Commercial Awareness Update 15th March 2019

1) GLOBAL BANKS SUED OVER CHINA IPO

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Hong Kong’s securities regulator has imposed its largest ever fine on a number of international investment banks for failing in their roles as sponsors for Chinese initial public offerings.

The Securities and Futures Commission penalised UBS, Morgan Stanley, Bank of America Merrill Lynch and Standard Chartered a total of about HK$786.7m ($100m).

It also suspended for one year the Hong Kong licence of UBS Securities to advise on corporate finance, following an 18-month sponsorship ban it proposed last year.

Analysis

The record fines hint at an increased willingness by the watchdog to take on global banks after years of criticism for a lack of action on such issues.

The regulator has been criticised in recent years for a lack of action on allegations of fraud and misreporting often connected to Chinese companies, as it tried to strike a balance with attracting world-class listings to the city.

2) GOOGLE TO BE HIT WITH FINE

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Brussels is set to fine Google for hampering potential rival search advertisers, in the latest antitrust showdown between the EU and the US tech giant.

Following a high-profile investigation, Margrethe Vestager, EU competition commissioner, will announce the fine next week.

Analysis

Google has already paid €7bn in EU penalties to date for two other cases. The search giant was fined a record €4.3bn last year for abusing the dominant market position of its Android operating system for smartphones, and was hit with a €2.4bn penalty the prior summer for favouring its own shopping services over competitors. The search giant is appealing both decisions to the European courts in Luxembourg.

The latest investigation has focused on Google’s AdSense business, which places its search box on third-party websites, such as news websites. The commission can fine up to an additional $13bn — which is 10 per cent of the latest global turnover of Google’s parent company, Alphabet — but the penalty is expected to be significantly smaller than the maximum.


While next week’s fine will bring an end to the AdSense investigation, EU antitrust officials continue to scrutinise Google’s behaviour in other services — such as dedicated search for travel, jobs and local businesses — and could open fresh probes. They are also still considering if the fixes to Google’s Android operating system and shopping services are sufficient.

3) SPOTIFY WARNS OF PRICE RISES

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Spotify will raise prices if Apple continues to charge it a 30 per cent fee for using its ubiquitous App Store, the music-streaming service’s chief executive has said.

The warning from Daniel Ek comes just days after Spotify filed an antitrust complaint with the EU accusing Apple of unlawfully abusing its App Store dominance to favour its own Apple Music service.

Analysis

its EU complaint, Spotify said that Apple had required all iPhone app makers exclusively to use the Apple payment system for the past eight years.

Apple has introduced a 30 per cent fee, applied to Spotify and all other digital content providers in the first year after users download their app, for using the payment system. Other apps, such as Uber and Deliveroo, are not subject to the fee, which drops to 15 per cent after a year

While Spotify remains the global leader in music streaming by a wide margin, Apple recently overtook Spotify’s subscriber count in the US, where the iPhone dominates.

4) ZUCKERBERG PUSHES AHEAD

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Mark Zuckerberg is pushing ahead with plans to integrate Facebook’s trio of apps — even if it costs him a key member of his inner circle.

The Facebook chief executive wrote in a blog post on Thursday that two of the social network’s top bosses were leaving the company, less than a year after being promoted to their roles.

The resignations of Chris Cox, Facebook’s chief product officer, and Chris Daniels, head of WhatsApp, were widely seen as early signs of a backlash against Mr Zuckerberg’s new “privacy-focused” vision for the world’s largest social network, and sent Facebook shares down more than 4 per cent.

Mr Cox, the “number three” in command at Facebook after Mr Zuckerberg and chief operating officer Sheryl Sandberg, was well-liked within the company, having joined in 2005 as one of its first software engineers. He played an instrumental role in building the company, helping to develop the news feed feature.

Mr Daniels became vice-president of WhatsApp in May last year, having held multiple roles within Facebook, ranging from business development to partnerships, since 2011.


Analysis
The high-profile departures come just one week after Mr Zuckerberg used a 3,200-word blog post to pin Facebook’s future on products focused on privacy and control for its users.

As part of the change, the group plans to integrate the messaging services of Instagram, WhatsApp and Facebook into one encrypted system, meaning only people sending and receiving messages will be able to view them.

The move has divided analysts. Some say it is part of a push to find new sources of revenue at a time when sales growth is slowing in developed markets. But others see it as a more radical attempt to knit the three apps more closely together as antitrust regulators threaten to break them apart.

