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The Morning Risk Report: U.S. Sanctions Rosneft Subsidiary Over Alleged Venezuela Oil Exports
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Igor Sechin, the chief executive of Rosneft, attends a meeting with Russian President Vladimir Putin in Moscow Feb. 11 PHOTO: SPUTNIK PHOTO AGENCY/REUTERS
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Good morning. The Trump administration on Tuesday stepped up its pressure campaign against the Maduro regime in Venezuela by blacklisting the trading brokerage owned by Russia oil giant Rosneft that the U.S. says has been helping Caracas export crude.
In sanctioning the Swiss-registered Rosneft Trading SA, the administration warned that anyone caught doing business with Rosneft’s subsidiary risks being sanctioned by the U.S.
[Continued below...]
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Senior administration officials said more sanctions are under consideration that target other foreign firms aiding the regime of President Nicolás Maduro and that the White House had not taken the use of military force as a potential option off the table.
Addressing fears that penalizing a unit of a global energy provider could squeeze oil supplies, the senior official said the U.S. Energy Department has assessed that the action wouldn’t destabilize global oil markets. The U.S. Treasury Department said the sanctions allow for a three-month period to allow firms to wind down their business with Rosneft Trading. It also issued a special note accompanying the sanctions clarifying that the brokerage’s blacklisting doesn’t mean that business with its parent company is prohibited.
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EU Adds Four Jurisdictions to Potential Tax Haven List
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The European Union has added four new jurisdictions to its blacklist of potential tax havens.
The bloc’s finance ministers on Tuesday added the Cayman Islands, Palau, Panama and Seychelles to its list of noncooperative tax jurisdictions. The list, introduced in December 2017, is designed to encourage governments to adopt more transparent tax laws and discourage tax evasion.
Forty-nine countries have made changes to comply with the EU’s criteria since the list was first introduced, according to Zdravko Marić, the Croatian minister of finance and deputy prime minister, who is one of the EU finance ministers who approved the change. In a statement, he described the list as a “work in progress,” adding that the methodology and criteria for determining the list are constantly under review.
The additions announced Tuesday bring the total number of blacklisted tax jurisdictions to 12. American Samoa, Fiji, Guam, Oman, Samoa, Trinidad and Tobago, the U.S. Virgin Islands and Vanuatu were already on the list.
—Kristin Broughton
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From Risk & Compliance Journal
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Former Law Firm Client Pleads Guilty in Panama Papers Case
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A former client of the law firm Mossack Fonseca on Tuesday became the first individual to plead guilty in the U.S. to charges stemming from a trove of leaked documents that became known as the Panama Papers.
Harald Joachim von der Goltz, a former U.S. resident, pleaded guilty in a Manhattan federal court to a nine-count criminal indictment, which included charges of conspiracy to evade taxes and commit money laundering and wire fraud.
Mr. von der Goltz—who had initially pleaded not guilty to the government’s charges and was scheduled for trial on March 9—didn’t reach a plea deal with prosecutors and instead agreed to plead guilty to the government’s full set of charges, a federal judge said Tuesday.
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Charges Unsealed Against Executives Who Allegedly Paid Bribes
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U.S. prosecutors unsealed charges against three former executives they said were involved in a bribery scheme to win a power project in Indonesia.
The two former executives of French transportation company Alstom SA and a former executive of Japanese trading company Marubeni Corp. bribed high-ranking Indonesian officials in exchange for help securing the $118 million contract, according to a criminal indictment unsealed Tuesday.
The individuals were charged in a federal court in New Haven, Conn., with conspiracy to violate the U.S. Foreign Corrupt Practices Act and conspiracy to commit money laundering. The charges relate to alleged misconduct that took place between 2002 and 2009.
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U.K. Regulator Warns of Poor Compliance at Payments Firms
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A top financial regulator in the U.K. has stepped up its supervision of digital payments firms because of what it views as the industry’s record of poor compliance and weak protections.
The Financial Conduct Authority said in a report Tuesday that it is placing additional scrutiny on companies that offer digital wallets because of what it views as insufficient consumer safeguards.
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Mikhail Khodorkovsky said that the verdict confirms the political nature of the Yukos case. PHOTO: MATT DUNHAM/ASSOCIATED PRESS
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A Dutch court reinstated an order that Russia pay $50 billion in compensation to shareholders of former Russian oil giant Yukos, which was once headed by Mikhail Khodorkovsky, a vocal critic of President Vladimir Putin.
Yukos Oil went bankrupt in 2006 after Mr. Khodorkovsky fell out with the Kremlin and the company was hammered with significant tax claims. Russian state oil company Rosneft took over most of the company’s assets, and Yukos’s former owners have for years been fighting the case in court.
Tuesday’s verdict by an appeals court in The Hague is the latest stage in a long legal battle, with Russian officials saying they would appeal the decision with the Dutch Supreme Court.
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A federal judge in Texas dismissed a lawsuit filed by Huawei Technologies challenging a 2018 U.S. law that stopped federal agencies from doing business with the Chinese company.
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President Trump said he would support the continued export of U.S.-made jet engines to China, taking sides in a continuing dispute within the administration about restricting high-tech exports over piracy concerns.
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The Trump administration is planning to waive some federal contracting laws to accelerate construction of its southern-border wall, according to a notice filed by the Department of Homeland Security.
