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The Morning Risk Report: Mexico Is Investigating Ex-President Enrique Peña Nieto, Top Official Says
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Then-Mexican President Enrique Peña Nieto speaking at the National Palace in Mexico City in September 2018. PHOTO: JORGE NUNEZ/ZUMA PRESS
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Good morning. Mexican law-enforcement officers are investigating former President Enrique Peña Nieto as part of the country’s highest-profile corruption case in years, a senior Mexican judicial official said. The probe into the former leader is part of a broad case against Emilio Lozoya, the former head of state-run oil company Petróleos Mexicanos. Mr. Lozoya was arrested in Spain last week and is awaiting a hearing on Mexico’s request for his extradition. Mexican prosecutors have accused him of receiving millions of dollars in bribes from Brazilian construction firm Odebrecht SA and Mexican steelmaker Altos Hornos de México SAB.
Mexican government investigators, citing 2016 testimony from Odebrecht executives and other evidence, say Odebrecht paid $9 million to Mr. Lozoya to secure Pemex contracts while he was a top campaign official during Mr. Peña Nieto’s 2012 presidential campaign, and after he was named Pemex chief. They say Altos Hornos paid Mr. Lozoya $3.5 million to ensure the sale of a decrepit fertilizer plant, Agronitrogenados, to Pemex for a vastly inflated price.
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“The attorney general’s office has evidence that the corruption of Lozoya in Agronitrogenados and Odebrecht reaches to the highest level,” the senior official said, referring to Mr. Peña Nieto. “The extradition and [any possible] confession of Lozoya are elements that together with ongoing investigations will decide if the former president is charged in the future.”
Mexico’s investigation into the Odebrecht allegations was opened in early 2017 but didn’t lead to any charges until after Mr. Peña Nieto’s term expired at the end of 2018. If Mr. Peña Nieto is eventually prosecuted, it would be the first time any modern Mexican president faced corruption charges in court. Charges aren’t likely in the short term, since Mr. Lozoya’s extradition alone might take several months, legal experts say.
Mr. Peña Nieto has denied any wrongdoing, as has Altos Hornos. Before becoming a fugitive in May, Mr. Lozoya said he was innocent.
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From Risk & Compliance Journal
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Alcoholic-beverage company Diageo agreed to settle charges that it hit goals by pressuring distributors to buy products in excess of demand. PHOTO: JONATHAN BRADY/ZUMA PRESS
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Diageo agreed to pay $5 million to settle charges brought by the Securities and Exchange Commission that it hit performance goals by pressuring distributors to buy products in excess of demand.
The pressure on distributors by the company’s employees at Diageo North America, its largest subsidiary, contributed to an uptick in shipments that allowed it to meet performance targets and post higher growth in closely watched indicators amid declining market conditions, the SEC alleged. The London-based alcoholic-beverage company didn’t disclose the risk of the inventory increase on future growth, the SEC said Wednesday.
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A former procurement manager for Petróleos de Venezuela SA was sentenced to 70 months in prison for allegedly taking bribes to help U.S.-based businesses secure contracts with Venezuela’s state-owned oil giant and for obstructing U.S. prosecutors’ investigation, the Justice Department said Wednesday.
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PHOTO: MOHAMED AZAKIR/REUTERS
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French authorities are deepening their investigation of spending authorized by Carlos Ghosn when he was chief executive of Renault, including on a lavish black-tie event he hosted on the grounds of Versailles and millions of dollars in payments to an auto dealer in Oman.
Prosecutors in Nanterre, a town near Renault’s headquarters to the west of Paris, said that they had gathered enough evidence to refer their probe to a team of investigating magistrates.
Such a referral is a key step within the French legal system in that it allows investigators to dedicate more resources to a probe and extend it overseas, cooperating with foreign authorities. Investigating magistrates would be empowered to summon Mr. Ghosn for questioning and then decide whether to bring preliminary charges against him or to drop the case.
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American tech companies will soon need to meet new requirements in the European Union regarding artificial intelligence and sharing data with smaller rivals, as the bloc seeks to assert its “technological sovereignty” from the U.S. and China. EU regulators unveiled plans aimed at placing more restrictions on machine learning-enabled technologies in fields ranging from public surveillance cameras to cancer scans and self-driving cars.
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The drug industry doesn’t pack the lobbying punch it once did, and one sign is something rare in the capital today—a dose of bipartisanship. A growing rift between the GOP and longtime drug-industry allies is shaking up pharmaceutical policy, and for the first time in a generation, some Republicans and Democrats are joining to overhaul drug-price regulation.
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Oil prices climbed Wednesday as investors weighed the U.S. sanctions imposed on a subsidiary of Russian-oil giant Rosneft. The move Tuesday by the U.S. will limit Rosneft’s exporting activity, analysts said, and could reduce the supply of oil to Indian and Chinese refiners—two of its Swiss-based trading arm’s most important customers.
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A federal judge lambasted PG&E for falling behind on efforts to trim trees near power lines, which are designed to reduce the risk that its equipment will spark more California wildfires.
