By Huw Jones
LONDON (Reuters) – The European Union’s system of financial-market access needs adapting to avoid disputes between the EU and Britain over rules after Brexit, a top UK regulator said on Tuesday.
Andrew Bailey, chief executive of the Financial Conduct Authority, said future regulation in Britain will hinge on where the EU system of “equivalence” leads to.
Equivalence refers to Brussels granting foreign banks direct access to customers in the EU if it determines that their home rules are similar enough to those in the EU.
But for this to work after Brexit, it needs a “rules of the game” agreement setting out how equivalence is determined and a mechanism for handling disputes, Bailey said.
Equivalence should be based on whether the outcomes of foreign and EU regulation are the same, rather than on actual rules being written in the same way, Baile said.
Focusing on outcomes was critical, since Britain has a history of common law and preference for broad principles, while the EU has moved to harmonized rules, Bailey said.
“Left to our own devices, I think the UK regulatory system would evolve somewhat differently,” Bailey said in a speech at Bloomberg.
The EU has said that equivalence was the most likely form of market access for Britain’s financial sector to the EU, its most important customer.
Critics say the system is patchy, unpredictable and access can be withdrawn at short notice, citing the four years it took for the Europe and the United States to agree on clearing rules.
“We need to be careful here because I would submit that the record to date indicates that all of us are good at talking the language of outcomes but practicing the world of rules,” Bailey said in a speech at Bloomberg.
Britain’s government has called for “enhanced” equivalence to avoid the UK becoming a “rule taker” or continually copying EU law, but Brussels has shown little appetite for radically overhauling its system.
Faced with a major foreign financial center on its doorstep after Brexit, the EU has instead tightened access for foreign clearing houses and investment firms.
Banks, insurers and fund managers in Britain have opted to play safe and open new EU hubs.
Britain has introduced equivalence along with all EU financial rules into national law as part of its Brexit preparations.
The FCA is already fending off pressure for a tit-for-tat response to moves by EU regulators to ban trading of thousands of shares outside the bloc – including leading UK stocks – if there is a no-deal Brexit.
(Reporting by Huw Jones, editing by Larry King)
Source: OANN
FILE PHOTO: Spain’s Socialist leader and current Prime Minister Pedro Sanchez looks on as he delivers his speech during a PSOE party meeting before he kicks off his political campaign ahead of the April 28 general election in Dos Hermanas, near Seville, Spain April 11, 2019. REUTERS/Jon Nazca/File Photo
April 23, 2019
By Isla Binnie
MADRID (Reuters) – As they prepare to vote in the most uncertain national election in decades, Spaniards can safely predict one thing regardless of political persuasion – that their next prime minister will be young, cosmopolitan, white and male.
The main contenders in Sunday’s ballot offer a lack of diversity that has left parts of the electorate at risk of feeling unrepresented, political commentators say. Surveys show up to four in ten voters are still undecided and no single party is close to winning a majority.
Conspicuously missing from the field are women, as well as anyone who identifies directly with the rapidly aging communities of rural Spain, a constituency that is fast emptying out as working-age people abandon farms and villages for cities.
“We have ended up with something like a Corte Ingles catalogue,” said political communication consultant Luis Arroyo, referring to a famous Spanish chain of department stores.
A televised pre-election debate on Monday night did little to dispel that impression.
No clear winner emerged, and images of the top three candidates – Socialist Pedro Sanchez and rightists Pablo Casado and Albert Rivera – appearing in virtually identical dark blue suits circulated widely in domestic and international media.
Far-right Vox’s Santiago Abascal, excluded from the debate because his party holds no parliamentary seats yet, tweeted a picture shortly after it ended of a row of blue and yellow macaws with the caption: “Spot the difference”.
‘PEDRO EL GUAPO’
Sanchez, outgoing Prime Minister and poll leader with around 30 percent of votes, earned the nickname “Pedro El Guapo”, or “Handsome Pedro” earlier in his career for his rarity value as a young newcomer to the Socialist hierarchy among a crowd of older politicians.
But as it has gradually fractured over the past five years, Spain’s political landscape has been increasingly populated by young, contemporary males.
At 47, Sanchez is now the oldest candidate. The last time he stood for office, in 2016, he lost out to conservative Mariano Rajoy, then 61.
