Day: July 16, 2018

A former official at a Venezuelan state-run electric company pleaded guilty on Monday to U.S. charges that he participated in a scheme to solicit bribes in exchange for helping vendors win favorable treatment from state oil company PDVSA.

Luis Carlos De Leon Perez, 42, pleaded guilty in federal court in Houston to conspiring to violate the Foreign Corrupt Practices Act and to conspiring to commit money laundering, the U.S. Justice Department said.

He became the 12th person to plead guilty as part of a larger investigation by the Justice Department into bribery at Petroleos de Venezuela SA that became public with the arrest of two Venezuelan businessmen in December 2015.

The two men were Roberto Rincon, who was president of Tradequip Services & Marine, and Abraham Jose Shiera Bastidas, the manager of Vertix Instrumentos. Both pleaded guilty in 2016 to conspiring to pay bribes to secure energy contracts.

De Leon is scheduled to be sentenced on Sept. 24. His lawyers did not respond to requests for comment.

De Leon was arrested in October 2017 in Spain and was extradited to the United States after being indicted along with four other former Venezuelan officials on charges they solicited bribes to help vendors win favorable treatment from

PDVSA.

An indictment said that from 2011 to 2013 the five Venezuelans sought bribes and kickbacks from vendors to help them secure PDVSA contracts and gain priority over other vendors for outstanding invoices during its liquidity crisis.

Prosecutors said De Leon was among a group of PDVSA officials and people outside the company with influence at it who solicited bribes from Rincon and Shiera. De Leon worked with those men to then launder the bribe money, prosecutors said.

De Leon also sought bribes from the owners of other energy companies and directed some of that money to PDVSA officials in order help those businesses out, prosecutors said.

Among the people indicted with De Leon was Cesar David Rincon Godoy, a former general manager at PDVSA’s procurement unit Bariven. He pleaded guilty in April to one count of conspiracy to commit money laundering.

Others charged included Nervis Villalobos, a former Venezuelan vice minister of energy; Rafael Reiter, who worked as PDVSA’s head of security and loss prevention; and Alejandro Isturiz Chiesa, who was an assistant to Bariven’s president.

Villalobos and Reiter were, like De Leon, arrested in Spain, where they remain pending extradition, the Justice Department said. Isturiz remains at large.
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The United States launched five separate World Trade Organization dispute actions on Monday challenging retaliatory tariffs imposed by China, the European Union, Canada, Mexico and Turkey following U.S. duties on steel and aluminum.

The retaliatory tariffs on up to a combined $28.5 billion worth of U.S. exports are illegal under WTO rules, U.S. Trade Representative Robert Lighthizer said in a statement.

“These tariffs appear to breach each WTO member’s commitments under the WTO Agreement,” he said. “The United States will take all necessary actions to protect our interests, and we urge our trading partners to work constructively with us on the problems created by massive and persistent excess capacity in the steel and aluminum sectors.”

Lighthizer’s office has maintained that the tariffs the United States has imposed on imports of steel and aluminum are acceptable under WTO rules because they were imposed on the grounds of a national security exception.

Mexico said it would defend its retaliatory measures, saying the imposition of U.S. tariffs was “unjustified.”

“The purchases the United States makes of steel and aluminum from Mexico do not represent a threat to the national security,” Mexico’s Economy Ministry said in a statement.

“On the contrary, the solid trade relationship between Mexico and the U.S. has created an integrated regional market where steel and aluminum products contribute to the competitiveness of the region in various strategic sectors, such as automotive, aerospace, electrical and electronic,” the ministry added.

Lighthizer said last month that retaliation had no legal basis because the EU and other trading partners were making false assertions that the U.S. steel and aluminum tariffs are illegal “safeguard” actions intended to protect U.S. producers.
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Democratic Republic of Congo’s plan to drill for oil in national parks could leave thousands of farmers and fishermen who rely on the land in a struggle to survive, rights groups said Monday.

The central African country announced last month that it was taking steps toward declassifying parts of Virunga and Salonga national parks, both recognized as world heritage sites by the United Nations, to allow for oil exploration.

The parks, which together cover an area about the size of Switzerland, are among the world’s largest tropical rainforest reserves and home to rare species including forest elephants.

Allowing drilling in the parks would cause a loss of biodiversity, release huge amounts of carbon dioxide into the atmosphere and pollute water that thousands of local people use for fishing and farming, according to several rights groups.