Usama Kubo,

Commercial Awareness Director

Commercial Awareness Update 8th March 2019

1) NORWAY’S $1TN WEALTH FUND

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The Norwegian oil fund, which is the world’s largest sovereign investor, would dispose of about $7.5bn of oil and gas companies that are focused purely on exploration and production under the proposal from the centre-right government in Oslo.

Analysis

The move is designed to reduce the dependence of Norway — western Europe’s biggest petroleum producer — on an industry that is facing growing questions about its long-term future. Global oil demand is forecast by many experts to peak by the 2030s while climate targets are speeding up efforts to reduce dependence on fossil fuels.

Share prices in oil companies fell following the announcement on Friday morning in Oslo, with UK-based Tullow Oil down almost 3 per cent. Norway has faced cries of hypocrisy over its attempts to balance being one of the world’s largest petroleum producers and an environmentally engaged country, pushing the likes of Indonesia and Brazil to protect their rainforests as well as becoming the leading nation for electric cars

2) CHINA EXPORTS DROP

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China on Friday reported its steepest year-on-year decline in exports in three years, with no clear end in sight to Beijing’s trade dispute with the US that has been hurting the world’s second-largest economy.

Hopes that the trade dispute would soon be resolved have cooled. A summit between US president Donald Trump and Chinese president Xi Jinping has been pushed back from the end of March, as both sides try to pin down details and avoid an embarrassing failure.

While the dates were not yet finalised, a meeting at Mar-a-Lago in Florida had been pencilled in for March 27 or March 28, immediately following Mr Xi’s planned trip to Europe. That is now unlikely. US ambassador to China Terry Branstad told the Wall Street Journal on Friday that no date had been set as the two sides were still negotiating.

Analysis

China’s exports sank 20.7 per cent last month compared with February 2018 in US dollar terms, the biggest monthly fall since February 2016 and four times steeper than the 4.8 per cent decline forecast in a Reuters poll of economists. Imports fell 5.2 per cent, resulting in the smallest trade surplus for China in 11 months. 

Major Chinese stocks recorded their biggest intraday dip since October with the CSI 300 index of Shanghai and Shenzhen-listed stocks ending down nearly 4 per cent. 

Weak Chinese imports are the latest sign of a slowdown in the domestic economy, which analysts have also cited as a key reason for slowing Japanese and South Korean exports. Chinese exports to the US fell disproportionately, down 14.6 per cent in the first two months of the year, while imports from the US fell 35 per cent.

3) EU OFFERS UNILATERAL EXIT

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The EU has offered London a “unilateral exit” from the UK-wide parts of the backstop plan for Northern Ireland, with the aim of showing Great Britain would not be “forced into a customs union against its will” after Brexit.

Michel Barnier, the EU’s chief Brexit negotiator, informed EU ambassadors of a package of proposals offered to Theresa May, which Brussels will publicly announce even though they fall short of the UK’s negotiating demands.

The legally binding package of assurances aims to rescue Theresa May’s exit deal ahead of a House of Commons vote on Tuesday. According to diplomats briefed on the terms, it would include a “unilateral exit clause”, allowing Great Britain to break its customs union with the bloc as long as other parts of the backstop still apply to Northern Ireland.

Analysis

Such a Northern Ireland-only backstop has been rejected by Mrs May in the past because it would create a customs border along the Irish Sea, dividing the UK’s internal market. In recent weeks Mrs May’s team sought alternative exit mechanism from the backstop, the part of the draft exit deal most hated by Brexiters, which would apply to the entire UK.

Mr Barnier told ambassadors that the EU proposals would underline that the EU had no interest in holding Britain in a customs union “against its will”, according to people familiar with the meeting. The EU has long preferred backstop arrangements only applying to Northern Ireland to enable the continuation of an open border on the island of Ireland.

Other proposals made by the EU include a legally binding interpretation of the withdrawal agreement, which would underline the temporary nature of the backstop plan.

Commercial Awareness Director,

Usama Kubo

Commercial Awareness Update 22nd February 2019

1) INFLATION DROPS

In the UK, inflation hit a two-year low of 1.8% in January, below the Bank of England’s 2% target. A recent cap on energy bills, and falling clothing costs, were the prime factors.

In America, inflation is rising at a 19-month low of just 1.6%. Drivers benefited from cheaper gasoline, with consumer prices unchanged in January.

