Financial Times UK May 13 2021

THURSDAY 13 MAY 2021 NEWS PROVIDER OF THE YEAR UK £2.90 Channel Islands £3.20; Republic of Ireland €3.
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Reading your mind How accurate are AI facial tools that track emotions? BIG READ, PAGE 21
Deadly attacks
Gaza Strip Southern Israel
Briefing
More than 50 i Return to the office
Boris Johnson has signalled that
killed in Gaza government guidance for people to

work from home where posible
and Israel
could be lifted next month if Covid-
19 cases continue to drop.— PAGE 3
i Quintessentially wrong
Quintessentially, a company run by
Fires rage yesterday both in the Gaza Ben Elliot, Conservative party co-
strip’s Khan Yunis and at a refinery in chair, made errors in its accounts of
the southern Israeli city of Ashkelon. more than £7m and paid £1.4m of
Palestinian militants and Israel’s mili- unlawful dividends, its delayed
tary forces have exchanged a volley of financial report says.— PAGE 12
deadly rockets for days, triggered after
hundreds of Muslim protesters were i Leaders blamed over virus
injured last weekend by Israeli police at Global leaders and the World
al-Aqsa mosque in Jerusalem. Health Organization could have
This week’s furious attacks have left prevented Covid-19 becoming a
49 people dead in Gaza and seven in catastrophe had they acted faster,
Israel. Hundreds were injured in the an expert panel has found.— PAGE 4
Gaza Strip and dozens in Israel, accord-
ing to medics on both sides. i Vatican broker arrested
Benjamin Netanyahu, Israel’s prime A broker who represented the
minister, yesterday said that the opera- Vatican in a deal to buy a property
tions in Gaza were “just the beginning” development in London has been
as Israel announced that it had killed arrested on money laundering
several senior Hamas military figures allegations.— PAGE 4
and destroyed high-rise towers in the
Gaza Strip in the most severe outbreak i Republicans oust Cheney
of violence since 2014. Congresswoman Liz Cheney has
Report page 6 been removed from the
Editorial Comment page 22 Youssef massoud/AFP (left); Jack Guez/AFP via Getty Images Republican leadership over her
opposition to the influence of
Donald Trump.— PAGE 8
Stocks retreat after US inflation surge

i MPs query Greensill claim
Financier Lex Greensill may have
misled parliament when he said his
company did not lend money to its
shareholders, say MPs who cited a
sparks fears economy is overheating

£300m loan to General Atlantic, a
Greensill backer.— PAGE 12
Datawatch
Connection to Israel
3 April rise of 4.2% on previous year 3 Biggest jump since 2008 3 Challenge for policymakers % of Jewish respondents
18-29 30-49 50-64 65+
A lot in common with Jews in Israel
JAMES POLITI — WASHINGTON trade in New York. The tech-heavy Nas- pared with previous forecasts for coronavirus outbreak. It poses a said he was “surprised” by the higher
ANDREW EDGECLIFFE-JOHNSON
daq, whose companies are sensitive to 3.8 per cent growth in both years. challenge to US economic policymak- inflation reading, but he still expected Feel attached to Israel
NEW YORK
higher inflation and interest rates, fell In the US, the 4.2 per cent jump in ers, both at the Federal Reserve and the inflation “to return to, or perhaps run
US inflation rose 4.2 per cent in April about 2.2 per cent. inflation is the biggest rise since 2008 Biden administration, who continue to somewhat above, our 2 per cent longer- Follow news about Israel closely
over its level a year ago, a bigger jump A sell-off in US government bonds and a significant leap compared with pursue hefty monetary and fiscal stim- run goal in 2022 and 2023”.
than economists had expected, fuelling also accelerated, sending the yield on the 2.6 per cent reading in March. ulus to help the US recover. Some Republicans said the Biden Netanyahu’s leadership is good
concerns that the world’s largest econ- the benchmark 10-year bond 0.06 per- The surge reflects the relatively low The White House council of eco- administration had underestimated
20 40 60 80
omy is over heating. centage points higher to 1.68 per cent. levels of inflation at the start of the nomic advisers said that the US econ- the risk of higher inflation. “It is time Source: Pew Research Center
The higher inflation reading reflects a The increase came as the European omy was experiencing a “normalisa- for the Fed to revisit its accommodative (Nov 2019 to Jun 2020)
combination of hefty fiscal support, Commission sharply raised its eco- tion” of prices as it recovers from the policy stance,” said Pat Toomey, the
supply bottlenecks and increased nomic forecasts for the coming two
‘It is time for the Fed to pandemic. “There will be months that Republican senator from Pennsylvania.