His clean-cut conservative opponent this time is 38-year-old Casado, while Rivera – leader of centre-right Ciudadanos and equally chiselled in features and in his choice of suits – is one year older.
Even far-right Vox’s Abascal, 43, is university-educated, keeps his beard neatly trimmed and often wears a tie.
Only the pony-tailed Pablo Iglesias, whose far-left Podemos party rode a wave of anti-austerity fury into parliament in 2015, dresses more casually but, as a television regular, he keeps his appearance smart. On Monday evening he did not wear a suit.
While younger, city-dwelling, professionals may see familiar characters in the shiny line-up, people in less technologically advanced, under-populated parts of the country may struggle.
“They reflect this generation of people, many of whom studied in public universities and did masters (degrees),” said Arroyos.
“The other Spain, which is more rural, and famously emptying out, does not see itself reflected in any way.”
Residents of the depopulating regions marched through Madrid last month in what they called a “peaceful revolt”, underlining the concerns of a demographic that feels it has been forgotten.
GENDER BIAS?
Despite the visible generational shift, few Spanish women have made it to the political front line.
“In terms of gender balance there is definitely still lots of room for improvement,” said Eurasia analyst Federico Santi.
Sanchez describes his government, in which a majority of ministers are female, as feminist, and Podemos changed the name of its parliamentary grouping to the feminine Unidas Podemos for this campaign, to reflect its commitment to women’s rights.
Two parties have high-profile spokeswomen: Ines Arrimadas of the center-right Ciudadanos has led her party’s crusade against Catalan regional independence, while Irene Montero is a prominent Podemos deputy.
But neither are party leader and, across the parties, women tend mostly to be assigned supporting roles, Santi said.
The lack of racial diversity among the candidates has raised few eyebrows, however, due to Spain’s relative ethnic homogeneity – only just over 10 percent of the resident population has foreign nationality.
(Reporting by Isla Binnie; Editing by Ingrid Melander and John Stonestreet)
Source: OANN
FILE PHOTO: The company logo and trading information for BlackRock is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 30, 2017. REUTERS/Brendan McDermid
April 23, 2019
By Simon Jessop and Ludwig Burger
LONDON/FRANKFURT (Reuters) – Fund manager BlackRock will not support Bayer’s management in a key vote at its annual general meeting (AGM) on Friday, two people familiar with the situation told Reuters.
About 30 billion euros ($34 billion) has been wiped off the German drugmaker’s market value since August, when a U.S. jury found Bayer liable because Monsanto, which it bought for $63 billion last year, had not warned of alleged cancer risks linked to its weedkiller Roundup.
Bayer suffered a similar courtroom defeat last month and more than 11,000 plaintiffs are claiming damages.
BlackRock, which latest filings show owns 7.2 percent of Bayer’s voting rights, plans to either abstain from or vote against ratifying the management board’s actions during the year under review, the sources said.
The largely symbolic vote of confidence “will send a message to the board” that BlackRock is not happy with the way Bayer’s management handled the Monsanto deal, one of the sources said.
A vote to ratify the board’s actions features prominently at every German AGM. It has no bearing on management’s liability, but is seen as a key gauge of shareholder sentiment.
Bayer’s next two biggest shareholders, Singapore state investor Temasek and Norway’s oil fund, both declined to comment on their AGM voting intentions when contacted by Reuters.
(Additional reporting by Patricia Weiss, Anshuman Daga and Terje Solsvik; Editing by Alexander Smith)
Source: OANN
Rep. Eric Swalwell, who is campaigning for the Democratic presidential nomination, rejected the idea that House Speaker Nancy Pelosi has dismissed the idea of impeaching President Donald Trump, and predicted he’ll be removed from office before being elected to serve a second term.
“She’s saying, do it right,” the California lawmaker told CNN’s “New Day.” “Let’s not take it off the table. If you contrast with reaching a conclusion without evidence, I can see how you’d say, why aren’t they moving that fast? We don’t move like that. We still believe in a rule of law and an order of things. We’re going to get this right.”
Further, Swalwell said he’s “confident” that Trump will be removed from office, whether it’s by Congress or by voters in November 2020.
“We’re near the end of Donald Trump,” Swalwell said, adding that he thinks “we’re on that road” toward his impeachment.
Meanwhile, there are still many steps that remain before proceedings could start, he acknowledged, but he does think Trump must be “held accountable,” because if he isn’t, the standard for future presidents will be lowered.