Analysis

The fall means real incomes in Britain are continuing to rise (after a long trough when wages didn’t keep pace with prices).

Economists predicted that inflation could remain subdued, unless a hard Brexit causes sterling to plunge.

Stock markets are rallying, after president Trump hinted that the deadline for a US-China trade deal could be extended.

Wall Street has just opened higher, while Britain’s FTSE 100 has reached a four-month high.

2) DECLINE IN BRITAIN’S EU WORKFORCE

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The number of workers in the UK from elsewhere in the EU fell by 61,000 at a time when the number of British and non-EU workers soared, official figures show.

There were an estimated 2.33 million workers from the EU27 in the UK between October to December in 2017, but that figure dropped to 2.27 million a year later.

It contrasted with an increase in the number of non-EU workers in the UK, rising from 1.16 million to 1.29 million in the same period.


Analysis

Labour MP Rosie Duffield said, “EU citizens work in our hospitals, our schools and our businesses. They are our friends, our neighbours and our families. No one voted for a Brexodus of EU citizens who contribute greatly to our economy and to our public services.”

The uncertainty over Brexit means it is no surprise that thousands of EU nationals have left Britain over the past year, and that fewer people want to come here to contribute to our society and our economy. Brexit is already damaging our NHS, our universities and industry and means less money for public services.


3) BREXIT: ECONOMIC RETROGRESSION

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The cost of Brexit to the British economy is running at £40bn a year and a damaging no-deal scenario could force an emergency cut in interest rates.

Gertjan Vlieghe, a member of the Bank’s monetary policy committee, said that since the vote in June 2016, the economy had lost about 2% of GDP compared with a scenario where there had been no significant domestic economic events.

The cost to Britain is currently £40bn a year, or about £800m a week of lost income, he said. Since the referendum, the UK’s economic growth has slowed while the rest of the world has recorded one of its strongest periods for growth of the past decade.

Analysis

Vlieghe’s estimate for the weekly cost of Brexit so far is more than double the £350m the Leave campaign claimed could be saved on EU membership fees and instead spent on the NHS. The claim, emblazoned on the side of the campaign’s battlebus, became a key focus for debate in the run-up to the vote.

Vlieghe said in London on Thursday: “That 2% of GDP is not trivial, that’s £40bn or if you prefer it in bus units, it’s £800m a week.”

The Bank has calculated that the cumulative total of lost GDP since 23 June 2016 is £55bn.

He said business investment in Britain had been stuck around zero, with a drop of 3.7% in 2018, despite an upswing worth about 6% annually in the rest of the G7. Consumer spending also slowed as households came under pressure from higher prices, sparked by the sharp fall in the value of the pound straight after the Brexit vote.

Usama Kubo,

Commercial Awareness Director

Commercial Awareness Update 8th February 2019

1) BREXIT: ECONOMIC INSTABILITY

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Britain’s services sector slowed to the brink of stagnation last month. Markit’s monthly service sector PMI dropped to just 50.1%, showing barely any growth at all.

Services bosses reported that they’ve been forced to cut headcount, after suffering weakening new business. Many blamed Brexit uncertainty for spooking clients.

Moreover, UK car sales have fallen by 1.6% in January - although electric vehicle sales rose.

Analysis

Economists fear that the UK could struggle to post any meaningful growth this quarter, given that construction firms and manufacturers also found January tough.

The picture isn’t any better overseas. The eurozone private sector is growing at the slowest rate since mid-2013, with France and Italy particularly weak. Growth in Ireland also slowed, while even Australia is feeling the chill.

Despite this gloom, European stock markets have risen steadily as traders put their recent worries behind them.

As any legitimate economist worth their weight would argue, the short and long term ramifications of the UK’s withdrawal from the EU poses great threats to the UK’s domestic policy and its economy. It is now in the hands of the UK government to come to an agreement in order to avoid a ‘No-Deal Brexit’ and minimise the great negative impact of Brexit.

2) US-CHINA TRADE DEAL

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The US and China don't even have a trade deal draft yet as deadline approaches

The Wall Street Journal says the two sides have not even drafted an accord specifying the matters they agree and disagree on.

The report comes just a day after White House economic advisor Larry Kudlow said there is a "pretty sizable distance to go" before China and the U.S. reach a deal.