Young American Jews are less emotionally
attached to Israel than older ones. As of
spending as economic activity picks up years, with the accelerating vaccination revisit its accommodative come in below or above expectations as Additional reporting by Sam Fleming 2020, nearly half of Jewish adults under 30
said they were very, or somewhat, attached
following the rollout of coronavirus campaign helping the eurozone recover strong demand meets recovering sup- in Brussels
vaccinations. US equities dropped after from the pandemic. The euro area will
policy stance’ ply. Recovery from the pandemic will UK economy grows page 3
to Israel, compared with two-thirds of
those aged 65 and older.
the inflation report, with the S&P 500 grow by 4.3 per cent this year and Pat Toomey, Republican Senator not be linear,” it said. US petrol & China inflation page 6
down 1.7 per cent in late afternoon 4.4 per cent in 2022, Brussels said, com- Richard Clarida, the Fed’s vice-chair, Katie Martin & stock markets page 14
Former Tory chair faces conflict of

interest claims over PPE contract
JIM PICKARD health department awarded Bunzl a to supply the UK government with
CHIEF POLITICAL CORRESPONDENT
£22.6m deal the following month. equipment. He will be in touch.”
The former chair of the Conservative The FT reported last November that On April 3 Bunzl emailed Wood, say-
party used an advisory role in the Bunzl won contracts to supply PPE during it was waiting for sign-off “since we
health department at the start of the ing the pandemic without a tender proc- first communicated with each other via
Entrepreneurs come out pandemic to initiate a government con- ess. At the time Bunzl said its only state Andrew Feldman in March”. Ten min-
in force during pandemic tract for a client of his lobbying com- orders were from NHS Scotland and utes later Wood confirmed the order.
pany, according to emails seen by the Wales under longstanding procurement Feldman defended his actions, telling
One unexpected consequence of the Financial Times. deals. But this March the government the FT that his “sole motivation” was to
Coronavirus pandemic has been to said there was a separate £22.6m con- support the government and the NHS.
inspire the strongest start-up boom in Andrew Feldman was quietly given an tract for Bunzl to provide goggles, masks But Jo Maugham, director of the Good
Britain in the past decade, with unpaid job advising health minister and gowns to the Department of Health Law Project, said the emails raised con-
business incorporations up 22 per cent Lord James Bethell last year, despite and Social Care in London. cerns. “An ex-Conservative party chair,
in the four quarters to the end of potential conflicts of interest with cli- In an email on March 22 2020 Feld- who now runs a huge PR agency, walked
March compared with the same period ents of Tulchan, the lobbying and PR man wrote to Frank van Zanten, Bunzl into a role at the heart of this vast pro-
a year earlier. Some former employees firm he has run since 2019. chief executive, saying the group was curement process without any formal
have been forced to strike out on their Emails obtained by campaign group “well-placed” to supply the NHS. The process. He then spent his days chivvy-
own after losing their jobs, while the Good Law Project show that Feld- same day he emailed Bunzl representa- ing officials to speed up a contract for a
others have reassessed their priorities man — while advising Bethell — urged tives, copying in Andrew Wood, the offi- firm his agency represents.”
during repeated lockdowns. an official at the Cabinet Office in March cial leading procurement at the Cabinet One official from the DHSC said Feld-
Boom in start-ups i PAGE 3 2020 to buy personal protective equip- Office: “I have spoken to him [Wood] man had no involvement in the contract
ment from Bunzl, a Tulchan client. The about Bunzl and the opportunity for you award process to Bunzl.
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2 ★ FINANCIAL TIMES Thursday 13 May 2021
NATIONAL
Emergency support County court
Directors face bans for Covid loan abuses Debt order

against PM
Insolvency Service will be down on any potential fraud in repaying backed loans given to businesses to sup- sands of borrowers to warn them of the The bill also aims to prevent compa- unfounded,
says No 10
Covid loans in the Budget this year. Offi- port them during the pandemic”. need to start covering outstanding nies claiming business rates relief on the
given stronger powers cials are keen to close the loophole to The government has provided partial debts, which executives have said would grounds the pandemic represented a
to clamp down on fraud curb any losses to the taxpayer as banks or full guarantees on about £75bn of the flush out attempts at fraud. “material change of circumstance”.
start to charge interest or seek to recoup emergency loans that were designed to Kwasi Kwarteng, business secretary, The government has estimated that
DANIEL THOMAS the loans once the repayment holidays keep business afloat during lockdowns. said the government would “not hesi- 170,000 companies have made such
on the state-backed schemes end. The majority went to about 1.5m small tate to disqualify directors who deliber- claims but yesterday said that such mar- SEBASTIAN PAYNE AND JIM PICKARD
Directors seeking to dissolve their com- Individuals found to have misused the companies through the “bounce back” ately leave employees and the taxpayer ketwide economic changes to property
Boris Johnson will seek to quash a
panies to avoid repaying creditors face process would face sanctions such as a scheme that offered up to £50,000 out of pocket”, adding: “Extending pow- values could be properly considered
county court judgment for an unpaid
government action to prevent exploita- ban from serving as a director for up to interest-free for a year. ers to investigate directors of dissolved only at general rates revaluations.
debt of £535, Downing Street said yes-
tion of a loophole to write off state- 15 years. The measures would bar direc- Banks have started to write to thou- companies means those who have pre- “Allowing business rates appeals on
terday, describing the claim as “totally
backed emergency Covid-19 loans. tors of dissolved companies from setting viously been able to avoid their respon- the basis of a ‘material change in cir-
without merit”.