Congolese state spokesman Lambert Mende told Reuters that the government will study the potential impact of oil drilling on local communities before they proceed.

The government has previously defended its right to authorize drilling anywhere in the country and said it is mindful of environmental considerations, such as protecting animals and plants, in the two national parks.

“There are lake-shore communities, especially in Virunga, that are very dependent on fishing and on the park’s integrity,” said Pete Jones of environmental advocacy group Global Witness.

“That really needs to be taken into account and doesn’t seem to be part of the debate that’s happening, which is a shame,” he told Reuters.

Conservation group World Wildlife Fund (WWF) also said it is concerned about the impact of oil drilling on at least 50,000 people who benefit from the fishing industry in Virunga, and tens of thousands more who farm on the outskirts of the parks.

“The risks of pollution are clear and present. The fishing industry would suffer considerably if it gets to that point,” said Juan Seve, WWF country director in Congo.

The oil industry would be unlikely to create local jobs since specialists would be brought in from abroad, he added.

The U.N.’s cultural agency UNESCO has previously said that oil exploration should not be conducted at world heritage sites.
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The U.N. envoy for Libya said Monday he fears the recent agreement to resume oil production in the conflict-torn country will not hold unless two issues are speedily tackled — distribution of wealth and “endemic plundering of resources.”

Ghassan Salame told the Security Council in a video briefing that unless the issues are addressed it will also “be difficult to advance the political process.”

Libya descended into chaos following the 2011 uprising that toppled longtime dictator Moammar Gadhafi, who was later killed. The country is now split between rival governments in the east and west, each supported by an array of militias.

The Security Council has backed the holding of presidential and parliamentary elections in Libya this year but Salame warned that “without the right conditions, it would be unwise to conduct elections.”

He said national political consultations over the last 14 weeks that included more than 75 meetings in Libya and abroad and over 7,000 participants showed that “the Libyan people want clear and effective leadership by legitimate bodies, formed through elections.”

“However, a handful of people defy this popular desire,” Salame said. “The few who benefit from the status quo will, if left unchecked, do whatever they can to hinder elections. Unfortunately, they can do much, especially as they hold crucial, and too often lucrative, official positions.”

“Without clear and strong messaging to those who would attempt to stall or disrupt these elections, the conditions will not be met,” he warned.

In a statement after closed consultations following the open briefing, the Security Council “underlined support for the U.N.-facilitated, Libyan-owned political process, including the preparations for credible and inclusive elections.”

But the U.N.’s most powerful body made no mention of “spoilers” trying to thwart the elections.

The Security Council did welcome the National Oil Corp.’s announcement last Wednesday that it was in charge of the oil ports and would resume exports. The firm is controlled by the U.N.-backed government in Tripoli, which is in the west.

The self-styled Libyan National Army allied with the east’s interim government and led by Field Marshal Khalifa Hifter seized the ports earlier this year from another militia led by Ibrahim Jadhran, a rebel commander opposed to Hifter who took part in the 2011 uprising that toppled Gadhafi.

The seizure prompted the National Oil Corp., with international support, to issue a “force majeure” to halt exports, which are Libya’s main source of income.

The LNA said it agreed to return the ports for a commitment by the Tripoli-based government in the west to investigate allegations that oil and gas revenues had been used to fund terrorist organizations.

The Security Council condemned attacks by Jadhran’s militia against the country’s oil infrastructure and said it now expects the National Oil Corp. “to continue its work unimpeded.”

Salame told council members the U.N. “will redouble its efforts to push for economic reforms, as the very stability and unity of the country are at stake.”

Libya is “in decline,” he said. “The crisis in the oil crescent gave us a glimpse of what is in store if tangible progress is not made now — economic collapse, the breakdown of public services, and more frequent and intense outbreaks of violence.”

“In a country where terrorists lurk, where criminals are waiting to traffic migrants, where foreign mercenaries are increasing in number, where the oil industry hangs in the balance, this should be of concern to all,” Salame said. 

He urged Libya’s rival leaders to stand by their commitment at a May 29 international meeting in Paris “to engage constructively to enable elections to take place by the end of the year.”
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China is saddling poor nations with unsustainable debt through large-scale infrastructure projects that are not economically viable, the head of the U.S. Overseas Private Investment Corporation (OPIC) said on Monday.

The criticism of Beijing — targeted by President Donald Trump in a trade war that has sent ripples through economies around the world — comes as Washington seeks to ramp up development finance in the face of China’s global ambitions.