“The first is to get the full [Robert] Mueller report,” said Swalwell. “About an eighth is redacted. Second is having Mueller testify…of course, there is Don McGahn and other witnesses who will need to supplement [his testimony.]
Swalwell also spoke out about points presented by several candidates participating in Monday night’s series of town halls on CNN, especially on Sen. Bernie Sanders, I-Vt., who argued in favor of allowing prisoners the vote.
Source: NewsMax Politics
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As Democrats mull how far to push the impeachment envelope against President Trump after Robert Mueller found no evidence of collusion with Russia in the 2016 election but punted on obstruction of justice charges, another investigation could further blunt their attempts to oust the president from office or damage his re-election chances.
Amid calls from Trump and his supporters to “investigate the investigators,” Justice Department Inspector General Michael Horowitz has been hard at work over the last year looking into the sources and methods the FBI used to begin surveillance of a one-time Trump campaign adviser based at least in part on discredited information gathered by a former British spy.
That packet of intelligence, known as the “Steele dossier,” contains salacious and unsubstantiated details about Trump’s alleged romps with Russian prostitutes, along with business and political quid pro quos with Russian officials.
Attorney General Robert Barr said the inspector general is wrapping up his probe and could release a final report as early as next month.
Those interviewed by Horowitz and his team over the past year, according to Politico, say he seems intensely focused on undermining the dossier and credibility of Christopher Steele, the former British MI6 agent who produced the document. Steele had served as a confidential source for the FBI since 2010 until a falling out over his leaks to the media about the Trump-Russia probe.
While prominent Democrats have accused Mueller of failing to do his duty and Barr of prioritizing the interests of Trump over the American people, they’ll have a more difficult time assailing Horowitz, a Harvard-educated lawyer appointed by President Obama to the DoJ’s top watchdog post in 2012.
Horowitz, who was a partner in New York City’s oldest law firm, Cadwalader, Wickersham & Taft LLP, before becoming inspector general, served as a board member of the Ethics Resource Center and the Society of Corporate Compliance Ethics.
He began his career at the Justice Department in the 1990s, serving as an assistant U.S. attorney for the Southern District of New York, including stints as the chief of the public corruption unit. Before leaving in 2002, he worked as the deputy assistant attorney general of the criminal division and as its chief of staff.
Roughly a year ago, Horowitz also proved he’s willing to disappoint Trump and his supporters. He thoroughly investigated the FBI’s handling of the Hillary Clinton email investigation and charges that the probe was rigged to let Clinton off the hook.
Horowitz amassed a mountain of embarrassing emails and electronic messages between former FBI counterintelligence agent Peter Strzok and his co-worker and lover, Lisa Page, about their hatred for Trump and an “insurance plan” to derail his presidency. However, Horowitz concluded that he could not link the “appearance” of personal bias against Trump to “evidence that any political bias or improper considerations actually” impacted the way the FBI pursued the Clinton email probe.
He also harshly criticized then-FBI Director James Comey for his July 2016 announcement that he would not recommend any charges against Clinton, and his subsequent October 2016 decision to tell Congress that the FBI had discovered new emails and had re-opened the case.
Still, Horowitz concluded that Comey hadn’t acted out of political bias, but did “deviate” from established procedures and engaged “in his own subjective, ad hoc decision making” in what the IG described as an extremely unusual case with high political stakes.
The stakes couldn’t be higher when it comes to Horowitz’ current probe. Steele was hired by the opposition research firm Fusion GPS in 2016 to look into Trump’s Russia ties, and that work was funded by the Hillary Clinton campaign and the Democratic National Committee through a law firm.
Republican members of Congress and other Trump allies allege the only true collusion took place between the Clinton camp and the FBI, with Steele’s help. They accuse the DoJ and the FBI of abusing the FISA process and misleading the Foreign Intelligence Surveillance Court by relying on the dossier to obtain approvals for the surveillance without disclosing that the information was unverified or paid for by Democrats and the Clinton campaign itself.
Democrats counter that the FBI wouldn’t be doing its job if it hadn’t investigated Trump associates’ ties to Russia. For instance, the unpaid campaign adviser at the center of the FISA controversy, Carter Page, first attracted FBI attention back in 2013 when he interacted with undercover intelligence agents in New York City. Carter’s trip to Russia in the summer of 2016 sparked more scrutiny and justified the warrant the FBI submitted to in October 2016, they argue.