The Insolvency Service will be given up a near identical business. sibilities will be held to account.” cumstances’ could have led to signifi-
beefed up powers to investigate and The government said the process,
‘Those who have Roger Barker, director of policy and cant amounts of taxpayer support going The judgment against the prime minis-
sanction directors found to have abused which often leaves customers and credi- previously been able to corporate governance at the Institute of to businesses who have been able to ter was issued on October 26 last year by
the process. The measures, part of bill tors, including HM Revenue & Customs, Directors, said: “Using company disso- operate normally throughout the pan- the online county court, Private Eye
put before parliament yesterday, will out of pocket, would “no longer be able
avoid their responsibilities lution as a mechanism for the evasion of demic and disproportionately benefit- magazine revealed. It shows an “unsat-
give the agency retrospective powers. to be used as a method of fraudulently will be held to account’ a directors’ duties has no place in the ing particular regions like London,” the isfied record” — meaning Johnson still
The government promised to clamp avoiding repayment of government- governance of a responsible enterprise.” government said. owes the money.
Number 10 said the court claim was
unfounded and would be challenged.
“An application will be made for an
Scotland. Local elections order to set aside the default judgment,
to strike out the claim and for a declara-
tion that the claim is totally without
Salmond political future in doubt after dismal result merit.”

Downing Street added that the claim
had nothing to do with the refurbish-
ment of Johnson’s private residence
above 11 Downing Street last year that
two-vote parliamentary election system cost tens of thousands of pounds. “All
Former first minister’s defeat to maximise independence support in bills have been paid by the government
eases pressure on Sturgeon to the devolved parliament at Holyrood. or the prime minister, personally.”
Alba stood only for Holyrood’s 56 One senior government insider said
call independence referendum “regional list” seats, which are intended that the county court judgment was a
to make the parliament more propor- “vexatious claim” and “without merit”.
tionally representative, while calling for The official added: “There’s no substan-
MURE DICKIE — EDINBURGH
voters to back the SNP in the 73 first- tive evidence behind this at all.”
The decline of Alex Salmond, former past-the-post constituency seats. Sal- It is unknown who made the court
first minister of Scotland and one of the mond said doing this would create a order or whether the claim was ever
nation’s most influential politicians of “supermajority” for independence that served on Johnson. The fact that the
the past 20 years, can be summed up in was much bigger than the proportion of
two numbers. Scottish voters who actually want to
Salmond led the Scottish National leave the UK.
The fact that the issue had
party to an overwhelming 59 per cent Sturgeon denounced the approach as reached the court would
share of the vote in his northern home an attempt to “game the system”, while
constituency of Aberdeenshire East in Salmond was unable to explain what he
suggest Johnson had been
the 2011 election for the Edinburgh par- meant by a supermajority or why win- asked to repay the debt
liament. Last week, by contrast, just ning one would compel the UK govern-
3 per cent of voters in the area backed ment to agree to talks on independence. issue reached the court would suggest
the former first minister’s Alba party. Alba’s failure was a huge relief for the that the prime minister had been asked
The results of the wider election, in SNP, particularly since the new party to repay the debt. County court judg-
which Alba took an even more meagre did not take enough votes to stop the ments can stay on an individual’s credit
1.7 per cent of the vote across the coun- governing party winning two regional record for six years, impairing their
try, were an emphatic rejection of the list seats alongside the vast majority of ability to borrow, and can be used as a
man who led the SNP and its independ- constituencies. basis for sending a bailiff to collect the
ence cause from the political fringes to Salmond had hoped to tap impatience owed money.
Scotland’s centre stage. within the independence movement at The news comes as Johnson faces con-
“Alba absolutely bombed,” said Mark what he sees as Sturgeon’s overly cau- tinued questions over how he paid for
Diffley, a consultant on Scottish politics. tious approach to challenging Westmin- the refurbishment of the Downing
Alba’s failure has wider implications ster’s refusal to approve a rerun of the Street flat. Leaked emails showed
for Scotland and the constitutional 2014 referendum, in which Scots that Lord David Brownlow, a Tory
future of the UK, reinforcing the domi- backed staying in the UK by 55 per cent donor, gave £58,000 to cover payments
nant role of Salmond’s successor as SNP to 45 per cent. “already made” by the Conservative
leader and first minister, Nicola Stur- But the defection to Alba of some of party towards the project, and wanted
geon, and her relatively cautious Sturgeon’s most high-profile critics in the donation to be attributed to a
approach to pushing for a second refer- the SNP, including Kenny MacAskill, a “soon-to-be-formed Downing Street
endum on independence. member of the UK parliament and trust”.
