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The Morning Risk Report: Pope Francis Tightens Vatican Spending Rules to Fight Corruption
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Pope Francis is pushing for greater transparency around the awarding of public contracts at the Vatican. PHOTO: VATICAN PRESS POOL
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Good morning. The Vatican published new procurement rules intended to prevent corruption and save money at the Catholic Church’s world-wide headquarters, whose already troubled finances have suffered acutely during the coronavirus pandemic.
Pope Francis was elected in 2013 with a mandate to reform Vatican finances, after a series of scandals over alleged corruption and incompetence, including €550,000 ($610,000) spent on a manger scene in St. Peter’s Square. The new rules, published Monday, are meant to address serious shortcomings in the Vatican’s procurement systems.
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The rules prohibit anyone convicted of, or under investigation for, offenses including fraud, money laundering, tax evasion or participation in organized crime from bidding for Vatican contracts. Companies based in internationally recognized tax havens are also excluded from bidding.
Centralized panels will approve most contracts, based on a list of standard prices and fees for goods and services set by the Vatican’s Secretariat for the Economy, the department that oversees its finances. Staff members with family or professional ties to merchants who have presented bids won’t be eligible to serve on the panels.
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From Risk & Compliance Journal
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Drug Crime Expert Pleads Guilty to Money Laundering
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Retired University of Miami professor Bruce Bagley, an often-cited expert on crime in Latin America, pleaded guilty Monday to laundering money from a bribery scheme in Venezuela.
An indictment filed in November accused Mr. Bagley of laundering $3 million in profits from foreign bribery and embezzlement schemes connected to public works projects in Venezuela. The money came from overseas banks in Switzerland and the United Arab Emirates and flowed through a bank account in Weston, Fla., set up by Mr. Bagley using the name of a company he owned, prosecutors said.
Mr. Bagley, who faces up to 20 years in prison and is scheduled to be sentenced in October, had gone “from writing the book on crime—literally writing a book on drug trafficking and organized crime—to committing crimes,” the top federal prosecutor in Manhattan, Geoffrey Berman, said in a statement.
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Justice Department Adds Detail to Compliance Evaluation Guidance
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The Justice Department refined a document outlining how it assesses programs developed by companies to prevent their employees from violating the law.
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The guidance is written as a series of questions that prosecutors can ask companies about their compliance programs during criminal investigations. It serves as an informal set of standards that companies can use when designing compliance programs.
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Bernard Madoff leaving court in New York in 2009. He is serving a 150-year prison sentence after pleading guilty to running the largest Ponzi scheme in history. PHOTO: DAVID KARP/ASSOCIATED PRESS
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The U.S. Supreme Court extended the global hunt for tainted cash from Bernard Madoff’s Ponzi scheme, refusing to shield European banks and other foreign investors from having to return roughly $3 billion they collected before his 2008 arrest.
The justices declined to stop lawsuits against foreign institutions including HSBC Holdings, Crédit Agricole and Société Générale over money stolen from Mr. Madoff’s victims that was transferred overseas.
The court order paves the way for years of additional litigation against these foreign firms, some of the last—and largest—targets in an international legal campaign to dig up money for Madoff victims.
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The first major federal effort to measure the deadly impact of the new coronavirus in nursing homes found around 26,000 deaths, a total that likely falls short of showing the full toll on some of the most vulnerable Americans.
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A former staffer on Donald Trump’s 2016 campaign filed a new challenge against the president’s use of nondisclosure agreements, asking a New York state court to rule in a lawsuit filed Monday that the agreements drawn up by the campaign are “null, void and unenforceable.” NDAs are routine in the business world, where they are frequently used to prevent disclosure of trade secrets. But they are growing increasingly common as well on political campaigns.
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The Environmental Protection Agency on Monday set new rules aimed at speeding up Clean Water Act permit approvals that are often a sticking point for pipelines and other major infrastructure projects.
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The Macy's store at Manhattan's Herald Square was covered with boards on Monday to prevent any damage from protests. PHOTO: JOHANNES EISELE/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Macy’s delayed the reopening of some stores shut by the coronavirus pandemic. Chains from Kroger to Popeyes have cut back their hours. And the CEOs of Starbucks and McDonald’s organized companywide forums to discuss the social unrest that has disrupted efforts to restart business as pandemic lockdowns ease.
After widespread protests over the death of George Floyd while in police custody, CEOs were looking for ways to balance their efforts to run their companies, protect their employees and property, and articulate a response to their customers, staff and communities about racism and deep-seated problems in American society. For many, it followed months of struggles to restart their businesses after the crippling global pandemic.
A flood of messages from business leaders across industries about social injustice and racial inequality reflects how quickly the world has changed for chief executives and big businesses, who up until a few years ago tended to steer away from hot-button issues.