Unveiled in 2013, President Xi Jinping’s “Belt and Road” initiative aims to build an infrastructure network connecting China by land and sea to Southeast Asia, Central Asia, the Middle East, Europe and Africa.

China has pledged $126 billion for the plan, which has been praised by its supporters as a source of vital financing for infrastructure-starved partners in the developing world.

But in an interview with Reuters in Johannesburg, OPIC CEO Ray Washburne warned that the Chinese strategy created a debt trap for many poor nations.

“Just look at any project in these countries and they’re overbuilding the size,” he said. “We try to have countries realize that they’re indebting themselves to the Chinese.”

Washburne is not the first to warn of growing debt linked to Chinese infrastructure projects.

International Monetary Fund Managing Director Christine Lagarde in April cautioned China’s Belt and Road partners against considering the financing as “a free lunch.”

Sri Lanka formally handed over commercial activities in its main southern port in the town of Hambantota to a Chinese company in December as part of a plan to convert $6 billion of loans that Sri Lanka owes China into equity.

U.S. officials have warned that a strategic port in the tiny Horn of Africa nation of Djibouti could be next, a prospect the government there has denied.

Washburne also voiced concern over a $360 million expansion of the airport in Zambia’s capital Lusaka currently being carried out with financing from the Exim Bank of China.

“The local economy isn’t benefiting from that. It’s a much too large airport. They’ll have too much debt on it. At some point, someone’s got to pay. Pay or the Chinese take control,” he said.

Keeping pace

Lawmakers in the United States are advancing a new law — the BUILD Act – through Congress that Washburne says should bolster private U.S. investment in developing nations by doubling OPIC’s access to U.S. Treasury credit to $60 billion.

About a quarter of the active portfolio of OPIC, a government agency that helps U.S. businesses invest in emerging markets, is currently focused on Africa and it typically invests around $1 billion annually on the continent.

“With the right quality projects, it could double here,” Washburne said, adding that many investments would focus on the kinds of infrastructure projects Chinese firms are currently dominating.

“The Chinese are in with ports and railroads and highways, things that we need to be in as a competitor.”

OPIC this month launched an Africa-focused initiative that will earmark more than $1 billion over the next three years for projects supporting transportation, information and communications technology and value chains.

“Instead of giving them a fish, we want to teach them how to fish,” Washburne said. “They’ll have to stand on their own two feet. So we’re not in making loans or doing projects that don’t make economic sense.”
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American boxer Floyd Mayweather was named the world’s highest-paid entertainer on Monday on a list that saw actor George Clooney take the No. 2 spot with the highest annual pay of his career.

Reality star Kylie Jenner, 20, came in third on the annual Forbes Celebrity 100 list, largely thanks to her booming cosmetics line that Forbes said put her on track to become the youngest self-made billionaire in the United States.

Forbes compiled its 2018 list estimating pre-tax earnings from June 2017-June 2018, before deducting fees for managers, based on data from Nielsen, touring trade publication Pollstar, movie database IMDB, and interviews with industry experts and celebrities themselves.

Mayweather pulled in some $285 million in the period, largely thanks to his August 2017 comeback fight win over mixed martial arts champion Conor McGregor.

Oscar-winning star Clooney earned an estimated $239 million after selling the Casamigos tequila company he co-founded to British spirits company Diageo in June 2017. Forbes said the sale gave Clooney the best annual earnings of his 35-year career in film and television.

Forbes said entertainers on its 2018 Celebrity 100 list earned a combined $6.3 billion before tax, up 22 percent from last year’s list. Many of the highest earners came from celebrities leveraging their brands through side ventures and through their social media presence.

“There’s never been a more lucrative time to be famous than now, with 11 superstars earning $100 million or more over the past year,” Zack O’Malley Greenburg, senior entertainment editor at Forbes, said in a statement.

“Entertainers have found all sorts of new ways to monetize their audiences, especially with the help of social media,” he added. 

Dwayne “The Rock” Johnson almost doubled his earnings from  the previous year to land in 5th place with estimated earnings of $124 million. Forbes said the earnings of the “Jumanji” and “Fast & Furious” star were the largest acting-related earning it had recorded in 20 years.

The top earner on last year’s list, musician Sean Diddy Combs, dropped to No. 32 on the current list. His earnings on the 2017 list were inflated by a tour and the sale of part of his Sean John clothing line, Forbes said.