Salmond, who led the SNP govern- former Scottish justice secretary, has The Electoral Commission, which
ment from 2007 to 2014, fell out spec- further secured the first minister’s grip monitors political party spending, has
tacularly with Sturgeon, his former pro- on the governing party and its strategy. begun an inquiry into the apartment,
tégé, after two female civil servants in “Alba’s failure to make any impact in saying there were “reasonable grounds”
2018 accused him of sexual harassment the elections eases pressure that Nicola to suspect an offence.
during his time as first minister. Sturgeon might otherwise have faced to Johnson has a history of carelessness
In 2019, the Scottish government’s push for a referendum early in this par- with money, having had to previously
investigation into the complaints was liamentary term,” said Nicola McEwen, apologise to MPs for the late declaration
ruled unlawful because it was “proce- Sign of “People saw Alex Salmond as an unat- plained that media focus on the issue ‘People professor of territorial politics at Edin- of more than £52,000 of income from a
durally unfair” and “tainted by appar- frustration: tractive leader for a mainstream political had been unhelpful. “It stopped Alba burgh university. newspaper column and books.
ent bias”. At a criminal trial last year, Alba party party,” Diffley said. He cited polls that from getting the message across.” saw Alex “I’d expect her to use the time to focus In 2008, Dylan Jones, then editor of
Salmond was acquitted of all 13 sexual leader Alex suggested a majority of voters thought Salmond said more important prob- Salmond on Covid recovery . . . and in the mean- GQ magazine, said: “I have employed
offence charges against him. But ana- Salmond says the former first minster was unfit for lems for the party, which he launched to time build a case for independence that Boris Johnson for eight years as GQ’s
lysts said a factor in voters’ rejection of he has been office and gave him approval ratings media fanfare on March 26, had been a as an addresses the tricky questions that motoring correspondent, and even
Alba appeared to have been Salmond’s unfairly treated even lower than UK Conservative prime lack of “time and television”, citing in unattractive don’t yet have answers,” McEwen said. though he’s probably cost the company
struggle to fend off questions about his by the media minister Boris Johnson in Scotland. particular the decision of the BBC not to Salmond insisted Alba would con- £5,000 in parking tickets, I wouldn’t
conduct while first minister. Ewan Bootman/NurPhoto/
Shutterstock
In a telephone interview, Salmond include him in election debates. “I think leader for a tinue as a political home for disaffected have him any other way.”
At his trial, Salmond admitted to what said journalists had been “pouring mas- the BBC is a disgrace to public service mainstream independence supporters. Party candi- When Johnson was editor of The
he said were consensual sexual encoun- sive amounts of dung” over him but dis- broadcasting,” said Salmond, who has dates have decided to contest local gov- Spectator magazine, interns com-
ters with much younger and more jun- missed the idea his personal ratings had since 2017 hosted a chat show on Krem- political ernment elections next year. He waved plained that he never repaid them for
ior colleagues at his official residence. been the key factor. “It wasn’t the reason lin-backed Russian broadcaster RT. party’ aside any suggestion that the results rounds of coffee. Meanwhile Jennifer
But during the campaign he repeatedly that Alba didn’t make the break- Despite heavy media coverage the showed Alba had no future. “That’s just Arcuri, his former girlfriend, said he
declined to say if he regretted any of his through,” Salmond said of the questions public appeared unpersuaded by Alba’s election number one,” he said. had to borrow £3.10 from her when they
actions or to offer any apology. about his conduct. However, he com- pitch of attempting to use Scotland’s Opinion page 23 went on a date.
Northern Ireland
MAKE A SMART INVESTMENT
Subscribe to the FT today at FT.com/subscription Johnson apologises over Ballymurphy shootings
FRIDAY 31 MARCH 2017 WORLD BUSINESS NEWSPAPER UK £2.70 Channel Islands £3.00; Republic of Ireland €3.00
Trump vs the Valley

Tech titans need to minimise
political risk — GILLIAN TETT, PAGE 13
A Five Star plan?
Italy’s populists are trying to woo
the poor — BIG READ, PAGE 11
Dear Don...
May’s first stab at the break-up
letter — ROBERT SHRIMSLEY, PAGE 12 LAURA NOONAN 9 and August 11, 1971, the early years of also died but the inquest could not call with the region’s leaders to restate
HMRC warns Lloyd’s of Brussels Insurance market
to tap new talent pool with EU base
UK £3.80; Channel Islands £3.80; Republic of Ireland €3.80
Briefing
THE END
SATURDAY 1 APRIL / SUNDAY 2 APRIL 2017
what would become more than 30 years determine who had fired the bullet that “the government’s intention to deliver a
customs risks
i US bargain-hunters fuel Europe M&A
Boris Johnson has apologised “unre- of sectarian unrest in Northern Ireland killed him. way forward in Northern Ireland that
Europe has become the big target for cross-border
dealmaking, as US companies ride a Trump-fuelled
equity market rally to hunt for bargains across the
HOW DRIVERLESS
OF THE TECHNOLOGY IS
Atlantic.— PAGE 15; CHINA CURBS HIT DEALS, PAGE 17
being swamped i Report outlines longer NHS waiting times

A report on how the health service can survive CHANGING AN
ROAD
more austerity has said patients will wait longer for
AMERICAN WAY OF LIFE
servedly” for events involving the before the Good Friday Agreement After the verdict on Tuesday, O’Neill, focuses on reconciliation, delivers for
non-urgent operations and for A&E treatment while
by Brexit surge
some surgical procedures will be scrapped.— PAGE 4 Censors and sensitivity
i Emerging nations in record debt sales Warning: this article may be
FT WEEKEND MAGAZINE
FEBRUARY 4 2017
Developing countries have sold record levels of

government debt in the first quarter of this year,
upsetting — LIFE & ARTS
taking advantage of a surge in optimism toward
emerging markets as trade booms.— PAGE 15
Credit Suisse
3 Confidence in IT plans ‘has collapsed’ i London tower plans break records
Art of persuasion Mystery deepens
British army that led to the deaths of 10 brought peace in 1998. the most senior Belfast politician for victims of the Troubles and ends the
3 Fivefold rise in declarations expected
A survey has revealed that a
record 455 tall buildings are
planned or under construction over disputed painting of Jane Austen How To Spend It
engulfed in
JAMES BLITZ — WHITEHALL EDITOR adjust its negotiation position with the in London. Work began on
EU, a Whitehall official said. “If running almost one tower a week
A computer system acquired to collect our own customs system is proving during 2016.— PAGE 4
duties and clear imports into the UK much harder than we anticipated, that
may not be able to handle the huge ought to have an impact on how we i Tillerson fails to ease Turkey tensions
fresh tax probe

people in what became known as the Delivering her rulings in a series of nationalist Sinn Féin, described the cycle of reinvestigations”.
