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The Morning Risk Report: U.S. Charges North Korean Officials With Illegally Transferring $2.5 Billion
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North Korea released an undated image of leader Kim Jong Un this week. The country’s economy appears to be under pressure amid the coronavirus lockdown. PHOTO: KCNA/KNS/ASSOCIATED PRESS
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Good morning. U.S. authorities unsealed a sweeping indictment charging more than 30 people with helping North Korea illegally transfer $2.5 billion, amid dim hopes for the resumption of long-stalled nuclear talks between the two countries.
In a 50-page indictment, prosecutors said officials and agents of North Korea’s primary foreign exchange bank, the Foreign Trade Bank, operated covert branches in Thailand, Austria, Russia, China and elsewhere to move funds as recently as earlier this year.
Pyongyang has said that relief from U.S. and international sanctions that have crippled its access to the global financial system are critical to any talks on the nuclear issue. The U.S. counters that it won’t consider any deal that doesn’t include a commitment by the government to total denuclearization, a stance the North Koreans reject.
[Continued below…]
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The case is among only a handful in the U.S. targeting North Korean citizens, and appears to be the first targeting senior North Korean government officials, including the chairman of the Foreign Trade Bank and a member of North Korea’s intelligence agency, the Reconnaissance General Bureau. None of the defendants are in U.S. custody.
The indictment says the agents and officials opened and operated front companies at the secret branches and worked with others to procure commodities and facilitate otherwise prohibited payments in U.S. dollars on behalf of parties in North Korea. The actions began in 2013, after the U.S. Treasury Department sanctioned the bank in an effort to limit North Korea’s ballistic missile and weapons of mass destruction programs, and continued through January, the indictment said.
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Justice Department Hires New FCPA Assistant Chief
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The U.S. Justice Department has hired Brent Wible to serve as an assistant chief of its Foreign Corrupt Practices Act unit, a spokesman said on Thursday.
Mr. Wible, a lawyer at Freshfields Bruckhaus Deringer for the past three years, is a veteran of the DOJ’s fraud section, where the foreign bribery unit is based. He previously served as an assistant chief of the fraud section’s Securities and Financial Fraud unit, which last year was renamed the Market Integrity and Major Frauds Unit.
Mr. Wible also served as a special assistant and senior counsel to President Barack Obama early in his administration, and as an assistant U.S. attorney in the Southern District of New York.
—Dylan Tokar
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Attorney General William Barr, left, with President Trump, who on Thursday signed an executive order with the intent of limiting some protections afforded social-media firms. PHOTO: JONATHAN ERNST/REUTERS
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Twitter placed a notice on a tweet from President Trump, shielding it from view for breaking what the company said are its rules about glorifying violence. Mr. Trump’s tweet was a comment on the violent protests in Minnesota. The post can now only be seen after users click a box with a notice saying it violated Twitter’s rules against encouraging violence, but it otherwise remains visible.
“We’ve taken action in the interest of preventing others from being inspired to commit violent acts, but have kept the Tweet on Twitter because it is important that the public still be able to see the Tweet given its relevance to ongoing matters of public importance,” Twitter said on its official communications account.
President Trump yesterday signed an executive order seeking to limit the broad legal protection federal law provides to social-media and other online platforms. The order seeks to make it easier for regulators to hold companies such as Twitter and Facebook liable if they’re deemed to be unfairly curbing users’ speech.
Legal experts expect the order to be challenged in court. Facebook Chief Executive Mark Zuckerberg, meanwhile, backed his own stance of largely not interfering with politicians’ posts on the company’s platform.
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Two Liberian-flagged, Greek-owned vessels loaded with Iranian oil products and headed to Venezuela halted their deliveries after the threat, U.S. officials said. The tankers would have been unable to get insurance and access to international banking if they had carried on, the officials said.
The tankers were to arrive in Venezuela in the wake of three Iranian tankers carrying gasoline that have reached the country. Two other Iranian-owned tankers are also headed to Venezuela. The Venezuelan regime of Nicolás Maduro and the Islamic Republic, both U.S. sanctions targets, have described the shipments as a blow to the Trump administration.
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The U.S. House of Representatives approved a bipartisan bill that would loosen requirements on hundreds of billions of dollars in small-business loans, responding to concerns from employers struggling to stay open during the coronavirus pandemic. The House bill reduces the level of Paycheck Protection Program funds that must be used for payroll to 60% from 75%. It also gives borrowers up to 24 weeks to use the funds, up from the eight set in the initial bill passed in March, and extends the deadline to rehire workers to Dec. 31. The bill now goes to the Senate.
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The Justice Department is preventing struggling cannabis businesses and their workers from accessing bankruptcy to weather the coronavirus-related downturn, even in states that determine medical marijuana is an essential industry during the pandemic. The department’s policy means the financial safety net that bankruptcy provides consumers who fall behind on mortgages or car payments is likely out of reach for those who work in the marijuana industry or businesses supporting state-regulated dispensaries or growers.
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A woman on staff at the United Auto Workers filed a lawsuit claiming she was sexually harassed by higher-ranking UAW officials and that the union failed to take corrective action when she complained of the alleged incidents. The lawsuit claims the UAW created an “atmosphere of harassment” and a hostile work environment for women, in violation of the UAW’s internal workplace policies and federal civil-rights laws.
