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The Morning Risk Report: PG&E Admits Fault in 84 Fire Deaths, Pleads Guilty to Manslaughter
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PG&E chief Bill Johnson stood with lowered head after admitting the company's guilt in court on Tuesday. PHOTO: RICH PEDRONCELLI/ASSOCIATED PRESS
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Good morning. PG&E on Tuesday became one of the few U.S. corporations to plead guilty to manslaughter charges as the utility admitted to criminal negligence in starting the deadliest wildfire in California history. Chief Executive Bill Johnson entered guilty pleas on behalf of the company to 84 felony counts of involuntary manslaughter in Superior Court in California’s Butte County, where the 2018 Camp Fire razed the town of Paradise. He also pleaded guilty to one count of unlawfully causing a fire.
State investigators concluded that the Camp Fire was sparked by a failure of aging PG&E equipment, and the company has acknowledged responsibility. The sentencing is likely to take place later in the week, after a series of victim-impact statements are read aloud in court. The San Francisco-based company has agreed to pay a $3.48 million penalty, the statutory maximum.
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The anticipated conviction follows a yearlong state criminal investigation into PG&E’s role in the Camp Fire, which started after a worn piece of metal known as a “C-hook” broke free from a transmission tower, dropping a high-voltage power line that shed molten embers onto the dry brush below. The probe determined that the company was reckless in its failure to properly maintain its transmission system.
At a hearing Tuesday in the U.S. Bankruptcy Court in San Francisco, meanwhile, a federal judge gave PG&E a green light to exit bankruptcy. Judge Dennis Montali said he intends to approve PG&E’s $59 billion reorganization plan, which involves issuing huge amounts of new debt and equity to help pay for fire-related claims totaling $25.5 billion.
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From Risk & Compliance Journal
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U.K. Serious Fraud Office Ends Investigation Into Bank Note Producer
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The U.K.’s economic-crimes watchdog has ended its probe into bank note producer De La Rue PLC, saying Tuesday that the evidence in the case doesn’t meet the threshold for prosecution. The Serious Fraud Office said in July 2019 that it had opened an investigation into De La Rue and related entities or individuals in connection with alleged corruption in South Sudan.
Under the SFO’s rules, the evidence must be sufficient to secure “a realistic prospect of conviction” against each defendant and the prosecution must be in the public interest. The agency didn’t specify which aspect of the test its investigation failed to meet.
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Founder of Iranian Firm Accused of Sanctions Violations Pleads Guilty
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An Iranian businessman accused of conducting financial transactions that violated U.S. sanctions has pleaded guilty, the U.S. Justice Department said Tuesday.
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Seyed Sajjad Shahidian, founder and former chief executive of Iranian online financial services company Payment24, in May pleaded not guilty in federal court in Minnesota after being arrested and extradited from the U.K., according to court documents. Mr. Shahidian, in a videoconference Tuesday, changed his plea for one count of conspiracy to defraud and commit offenses against the U.S.
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The FCC said it would investigate T-Mobile’s nationwide network problem that resulted in service failures on Monday. PHOTO: JOSE A. ALVARADO JR. FOR THE WALL STREET JOURNAL
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Federal regulators said they would open an investigation into T-Mobile US’s nationwide network problem that knocked out voice and data service for many of its customers. The Federal Communications Commission has fined cellphone carriers including T-Mobile before for service failures, especially when they prevent customers from phoning emergency services.
T-Mobile Chief Executive Mike Sievert said an internet protocol traffic-related issue caused problems that affected customers across the country. The problems began a little after noon Eastern Time on Monday. The company sounded the all-clear more than 12 hours later.
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Judges for a federal appeals court handed stock exchanges a victory by ruling their regulator can’t order them to experiment with trading fees. The decision thwarts a planned regulatory effort to study how exchanges’ pricing creates conflicts of interest for stockbrokers that may harm investors. A panel of the appeals court said the program would have been an “unprecedented action that clearly exceeded the SEC’s authority under the Exchange Act.”
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Civil-rights organizations sued the Small Business Administration for excluding business owners with felony convictions from a $670 billion relief program for small businesses struggling with the impact of the coronavirus pandemic.
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The U.S. filed a breach-of-contract lawsuit against former national security adviser John Bolton, seeking to delay the publication of his book, which the suit alleges contains classified information that could compromise national security.
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Some New York City business owners, desperate for revenue months into the coronavirus pandemic, are bending or breaking the rules limiting restaurants and retail stores to takeout or curbside pickup.
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The CIA theft included details about the agency’s playbook for hacking smartphones, computer operating systems, messaging applications and internet-connected televisions. PHOTO: CAROLYN KASTER/ASSOCIATED PRESS
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A “woefully lax” security culture within the Central Intelligence Agency’s elite hacking unit that favored building cyber weapons over protecting its own computer systems from intrusion allowed for the 2016 theft of top-secret hacking tools, according to an internal report disclosed Tuesday.