President Donald Trump also says that a meeting with Chinese President Xi Jinping will not take place before the crucial March deadline.

Analysis

The report comes just a day after White House economic advisor Larry Kudlow said there is a "pretty sizable distance to go" before China and the U.S. reach a deal. Kudlow also indicated, however, that President Donald Trump is "optimistic with respect to a potential trade deal."

After that, Trump said that a meeting with Chinese President Xi Jinping will not take place before the crucial March deadline. Trump's remarks came hours after CNBC reported the meeting was "highly unlikely," citing a senior White House official.

U.S. stocks fell sharply on Thursday as it became clear the meeting will not take place before the deadline. The Dow Jones Industrial Average lost 220 points, while the S&P 500 dropped 0.9 percent.

3) RBS LAWSUIT

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Newham council is suing Royal Bank of Scotland over the terms of about £150m in complex bank loans, making it the latest UK bank to face a lawsuit over lending terms that critics say piled undue pressure on local services.

The east London authority filed a high court claim against RBS earlier this week, the Guardian can report. The claim centres on terms of its lender option borrower option loans, known as Lobos, which proved popular with local councils in the early 2000s. One of the main attractions were the Lobos’ teaser interest rates that kept costs low in the short term but later proved expensive as austerity and spending cuts took hold.

Analysis

The loans gave banks the power to raise interest rates at certain points over their lifetime, accounting for the “lender option” of the loan agreement.

Although borrowers had the option of rejecting those terms, it would trigger a clause forcing them to immediately repay the loan in full.

The seven councils say the bank knew customers would rely on Libor rates, which Barclays was accused of lowballing, when deciding whether to enter into contracts. Barclays then has the power to raise interest rates over the lifetime of the Lobo loans as part of the central terms.

Usama Kubo,

Commercial Awareness Director

Commercial Awareness Update 1st February 2019

1) BREXIT

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Theresa May is seeking to renegotiate her withdrawal agreement with the EU after it was rejected by MPs this month, and Mr Hunt stressed it would take time to develop fresh proposals and discuss them with the bloc.

The foreign secretary suggested this could mean that not all the relevant Brexit legislation could be approved by MPs by March 29 — the UK’s scheduled departure date from the EU. “If we ended up approving a deal in the days before 29 March, then we might need some extra time to pass critical legislation,” he said.

Jeremy Corbyn says he told Theresa May "don't bring no deal back to Parliament" in their long-awaited face-to-face meeting on Brexit.

The Labour leader said it was "not acceptable" for the PM to keep the no-deal option on the table after MPs voted against it on Tuesday.

After the meeting, Mrs May tweeted: "The only way to avoid No Deal is to vote for a deal."

MPs will vote on the deal again after she seeks to renegotiate with the EU.

Analysis

Nearly one in three British businesses are planning to relocate some of their operations abroad or have already shifted them to cope with a hard Brexit, according to a leading lobby group.

The Institute of Directors (IoD) warned that 29% of firms in a survey of 1,200 members believed Brexit posed a significant risk to their operations in the UK and had either moved part of their businesses abroad already or were planning to do so.

More than one in 10 had already set up operations outside the UK as the prospect of a no-deal Brexit becomes more likely amid Westminster gridlock. Most firms considering a move were looking to open offices inside the European Union, said the IoD, which represents 30,000 firms.

Amidst the uncertainties associated with Brexit, one thing remains for certain:

Regardless of a deal or no-deal agreement, businesses will have to reshape their strategies to cope with the changing economic climate.


2) VENEZUELA CRISIS

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Protests have been held across the country since Mr Maduro began his second term on 10 January. He was elected last year during a controversial vote in which many opposition candidates were barred from running, or jailed.

About three million people have fled Venezuela amid acute economic problems.

Analysis

Much is at stake. Most important is the fate of 32m Venezuelans made wretched by six years under Mr Maduro. Polls suggest that 80% of them are sick of him. Other countries are also hurt by Venezuela’s failure. The region is struggling with the exodus of over 3m of its people fleeing hunger, repression and the socialist dystopia created by the late Hugo Chávez.

Europe and the United States suffer from Venezuela’s pervasive corruption, which enhances its role as a conduit for narcotics. And as world leaders pile in for Mr Maduro or against him, they are battling over an important idea which has lately fallen out of favour: that when a leader pillages his state, oppresses his people and subverts the rule of law, it is everybody’s business.

