Month: March 2018

The Weinstein Co. filed for bankruptcy protection on Monday with a buyout offer in hand from a private equity firm, the latest twist in its efforts to survive the sexual misconduct scandal that brought down co-founder Harvey Weinstein, shook Hollywood and triggered a movement that spread out to convulse other industries.

The company also announced it was releasing any victims of or witnesses to Weinstein’s alleged misconduct from non-disclosure agreements preventing them from speaking out. That step had long been sought by New York Attorney General Eric Schneiderman, who filed a lawsuit against the company last month on behalf of its employees.

“Since October, it has been reported that Harvey Weinstein used non-disclosure agreements as a secret weapon to silence his accusers. Effective immediately, those ‘agreements’ end,” the company said in a statement. “No one should be afraid to speak out or coerced to stay quiet.”

In a statement, Schneiderman praised the decision as “a watershed moment for efforts to address the corrosive effects of sexual misconduct in the workplace.” 

The movie and TV studio becomes the first high-profile company to be forced into bankruptcy in the nationwide outcry over workplace sexual misconduct. Dozens of prominent men in entertainment, media, finance, politics and other realms have seen their careers derailed, but no other company has seen its very survival as tightly intertwined with the fate of one man as the Weinstein Co. 

Some 80 women, including prominent actresses, have accused Harvey Weinstein of misconduct ranging from rape to harassment. Weinstein, who was fired as his company’s CEO in October, has denied any allegations of non-consensual sex.

The Weinstein Co. said it has entered into a “stalking horse” agreement with an affiliate of Dallas-based Lantern Capital Partners, meaning the equity firm has agreed to buy the company, subject to approval by the U.S. Bankruptcy Court in Delaware. 

Lantern was among a group of investors that had been in talks for months to buy the company outside of bankruptcy. That deal was complicated when Schneiderman filed his lawsuit, citing concerns that the sale would benefit executives accused of enabling Weinstein’s alleged misconduct and provide insufficient guarantees of compensation for his accusers. Talks to revive the sale finally fell apart two weeks ago when the group of buyers said they had discovered undisclosed liabilities.

The Weinstein Co. said it chose Lantern as a potential buyer because the firm was committed to keeping on the studio’s employees as a going concern.

“While we had hoped to reach a sale out of court, the Board is pleased to have a plan for maximizing the value of its assets, preserving as many jobs as possible and pursuing justice for any victims,” said Bob Weinstein, who co-founded the company with his brother Harvey in 2005 and remains chairman of the board of directors.

Lantern co-founders Andy Mitchell and Milos Brajovic said they were committed to “following through on our promise to reposition the business as a pre-eminent content provider, while cultivating a positive presence in the industry.”

Under bankruptcy protection, civil lawsuits filed by Weinstein’s accusers will be halted and no new legal claims can be brought against the company. Secured creditors will get priority for payment over the women suing the company.

Schneiderman’s lawsuit will not be halted by the bankruptcy filing because it was filed by a law enforcement agency. Schneiderman said his investigation would continue and that his office would engage with the Weinstein Co. and Lantern to ensure “that victims are compensated, employees are protected moving forward, and perpetrators and enablers of abuse are not unjustly enriched.”

Other bidders also could emerge during the bankruptcy process, particularly those interested in the company’s lucrative 277-film library, which includes award-winning films from big-name directors like Quentin Tarantino and horror releases from its Dimension label. Free of liabilities, the company’s assets could increase in value in a bankruptcy.

In more fallout over the scandal, New York’s governor directed the state attorney general to review a decision by the Manhattan district attorney’s office not to prosecute a 2015 case involving an Italian model who said Weinstein groped her.

The bankruptcy process will bring the company’s finances into public view, including the extent of its debt. The buyers who pulled out of the sale earlier this month said they discovered up to $64 million in undisclosed liabilities, including $27 million in residuals and profit participation. Those liabilities came on top of $225 million in debt, which the buyers had said they would be prepared to take on as part of a $500 million acquisition deal.