surge in workload expectedonce Britain press for certain options in Brussels.” The US secretary of state has failed to reconcile
leaves the EU, customs authorities have
admitted toMPs.
In a letter to Andrew Tyrie, chairman
of the Commons treasury select com-
tensions after talks in Ankara with President Recep
Tayyip Erdogan on issues including Syria and the Chic new lodgings
Ballymurphy Massacre in Belfast 50 inquests on Tuesday the coroner, Mrs deaths as “British state murder”. Foster, In Tuesday’s Queen’s Speech, the gov-
FINANCIAL TIMES Reproduction of the contents of this newspaper in years ago. Justice Keegan, said the British army did the outgoing leader of the Democratic ernment set out plans to introduce “leg-
Bracken House, 1 Friday Street, London EC4M 9BT. any manner is not permitted without the publisher’s
prior consent. The prime minister’s spokesman said not follow its own protocols and shot Unionist party, commended the fami- islation to address the legacy of the
Published by: The Financial Times Limited, he had spoken with Northern Ireland’s unarmed individuals who had not posed lies for their “tenacity” and said “the Troubles in Northern Ireland”. But it did
Bracken House, 1 Friday Street, ‘Financial Times’ and ‘FT’ are registered trade marks first minister, Arlene Foster, and the any threat, including a priest waving a findings should be accepted”. not confirm leaked plans for an amnesty
London EC4M 9BT. of The Financial Times Limited.
Tel: 020 7873 3000
region’s deputy first minister, Michelle white object while tending to an injured Johnson’s spokesman said that the on crimes committed during the Trou-
Editor: Roula Khalaf The Financial Times and its journalism are subject to O’Neill, yesterday after the conclusion man. A tenth victim, a 49-year-old man, prime minister also used yesterday’s bles, which sparked uproar.
a self-regulation regime under the FT Editorial Code of lengthy inquests into the killings, Foster said the prime minister also
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the lengthy pursuit of truth has caused “It is clear the protocol needs to be
Printed by alternatively, email syndication@ft.com the families of those killed,” Number 10 replaced to restore the free flow of goods
St Clements Press (1988) Ltd, London, Newsprinters said, describing the outcome of the from GB-NI,” Foster said, articulating
(Knowsley) Limited, Merseyside, Newsprinters Newspapers support recycling inquests as “deeply sad”. unionists’ long-held opposition to meas-
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Press Ld, Kells, Ireland 2018 was 69.2% The inquests found that eight men ures that impose a trade barrier
and one woman, aged between 19 and between Northern Ireland and Great
© Copyright The Financial Times Limited 2021. All 44, were killed by the British army in Britain in order to avoid any barrier on
rights reserved.
five separate incidents between August Inquests result: relatives arrive to hear the outcome in Belfast — Peter Morrison/AP the island of Ireland.
Thursday 13 May 2021 ★ FINANCIAL TIMES 3
NATIONAL
Pandemic drives strongest boom

Workplace guidance
PM signals
in start-up businesses for a decade return to
office will
happen from
Lockdown restrictions and job insecurity lead people to reconsider priorities and strike out alone
next month
ANDY BOUNDS — DENTON
VALENTINA ROMEI — LONDON DANIEL THOMAS AND JIM PICKARD
Boris Johnson has signalled that work-

It took the coronavirus pandemic to
from-home guidance for England will
turn Bora Kirgiz into an entrepreneur.
be lifted next month if Covid-19 cases
He had already decided long hours as a
continue to drop, raising the prospect
taxi driver were not compatible with his
of staff returning to pre-pandemic
new married life. Then the first lock-
office environments.
down killed the taxi trade and his cousin
offered him a cheap commercial prop- Asked about the government’s advice to
erty to rent in Denton, a commuter town workers — and whether it would be
near Manchester. relaxed on June 21 — the prime minister
He and wife Nalan fulfilled their told the House of Commons: “That is
dream of opening a café, Bona Couple certainly our intention provided we stay
Café & Lounge, shortly after the first on track . . . we must be guided by
lockdown ended. what’s happening with the pandemic.”
