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The Morning Risk Report: Former Nissan Chairman Is Arrested on New Allegations
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Former Nissan Chairman Carlos Ghosn leaves the office of his lawyer, Junichiro Hironaka, in Tokyo on April 3. PHOTO: SADAYUKI GOTO/KYODO/ASSOCIATED PRESS
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Good morning. Former Nissan Motor Co. Chairman Carlos Ghosn was arrested again in Tokyo over new suspicions of financial misconduct, less than a month after he was released on bail. Prosecutors descended on Mr. Ghosn’s Tokyo apartment in an early-morning move and said he was arrested on suspicion of breach of trust, meaning abuse of his position at Nissan for personal gain.
Prosecutors said they suspected that on several occasions between 2015 and 2018, Mr. Ghosn arranged for a company he personally controlled to receive a portion of money that Nissan sent to an overseas distributor. Of a total $15 million sent by Nissan to the distributor, Mr. Ghosn is suspected of personally receiving $5 million, prosecutors said.
[Continued below…]
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Prosecutors didn’t name the distributor or the country, but people familiar with the matter said earlier this week Nissan has investigated whether Mr. Ghosn funneled millions of dollars in company funds through a distributor in Oman, Suhail Bahwan Automobiles, for personal use. Nissan investigated whether the Omani company helped Mr. Ghosn obtain a yacht and whether it helped fund an investment company partly owned by Mr. Ghosn’s son, they said.
“My arrest this morning is outrageous and arbitrary,” Mr. Ghosn said in a statement released by a representative Thursday. “Why arrest me except to try to break me? I will not be broken. I am innocent of the groundless charges and accusations against me.”
Also: Renault Board Says Probe Finds Questionable Expenses
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From Risk & Compliance Journal
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Micronesian Official Pleads Guilty to Corruption Scheme
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A Micronesian government official has pleaded guilty to a money-laundering charge involving bribes from a Hawaiian business looking to secure government contracts.
Master Halbert, 44, pleaded guilty in federal court in Honolulu to one count of conspiracy to commit money laundering, the Justice Department said. Mr. Halbert oversaw aviation programs in Micronesia, including the management of the country’s airports.
He admitted to taking bribes from a Hawaiian engineering and consulting company that was attempting to obtain and retain contracts valued at nearly $8 million, according to federal prosecutors. The contracts included deals for an airport improvement project, according to the complaint.
“He regrets everything he did and the embarrassment he brought to his family, his community and the Federated States of Micronesia,” said Myles S. Breiner, a lawyer who represents Mr. Halbert.
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The Future of Corporate Compliance
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Join The Wall Street Journal and Dow Jones Risk & Compliance in Houston on April 11 for an interview with Stratfor’s vice president of global analysis, Reva Goujon, on how world events are creating corporate risk, followed by a panel discussion on energy company compliance with Christine Stevenson, chief compliance officer for integrated supply and trading at BP Americas and Brent Benoit, chief compliance officer of National Oilwell Varco. Register here.
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Supporters gathered around Najib Razak as he left court in Kuala Lumpur on April 3. PHOTO: MOHD RASFAN/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Former Malaysian Prime Minister Najib Razak lost his bid to delay the first of several trials related to the multibillion scandal surrounding state investment fund 1Malaysia Development Bhd., with proceedings finally getting under way. In coming months, Mr. Najib will face 42 charges in all, most of them linked to how vast sums of money were siphoned out of 1MDB. U.S. investigators say more than $4.5 billion was stolen between 2009 and 2014 and laundered through a variety of bank accounts.
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South Korean authorities revealed this week they had been detaining a domestic cargo ship for months due to suspicion that the vessel had helped supply illicit oil to North Korea, in a breach that casts doubts over Seoul’s level of enthusiasm for enforcing U.S.-led sanctions.
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The Food and Drug Administration issued a warning letter to a Florida company that processes human umbilical-cord blood cells as treatments, and issued 20 other letters to entities the FDA said may be offering unapproved stem-cell products.The steps are being taken as the FDA tries to take action against entities it contends are endangering the public in the fast-emerging field of stem-cell products.
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The former finance chief of Roadrunner Transportation Systems Inc. was arrested and charged in an alleged accounting fraud scheme that led the trucking company to restate several years of financial reports, according to court documents.
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Sorrento Therapeutics Inc. alleges billionaire Patrick Soon-Shiong and one of his companies stopped development of an experimental cancer drug because its success would hurt sales of a rival drug sold by Celgene Corp. that Dr. Soon-Shiong invented, according to a civil complaint filed in Los Angeles Superior Court.