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Mr. Trump granted a pardon to financier Michael Milken, the onetime “junk bond king” who spent nearly two years in prison for securities-law violations. The president also pardoned Edward DeBartolo Jr., a former owner of the San Francisco 49ers, who pleaded guilty to a felony in 1998 as part of a Louisiana gambling-industry investigation.
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The Trump administration is heightening scrutiny of China’s large state-owned media outlets in the U.S., designating them as foreign diplomatic missions, in a further effort to rein in Chinese government activity.
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Boeing said it found debris in the fuel tanks of undelivered 737 MAX jetliners, the latest setback in the plane maker’s efforts to address quality-control problems.
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Canada loosened mortgage-financing rules originally introduced to keep house prices in check and deter debt growth, marking a shift in policy after fears of a U.S.-style housing bubble over the last decade.
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Apple said it will likely miss revenue forecasts because of the coronavirus. PHOTO: CARLOS GARCIA RAWLINS/REUTERS
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The U.K.’s audit and accounting watchdog said Tuesday that companies and auditors should provide up-to-date information on the risks arising from the novel coronavirus when reporting their year-end results.
Companies with operations or close trading links in China should detail how they could be affected by the outbreak as part of their obligation to disclose the principal risks to their business, the Financial Reporting Council said.
“Companies will need to monitor developments and ensure they are providing up-to-date and meaningful disclosures to their shareholders when preparing their year-end reports,” a spokesperson said.
Meanwhile, the Dow Jones Industrial Average dropped Tuesday and semiconductor stocks slid, after Apple warned its revenue may be lower than forecast due to the coronavirus in China, one of the most significant indications yet of the outbreak’s impact on multinational businesses.
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As scientists race to develop a cure for the coronavirus, businesses are trying to assess the impact of the outbreak on their own enterprises. Corporate executives are largely working blind because the coronavirus could cause supply-chain disruptions that are unlike anything we have seen in the past 70 years. The outbreak also is exposing how heavily dependent foreign companies are on China for their production and business, and putting U.S. public-health officials under strain as they try to monitor self-quarantined Americans.
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China revoked the press credentials of three Wall Street Journal reporters based in Beijing, the first time in the post-Mao era that the Chinese government has expelled multiple journalists from one international news organization at the same time. China’s Foreign Ministry said the move Wednesday was punishment for a recent opinion piece published by the Journal.
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Former New York City Mayor Michael Bloomberg’s company, Bloomberg LP, could sell for as much as $60 billion, analysts have estimated.
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Michael Bloomberg will sell Bloomberg LP, the multibillion-dollar financial-data and media company he co-founded nearly 40 years ago, if he is elected president, his campaign said Tuesday.
The campaign said Mr. Bloomberg would first put the company in a blind trust and eventually sell. Analysts have estimated the company could sell for as much as $60 billion.
The future of Mr. Bloomberg’s company had been in question since he announced his run for president in November, with him and his advisers going back and forth on whether he would place the business in a blind trust if he won, or if he would divest his interests entirely.
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DuPont de Nemours Inc. said Tuesday that it is bringing back as its chief executive Edward D. Breen, an architect of the megamerger and spinoff from Dow Inc. that left a smaller industrial-materials maker struggling to generate sales growth.
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Nissan Motor Chief Executive Makoto Uchida faced down angry shareholders at a rowdy 2½ hour meeting, where they questioned whether he had a plan to reverse the company’s widening losses.
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Nike's new chief executive, John Donahoe, is shuffling the sportswear giant’s leadership ranks, a shake-up that will result in the departure of two longtime executives.
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155-year-old HSBC is reorganizing its business as political challenges destabilize its main markets. PHOTO: ISAAC LAWRENCE/AGENCE FRANCE-PRESSE/GETTY IMAGES
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The biggest U.S. food makers, already dealing with increased competition and shifting consumer tastes, now face an additional threat: supermarkets are taking away prime shelf space. Grocers are relying on their own proprietary research to decide how and where to shelve certain products, rather than relying on companies that sell well-known brands to tell them what to put on what shelf at what price. The shift is resulting in less space for traditional supermarket staples from companies such as General Mills and Clorox in favor of niche items and store brands
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PG&E reported a $3.6 billion fourth-quarter loss as it continued to settle investigations and claims related to California wildfires.
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Amazon is no longer hiring as many M.B.A.s from top-ranked U.S. business schools, as it seeks to recruit a new wave of management talent from a broader array of institutions.
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The bankruptcy filing marks a watershed moment in the 110-year history of the Boy Scouts, which for years has been embroiled in lawsuits blaming the organization for failing to screen out sexual predators. PHOTO: RICHARD VOGEL/ASSOCIATED PRESS
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The Boy Scouts of America on Tuesday filed for bankruptcy protection, as one of the country’s largest youth organizations tries to endure intensifying legal pressure over accusations of childhood sexual abuse going back decades.
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Franklin Resources agreed to buy rival asset manager Legg Mason for $4.5 billion in cash, a deal that could help two big players in an industry under pressure from shifting investor tastes.
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Bed Bath & Beyond’s new chief executive, Mark Tritton, laid out his vision for remaking the troubled retailer. Decluttering stores is high on his list.
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