But Trump and his supporters have blasted the FBI for continuing to use the dossier to attain FISA court warrants even after Steele was terminated for unauthorized and potentially criminal leaks to the media.
Last January, then-Senate Judiciary Committee Chairman Chuck Grassley and Sen. Lindsey Graham, who now helms that panel, referred Steele to the Justice Department for criminal prosecution for lying about his contacts with several media organizations before the 2016 election.
Rep. Jim Jordan, who serves as the ranking Republican member on the House Oversight Committee, on Saturday pointed to the dossier as the rationale used to launch an investigation “on a false premise.”
“You can’t have the FBI using one party’s opposition research document to launch an investigation and spy on the other party’s campaign,” he said.
Rep. Matt Gaetz, a conservative Republican from Florida, over the weekend said Horowitz has evidence that FBI officials received tickets to concerts and athletic events from members of the press as incentives to leak to them.
“One of the … nuggets that the inspector general is working on is the corruption that existed between the media and members of the FBI,” Gaetz said, without citing his sources for the information.
The American public, especially those on the right, are already highly skeptical of the mainstream media, whose credibility has continued to sink during its coverage of the Trump administration amid the president’s frequent charges of “fake news” and the media’s torrent of stories alleging Trump’s collusion with Russia.
A Morning Consult/Hollywood Reporter survey released earlier this month found that the share of adults who said some of the biggest media outlets – including ABC, CBS, CNN, Fox News, MSNBC, the New York Times, NPR and the Wall Street Journal – were credible dropped an average of 5 percentage points over the past three years, from 56% to 44%.
The media skepticism was predictably most pronounced among Republicans, whose responses show a 12-point drop in their trust in news outlets over the course of the last three years.
It also doesn’t help that the dossier first surfaced in the liberal media when BuzzFeed posted it online – complete with the lurid details of a sex tape featuring prostitutes that the Russian government was said to be holding over Trump. Mueller’s investigation found no evidence that such a tape existed. It also didn’t corroborate another dossier claim published in a McClatchy report that then-Trump attorney Michael Cohen met with Russian officials in Prague.
The Mueller report’s conclusions poked huge holes in the Democrats’ Trump-Russia narrative and sparked new questions about the way the FBI went about investigating it, as well as the media’s role in fanning its flames. Horowitz’ report will try to address both issues.
At the beginning of the Horowitz probe, House Judiciary Chairman Jerrold Nadler – who is weighing whether to begin impeachment proceedings against the president — said it’s a “shame” that the inspector general has to “devote resources to investigate a conspiracy theory as fact-free, openly political, and thoroughly debunked as the president’s do-called ‘FISA abuse.’”
As the probe is winding down, Steele himself appears less sanguine about Horowitz’ findings and conclusions. He has reportedly declined to be interviewed and plans to rebut the IG’s characterizations in a rare public statement.
The New York Times on Friday also reported that Steele never tried portray the dossier as anything other than raw intelligence — jumping off points for the FBI to begin investigating.
How that assertion squares with Horowitz’s findings will be closely watched by those on both sides of the aisle. But for Democrats eager to herald the Mueller report’s details on possible obstruction, the IG’s work could be tough to portray as just another government investigation biased in Trump’s favor.
The Lyft logo is seen on a parked Lyft Scooter in Washington, U.S., March 29, 2019. REUTERS/Brendan McDermid
April 23, 2019
(Reuters) – Lyft Inc picked up upbeat ratings from the brokerage arms of its Wall Street underwriters on Tuesday, allowing the ride-hailing company to recover some of the damage done to its share price in the run-up to the debut of larger rival Uber Technologies Inc.
Lyft shares, which as of Monday’s close were down 30 percent from its initial public offering debut on March 29, rose 2.5 pct to $62.49 in trading before the bell. That puts them almost 10 percent up in the past week after hitting lows beneath $56.
At least seven brokerages including Jefferies, JP Morgan and Piper Jaffray initiated coverage of Lyft with “buy” or equivalent to “buy” ratings, even as the stock languishes more than 15 percent below the price set in its heavily-hyped IPO last month.