“We cannot wait to open fully again on Kwasi Kwarteng, the business secre-
May 17,” he said. “I am very hopeful. We tary, told company leaders this week he
have good customers who really want to was increasingly confident the rules for
come here again.” workplaces could be relaxed within
The couple are part of an unexpected weeks. Ministers hope workers will
consequence of the year-long pandemic: be allowed back into offices from late
the strongest start-up boom in Britain in June without mandatory wearing of
the past decade. Some who have struck face masks, enforced social distancing
out on their own have done so out of or need for coronavirus vaccine certifi-
necessity after losing their jobs. Others, cation.
like Kirgiz, reassessed their priorities The government is set to drop its
and set up their own businesses. “work from home where you can” guid-
Business creation accelerated after ance next month if the vaccine rollout
the first reopening last summer. Low continues to reduce numbers of Cov-
interest rates, plenty of government
support and more people shopping
online were all factors.
The civil service is also
Denton has been in the vanguard, preparing for officials to
according to research firm the Local
Data Company. The town has had the
return to Whitehall offices
sharpest increase in independent busi- from the end of June
nesses on high streets in Britain since
the first lockdown in March, with 27 id-19 cases, according to insiders. Minis-
opening and 13 closing. ters have consulted business groups
Bona Couple is just one of several hos- about how far to relax workplace rules,
pitality businesses breathing new life with hopes that many employers can
into a town still recovering from the clo- Pandemic entrepreneurs The number of UK business UK business creation is strong in retail return to near pre-pandemic working
sure of hatmaking factories 30 years practices next month.
ago. Empty shops blighted the centre of
High streets in Great Britain with the biggest rise incorporations soared during and logistics The civil service is also preparing for
Denton for years as banks, food shops
in independent traders the pandemic Count of business births, Q4 2020-Q1 2021 officials to return to their Whitehall
and chain stores closed. Net change (%) ’000 (annual % change) offices from the end of June, albeit on a
Net increase (in units) 220
In second place is Erdington, a suburb Quarterly -50 0 50 100 more flexible “hybrid” model with
of Birmingham, with Birkenhead near 0 5 10 15 20 Average of Retail more homeworking than before.
Denton four quarters 200 Wholesale
Liverpool and Bradford in West York- Support services When the pandemic began last
shire, all struggling post-industrial Erdington 180 Transport & storage spring, workers were ordered to work
Walworth Professional
areas, also in the top 10 of the 1,200 high Motor trades from home by government diktat. In
Clitheroe 160 Production
streets monitored. Birkenhead Real estate May 2020 — as the first lockdown ended
Barbers are the most popular busi- 140 Finance — ministers provided guidance to ena-
Great Yarmouth Construction
nesses, with 1,969 opening and 1,234 Pandemic Agriculture ble a Covid-safe return to workplaces.
Kilburn 120 ITC
closing, a 5.1 per cent increase. Beauty Bradford Hospitality That saw an end to hot desking, the clo-
salons, grocers and ice cream parlours Lancaster 100 Education sure of canteens, lifts half-empty and
Health
are also common. Scarborough 2012 15 21 Entertainment social distancing enforced by floor tape.
In the four quarters to the end of the Between Mar 23 2020 and Apr 21 2021 Kwarteng told business leaders at a
Sources: Local Data Company; Companies House; ONS
first three months of 2021, there were meeting this week he was confident the
more than 810,000 business incorpora- government would ease those strict
tions, up 22 per cent compared with the Ready to serve: new businesses, up 14 per cent com- boost to local businesses in popular sea- ‘We have all These recent arrivals have brought guidelines, which could leave most deci-
same period last year, according to Bora Kirgiz at pared with the previous quarter and the side towns, such as Scarborough and their tastes with them, supporting a del- sions over mask wearing and social dis-
Companies House. his Bona Couple highest figure since quarterly records Great Yarmouth, while the move to had enough icatessen and an artisan bakery. tancing to the employer.
The 221,000 companies incorporated café in Denton began in 2017. working from home has seen often of staying Yusuf Ceyhan is about to open a wine One person at the meeting said the
in the third quarter of last year was the Jon Super
This follows a 24 per cent annual neglected commuter suburbs, like Kil- bar near his two restaurants in Denton. business secretary was bullish over the
highest figure of the past decade, with increase in business creations in the last burn, Denton and Erdington, enjoy an in. We want He has lost more than £100,000 in the prospects of returning to the workplace
the first three months of this year in sec- quarter of 2020, which “is contrary to increase in footfall. to spend pandemic but is investing £70,000 in his with few restrictions. Officials are keen
ond place, when there were more than expectations that business creation “With vacancy rates at record levels, new venture. for normal conditions to return as
211,000 incorporations. would be lower due to the coronavirus the number of units available to let has money “We have all had enough of staying in. quickly as possible.