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The House scrapped a planned vote on legislation to renew a set of expired domestic surveillance powers after support for the bill eroded following a veto threat by President Trump. The canceled vote cast further doubt over the fate of key portions of the Foreign Intelligence Surveillance Act, considered a cornerstone of expanded U.S. counterterrorism tools adopted after the Sept. 11, 2001, terrorist attacks.
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Charles Lu, chairman and co-founder of Luckin Coffee, at the company’s trading debut on Nasdaq on May 17, 2019. PHOTO: VICTOR J. BLUE/BLOOMBERG NEWS
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Fast growth at Chinese upstart Luckin Coffee came to a screeching stop after it revealed last month that many of its sales had been faked. Investigators delved into the company’s books, executives lost jobs and a stock exchange moved to delist Luckin.
According to internal documents and public records reviewed by The Wall Street Journal, Luckin sold vouchers redeemable for tens of millions of cups of coffee to companies that had ties to Luckin’s chairman and controlling shareholder, Charles Lu. Their purchases helped the company book sharply higher revenue than its coffee shops produced.
Other internal documents showed a procurement employee called Lynn Liang processing more than $140 million of payments for raw materials such as juice, delivery and human-resources services. Ms. Liang was fictitious, according to people familiar with Luckin’s business.
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The International Accounting Standards Board granted temporary relief to companies accounting for rent concessions they received on leases because of the coronavirus pandemic. The move aims to make it easier for companies leasing several properties to account for their lease liabilities if they are getting breaks on rent.
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A worker assembling face shields at Cartamundi’s plant in East Longmeadow, Mass., in April. PHOTO: ADAM GLANZMAN/BLOOMBERG NEWS
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U.S. gross domestic product fell at a 5% annual rate in the first quarter, the largest quarterly rate of decline since the last recession. Economists expect a bigger contraction in the second quarter, when lockdowns related to the coronavirus pandemic continued for weeks before states started slowly reopening their economies in May.
Today's consumer spending data will likely show U.S. shoppers likely pulled back on purchases at a record pace in April, but since then signs are emerging that consumer spending is slowly picking up.
Looking further into the future might prove difficult. The White House won’t issue updated economic projections this summer because of uncertainty caused by the pandemic, according to a senior administration official. But some early data suggest the recovery will be slow and patchy, with social distancing likely to weigh on economic activity for some time.
Meanwhile, the number of workers receiving unemployment benefits fell for the first time since February and new weekly claims continued to ease, offering evidence that layoffs related to the coronavirus pandemic are slowing.
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People gather at Echo Park Lake in Los Angeles on Saturday, May 23. PHOTO: MARK J. TERRILL/ASSOCIATED PRESS
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As U.S. states reopen, employers are urging workers to be cautious when they are off duty. Some companies are concerned the many safeguards put in place at workplaces to limit the spread of the coronavirus—from policies requiring masks on the job to separated desks—could be undone if workers are taking risks off the job.
At least one local official has begun advising employers to ask staffers about activities in their off hours. But employers have to tread carefully, legal authorities say, making sure to exert influence without violating employee privacy.
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Workers social distanced and wore masks at an Amazon fulfillment center in California last week. PHOTO: TERRY PIERSON/ORANGE COUNTY REGISTER/ZUMA PRESS
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Amazon will keep most of the U.S. jobs it added to meet demand in March and April as it sees the surge in online orders during the pandemic as a harbinger of lasting demand for its products and services. Amazon said Thursday it will give 125,000 of the 175,000 temporary hires the option of staying on full time, signaling it expects the recent growth to continue.
United Parcel Service, meanwhile, is adding “peak” surcharges for companies that have been inundating its delivery network with many more packages and oversize items during the coronavirus pandemic, an unprecedented move to manage a summer flood of shipments and higher costs.
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Restaurants say they expect months of sales losses ahead because of capacity constraints imposed to contain the new coronavirus. They are also buying plexiglass walls to separate tables, hiring cleaning staff and turning fewer tables to give booths deeper scrub downs between customers, expenses that draw on a shallower pool of revenue.
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Sanderson Farms Inc. warned the coronavirus is expected to increase expenses and weigh on production volumes for the rest of its fiscal year, another sign of how the pandemic disrupted meat production.
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Douwe Egberts is one of JDE Peet’s coffee brands. PHOTO: FRANCOIS LENOIR/REUTERS
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The European investment firm behind Peet’s Coffee, Krispy Kreme and Keurig Dr Pepper said it priced the initial public offering of its coffee business at the upper part of its targeted price range, valuing it at €15.6 billion ($17.3 billion) in one of the world’s biggest IPOs so far this year.
Backed by JAB Holding, JDE Peet’s BV bet that the resilience of coffee demand during economic downturns would attract investors despite slumping IPO markets in Europe and the U.S. amid the coronavirus pandemic. The wager has paid off. JDE Peet’s is selling around 71.4 million shares, or about 14% of the coffee and tea business, at €31.50 a share for a total of €2.25 billion. This is toward the high end of the range of €30 to €32.25 a share.
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