Piper Jaffray expects “solid near-term top line results”, as the company has been gaining market share in recent quarters, but believes that the path to positive net income will be a “multi-year journey”. The brokerage initiated coverage with an overweight rating and $78 target price.
At Monday’s prices, Lyft had a stock market value of around $17 billion. Both it and Uber have both warned that they may never become profitable, making it difficult for investors to estimate how much they might be worth.
Still, brokerage analysts remained confident of Lyft’s long-term fortunes, despite the competition from Uber both on U.S. streets and among stock market investors.
“Uber’s filing has added pressure, and we acknowledge that the upcoming roadshow could create more near-term uncertainty, but we believe Lyft continues to execute well,” said Doug Anmuth, an analyst at JP Morgan.
Reuters had reported that Uber plans to sell around $10 billion worth of stock at a valuation of between $90 billion and $100 billion. Its IPO is on track for mid-May.
More than 24 brokerages helped underwrite Lyft’s IPO. Industry standards require analysts from those firms to wait until a 25-day cooling off period has ended following the IPO before launching coverage.
At least three of Lyft’s underwriters, Canaccord, Cowen and JMP Securities, are also backing the Uber deal, according to SEC filings.
Some investors give more weight to the opinions of analysts who work at brokerages involved in underwriting a company’s IPO than they do to analysts at brokerages not involved in the IPO.
Including Tuesday’s initiations, 13 analysts now cover Lyft, with five positive ratings, seven neutral ratings and one negative rating. The analysts had a median price target of $74, down from a median price target of $75 on Monday.
Analysts on average expect Lyft’s revenue in 2019 to grow 57.3 percent to $3.39 billion, according to Refinitiv data, a slower pace than in previous years. Lyft’s revenue doubled last year after tripling in 2017.
(Reporting by Noel Randewich in San Francisco and Jasmine I S in Bengaluru; Editing by Bernard Orr)
Source: OANN
The price of gasoline is rapidly rising, economic activity is slowing down, the Middle East appears to be on the brink of war, and Democrats are trying to find a way to remove a Republican president from office. In many ways, 2019 is starting to look a lot like 1973. For many Americans, the 1970s represent a rather depressing chapter in U.S. history that they would just like to forget, but the truth is that if we do not learn from history it is much more likely that we will repeat our mistakes. And without a doubt, right now a lot of things are starting to move in a very ominous direction.
“Stagflation” was a term that was made popular in the 1970s, and it occurs when there is a high rate of inflation but economic growth is declining or stagnant.
The U.S. hasn’t had a serious bout with stagflation in quite a while, but it appears that we may be moving in that direction.
Let’s talk about the slowdown in the economy first. On Monday, we learned that sales of existing homes in the U.S. were way down in March…
Home sales are struggling to rebound after slumping in the second half of last year, when a jump in mortgage rates to nearly 5% discouraged many would-be buyers. Spring buying is so far running behind last year’s healthy gains: Sales were 5.4% below where they were a year earlier.
On a year over year basis, existing home sales have now fallen for 13 months in a row.
That is terrible, and there is no way to “spin” that fact to make it look good.
We also learned on Monday that Office Depot is closing 50 stores. Of course this is just the continuation of a trend that The Economic Collapse Blog has been tracking for quite some time.
Overall, U.S. retailers have already announced more store closings in 2019 than they did all of last year, and we are on pace for the worst year for store closings in all of U.S. history.
Ouch.
I could go on and on listing more numbers that indicate that the U.S. economy has been slowing down, but I don’t want to repeat much of what I have already shared over the past several weeks.
Meanwhile, inflation is starting to rise significantly in some pretty key areas. Previously I have explained why food prices are beginning to move up aggressively, and now gas prices are starting to make national headlines once again.
For example, the price of gas in the state of California just hit the highest level in nearly five years…
California’s gas prices continued to climb Wednesday, hitting the highest levels in almost five years.
Motorists throughout the Golden State are paying an average of $4.01 for a gallon of regular gasoline, by far the highest in the country and well above the national average of $2.83, according to a news release from AAA.
The primary factor driving up the price of oil is geopolitical wrangling in the Middle East. According to CNBC, President Trump intends to stop Iran from exporting any oil at all…
Oil prices surged about 3% at midday on Monday, hitting fresh 2019 highs, after the Trump administration announced that all oil buyers will have to end imports from Iran in just over a week or be subject to U.S. sanctions.