Musicians and athletes fared well, with Irish band U2, British band Coldplay and British singer Ed Sheeran appearing in the top 10. Soccer players Lionel Messi and Cristiano Ronaldo also earned more than $100 million, Forbes said. 
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As the United States ratchets up trade threats, China suffered a setback on Monday for its calls for international cooperation in counteracting  what it calls U.S. President Donald Trump’s protectionist policies.

Luca Jahier, the president of the European Economic and Social Committee, said that the European Union won’t “gang up” on America with China even if the trade bloc opposes the U.S. leader’s tariff measures.

Jahier said, ahead of Monday’s annual China-EU summit in Beijing, he strongly opposes protectionism, but escalating the situation would not be the appropriate response, the South China Morning Post reported.

Analysts say that China is probably barking up the wrong tree if it plans to seek a united trade front with European countries.

China’s unfair practice

Like the U.S., the European Union is firm in its fight against China’s unfair trade practice and intellectual property rights infringement, although it disagrees with Trump’s aggressive tariff measures, said Darson Chiu, a research fellow at the Taiwan Institute of Economic Research.

The researcher added that there’s not much China can do to hit back but play the victim’s game internationally should the U.S. next escalate with an extra 10 percent tariffs on US$200 billion-worth of Chinese goods in two months.

“China only imports $130 billion in American goods [annually], so, it is already out of elbows when it comes to the imposition of retaliatory tariffs,” Chiu said, adding that any talks in China about dumping U.S. treasuries it holds as a retaliatory move will only backfire and hurt its own economy.

Ball in US court?

The ball is thus in the U.S. court, and only a poor performance in the U.S. midterm elections in November will force Trump to re-evaluate his trade strategies against China, Chiu added.

The dispute, moreover, has escalated from trade volume to the broad economic interests of both countries, said Raymond Yeung, senior economist of Greater China at the Australia and New Zealand Banking Group.

“The tension between the two countries is not simply on trade, but in anything that the Chinese government thinks happens to the U.S. economic interests” Yeung said.

In other words, there is yet no end in sight to Trump’s trade war with China.

Protracted trade war

In preparation for a protracted trade war, China continues to put the blame on the U.S. and play down the tariffs’ impact at home, while tightening media censorship.

Chinese officials had nothing but angry words before any official efforts to seek rapprochement or renew negotiations with the U.S.

China’s Vice Minister of Commerce Wang Shouwen, representing Beijing during the country’s policy review at the World Trade Organization last week, called Washington a “trade bully,” which should “keep its gun” off China’s head.

In a statement last week, China’s Ministry of Commerce argued that the U.S. practice would drag the global economy into the “cold war,” “recession trap” and “the trap of uncertainly to worsen global trade environment and industrial supply chains.”

Controlling the narrative

Chinese censors have also stepped up efforts to control the narrative and public discussion about the trade dispute.

Most media in China were reportedly told not to hype up the trade war or link it to stock market fluctuation, the Chinese yuan’s depreciation, or the country’s economic and financial vulnerability to avoid spreading panic.

In its editorial, state media Global Times, on Sunday, heralded “China’s advantages in a protracted trade war.”

“Some are concerned that … China seems to have no tools with which to hit back. This is a huge misconception. The tariffs on $200 billion of Chinese goods are meant to be a bluff,” the editorial read.

‘Strategic risk’

The paper called the Trump administration complacent in telling its society that the U.S. will clench an easy win and hence “against this backdrop, arrogant Washington has created a tremendous strategic risk for itself.”

And it concluded that “China will likely find losses lower than expected while the U.S. will be shocked by unexpected real losses.… China has to play hardball and knock the Trump administration forcibly out of its dream to conquer us.”

State censorship on social media appeared to have also reached its peak to silence unwanted comments since late last week.

On Friday, the Sino-U.S. trade war was the second top-trending censored topic on freeweibo.com.

The screening of critical voices continued this week with most online postings share the similar nationalistic nature.

Echoing the Chinese official statement, one Weibo user on Monday wrote “the U.S. is shooting itself in the foot and got so scared that it peed its pants. China will be the biggest winner.”

Another user said that he will always support China. “Maybe after the war [with the U.S.], we will also be able to reclaim Taiwan.”

 
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The International Monetary Fund is warning escalating trade conflicts threaten to curb the world’s economic recovery, saying U.S. exports are especially vulnerable in the face of retaliatory tariffs other nations are imposing on them in response to President Donald Trump’s new levies on foreign imports.

