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The Morning Risk Report: Questions Over Perks Push Out ANZ Executive
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David Hisco, shown in 2016, won’t be required to repay any money claimed as expenses. PHOTO: ANZ COURTESY/ZUMA PRESS
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Good morning. Chauffeur-driven cars, a common perk for corporate leaders, cost a veteran banking executive his job after Australia & New Zealand Banking Group Ltd. took issue with how he expensed his use of the vehicles.
David Hisco, head of ANZ’s New Zealand operation, left the job after an internal review and amid health issues, the bank said. The review, which also pointed to expense claims Mr. Hisco filed for wine storage, concluded that his characterization of the expenses fell short of company standards, ANZ said.
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Mr. Hisco, who has been on sick leave for several weeks, couldn’t immediately be reached for comment. ANZ said that Mr. Hisco didn’t accept all of the concerns raised by directors of its New Zealand unit but that he accepted accountability, given his leadership position, and agreed the characterization of the expenses didn’t meet standards.
ANZ and other major banks are striving to rebuild their reputation in Australia following last year’s government-ordered judicial inquiry into misconduct in the country’s financial industry, which heard allegations of inappropriate lending practices and widespread charging of fees for services never provided to customers.
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Nasdaq Launches Corporate Governance Research Center
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Nasdaq Inc. is launching a research center to help directors and senior leaders better understand some of the thorniest issues in corporate governance.
The launch Tuesday comes as investors are increasingly focused on nonfinancial issues, such as gender diversity and climate risks. The research produced by the center will be publicly available and will provide advice to senior leaders on how to implement changes to their governance strategies.
“One of the issues we have in the marketplace generally is the lack of support and guidance,” said Martyn Chapman, executive director of the Nasdaq Center for Corporate Governance and head of strategy for the company’s governance solutions division.
In its first report, the research center analyzed proxy statements and sustainability reports for S&P 100 companies, focusing on how they disclosed information on topics ranging from board composition to environmental goals. Among the findings: 22% of companies say they have an environmental expert on their board.
—Kristin Broughton
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Internal Auditors Call for Review of ‘Three Lines of Defense’ Model
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A professional organization for internal auditors is seeking public feedback on how to improve a popular risk management model, saying it doesn’t take into account the expanding role of risk executives within many companies. The Institute of Internal Auditors said Monday that comments from companies could help it update a system of internal checks known as the “three lines of defense” that lays out responsibilities for front-line business executives, corporate risk managers and auditors.
Some internal auditors—the last line of defense in many companies—are developing closer relationships with senior management, including advising them on future actions and providing training, according to a report published by an IIA working group. An updated “three lines of defense” model should take these shifts into account—but also ensure that companies, in the process, don't compromise internal safeguards, the working group said.
The IIA will accept feedback from June 20 through Sept. 19.
—Kristin Broughton
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Join Risk & Compliance Journal on Wednesday for a webinar discussing major antibribery and corruption enforcement actions of 2019. The Wall Street Journal’s Nicholas Elliott, Laura Perkins, a partner at Hughes Hubbard & Reed LLP and Nicole Sprinzen, vice chair of white collar defense and investigations at Cozen O’Connor P.C., will discuss lessons compliance and risk officers can learn from these cases. Register here.
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Google and Facebook both appear to have grown faster in Europe last year than the overall digital ad market as the GDPR took effect. PHOTO: L.J. DAVIDS
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Europe’s new privacy law appears to be helping tech giants—for now. The General Data Protection Regulation, or GDPR, which went into effect across the European Union last year, has pushed marketers to spend more of their ad dollars with the biggest players, in particular Alphabet Inc.’s Google and Facebook Inc., ad-tech companies and media buyers say.
One year on, how different countries will enforce the regulation is still being determined, and experts say that a uniform standard for the use of data in digital advertising is unlikely to materialize for a number of years. That’s pushing some firms to concentrate their digital ad budgets with fewer tech giants, whom they trust not to run afoul of the rules. Violators of GDPR face fines of up to €20 million (about $23 million), or 4% of their global revenue, whichever is higher.
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The $50 million fine is one of the largest imposed on an auditor in an SEC action. PHOTO: CHARLES PLATIAU/REUTERS
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KPMG LLP agreed to pay $50 million to settle allegations that former employees got an unlawful sneak peek at regulators’ plans to inspect its work and auditors at the firm cheated on internal training exams. The firm’s settlement with the Securities and Exchange Commission wraps up a two-year probe of an ethical collapse at the firm that already led to the criminal convictions of four former audit partners or managers.
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A group of five television station owners on Monday agreed to settle Justice Department charges that they used third-party firms to illegally coordinate on sales of local advertising spots. CBS Corp., Cox Enterprises Inc., E.W. Scripps Co., Fox Corp., and Tegna Inc. all agreed to consent decrees barring them from sharing certain competitively sensitive information for the next seven years, according to court documents filed Monday. In addition, each company is required to adopt rigorous antitrust compliance and reporting measures.