The administration said the State Department will cease granting sanctions waivers to any country still importing Iranian crude or condensate, an ultra-light form of crude oil, after May 2.
If President Trump is successful, it will eliminate approximately a million barrels of oil per day from the global marketplace.
That is a big deal.
And this comes at a time when oil prices have already been steadily rising.
Unfortunately, Iran doesn’t plan to take this move lying down, and their response could potentially spark a full-blown oil crisis.
According to Bloomberg, Iran is actually threatening to close the Strait of Hormuz for all commerce…
Iran will close the Strait of Hormuz, a waterway vital for global oil shipments, if the country is prevented from using it, a senior military official said on Monday in what appears to be a response to the U.S. plan to end waivers on Iranian oil exports.
“If we are prevented from using it, we will close it,” the state-run Fars news agency reported, citing Alireza Tangsiri, head of the Revolutionary Guard Corps navy force. “In the event of any threats, we will not have the slightest hesitation to protect and defend Iran’s waterway.”
If Iran did such a thing, it would throw global oil markets into a state of tremendous turmoil, and it would bring us much, much closer to war with Iran.
In recent days the Iranians and the Trump administration have been trading very angry words, and it certainly doesn’t help that the Iranians just appointed a certified hothead as the leader of the Republican Guards…
Salami has frequently vowed to destroy Israel and “break America.” Iran was “planning to break America, Israel, and their partners and allies. Our ground forces should cleanse the planet from the filth of their existence,” Salami said in February. The previous month, he vowed to wipe Israel off the “global political map,” and to unleash an “inferno” on the Jewish state.
He also said “Iran has warned the Zionist regime not to play with fire, because they will be destroyed before the US helps them.” Any new war, he said, “will result in Israel’s defeat within three days, in a way that they will not find enough graves to bury their dead.”
Hossein Salami is a complete and total nutjob, and I am entirely convinced that he actually wants a war with the United States and Israel.
For a long time I have been warning that we need to watch the Middle East, and a major regional war could potentially erupt at any time.
Let us hope that cooler heads prevail, because a full-blown war involving Iran, Israel and the United States would mean an immense amount of death and destruction.
For the moment, things are relatively calm in the United States, but most Americans don’t realize that we are actually in a very precarious position.
It isn’t going to take much for global events to reach a tipping point, and once they do there will be no going back.
Source: InfoWars
FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, April 16, 2019. REUTERS/Staff
April 23, 2019
By Agamoni Ghosh and Medha Singh
(Reuters) – European shares fell on Tuesday as battery maker Umicore kicked off a busy week of earnings with a grim outlook and investors grew concerned about China cutting additional support to its economy, but a rally in oil and gas stocks helped temper losses.
The pan-European STOXX 600 index fell 0.3 percent by 0930 GMT after seven straight sessions of gains, with all major indices in the red except oil major-heavy London’s FTSE 100 which rose 0.4 percent.
Earnings started to roll in on a not-so-positive note with Umicore tumbling 16 percent, after the Belgian group warned revenue and earnings growth in 2020 will be lower than previous indications due to delays in the electric vehicle and energy storage markets.
Umicore’s slide weighed heavily on Belgium’s blue chip Bel 20 Index, pulling it 1.5 percent lower.
Car part suppliers Plastic Omnium and Faurecia also reported first quarter results. Plastic Omnium slid after warning of a decline in worldwide auto production, but Faurecia rose 1.5 percent after the company met its full-year target.
Belgium’s Melexis, which supplies semiconductor solutions for cars, slipped 6 percent after first quarter net income tumbled.
“We’re pausing for breadth ahead of a fairly busy week of earnings after a decent winning streak,” said Jasper Lawler, head of research at London Capital Group in London.
The banking index eased from six-month highs with major European banks as UBS, Credit Suisse and Barclays slated to report earnings late this week after last week’s mixed bag of results from big Wall Street banks.
“We’ve seen the likes of record profits from J.P. Morgan but nothing close in Europe. The numbers aren’t going to be great,” said Lawler.
Earnings numbers from some of the biggest S&P 500 companies, including Boeing Co, Amazon.com Inc and Facebook Inc, are also due this week.
Payments company Wirecard was among the biggest decliners after Germany’s markets regulator Bafin’s two-month ban on short-selling ended on Friday.