3) US NUCLEAR ARMS TREATY

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The Trump administration is suspending US participation in a cold war-era nuclear arms control treaty in a last-ditch attempt to put pressure on Russia, which it accuses of violating the 1987 pact.

Secretary of state Mike Pompeo announced on Friday that the US would withdraw from the Intermediate-Range Nuclear Forces Treaty for 180 days starting from Saturday.

The suspension comes after US and Russian officials failed to bridge their differences during months of negotiations and amid concerns that China is not a signatory.

Analysis

The stand-off over one of the most important cold war arms control pacts has raised fresh worries about an arms race. Russian President Vladimir Putin sparked alarm in December when he said Russia would develop weapons banned under the INF if the US pulled out of the bilateral treaty.

Russian officials said on Friday they feared the US would seek to abandon other arms control deals, and could deploy cruise missiles aimed at Moscow in eastern Europe after the INF withdrawal.

4) APPLE AND FACEBOOK PRIVACY CONCERNS

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Apple has shut down Facebook’s internal apps, including those used to test the social network’s new products and organise employee transportation, in a dramatic escalation of tension between two of the world’s biggest technology companies.

Apple said on Wednesday that it had banned a Facebook app that paid $20 a month to people between 13 and 35-years-old to allow it to collect data from their iPhones, known as Research. It said the app breached its policies.

Analysis

Facebook confirmed that the move by Apple had affected all of its internal apps — not just the controversial Research one.


The ban could slow product development, since Facebook typically tests new features on its own employees before offering them more widely, a process known as “dogfooding”. The move will also hit resource apps that employees use internally for anything from transportation to booking meeting rooms.


The news that Apple has chosen to turn off all of Facebook’s internal apps is the latest in a series of public spats after Apple took a critical stance towards privacy at Facebook in the wake of the Cambridge Analytica scandal.

Usama Kubo,

Commercial Awareness Director

Commercial Awareness Update 7th December 2018

1) CAMBRIDGE ANALYTICA FINE

Facebook has appealed against a fine imposed on it by the UK's data watchdog after the Cambridge Analytica scandal. The social network says that because the regulator found no evidence that UK users' personal data had been shared inappropriately, the £500,000 penalty was unjustified. Last month, the watchdog said Facebook's failure to make suitable checks on apps and developers amounted to a "serious breach of the law".

It has acknowledged the appeal.

This was the last day on which the US firm could challenge the Information Commissioner's ruling.

Analysis

Sir Humphrey, the civil servant in Yes Minister, described Facebook’s decision to appeal as "brave".

Amidst the barrage of accusations the social media firm has been recently subjected to, picking a fight with the UK regulator over an issue which was beginning to fade into the background seems reckless.

After all, the social media giant admits that it got a whole lot of things wrong in the Cambridge Analytica affair, in particular allowing the data of friends of people who took part in a personality quiz to be scraped.

But Facebook feels that the Information Commissioner's Office conducted a poor investigation, deciding that one million UK users had suffered harm and then finding that the researcher Dr Aleksandr Kogan did not pass their data on to Cambridge Analytica.

Some data protection experts think the company has a point.

Mark Zuckerberg and his company appear determined to fight back against what they see as a flawed process but the appeal is a gamble.

The stakes are also high for the Information Commissioner Elizabeth Denham. She made the unusual decision to go public with her intention to impose a fine before receiving representations from the company.

If Facebook's appeal succeeds, her authority as a regulator will be seriously undermined.


2) BREXIT: WITHDRAWAL

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The UK should be able to unilaterally cancel its withdrawal from the EU, according to a top European law officer.

The non-binding opinion was delivered by the European Court of Justice's advocate general.

A group of Scottish politicians has asked the court whether the UK can call off Brexit without the consent of other member states.

The Court of Justice (ECJ) will deliver its final ruling at a later date.

Analysis

While the advocate general's opinions are not binding, the court tends to follow them in the majority of its final rulings.

The anti-Brexit politicians and campaigners who have brought the case hope it will give MPs an extra option when considering whether to approve Mrs May's draft deal or not, because it could keep alive the prospect of calling off Brexit - potentially through another referendum.

The ECJ statement said the advocate general had proposed that the Court of Justice should "declare that Article 50 allows the unilateral revocation of the notification of the intention to withdraw from the EU".

It added: "That possibility continues to exist until such time as the withdrawal agreement is formally concluded."