The trend has continued into the sec- pandemic”, according to the ONS, which never been greater. This has facilitated and come We want to spend money and come A final decision will not be made until
ond quarter. According to weekly data published the data. generous property terms for independ- somewhere classy,” he said. a review of social distancing by minis-
published by the Office for National Sta- Industries that showed the greatest ent retailers including rent-free periods somewhere Even when indoor dining was banned ters, due to report before June 21. The
tistics, the number of business incorpo- increases in business creations in the or landlord contributions.” classy’ last year, local entrepreneurs turned the business department said ministers
rations in April was up 20 per cent com- first quarter compared with the same This is certainly true in Denton, disused post office in the town square would say more this week about the
pared with the same month in 2019. period last year were retail, wholesale, according to local MP Andrew Gwynne. into a smart restaurant and cocktail bar, rules. “As the prime minister has said,
The Interdepartmental Business Reg- and logistics. These were consistent He said units were rented out almost as The Postroom. we remain on track to move to step four
ister, a government record of 2.7m com- with a rise in businesses trying to soon as they become vacant. Ross Anderton once travelled the of our road map on June 21 where we
panies, tells the same story. Its figures address the increased need for online Manchester residents looking for world building stage sets, but now man- hope to be in a position to remove all
differ in definition and, for example, do shopping and home delivery. houses with gardens as they work more ages the venue. legal limits on social contact.”
not include small single-person limited Ronald Nyakairu, senior manager for from home had been a catalyst for the “We are all Denton lads and we want Companies are seeking guidance as
companies or non-profit organisations, Insight & Analytics at LDC, said chang- start-up boom, he said. “The traditional to give locals the same quality you get in soon as possible to know whether or not
but the growth pattern is clear. ing work and holiday patterns had been terraced housing in old Denton used to central Manchester,” he said. “You don’t they need to commit to costly office
It recorded that in the first three significant contributing factors. “The be short-term tenancies. Now families have to spend £20 on a taxi into town to alterations and personnel limits if social
months of this year, there were 137,000 increase in staycations has provided a are buying them. It’s gentrifying.” have a good night out.” distancing is maintained.
First quarter Health crisis
Sunak welcomes economy’s lockdown strength Covid statutory inquiry to be held in spring
CHRIS GILES AND BETHAN STATON online, pointing to continued rapid this is likely to change soon, following SEBASTIAN PAYNE procurement of vital equipment; the the next general election, due by 2024 at
growth in the second quarter. the upswing in March. effectiveness of the Test and Trace sys- the latest.
The economy showed resilience in the Boris Johnson said yesterday that a
Howard Archer, chief economic Steffan Ball, UK economist at Gold- tem; and whether borders should have Sir Keir Starmer, Labour leader, wel-
second wave of coronavirus, growing statutory inquiry into the handling of
adviser to the EY Item Club, said the man Sachs, raised the bank’s growth been closed sooner. comed the announcement of the
strongly in March and contracting only the coronavirus pandemic would begin
economy had been “pretty resilient” in forecast to 8.1 per cent. “The upside sur- The prime minister said the inquiry inquiry and said his party would “play
1.5 per cent in the first quarter of 2021. in spring 2022 with powers to compel
the first three months of the year prise to March GDP and the upward would place a significant time burden whatever role to make this work well”.
witnesses to give evidence and provide
Official figures also suggest a brighter with the lockdown causing “much less revision to February imply more growth on the NHS, the government and its But the opposition leader criticised the
documents.
outlook for the economy over the sum- momentum going into the second quar- timing. “The principle is that the
mer with the coronavirus recovery ter,” he said yesterday. The prime minister told MPs that a inquiry should be as soon as possible, as
stronger than expected in recent months. Happier days:
Ruth Gregory, senior UK economist at comprehensive examination would
‘Amid such tragedy, the soon as possible. Now I understand that
official figures
The Office for National Statistics also suggest a brighter Capital Economics, said the economy begin after the government was certain state has an obligation to a statutory inquiry will take time to set
said yesterday that exports and imports was on track to reach its pre-pandemic that the UK had passed the worst of the up, but why can’t it be later this year?
had continued to recover in March.
outlook for the
economy over level before the end of the year and well pandemic. Johnson noted that a rise in
examine its actions as Why can’t it start earlier?”