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A store in Dedham, Mass., posted this sign in April due to the pandemic. PHOTO: STEVEN SENNE/ASSOCIATED PRESS
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The U.S. economy could take the better part of a decade to fully recover from the coronavirus pandemic and related shutdowns, a U.S. budget agency said, as a series of surveys pointed to continuing weakness in global manufacturing.
The Congressional Budget Office said the sharp contraction triggered by the coronavirus caused it to mark down its 2020-30 forecast for U.S. economic output by a cumulative $7.9 trillion, or 3% of gross domestic product, relative to its January projections. GDP isn’t expected to catch up to the previously forecast level until the fourth quarter of 2029, the CBO added.
Surveys of purchasing managers at manufacturers in the U.S., Asia and Europe offered signs that the decline in global factory activity is starting to bottom out after the record fall seen in April. But sentiment remained negative, suggesting any recovery in the months ahead could be tentative.
Meanwhile, the economic fallout from the coronavirus pandemic is whittling away the U.K. central bank’s long-held aversion to subzero rates. Senior officials have said the controversial policy is under review as a potential tool to support the U.K. economy as it emerges from lockdown into what will likely be a slow and protracted recovery.
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Hundreds of thousands of respirator masks to protect against coronavirus have been sent through a decontamination system that has triggered warnings from front-line workers. Federal guidelines and the largest U.S. N95 mask maker indicate that some mask-reuse systems are unproven and could make masks unable to properly protect health-care workers from the coronavirus. Some unions said that decontamination systems put workers at risk.
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Some employees set up their remote work stations to say they weren’t working Monday to voice their disagreement with Mark Zuckerberg’s stance. PHOTO: JOHN G. MABANGLO/EPA/SHUTTERSTOCK
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Some Facebook employees staged a virtual walkout Monday to protest CEO Mark Zuckerberg’s decision to allow a post from President Trump about the recent social unrest, comments they believed violated the company’s rules about inciting violence.
Over the weekend, more than a dozen employees spoke out on Twitter against Mr. Zuckerberg’s decision to keep up a post from the president in which called the demonstrators thugs and warned: “When the looting starts, the shooting starts.” Some employees set up their remote work stations to say they were not working Monday to voice their disagreement with Mr. Zuckerberg, according to people familiar with the matter and public tweets from Facebook employees.
Facebook refrains from fact-checking or removing politicians’ posts on the platform unless they are glorifying violence and spreading voter misinformation. Some employees and outside academics who study Facebook’s content rules said the looting post, along with an earlier one that contained inaccuracies about voting by mail, broke the company’s rules.
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Media companies encourage and facilitate comments that can be seen by other Facebook users, said the highest court in the Australian state of New South Wales, which includes Sydney. That means, it ruled Monday, that the companies should be considered publishers of the comments, responsible for their content. The ruling presents a fresh dilemma for traditional publishers in the social-media age
The media companies that were defendants in the original lawsuit, which include News Corp Australia as well as the publisher of the Sydney Morning Herald, said they are considering a further appeal to the country’s highest court. News Corp Australia is a subsidiary of News Corp, which also owns Dow Jones & Co., publisher of The Wall Street Journal.
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A Brooklyn Starbucks in late April. Dining rooms at most of the chain’s U.S. stores remain closed for now. PHOTO: GABBY JONES/BLOOMBERG NEWS
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Starbucks said it would further limit employee hours to match pared-back operations at its U.S. stores, reflecting expectations that sales won’t bounce back from the coronavirus pandemic until at least this fall.
The world’s largest coffee company said it is encouraging workers to take unpaid leave until September because it has decided to keep the dining rooms at most of its thousands of U.S. cafes closed for now. The latest reduction comes after the chain in May reopened stores with reduced operations and had to trim employee hours as a result, limiting sales to drive-throughs, delivery and pickup.
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Acquisition target Tiffany & Co. is among those whose stocks fell after the arrival of the coronavirus pandemic. A shop in Madrid in mid-May as Spain phased out some lockdown closures. PHOTO: MARISCAL/EPA/SHUTTERSTOCK
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Some hedge funds that wager on mergers and acquisitions are taking an unusual approach to navigating the uncertainty caused by the new coronavirus: They’re betting against the target. For these so-called merger-arbitrage investors, this marks a big shift in strategy. They typically make money by buying up the stock of target companies in M&A deals, betting the share price will rise after a combination is announced and nears completion.
But many are finding that reducing their long position, or even shorting the target—betting its price will fall—is now a better option as prospects mount that deals get delayed, close at lower prices or fall through because of the crisis.
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Two big stock-market debuts are set to reinvigorate the U.S. IPO market this week. Warner Music Group and ZoomInfo Technologies plan to list their shares Wednesday and Thursday in what would be the biggest overall IPO and the top new technology issue of the year, respectively.
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