The UK is due to leave the EU on 29 March next year, but the deal negotiated with the EU has to be backed by a majority MPs if it is to come into force.

Welcoming the advocate general's opinion, SNP MEP Alyn Smith, one of those who brought the case, said it showed that "we now have a roadmap out of the Brexit shambles", and that parliament was not necessarily facing a choice between accepting Mrs May's deal or leaving the EU with no deal.

He added: "There are other options, and we can stop the clock."

3) HUAWEI CFO ARRESTED

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Huawei’s chief financial officer has been arrested in Canada in a probe by the US into alleged violation of sanctions against Iran, reigniting tensions between Washington and Beijing just days after Donald Trump and Xi Jinping tried to resolve their trade conflict at the G20 summit.

Canadian officials on Wednesday said that the US was seeking to extradite Meng Wanzhou, the daughter of Ren Zhengfei, founder of the Chinese telecoms group, after her arrest on Saturday in Vancouver. Ms Meng, who became one of Huawei’s four deputy chairpersons this year, will face a bail hearing on Friday.

The arrest sparked an immediate response from Beijing, which urged the US and Canada to release Ms Meng. The Chinese embassy in Ottawa said that China “firmly opposes and strongly protests over such kind of actions which seriously harmed the human rights of the victim”.

Analysis

Her arrest, which comes after recent moves by western governments to curtail Huawei on security grounds, added to investor concerns over heightened trade tensions between Washington and Beijing.

In China, the benchmark CSI 300 index of stocks dropped 2.2 per cent while in Europe, key market indices were sharply lower. The Euro Stoxx 50 index was down 2.2 per cent in morning trading while the FTSE 100 was 2.7 per cent lower.

Futures market trading indicated that on Wall Street, the S&P 500 was expected to open about 1.7 per cent down and Nasdaq 2.2 per cent weaker.

Huawei has been in the sights of US security officials, and the latest move comes as the Trump administration takes an aggressive stance towards China. In a speech in October, Mike Pence, the US vice-president, put China on notice that Mr Trump was prepared to take a harder stance against Beijing than his predecessors.

4) TESCO EXECUTIVES ACQUITTED

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A high profile trial over a £250m accounting scandal brought by the Serious Fraud Office against two former Tesco executives collapsed dramatically after the two men were acquitted.

On Thursday, a jury at Southwark Crown Court was told that Chris Bush and John Scouler had been acquitted by the Criminal Court of Appeal after judges backed the ruling of the trial judge, Sir John Royce, that they had no case to answer. The prosecution case, which lasted two months, finished last week.

The SFO had appealed against his decision to the Criminal Court of Appeal. Sir John told the jury that the prosecution case had been “so weak” in certain areas it should not be left before the jury’s consideration.

Analysis

The collapse of the trial of the two former Tesco directors accused of false accounting will cause more embarrassment for the Serious Fraud Office (SFO) and also call into question an earlier deferred prosecution agreement (DPA) between the supermarket and the fraud-busting agency.

Alison Geary, counsel in the white collar defence team at international firm WilmerHale, said: ‘This throws into stark relief the very different considerations between concluding a court approved DPA with a company and prosecuting individual executives. It should not be assumed that the prosecution of individuals will inevitably follow the conclusion of a DPA.’

Maria Cronin, partner at Peters & Peters, said the acquittals are likely to cause companies to ’reconsider the potential advantages of DPAs’.

She added ‘It is notable, that, to date, the SFO has had little success in securing convictions against individuals following a DPA.’ ‘That the judge considered that the SFO’s case was unsupported by evidence is extremely concerning,’ Cronin said.

5) OPEC OUTPUT CUT

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Oil prices fell almost 5 per cent on Thursday to below $59 a barrel as Saudi Arabia signalled that producers were working towards a deal to cut output that could fall short of market expectations.

Khalid al-Falih, the kingdom’s energy minister, told reporters ahead of a meeting of oil ministers in Vienna that Opec and allies outside the cartel including Russia were still working towards a deal by Friday. But he said the preference for Saudi Arabia — Opec’s de facto leader — was for a “sufficient cut but not overly large” adding that 1m barrels a day between Opec and non-Opec countries “would be adequate”.

Analysis

At the June meeting of oil ministers, Saudi Arabia pledged to relax oil curbs that had been in place since January 2017, to compensate for a drop in Iranian exports as sanctions kicked in, taking its output above 11m b/d. But worries about a global economic slowdown that could hit oil demand and see the swelling of crude stockpiles again, has concerned big producer countries that rely on export revenues to fill government coffers.