Ahold Delhaize slid after the Dutch supermarket warned that a strike at its Stop & Shop chain in U.S. would hurt its underlying 2019 profit margin, as it missed out on around $200 million on Easter week sales.
Renault fell 1.4 percent after Nissan Motor Co Ltd said it would reject a management integration proposal from its French partner and called for an equal capital relationship, according to a Nikkei report.
Also weighing on sentiment was Beijing’s indication to tone down its stimulus measures following unexpected signs of recovery from first-quarter economic data last week.
CRUDE LIFT
The oil and gas sector was among the lone bright spots with Royal Dutch Shell, British Petroleum and Total, up between 1.7 percent and 2 percent.
Oil prices were at 2019 highs on Tuesday after Washington announced all Iran sanction waivers would end by May, pressuring importers, mostly Asian, to stop buying from Tehran.
Surging oil prices, however, took a toll on airline stocks. Air France, EasyJet plc, Lufthansa and Ryanair , all shed between 2 percent and 4 percent.
Getinge was the top performer on the STOXX 600 after the Swedish medical technology company beat first quarter sales estimates and said restructuring measures will boost profit in the second half of the year.
Thomas Cook jumped 14 percent after a Sky News report that the world’s oldest tour operator was tentatively approached by several parties regarding a takeover of its tour operating division or the entire company.
(Reporting by Agamoni Ghosh and Medha Singh, Editing by William Maclean and Ed Osmond)
Source: OANN
FILE PHOTO: A BT (British Telecom) company logo is pictured on the side of a convention centre in Liverpool northern England, April 9, 2016. REUTERS/Phil Noble
April 23, 2019
By Emilio Parodi
MILAN (Reuters) – A criminal investigation into accounting fraud inside British Telecom’s Italian unit has uncovered more evidence of what prosecutors say was the involvement of senior executives in artificially inflating the division’s financial performance.
Emails seized by the police and reviewed by Reuters show for the first time why Italian prosecutors allege that top BT employees were at the heart of the problem, contrary to the company’s assertions that managers at head office knew nothing about the misconduct.
“A series of emails between the top financial executives of BT Plc and managers of the (Italian) unit point to the existence of ‘insistent’ requests by the leadership of the parent company aimed at achieving ambitious economic targets, even using aggressive, anomalous and knowingly wrong accounting practices,” Italy’s financial police said in a 353-page report.
The report has not been made public and its contents have not previously been reported.
The report contains emails from Brian More O’Ferrall, currently finance director at BT Wholesale, the company’s business-to-business division, in which he asks colleagues in Italy to find ways of adjusting their accounts to boost profits.
At the time, O’Ferrall was chief financial officer (CFO) for BT Europe, the European part of Global Services, one of the company’s biggest businesses.
O’Ferrall did not respond to Reuters’ requests for comment. BT declined to make O’Ferrall or group Chief Executive Philip Jansen available for interview.
“We cannot comment on ongoing legal proceedings,” spokesman Richard Farnsworth said.
In the past, BT has blamed former executives in Italy for the bookkeeping irregularities, saying they had kept their bosses in London in the dark about what was going on. The scandal required the company to take a 530 million pound charge in early 2017. For a timeline click on.
In a complaint filed in April 2017 with Milan prosecutors against the conduct of its former managers, BT said the company itself was a victim of any fraud found to have taken place.
Italian prosecutors named three top BT executives among an expanded list of 23 suspects allegedly involved in the debacle, Reuters exclusively reported in February. O’Ferrall was not on that list.
Prosecutors are not investigating O’Ferrall because he was not on BT Italy’s board and did not sign off on the division’s accounts in the four years, 2013-2016, under scrutiny, according to a source familiar with the probe.
O’Ferrall was appointed chairman of BT Italy in February 2017, taking up the post after an internal investigation was launched into the unit’s bookkeeping. He stepped down from that role in November 2018.
Prosecutors in Milan allege that three former senior BT executives, Luis Alvarez, Richard Cameron and Corrado Sciolla, set unrealistically high business targets and were complicit in false accounting at BT Italy.
Alvarez and Cameron, were respectively the former chief executive and former chief financial officer of BT Global Services and Sciolla was the former head of continental Europe for BT. The three men, two of whom were based in London, left the company in 2017.
Reuters tried to contact Alvarez and Cameron via social media and email but they did not respond to those requests for comment. Sciolla declined to comment.
