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The Morning Risk Report: Lebanon’s Central Bank Fuels Corruption, Extremism Concerns
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Riad Salamé, the central-bank governor, has rejected allegations of involvement in corruption and facilitating Hezbollah. PHOTO: JOSEPH EID/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Good morning. U.S. and other Western financial-enforcement and diplomatic officials are exerting pressure on Lebanon’s central bank as part of an international push to sideline Iran-backed Hezbollah, oppose corruption and alleviate the country’s economic and political crises.
Washington and its allies for months have demanded a forensic audit of the central bank that they believe may uncover evidence of money laundering, corruption and links to Hezbollah by top Lebanese officials, including at the central bank, Western officials said. The pressure on the central bank, including the threat of possible sanctions, according to the Western officials, is a rare step the U.S. usually reserves for bitter rivals such as North Korea, Iran and Venezuela.
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Forensic audits are investigatory examinations that check for possible evidence of fraud or other activity that could bring legal or enforcement action.
Washington and its allies are leveraging Beirut’s desperate need for emergency financing, demanding the examination in the hope of shedding light on long-opaque central-bank operations, the officials said. Efforts to conduct an exam suffered a setback this month when the independent auditor hired to carry it out withdrew, citing insufficient access to central-bank records.
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From Risk & Compliance Journal
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The probe underscores the risks posed to companies by the proliferation of antibribery laws such as the U.S. Foreign Corrupt Practices Act. Even highly coordinated settlements resolving allegations of wrongdoing in multiple countries don’t prevent law enforcement agencies in other countries from opening their own subsequent investigations—sometimes years later.
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Facebook CEO Mark Zuckerberg testified remotely this month to U.S. senators who are probing whether the company violates antitrust law. PHOTO: BILL CLARK/PRESS POOL
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Federal and state antitrust authorities are preparing new lawsuits against Facebook and Alphabet Inc.’s Google, people familiar with the matter said. The authorities are readying as many as four more cases targeting Google or Facebook by the end of January, these people said, following the Justice Department’s antitrust lawsuit against Google last month.
Federal and state officials are probing whether the tech giants abused their power in the internet economy—Google to dominate search and advertising, and Facebook to dominate social media. Google and Facebook have denied doing so, saying they operate in highly competitive markets and that their services, which are mostly free, benefit consumers.
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Federal Communications Commission Chairman Ajit Pai announced plans to step down on Jan. 20. The Republican chairman’s departure will allow Democrats to start work soon after Inauguration Day on their expected priorities, including restoring Obama-era net-neutrality rules regulating how internet service providers treat traffic on their networks.
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The Federal Reserve Bank of New York called the announcements critical to help end dollar-based Libor transactions. PHOTO: BRYAN SMITH/ZUMA PRESS
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U.S. regulators pressed banks to stop using the London interbank offered rate on new transactions by the end of 2021 while backing a plan to allow many existing transactions to mature before Libor fully winds down in June 2023. The moves amount to the strongest and clearest guidance yet from regulators about the risks to banks for writing new contracts based on Libor, an interest-rate benchmark that global policy makers moved to scrap after concluding it was balky and prone to manipulation.
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The nation’s system for providing unemployment benefits to jobless workers has consistently produced inaccurate data and lower-than-appropriate payouts to millions of workers amid the Covid-19 pandemic, a government watchdog said.
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A U.K. civil court froze up to $5 billion in assets including stakes in luxury hotels, cash in bank accounts and a Burger King franchise, as part of a legal saga that ensnared Kazakhstan’s richest businessmen, according to court documents.
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The Business and Property Courts of England and Wales issued the asset freeze on Nov. 13, based on a petition from Kazakhstan’s state-owned BTA Bank, which has alleged for years that its former bank chairman stole more than $6 billion and laundered it through shell companies around the world. The freeze is among the biggest granted by the court, according to lawyers who work there.
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The U.S. views the government of Venezuelan President Nicolás Maduro as illegitimate. PHOTO: MIRAFLORES PALACE/EPA/SHUTTERSTOCK
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The Trump administration blacklisted a major Chinese government-owned defense company it said sold goods to Venezuela that aided political repression by the regime of President Nicolás Maduro. The action comes amid diplomatic tensions between Washington and Beijing across issues including commerce, espionage, military operations and relations with Hong Kong and Taiwan.
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Cuba hopes the incoming Biden administration will lift some of the crippling sanctions imposed under President Trump. But censorship and government repression could complicate things. “If the government represses harshly, it could make it impossible for Biden to move on a path towards normalization,” said Jorge Castañeda, a former Mexican foreign minister.
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The eruption on White Island occurred in December 2019 when 47 people were onshore. PHOTO: JORGE SILVA/REUTERS
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New Zealand’s workplace safety regulator has filed charges against 13 parties after an investigation into a volcanic eruption that killed 22 people last year. The agency said its investigation found that 10 organizations had failed to meet their obligations under New Zealand’s health and safety requirements, which carry fines of just over $1 million, while three individuals were charged for failing to ensure that companies were following health and safety standards, which carries a fine of up to $300,000.
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China accused American officials of harassing Chinese airline and shipping crews that arrive in the U.S. in attempts to single out Communist Party members, and warned that Beijing may retaliate against Washington for what it considers to be provocative behavior.
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The Supreme Court in Washington, D.C. PHOTO: BRENDAN SMIALOWSKI/AGENCE FRANCE-PRESSE/GETTY IMAGES
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The Supreme Court took up a Georgia police officer’s appeal Monday to examine a thorny question about the decades-old Computer Fraud and Abuse Act: Breaking into a computer system is a clear violation, but what about when someone has legal access to a computer or database but violates the terms of use? The case has attracted wide interest, pitting consumer groups, civil libertarians and media organizations against privacy advocates and hedge funds worried about data theft.
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Companies need millions more cybersecurity professionals to fill roles around the world, but researchers say outlandish job requirements are the problem, rather than a lack of workers.
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Tokyo Stock Exchange CEO Koichiro Miyahara attended a news conference in Tokyo on Oct. 1. PHOTO: ISSEI KATO/REUTERS
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The head of the Tokyo Stock Exchange resigned Monday, two months after computer problems caused one of the world’s largest markets to halt trading for a full day. The exchange’s regulator, the Financial Services Agency, criticized it for not having a good game plan in the event of technical glitches and ordered it to improve its operations.
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Credit Suisse Group named António Horta-Osório as its next chairman, marking a changing of the guard after a decade under current chairman Urs Rohner punctuated by regulatory fines and scandal.
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UniCredit Chief Executive Jean Pierre Mustier will step down in April over a rift with the board over future strategy at Italy’s second largest lender.
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GM will supply fuel cells to Nikola but it scrapped plans to build an electric pickup truck for the startup. PHOTO: PATRICIA BECK/TNS/ZUMA PRESS
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General Motors will no longer take an equity stake in electric-truck maker Nikola under a stripped-down agreement revealed Monday, a significant retrenchment from an earlier pact that fueled investor enthusiasm for both companies.
The Detroit auto maker has also scrapped plans to build an electric pickup truck called the Badger for Nikola, a key part of an earlier agreement outlined in September. That deal got delayed after a negative short seller’s report raised questions about the readiness of some aspects of Nikola’s business, allegations the company said were false and misleading.
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S&P Global agreed to acquire IHS Markit for about $44 billion, the companies said, a landmark deal that would combine two of the largest providers of data to Wall Street.
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