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During a pandemic, affected countries need money to respond to an infectious disease. People wait at Hankou Railway Station in Wuhan, China, last month. PHOTO: GETTY IMAGES
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It’s the third month of the coronavirus outbreak, and investors still don’t know whether the first-ever pandemic-insurance policy will pay out.
The World Bank issued pandemic-catastrophe bonds in 2017, a novel test of the ability to insure against global epidemics. The issuance marked an effort to expand the use of catastrophe bonds—financial instruments that were designed to help investors bet against natural disasters like hurricanes—to a new category of global risks.
Large investors such as pension funds and endowments have piled into catastrophe bonds in recent years as they seek diversification and higher returns.
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A low-intensity trade conflict with India is smoldering. It began a year ago when the U.S. stripped India of special low-tariff status over claims it discriminated against American companies. India responded by implementing tariffs. President Trump travels to India next week where he may reach some sort of truce. But the underlying conflict will likely persist, because it is driven by forces similar to those behind the trade war with China.
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‘If you control the definition of earnings per share, you control the vast majority of the important entities in the country,’ said Rep. Brad Sherman. PHOTO: AARON BERNSTEIN/REUTERS
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Rep. Brad Sherman (D., Calif.), the new chairman of a House of Representatives subcommittee on capital markets, is targeting U.S. accounting rules in a move to increase oversight of a U.S. accounting rule maker, despite a potential battle to enact legislation or alter its powers.
The House Committee on Financial Services Subcommittee on Investor Protection, Entrepreneurship and Capital Markets wants to hold more oversight hearings tackling complex accounting topics and the role of the Financial Accounting Standards Board, a private nonprofit that sets U.S. accounting standards.
Interaction between FASB and Congress is usually minimal. The expected Congressional hearings serve to bring attention to a complex corner of corporate finance and an often-overlooked rule-making body—something that may rankle organizations that advocate on behalf of auditors and investors, who have concerns about the possibility of Congress meddling with a standard-setter’s independence.
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Acting Secretary of the Navy Thomas Modly, center, testifying before the Senate Committee on Armed Services in Washington in December. PHOTO: STEFANI REYNOLDS/ZUMA PRESS
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Aging and fragmented technology has left the U.S. Navy unable to fully defend itself from persistent cyberattacks from China and elsewhere, defense officials said, prompting an effort across the service to upgrade and secure computer networks.
Alarmed by the technological shortcomings, the Navy’s acting secretary circulated an internal strategy memo last week outlining goals to quickly modernize computer infrastructure.
The 17-page memo calls on the Navy to rapidly leverage innovations such as artificial intelligence and bolster its cybersecurity defenses. It is the most recent call to arms by Navy leadership to address a blistering internal audit from nearly a year ago that concluded the service was “under cyber siege” by Chinese hackers and others who have stolen national-security secrets in recent years.
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A General Electric engine seen on a Boeing 777X airplane in January. PHOTO: JASON REDMOND/AGENCE FRANCE-PRESSE/GETTY IMAGES
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General Electric Chief Executive Larry Culp cautioned investors that the manufacturing giant would burn about $2 billion in cash flow in the first quarter. Mr. Culp cited pressure from the extended grounding and production halt of Boeing’s 737 MAX aircraft. A GE joint venture with France’s Safran SA makes the engines used on the jet.
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The U.K. government will curb the number of low-skilled migrants allowed into the country as part of a broad overhaul of its immigration policy following Brexit. Britain’s challenge is to control immigration while not damaging its service-heavy economy where unemployment has fallen to its lowest level since 1974 and where businesses have benefited from a flow of cheap European labor.
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Younger employees now entering their prime working years are so far proving as loyal to employers as the generation before them, despite a hot job market.
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Hundreds of U.S. companies plan to give employees time off to vote in this year’s presidential election as part of a business-led push to lift the nation’s traditionally low voter turnout.
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Sergio Ermotti, CEO of Swiss bank UBS, at a press conference last month in Zurich. PHOTO: CHRISTIAN BEUTLER/EPA-EFE/SHUTTERSTOCK
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Sergio Ermotti is stepping down as chief executive officer of UBS Group, Switzerland's largest bank by assets, and will be succeeded by current ING Groep NV boss Ralph Hamers, a person familiar with the matter said Wednesday, marking another leadership change at a major Swiss bank.
Mr. Ermotti has been UBS’s CEO since 2011 and was expected to announce his departure this year or next. He led UBS through a post-financial-crisis restructuring and repositioned it as a global wealth manager serving billionaires and entrepreneurs. Mr. Hamers, an ING veteran, has been that bank’s chief executive since 2013.
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L Brands Inc. is near a deal to sell control of Victoria’s Secret to private-equity firm Sycamore Partners in a transaction that values the lingerie brand at about $1.1 billion, according to people familiar with the matter. Leslie Wexner, the embattled billionaire who has run the retail company for more than 50 years, will step down from his roles as CEO and chairman, the people said.
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