The Weinstein Co. already had been struggling financially before the scandal erupted in October with a news stories in The New York Times and The New Yorker. Harvey and Bob Weinstein started the company after leaving Miramax, the company they founded in 1979 and which became a powerhouse in `90s indie film with hits like “Pulp Fiction.” After finding success with Oscar winners “The Artist” and “The King’s Speech,” the Weinstein Co.’s output and relevance diminished in recent years. The company let go 50 employees in 2016 and continuously shuffled release dates while short of cash.

Last year, the studio sold distribution rights for the movie “Paddington 2” to Warner Bros. for more than $30 million. 
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Some coastal states opposed to President Donald Trump’s plan to allow oil and gas drilling off most of the nation’s coastline are fighting back with proposed state laws designed to thwart the proposal.

The drilling Trump proposes would take place in federal waters offshore in an area called the Outer Continental Shelf. But states control the 3 miles of ocean closest to shore and are proposing laws designed to make it difficult, or impossible, to bring the oil or gas ashore in their areas.

A look at the issue:

What States Are Doing

States including New Jersey, New York, California, South Carolina and Rhode Island have introduced bills prohibiting any infrastructure related to offshore oil or gas production from being built in or crossing their state waters. Washington state is threatening such a bill. Maryland has introduced a bill imposing strict liability on anyone who causes a spill while engaged in offshore drilling or oil or gas extraction.

“We started thinking about how we control the first three miles of ocean, and there are state rights that we have,” said New Jersey state Sen. Jeff Van Drew, a Democrat who represents the state’s southern coast. “Even if we don’t succeed in banning it outright, we can still make it a lot more expensive to do it in this area. It’s a back-door, ingenious way to block this.”

California Democratic state Sen. Hannah-Beth Jackson said a ban on pipelines and docks could force the industry to rely on ships that would then have to sail to the waters of a different state to bring their cargo ashore. “What we can do is make drilling for offshore oil and gas so prohibitively expensive that it won’t pencil out,” she said.

Any Precendent?

In 1985, voters in Santa Cruz, California, required that any zoning changes to accommodate onshore facilities for offshore oil exploration or production must be approved by a vote of the electorate, one of 26 similar ordinances that were adopted in California. An oil and gas industry association unsuccessfully sued 13 of the communities, claiming they were interfering with lawful interstate commerce.

Oil Industry, U.S. Response

Andy Radford, a senior policy adviser with the American Petroleum Institute, said it has been 30 years since the last detailed analysis of potential offshore oil and gas supplies. He said states ought to welcome offshore drilling for the revenue it can produce for them. Offshore energy production in the Atlantic Ocean alone could support 265,000 jobs and generate $22 billion a year within 20 years, he said.

“We should take that step forward to advance our energy future,” he said. “Local communities and workers benefit from energy exploration and production, in addition to these investments generating significant state revenues to fund schools, hospitals and other public services.”

Connie Gillette, a spokeswoman for the U.S. Bureau of Ocean Energy Management, said “the laws, goals, and policies” of a state adjacent to the Outer Continental Shelf are among the factors the federal government must consider in approving oil and gas leases.

Conflicted in South Carolina

In May 2017, eight months before Trump proposed the nearly nationwide expansion of offshore drilling, a South Carolina legislator introduced a bill to prohibit oil drilling infrastructure in state waters. The bill remains in committee.

South Carolina’s House and Senate both introduced a resolution expressing support for drilling off their state’s coast and criticizing Republican Gov. Henry McMaster’s request to be exempted from the plan, saying the request is “tantamount to the state exercising excessive control of South Carolina’s free market.”
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A New York City councilman and a tenants’ rights group said they will investigate allegations that the real estate company formerly controlled by Jared Kushner, a presidential adviser and President Donald Trump’s son-in-law, falsified building permits.

In allegations first uncovered by The Associated Press, the Kushner Companies is accused of submitting false statements between 2013 and 2016, stating it had no rent-controlled apartments in buildings it owned when it actually had hundreds.

Rent-controlled apartments come under tighter oversight from city officials when there is construction work or renovations in buildings. 

The councilman and tenants’ rights group charged the Kushner Companies of lying about rent-control in order to harass and force out tenants paying low rents so it can move in those who would pay more.

They also blame city officials for allegedly being unaware what Kushner was up to.