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U.S. aviation regulators unveiled plans to ease noise restrictions for testing proposed supersonic commercial planes in American skies, part of a broader initiative to promote development of such technology.
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The Federal Reserve Bank of San Francisco wants banks to get extra credit for making loans that help communities adapt to climate change and prepare for future natural disasters. A paper released by researchers at the San Francisco Fed argues that banks should receive credit for climate-adaptation investments under the Community Reinvestment Act, which requires banks to lend to low- and moderate-income communities.
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PHOTO ILLUSTRATION: JOEL EASTWOOD/WSJ; PHOTOS: ASSOCIATED PRESS; GEOINVESTING LLC; WEST FACE CAPITAL COURT FILING
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In 2017, a private investigator masquerading as an adviser to a wealthy Indian businessman blundered trying to dig up dirt on an outspoken Russia critic. An undercover operative unsuccessfully tried to prod a former Canadian judge to disparage Jews in the same year. Last year, agents were exposed engineering a smear effort against financier George Soros.
The would-be secret agents all worked for Black Cube, a private Israeli investigative firm often referred to in press reports as a “private Mossad.”
The firm has helped clients by covertly eliciting damaging information about competitors or legal opponents, among other things. But a number of its cases in recent years have been marred when flimsy cover stories were exposed by bumbling agents and risky tactics, according to a review of past cases and Black Cube internal documents, along with former employees, rivals, targets and clients.
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Marc Benioff, chairman and chief executive officer of Salesforce.com, received a total of $28.4 million for 2018, the third-biggest compensation among chief executives in the software industry. PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS
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PayPal Holdings Inc.’s Daniel Schulman collected a pay package totaling $37.8 million in 2018, making him one of the highest-paid bosses in the S&P 500. But for Mr. Schulman and many of his fellow CEOs in the software industry, big paydays were backed by healthy returns.
Most companies selling software and related services thrived last year, with half delivering a total shareholder return of at least 10.3%, a Wall Street Journal analysis shows. That success translated to their CEOs, who received a median raise of 11.7%.
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A worker arrived May 2 for a shift at the U.S. Steel Clairton Plant, near Pittsburgh, which has been hit by a fire that knocked out pollution controls. PHOTO: GENE J. PUSKAR/ASSOCIATED PRESS
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The biggest coke plant in the U.S. was operating Monday with limited pollution controls after the second fire in nearly six months broke out at the facility, prompting a warning by county health officials to residents. U.S. Steel’s Clairton Plant, about 15 miles south of Pittsburgh, is more than 100 years old and one of the region’s largest contributors of air pollution. A Dec. 24 fire at the plant, which produces a high-carbon fuel used in steelmaking, knocked out pollution controls, sending emissions of sulfur dioxide higher for several months.
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Amazon.com Inc.’s yearslong effort to invade the $130 billion videogame industry is hitting a rough patch. The company last week laid off several dozen employees from its division that develops videogames, according to people familiar with the matter. The layoffs come as Amazon has struggled to produce a hit and make inroads with internal software it hoped would lead more game developers into becoming customers of its cloud service, Amazon Web Services.
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A 777X plane, with its signature folding wingtip, at a Boeing production facility in Everett, Wash., in February. PHOTO: LINDSEY WASSON/REUTERS
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General Electric Co. is having to redesign an engine part for Boeing Co.’s new 777X long-haul jetliner, meaning a delay for its first test flight and potentially for the first delivery of the plane to airline customers. Meanwhile, Airbus SE said it will develop its longest-range single-aisle plane yet, adding more pressure on Boeing, which plans a jet for the same market but is distracted by its 737 MAX crisis.
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Facebook Inc. formally announced plans to launch a cryptocurrency called Libra, promising a secure blockchain-based payment system backed by hard assets and designed for mainstream users. Facebook named early Tuesday a series of big, corporate partners—including financial-services heavyweights Mastercard Inc. and PayPal Holdings Inc. and tech giants Uber Technologies Inc. and Spotify Technology S.A.—that it said will help it create a “secure, scalable and reliable” crytocurrency.
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Pfizer Inc. agreed to buy Array BioPharma Inc. for $10.64 billion in cash, as one of the world’s biggest pharmaceutical companies seeks to expand its cancer lineup with targeted therapies. Monday’s deal for Array suggests just how important the market for cancer drugs is for the world’s biggest pharmaceutical companies.
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French billionaire Patrick Drahi is buying Sotheby’s for $2.7 billion, ending the storied auction house’s 31-year run as a public company as it seeks to expand its digital business targeting art collectors more accustomed to online shopping than live auctions.
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Ripple Inc., a startup behind the XRP cryptocurrency, agreed to invest up to $50 million in MoneyGram International Inc. in a deal that stands to rank among the first crypto-based company investments in a major U.S. publicly listed firm.
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