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A private-jet company won the ability to sell a digital token that doesn’t require oversight by financial regulators. The hitch: The token won’t operate like others, diminishing its allure to fans of cryptocurrencies. The Securities and Exchange Commission told TurnKey Jet Inc. that the company can issue “digital tokens” to people who sign up for its membership program. Members can then, in turn, use the tokens to charter a private jet.
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Vehicles produced by Tesla awaiting transport after arriving at the Port of Oslo in Norway, on March 15. PHOTO: ODIN JAEGER/BLOOMBERG NEWS
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Tesla Inc. said new-vehicle deliveries in the first quarter fell 31% from the previous three months as the electric-car maker struggled to ship its Model 3 compact car to customers in Europe and China for the first time. The Silicon Valley auto maker Wednesday said it delivered about 63,000 vehicles in the latest period, worse than analysts’ already-lowered expectations. Analysts on average had predicted deliveries would drop to 73,500, according to FactSet, a figure reflecting total deliveries of Model 3, Model S and Model X vehicles.
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Air accident investigators faulted a flight-control feature on a Boeing Co. 737 MAX flown by Ethiopian Airlines that crashed in March, raising pressure on Boeing to fix the problem. Ethiopian authorities, in a preliminary crash probe released Thursday, said the crew followed approved emergency procedures but couldn’t save the plane. They said Boeing should review the plane’s flight-control system and authorities should validate the changes before allowing the global MAX fleet, which was grounded after the crash, to return to service.
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The U.S. services sector expanded at a slower pace in March, a sign that a key segment of the economy continues to cool. The Institute for Supply Management’s nonmanufacturing purchasing managers index fell to 56.1 in March from 59.7 in February. Economists surveyed by The Wall Street Journal had expected the index to fall to 58. The reading was the lowest since August 2017. Readings above 50 are a sign of expansion while readings below 50 show a contraction. March was the 110th-straight month of growth, ISM said.
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JPMorgan Chase has estimated that the rule would lead it to increase reserves by $4 billion to $6 billion. PHOTO: SPENCER PLATT/GETTY IMAGES
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Accounting rule makers rejected a proposal by regional banks to soften the impact of a change that will force banks to book losses on soured loans much faster.
The rejection means the accounting change—known as CECL, for current expected credit losses—will go forward as planned at the start of 2020 for publicly traded U.S. banks. CECL will require banks to record all expected future losses on their loans as soon as they are issued. That will force some banks to boost their loan-loss reserves, cutting into earnings and regulatory capital.
Regional banks like Capital One Financial Corp., BB&T Corp. and Regions Financial Corp. had argued the need to book losses up front would discourage lending and worsen any future economic downturn.
Booking all expected future loan losses immediately means some banks will have to add substantially to their loan-loss reserves when CECL takes effect. JPMorgan Chase & Co., for instance, estimated in its annual report that the rule would lead it to increase its reserves by $4 billion to $6 billion, or 30% to 45%.
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Tennessee Valley Authority CEO Bill Johnson will take over as PG&E’s next chief executive. PHOTO: MARK HUMPHREY/ASSOCIATED PRESS
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PG&E Corp. on Wednesday named Bill Johnson, the current head of the Tennessee Valley Authority, as its next chief executive and announced a new board, as it seeks to steer a path out of bankruptcy.
The California utility, which sought bankruptcy protection in January, as it deals with billions in potential liabilities from its role in starting deadly wildfires, worked with a group of activist investors to remake its leadership.
But its selections have run afoul of California Gov. Gavin Newsom, who quickly panned the new board Wednesday for having too many new members representing Wall Street and too few focused on safety.
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Shares of Spotify Technology have passed through Forge Global’s exchange. Khalid performed for Spotify fans in Los Angeles last month. PHOTO: MATT WINKELMEYER/GETTY IMAGES
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Forge Global Inc., a five-year-old company that matches private companies and their employees with investors, plans to raise as much as $1 billion in the next year through the sale of a series of structured notes linked to the shares of startups. French bank BNP Paribas SA will offer the derivatives to both institutions and wealthy individuals in Europe and Asia, the companies said.
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The 5G era for smartphones began on Wednesday, providing the world’s first glimpses at what the much-hyped network technology can offer consumers and how much the speed upgrade will cost. Verizon Communications Inc. launched 5G wireless service in parts of Chicago and Minneapolis on Wednesday, a week ahead of its planned start date, while carriers in South Korea deployed their service in the Seoul metropolitan area the same day.
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WeWork Cos. has added another piece to its growing suite of services. The shared office-leasing giant said it agreed to acquire Managed by Q Inc., which runs a platform that office tenants can use to hire service providers such as cleaning crews, receptionists or IT support staff.
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Accenture PLC agreed to acquire Droga5, one of Madison Avenue’s hottest creative firms, the most aggressive move yet by a consulting firm to take on the advertising giants that have long dominated the business. Terms of the deal weren’t disclosed.
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