Rent control is a fixture in many big U.S. cities, where the government regulates rent to help make housing more affordable.

Some tenants in Kushner-owned buildings told the AP that the landlord made their lives a “living hell,” with loud construction noise, drilling, dust and leaking water. They said they believe they were part of a campaign of targeted harassment by the Kushner Companies to get them to leave.

The company denies intentionally falsifying documents in an effort to harass tenants. In a news release Monday, the company called the investigation an effort to “create an issue where none exists.”

“If mistakes or typographical errors are identified, corrective action is taken immediately with no financial benefit to the company,” it said.

The company also said it contracted out the preparation of such documents to a third party and that the faulty paperwork was amended. 

Kushner stepped down as head of his family’s company before becoming presidential adviser. But the AP said he still has a financial stake in a number of properties.
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Colombia proposed on Monday that the International Monetary Fund provide assistance to help several hundred thousand Venezuelan refugees who have fled an economic and political crisis to  neighboring countries, officials at the G20 summit said.

The proposal was discussed at a meeting on Venezuela by leading finance ministers from the Western Hemisphere, the European Union and Japan, including U.S. Treasury Secretary Steven Mnuchin.

“The consensus is that the situation is extremely negative and we must by any means possible try to influence a solution to the problem and a change in Venezuela’s situation, mainly from the humanitarian point of view,” Brazilian Finance Minister Henrique Meirelles told reporters.

The fund, to be decided by the IMF next month, would only be used outside Venezuela and not by socialist President Nicolas Maduro’s “regime,” he said.

More than 500,000 Venezuelans have crossed into Colombia and 40,000 have left for Brazil as an economic meltdown worsened and opposition hopes of fair elections faded.

There were an estimated 886,000 Venezuelan migrants in South America in 2017, up from around 89,000 in 2015, the International Organization for Migration said in February.

An IMF spokesperson said of the proposal: “We look forward to subsequent discussions in which we would be involved.”

Mnuchin offered to host a follow-up meeting of the finance ministers on the margins of the World Bank/IMF Spring meeting in Washington, in April, a Treasury spokesperson said.

“The focus was on coordinating economic measures to achieve democratic political objectives in Venezuela, addressing the economic and humanitarian tragedy, and constructive responses once Venezuela allows free, fair and regular elections,” he said.

Colombia’s government was preparing a statement on the proposal, a finance ministry official said in Bogota.

The countries concerned with the Venezuelan situation also discussed sanctions and debt repayment as ways to encourage a solution to the crisis, Meirelles said.

“Some countries are already applying sanctions, like the United States. In the case of Brazil, we are owed $1.3 billion in trade financing and want that repaid,” he said. Venezuela recently paid arrears and is up to date, he added.

Other countries, led by Russia and China, favor a moratorium that would suspend Venezuela’s payments, he said. Russia and China did not attend the meeting.

Venezuela is undergoing a major economic crisis, with millions suffering food and medicine shortages, and Maduro’s government is late in paying about $1.9 billion in interest on its debt.
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The Trump administration on Monday banned all use by Americans of Venezuelan cryptocurrency, saying that its introduction is intended to skirt U.S. sanctions. In a separate move, the administration also slapped sanctions on four current and former senior Venezuelan officials accused of corruption and mismanagement.

In an executive order that took effect immediately upon its issuance, President Donald Trump declared illegal all U.S. transactions related to Venezuelan digital currencies, coins or tokens. The prohibition applies to all people and companies subject to U.S. jurisdiction. The move follows the introduction last month of a Venezuelan cryptocurrency known as the “petro,” for which the government says it has received investment commitments of $5 billion.

In the executive order, Trump said it was an “attempt to circumvent U.S. sanctions” imposed for democratic backsliding.

The Treasury had said in January that the petro appeared to be an extension of credit to Venezuela and warned that transactions in it may violate U.S. sanctions.

In February, cash-strapped Venezuela became the first country to launch its own version of bitcoin, the petro, in a move that President Nicolas Maduro celebrated as putting his country on the world’s technological forefront.

The petro is backed by Venezuela’s crude oil reserves, the largest in the world, yet it has arrived on the market as the socialist country sinks deeper into an economic crisis marked by soaring inflation and food shortages that put residents in lines for hours to buy common products.