The Washington-based IMF, in its latest World Economic Outlook, continued to project international economic growth at 3.9 percent for this year and 2019, but said Monday “the risk of worse outcomes has increased, even for the near term.”

IMF chief economist Maurice Obstfeld said, “Our modeling suggests that if current trade policy threats are realized and business confidence falls as a result, global output could be about 0.5 percent below current projections by 2020,” adding that the United States is “especially vulnerable.”

“As the focus of global retaliation,” he said, “the United States finds a relatively high share of its exports taxed in global markets in such a broader trade conflict.”

Trump has imposed higher tariffs on steel and aluminum imports from Europe, Canada and Mexico and on an array of products from China, in all instances drawing protests from other world leaders about his actions, along with higher retaliatory levies on U.S. exports.

In addition to the growing trade disputes, the IMF concluded that other risks “have become more prominent” since its last assessment in April.

“Political uncertainty has risen in Europe, where the European Union faces fundamental political challenges regarding migration policy, fiscal governance, norms concerning the rule of law, and the euro area institutional architecture,” the IMF said.

“The terms of Brexit [Britain’s departure from the European Union] remain unsettled despite months of negotiation,” Obstfeld said.  “Prospective political transitions in Latin America over coming months add to the uncertainty.  Finally, although some geopolitical dangers may appear to be in remission, their underlying drivers in many cases are still at work.”

Despite the back-and-forth tariff increases the United States and China have imposed on each other, the IMF left as unchanged its growth projections for both countries.  It pegged the U.S. advance at 2.9 percent this year and 2.7 percent in 2019, with China at 6.6 percent this year and 6.4 percent next year.

But the IMF trimmed its outlook for the 19 European countries that use the euro currency, Japan, and Britain.  The agency’s report projected 2.2 percent growth in the eurozone this year, Britain at 1.4 percent and Japan at one percent, with all three figures down two-tenths of a percentage point.

The IMF also cut its forecast for Brazil by a half percentage point to 1.8 percent and India by a tenth of a point to 7.5 percent.  

 
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Thousands of workers will walk off the job on Tuesday at Amazon warehouses in Germany to demand better working conditions, joining colleagues in Spain and Poland in taking action that coincides with a major sales promotion.

The Verdi services union called the one-day strike to back its demand for labor contracts that guarantee healthy working conditions at fulfillment centers run by the world’s largest e-commerce company.

“The message is clear — while the online giant gets rich, it is saving money on the health of its workers,” said Stefanie Nutzenberger, Verdi’s top official responsible for the retail sector.

The one-day strike at six facilities in Germany coincides with Seattle-based Amazon’s Prime Day promotion. Workers in Spain are out on a three-day strike, meanwhile, while in Poland they are staging a work to rule, Verdi said.

Amazon said it expected only a fraction of its 12,000 workers in Germany to join the strike, and that there would be no impact on Prime Day deliveries.

It also said Amazon fulfillment center jobs offered competitive pay and comprehensive benefits from the first day of employment. Permanent staff earn 12.22 euros ($14.31) an hour or more after two years.

“We believe Amazon’s Fulfillment Center jobs are excellent jobs providing a great place to learn skills to start and further develop a career,” the company said in comments emailed to Reuters.

Germany is Amazon’s second largest national market after the United States. Net sales grew by 20 percent last year to $17 billion, accounting for 9.5 percent of the total, according to the company’s annual report.
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China’s economic growth slowed in the quarter ending in June, adding to challenges for Beijing amid a mounting tariff battle with Washington.

The world’s second-largest economy expanded by 6.7 percent, down from the previous quarter’s 6.8 percent, the government reported Monday.

Even before the dispute with Washington erupted, forecasters expected growth to cool after Beijing started tightening controls on bank lending last year to rein in surging debt.

Economic activity is expected to decline further as global demand for Chinese exports weakens and lending controls weigh on construction and investment, major contributors to growth.

Beijing has responded to previous downturns by flooding the state-dominated economy with credit. But that has swelled debt so high that global rating agencies have cut China’s government credit rating.

Chinese leaders are in the midst of a marathon effort to encourage self-sustaining growth driven by domestic consumption and reduce reliance on exports and investment. 

Consumer spending is rising more slowly than planned, leaving economic growth dependent on debt-supported investment.
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