The hacking tools were published by the anti-secrecy group WikiLeaks in early 2017, a disclosure totaling more than 8,000 pages. The leak of the so-called Vault 7 documents was widely viewed as one of the most devastating security breaches in the CIA’s history. It included details about the agency’s playbook for hacking smartphones, computer operating systems, messaging applications and internet-connected televisions.
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A group of Russia-based hackers used sophisticated new techniques to spread disinformation in the U.S. and avoid detection by social media companies for years, according to a new report from an information research firm.
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Germany became the largest Western country to launch a contact-tracing smartphone app to help curb the spread of the new coronavirus. Germany’s Corona-Warning-App was launched on Tuesday, weeks later than planned because of debates within the government about data protection. The country has strong privacy laws and politicians are worried that any suspicion surrounding the app could undermine its adoption.
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Marilyn Booker, pictured in 2017, said her budget for diversity efforts was repeatedly cut. PHOTO: RODIN ECKENROTH/GETTY IMAGES
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Morgan Stanley’s former head of diversity sued the bank, saying it hadn’t done enough to promote people of color and that it fired her in December for pushing for it to move faster.
Marilyn Booker said in a court filing that her budget for diversity efforts was repeatedly cut, that she was “trotted out” as a token minority at public events, and that she was belittled by white colleagues while watching more than a dozen black executives leave the firm since 2017.
A Morgan Stanley spokeswoman said: “We strongly reject the allegations made in this claim and intend to vigorously defend ourselves in the appropriate forum.”
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Some employees at Adidas are calling on the company’s supervisory board to investigate its chief human-resources officer and create an anonymous public platform to submit complaints about racism, after the sportswear giant promised to hire more people of color and invest in black communities.
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Anthony Fauci says a relaxed approach to public-health measures undermines efforts at combating the coronavirus pandemic. PHOTO: CAROLYN KASTER/ASSOCIATED PRESS
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Anthony Fauci, the U.S. government’s top infectious-disease expert warned the nation risks a resurgence of coronavirus infections should states fail to remain vigilant as they reopen their economies.
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Federal Reserve Chairman Jerome Powell said the economy faces potentially significant long-term damage from higher unemployment and a wave of small business failures due to the coronavirus pandemic despite recent signs of an economic rebound.
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Businesses will slash new overseas investments by 40% this year and as much as 10% next year, according to new United Nations forecasts, as disruptions from the coronavirus pandemic push multinationals to bring production closer to home. The trend is expected to hit developing countries hardest.
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Nursing homes and other senior-care facilities have started to allow more visits after a monthslong lockdown to protect vulnerable residents from coronavirus infections, even as the pandemic’s death toll tied to such places surpasses 50,000.
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India said 20 of its soldiers died in a clash with Chinese troops along the two countries’ disputed border in the Himalayan Mountains, the worst military confrontation between the nuclear-armed neighbors in decades.
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A Chinese spokesman said a clash took place after Indian soldiers attacked in an area China considers under its control. India blamed the fighting on Chinese troops operating in an area under Indian control. China has pressed other controversial territorial disputes in recent years, stoking anxiety among its neighbors by building military installations in the South China Sea, extending control over Hong Kong and moving to deny Taiwan, which it sees as part of China, legitimacy and participation in international forums.
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President Emmanuel Macron, center, visited an industrial development lab at Sanofi’s plant in Marcy-l'Étoile, France, on Tuesday. PHOTO: POOL/ZUMA PRESS
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Sanofi pledged to invest more than €600 million ($675 million) in vaccine research and production in France in response to President Emmanuel Macron’s demand that his country have access to any vaccine the French pharmaceutical giant develops against the coronavirus.
As countries from the U.S. to China jockey to secure supplies of future coronavirus vaccines, they are fueling what public-health experts call “vaccine nationalism,” a geopolitical race to become the first country to immunize its population. Those tensions were highlighted last month when Mr. Macron summoned Sanofi’s top management to his office after CEO Paul Hudson said American patients could expect any doses of the vaccine first because the U.S. had funded Sanofi’s research and development.
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Hilton said it is also extending its corporate pay cuts, reduced hours and furloughs for up to three more months. PHOTO: ANDREW HARRER/BLOOMBERG NEWS
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Hilton Worldwide Holdings is cutting nearly 22% of its corporate workforce globally, in what analysts said is one of the deepest job cuts so far by a major lodging company in response to the coronavirus pandemic. The job reductions amount to 2,100 corporate employees, Hilton said Tuesday. The hospitality company said it is also extending its corporate pay cuts, reduced hours and furloughs for up to three more months.
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Drugmakers in the U.S., Europe, China, and elsewhere are pushing ahead to test and manufacture vaccines against the new coronavirus, hoping to distribute billions of shots once they have proven to work safely. Yet hampering the ramp-up, industry officials said, is a shortage of vials and the special glass they are made from.
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