Maduro had announced late last year that he was creating the digital currency to outmaneuver U.S. sanctions preventing Venezuela from issuing new debt.

Bitcoin and other digital tokens are already widely used in Venezuela as a hedge against hyperinflation and an easy-to-use mechanism for paying for everything from doctor visits to honeymoons in a country where obtaining hard currency requires transactions in the illegal black market.

The government has promised that Venezuelans will be able to use the $60 coins to pay taxes and for public services. But with the Venezuelan minimum wage hovering around $3 a month, it’s unlikely citizens will buy in large amounts.

In its own statement on Monday, Treasury said it was hitting the four current and former Venezuelan officials with sanctions that freeze any assets they may have in U.S. jurisdictions and bar Americans from doing business with them.

The four include Americo Alex Mata, a director of Venezuela’s National Bank of Housing and Habitat and coordinator of Maduro’s 2013 campaign, Willian Antonio Contreras, the head of the body that oversees price controls in the country, Nelson Reinaldo Lepaje, the head of the Office of the National Treasury, and Carlos Alberto Rotondaro, the former president of the Board of Directors of the Venezuelan Institute of Social Security.
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Major U.S. and European stock indexes were sharply lower in Monday’s trading over continuing fears of a trade war, Brexit, an upcoming U.S. Federal Reserve meeting and trouble with Facebook.

The Dow Jones industrial average and the Standard & Poor’s 500 index were both down nearly 1.5 percent, while the tech-heavy NASDAQ was off more than 2 percent.

European markets also dropped over news of a possible deal for Britain’s total exit from the European Union.

President Donald Trump’s efforts to raise tariffs on steel and aluminum imports to the U.S. are raising concerns of a trade war, which is making investors nervous.

Also Monday, reports emerged that a consulting company associated with Trump’s 2016 presidential campaign and worked with tech giant Facebook improperly gained access to information on millions of Facebook users.

The price of Facebook shares plummeted 7 percent on Monday, shaking up tech stocks in general.
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Greenpeace says household brands including PepsiCo and Johnson & Johnson are refusing to disclose where they get their palm oil from despite vows to stop buying from companies that cut down tropical forests to grow the widely used commodity.

The environmental group said Monday that in January it asked 16 major brands to reveal their suppliers of palm oil, which is mainly grown in Indonesia and Malaysia and used in a slew of consumer products from snacks to cosmetics. It said eight disclosed the information and eight refused.

Greenpeace said that adds to concerns international consumer goods companies are “way off track” in meeting a 2010 commitment to remove deforestation-linked palm oil from their supply chains by 2020.

“Corporate commitments and polices have proliferated, but companies have largely failed to implement them,” it said.

Colgate-Palmolive, General Mills, Mars, Mondelez, Nestle, Procter & Gamble, Reckitt Benckiser and Unilever agreed to publicly disclose the mills that produce the palm oil they buy and the names of groups that control the mills. Ferrero, Hershey, Kellogg’s, Kraft Heinz, Johnson & Johnson, PepsiCo, PZ Cussons and Smucker refused to provide the information, according to Greenpeace.

Globally, four industries – palm oil, soya, logging and cattle rearing – are the biggest destroyers of the virgin forests that are a crucial buffer against the rise in global temperatures.

Indonesia, which has overtaken Brazil as the country cutting down its forests at the fastest rate, lost 24 million hectares of rainforest between 1990 and 2015, Greenpeace said citing government data.

“Alarmingly, the destruction of Indonesia’s rainforests for palm oil shows no signs of slowing down,” the group said.

Groups representing the palm oil industry in Indonesia and Malaysia contend that much of the opposition to palm oil is a protectionist effort by rival industries in Western nations.

They point to an initiative known as the Roundtable on Sustainable Palm Oil as evidence they are taking conservation and other commitments seriously.

But Greenpeace said neither the industry initiative nor governments can be relied on to prevent palm oil producers from clearing forests.

“Palm oil traders, typically corporations that also have plantation interests, continue to allow oil from rainforest destroyers into their mills, refineries and distribution systems,” it said.
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