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The Morning Risk Report: Tesla, GM Among Car Makers Facing Senate Inquiry Into Possible Links to Uyghur Forced Labor
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Good morning. The Senate Finance Committee has opened an inquiry into whether auto makers including Tesla Inc. and General Motors Co. are using parts and materials made with forced labor in China’s Xinjiang region.
In a letter sent Thursday, the committee asked the chief executives of eight car manufacturers to provide detailed information on their supply chains to help determine any links to Xinjiang, where the U.S. government has alleged the use of forced labor involving the Uyghur ethnic minority and others.
The move ratchets up already intense official scrutiny on company supply chains aimed at uncovering ties to Uyghur forced labor. Under U.S. law in force since June, goods from China’s Xinjiang region are presumed to be made with forced labor and barred by U.S. Customs and Border Protection from entering the U.S. market unless companies can show the absence of forced labor links.
Companies and their advisers have grappled with complying with the law, which is arguably the toughest legislation in the world aimed at the alleged abuse of the Uyghur people and other Xinjiang minorities. China has said the U.S. law is premised on lies about its policies.
Customs as of Dec. 6 had targeted over 2,300 shipments valued at $736.4 million under the Uyghur Forced Labor Prevention Act, according to data provided to Risk & Compliance Journal.
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Content from our Sponsor: DELOITTE
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For C-Suite, US Climate Laws Pose Business Opportunity and Risk
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The clean energy spending, incentives, and policies in the Inflation Reduction Act and other recent climate bills have major strategic implications for U.S. companies in virtually every industry. Read More ›
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Note to readers: The Morning Risk Report will take a break for the holidays. Our next issue will be on Tue. Jan. 3. See you in the new year!
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The Justice Department in 2019 credited Cognizant for its cooperation in a bribery investigation and agreed not to bring a criminal case against the company. PHOTO: PAVLO GONCHAR/ZUMA PRESS
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The Justice Department faces accusations of outsourcing a bribery investigation. Two former executives of a New Jersey technology company are accusing federal prosecutors of outsourcing a bribery probe, Risk & Compliance Journal’s Dylan Tokar reports. The legal challenge could have implications for the Justice Department’s preferred approach in recent years to investigating corporate
crimes.
The former president and chief legal officer of Teaneck-based Cognizant Technology Solutions Corp., in motions unsealed in New Jersey federal court Wednesday, said prosecutors investigating their former employer coordinated so closely with the company that they effectively deputized its lawyers to conduct the government’s investigation.
For the Justice Department, a favorable ruling for the executives would make it harder to navigate a series of recent policies that seek to recruit companies to detect and report criminal conduct by their employees.
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Sam Bankman-Fried being led out of a New York courthouse. PHOTO: JUSTIN LANE/SHUTTERSTOCK
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Sam Bankman-Fried was released on an exceptionally large bond. The FTX founder was released on a $250 million bond Thursday and ordered to detention in his parents’ Palo Alto, Calif., home, after the former executive’s first appearance in a New York federal court following his extradition from the Bahamas.
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Mr. Bankman-Fried, charged with engaging in criminal conduct that contributed to the cryptocurrency exchange’s collapse, came to court shackled by the ankles and wearing a charcoal gray suit. He sat quietly at the defense table, flanked by his lawyers.
The guilty plea on fraud charges by two of his associates paves the way for U.S. authorities to hold more of his deputies responsible for the cryptocurrency exchange’s collapse.
Caroline Ellison, who ran FTX’s sister trading firm Alameda Research, and Gary Wang, FTX’s former chief technology officer, both pleaded guilty this week to criminal offenses similar to those Mr. Bankman-Fried was charged with and are cooperating with federal investigators.
Meanwhile, Securities and Exchange Commission Chair Gary Gensler is pushing to hold cryptocurrency firms to the same rules that apply to stocks and bonds, rather than write a raft of new regulation for the troubled sector.
That puts him at odds with some lawmakers who say the collapse of FTX shows that crypto needs its own set of guardrails and point out that Mr. Gensler’s enforcement strategy moved too slowly to stop FTX from imploding.
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The $1.65 trillion omnibus spending bill released Tuesday, which would fund the federal government through September, includes a range of provisions of potential significance to companies and executives.
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France’s privacy watchdog fined Microsoft Corp. for not making it easy enough for users of its Bing search engine to reject cookies used for online ads, as part of a surge in enforcement of Europe’s privacy laws.
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A former top lieutenant of North Carolina insurance mogul Greg Lindberg agreed to plead guilty to a federal criminal conspiracy charge.
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Target Corp. has recalled more than 200,000 weighted blankets after receiving reports that two young children died by suffocation earlier this year, the retail giant and the U.S. Consumer Product Safety Commission said Thursday.
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A semiconductor fabrication plant in Germany. PHOTO: LIESA JOHANNSSEN/BLOOMBERG NEWS
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U.S. export controls targeting China are hitting the mark. Chinese imports of semiconductor-making equipment plunged in November, as U.S. export controls aimed at slowing Beijing’s technological advancement took a bite.
Chinese customers bought $2.3 billion worth of chip-making equipment in November, a drop of 40% from a year earlier, according to the country’s customs bureau.
The drop in imports followed new restrictions imposed in October by Washington on the export of advanced semiconductors and chip-manufacturing equipment to China. The Commerce Department said at the time that it wanted to prevent American technology from advancing China’s military and surveillance capabilities.
Separately, the strained relations between Beijing and Washington are undermining efforts to stop the flow of ingredients for illegal fentanyl. A few years ago, a joint effort to limit the flow of illicit fentanyl was a successful point of collaboration in a tense U.S.-China relationship.
Since then, the U.S. has adopted a tougher posture toward China, while China has also grown more assertive about defending its interests. As a consequence, the cooperation on combating the drug trade has broken down.
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Ukrainian President Volodymyr Zelensky’s address to Congress in a joint meeting showcased the divide between Republicans who want to support the beleaguered nation’s fight against Russia and those who have become increasingly critical of the billions in aid money the U.S. is sending. Zelensky said his country would never surrender.
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The U.S. labor market remains historically tight and resilient consumer spending propelled stronger economic growth this summer than previously estimated. But economists say higher interest rates resulting from the Federal Reserve’s efforts to tame inflation could weigh on growth and hiring in the coming year.
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Elon Musk speaking in February at SpaceX’s Starbase facility in Texas. JIM WATSON/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Twitter advertisers are shying away. Since taking over Twitter Inc., Elon Musk has rapidly made big changes, laying off employees, tweaking posting rules and suspending and reinstating accounts.
There’s one group he has struggled to manage, one that’s vital to the company’s future: advertisers.
About 70% of Twitter’s top 100 ad spenders from before Mr. Musk’s takeover weren’t spending on the platform as of the week ending Dec. 18, according to an analysis of data from research firm Pathmatics.
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