Usama Kubo

Commercial Awareness Director

Commercial Awareness Update - 23rd November 2018


This year, the Law Society has launched a new Commercial Awareness project. The aim of this project is to foster an understanding and awareness of world affairs within the SOAS Community. We hope to develop an interactive environment for fellow students to learn and discuss ongoing affairs that shape the world today.

We will be achieving this through the events that we will be hosting throughout the year and regular updates that we will be sending out.

As this is a new project, any constructive feedback will be much appreciated.




1) UWO TEST CASE – NCA GETS THE GREEN LIGHT

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The National Crime Agency ("NCA") had issued a UWO against Mrs A on 28 February 2018 requiring her to explain how she afforded two British properties worth £22m.

The NCA has six months to investigate the source of funds used to acquire the items, which were being valued for Hajiyeva’s daughter.

Analysis

UWOs are a new tool to help investigators crack down on the £90bn tide of “dirty money” flooding into London by forcing suspected corrupt government-linked officials to prove their wealth is legitimate. The introduction of UWO’s may have far-reaching ramifications such as the infringement on people’s right to privacy. It is unclear whether this is the beginning of a floodgate UWO era. Nonetheless, it seems that the NCA is eager to crack down on large-scale corruption; debuting with a multi-million-pound case is rightfully befitting.

2) BREXIT DEAL: WHAT’S NEXT?

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Theresa May has a draft divorce deal with the EU that sorts out how and when we leave andgives the outline of what the relationship will be like for decades to come. The PM secured her cabinet's backing for the deal after a five-hour meeting, but Brexit Secretary Dominic Raab has just resigned over it.

She has also faced a backlash from Tory Brexiteers and her Democratic Unionist Party (DUP) backers, amid suggestions of moves to force a no-confidence vote. Labour will announce later whether or not it will back the deal.

Analysis

Amongst many, Leader Jeremy Corbyn said he did not believe the agreement - set out in a 585- page document - was in the national interest. Speaking on Thursday morning, the president of the European Council, Donald Tusk, said he still saw Brexit as a "lose-lose" situation. But he added: "As much as I am sad to see you leave, I will do everything to make this farewell the least painful possible, for you and for us." Mr Tusk also confirmed that "if nothing extraordinary happens", an emergency EU summit will take place on 25 November to "finalise and formalise" the Brexit agreement.

In line with predicted economic instability, the pound and shares in housebuilders and banks have fallen sharply after cabinet ministers Dominic Raab and Esther McVey quit over Prime Minister Theresa May's draft Brexit deal. The Brexit fiasco has thus far proven to be detrimental to the UK’s economy and financial stability.

3) OIL PRICES TUMBLE BY MORE THAN 4%

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Oil prices tumbled more than 4 per cent on Tuesday to eight-month lows as global producers and traders weighed the prospect of supplies overwhelming demand amid worries about a slowdown in economic growth.

Prices spiraled further lower after Opec’s research arm again reduced its forecast for 2019 oil demand growth in another sign Saudi Arabia and its partners inside and outside the cartel might be forced to curb supplies to bring the market into balance.

Analysis

Productions need to be cut due to oil market oversupply and saturation. Opec said on Tuesday in its monthly market report that world oil demand was forecast to grow 1.29m barrels a day next year, about 70,000 b/d lower than last month’s forecast and down on the 1.45m b/d it forecast in July.

Khalid al-Falih, Saudi Arabia’s energy minister, said on Monday that Opec and its partners outside of the cartel had conducted an analysis that showed that a 1m b/d drop in oil supplies from October levels was required to balance the market.

4) SKILLS SHORTAGE IN THE UK

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Britain’s employers have warned that severe skills shortages are holding back the economy after the latest official figures showed the biggest fall in the number of workers from eastern Europe since modern records began. The British Chambers of Commerce and the Federation of Small Businesses urged the government to deliver a post-Brexit migration system to meet their needs amid signs that the fall in unemployment in recent years was putting upward pressure on wages.

Analysis

In order to avoid a regressing economy, firms who employ a large share of migrant workers need to think now about adjusting to a lower migration environment, in terms of the workers they employ, what they produce and how they operate.

Usama Khalab,

Commercial Awareness Officer