“AN URGENT REQUEST”
Allegations of fraudulent bookkeeping are part of a range of suspected wrongdoing at BT Italy. Italian prosecutors allege that a network of people at the unit exaggerated revenues, faked contract renewals and invoices and invented bogus supplier transactions in order to meet bonus targets and disguise the unit’s true financial performance.
The company has publicly disclosed that it uncovered a complex set of improper sales, leasing transactions and factoring at the division. Factoring is a way in which firms sell future income to financiers for cash.
Several BT shareholders have filed a class-action lawsuit in the United States alleging the group misled investors and failed to promptly disclose the financial irregularities. BT has moved to have the case dismissed.
In their report, Italy’s financial police reference an email dated Aug. 5, 2016, from O’Ferrall in which he says that Cameron wanted operating profit to increase by 700,000 euros and suggests to Luca Sebastiani, then CFO at BT Italy, along with other colleagues across Europe, that they capitalize labor costs as a solution.
“All, I have an urgent request from Richard to find another €700K,” O’Ferrall wrote to Sebastiani and his counterparts in Germany, Benelux, France, Spain, Hungary as well as Simon Whittle, then finance manager, reporting and consolidation, at Global Services Europe.
“Please can you look at all opportunities and come back to me and Simon asap. Labour capitalization? Regards Brian,” says the email, whose subject line reads “Another €700K EBITDA needed in P4.”
P4 refers to the month of July.
Reuters tried to reach Whittle via social media but he did not respond to requests for comment. The other finance officers O’Ferrall contacted did not respond to Reuters requests for comment.
Sebastiani’s lawyers, Giammarco Brenelli and Federico Riboldi, told Reuters the email was significant because “along with many others, it shows the constant and unrelenting pressure the parent company was putting on European subsidiaries with regards to accounting policies.”
Sebastiani is among the 23 suspects in the case.
In another email, dated April 8, 2016 and sent to Sebastiani’s predecessor Alessandro Clerici and Rosa Ronda Andres, CFO for BT Global Services in Spain, O’Ferrall says he has received a request “to find another €1 million of capitalization for 15/16.
“Can either of you accommodate this? €500K each?” the e-mail says.
Clerici and Andres did not comply with the request, according to a source familiar with the matter.
Andres did not respond to Reuters’ requests for comment. Clerici declined to comment. He is among the 23 suspects in the case.
Capitalizing costs is an accounting method that allows companies to amortize a cost related to an asset over time as opposed to book it as an expense in the income statement when the cost was incurred. The technique allows companies to smooth out expenses over time, and therefore boost profits.
“You can’t capitalize labor costs to improve earnings ex post (after the event), just to boost your accounts,” said Gian Gaetano Bellavia, an accounting expert who has in the past worked as a consultant for the Milan prosecutors. He is not involved in the BT Italy investigation.
Bellavia said it was common for top executives of a parent company to ask managers of subsidiaries to “always do more.” But he said some of the BT emails, which Reuters showed him a copy of, constituted “significant evidence” of wrongful accounting.
“EBITDA measures how much a company is earning. But to go up it needs actual income.”
Bellavia said another email, dated September 2016, in which Sebastiani says he has been told that Cameron would not accept an earnings estimate for the fiscal year 2016/17 below a certain amount, was less problematic because it could be interpreted as an aspiration and not a forecast communicated to investors.
The police report says the alleged accounting irregularities could have had an impact on the price of BT shares and this may justify adding market manipulation to the list of alleged crimes being investigated.
However, Milan prosecutors decided not to take this step on jurisdiction grounds, a source with direct knowledge of the probe said, since BT shares are listed in London and such allegations would have to be investigated by UK authorities.
Britain’s Serious Fraud Office (SFO) which investigates and prosecutes complex and often multinational fraud and corruption, declined to comment on whether it was investigating BT.
Britain’s accounting regulator, the Financial Reporting Council (FRC), said it was continuing to investigate PricewaterhouseCoopers’ (PwC) audits of BT from 2015 to 2017. BT dropped PwC as its auditor in 2017.
A spokesman for the accounting firm said it would continue to cooperate fully with the FRC in its enquiries.
(Additional reporting by Paul Sandle and Kirstin Ridley in London. Writing by Silvia Aloisi, editing by Carmel Crimmins.)
Source: OANN
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