However, there was less trade with the the summer before a forecast from the BoE last Covid-19 infections was possible this rigorously as possible’ Jo Goodman, co-founder of the
EU, following the imposition of border week. “The burst of growth in March winter and that would put pressure on Covid-19 Bereaved Families for Justice
restrictions after the end of the Brexit damage than had been feared at the shows that the recovery has been gath- the NHS. advisers, meaning that the process group, said the announcement of a stat-
transition period in January. start of the quarter”. ering momentum more quickly than we Johnson told the House of Commons: could not begin until the worst of the utory inquiry was a “huge relief” but
Chancellor Rishi Sunak welcomed the As recently as February, the Bank of had thought,” she said. “Amid such tragedy, the state has an pandemic was passed. added that spring 2022 was “simply too
figures, saying the economy was show- England had expected a 4.2 per cent Monthly trade statistics, released at obligation to examine its actions as rig- “Our own scientific advisers judge late to begin”.
ing “promising signs” after a “difficult drop in gross domestic product in the the same time as the GDP figures, orously and candidly as possible and to that although more positive data is com- The inquiry will be held under the
start to this year”. first quarter. showed a continued shift away from learn every lesson for the future.” ing in and the outlook is improving, 2005 Inquiry Act, which will give it legal
The first-quarter contraction of In March, GDP exceeded expectations trade with the EU. Imports from EU He added that the inquiry would put there could still be another resurgence powers for submission of evidence,
1.5 per cent was in line with economists’ and rose 2.1 per cent, the fastest countries, excluding precious metals, “the state’s actions under the micro- in hospitalisations and deaths,” he said. including documents and messages, as
expectations and caused by the third monthly growth rate since August last increased 4.5 per cent in March to scope” and the government was “fully “There is in any case a high likelihood of well as compelling witnesses to give evi-
lockdown, in January, which led the size year, leaving the economy only 5.9 per £17.8bn, according to figures from the committed to learning lessons at every a surge this winter when the weather dence. Johnson said the inquiry would
of the economy to shrink 2.5 per cent. cent smaller than it was in February ONS. Imports from outside the EU stage of this crisis”. Some of the themes assists the transmission of all respira- work closely with the devolved adminis-
Growth exceeded expectations in 2020 before the pandemic struck. increased 8.4 per cent, to £19.3bn. covered in the inquiry are likely to tory diseases.” trations in Scotland, Wales and North-
February and March as companies After the first quarter figures, the UK The UK imported more goods from include the introduction of nationwide Given the length of public inquiries, ern Ireland. He did not indicate who
adapted to the restrictions and consum- still has the worst pandemic economic outside the EU for the first time since lockdowns in March and November last such as the Chilcot inquiry into the Iraq would lead it but insisted the process
ers became ever more willing to spend record in the G7 group of nations, but comparable records began in 1997. year; the preparedness of the NHS; the war, it is unlikely to report back before would be independent and thorough.
INTERNATIONAL
GLOBAL INSIGHT
Pandemic
Covid report criticises global response

EUROPE
Ben
Hall
Expert review lashes out gate and publish information about disused from the outset, acknowledging ‘If travel But the strongest criticism was
ease outbreaks without the approval of that a respiratory disease may spread directed at the wealthy nations of Europe
at WHO and governments restrictions
in call for urgent reform
governments, and funding for an Inter-
national Pandemic Financing Facility
that could spend $5bn-$10bn a year on
from person to person unless and until
established otherwise,” the report said.
The panel is scathing about the Inter-
had been
and North America for “wasting Febru-
ary 2020” through inaction, leading to
“a lost month when many more coun-
EU cast as villain of
CLIVE COOKSON — LONDON preparedness and call on $50bn-$100bn
at short notice in a health emergency.
national Health Regulations, the only
legally binding instrument on disease
imposed
more
tries could have taken steps to contain
the spread of Sars-Cov-2 and forestall
virus drama despite
A swift and collaborative international
response could have stopped the 2019
Covid-19 outbreak in China becoming a
“The panel is recommending a funda-
mental transformation designed to
ensure commitment at the highest level
outbreaks. “With respect to travel, it is
hard to see that the IHR’s discourage-
ment of restrictions is realistic for pan-
quickly,
the global health, social and economic
catastrophe that continues its grip”. success of jab rollout
global catastrophe in 2020, according to to a new system . . . on which citizens demics in our highly interconnected
that would When the gravity of the crisis was
finally acknowledged in March 2020,
T
a scathing report on the response of can rely to keep them safe and healthy,” age,” the report said. have been a “there was a mad scramble for PPE,
world leaders and the World Health said its co-chairs, former New Zealand “If travel restrictions had been serious therapeutics and other equipment”, he development of Covid-19 vaccines has been
Organization to the pandemic. prime minister Helen Clark and former imposed more quickly and more widely, said Clark. a scientific marvel, offering a way out of a cata-
An expert review by the Independent Liberian president Ellen Johnson Sirleaf. that would have been a serious inhibi- inhibition “This was compounded by a lack of strophic pandemic. It is the source of hope of
Panel for Pandemic Preparedness and The review does not examine the ori- tion on the rapid transmission of the on the rapid global leadership.” life returning to something like normal. For
Response, commissioned by the WHO, gins of the virus that causes Covid-19. virus,” Clark told a press briefing ahead The panel called on the world’s heads the EU, though, it seems to be a source of per-
sets out lessons for preventing future But it criticises the Chinese authorities of the review’s publication. spread of of state to set up a Global Health Threats petual embarrassment.
pandemics and makes dozens of recom- and WHO for being too slow to recognise The panel criticises the WHO for not the virus’ Council that would allocate funds from Time and again on vaccine issues, the EU has found itself
mendations for reform. the virus was spreading between people declaring Covid a public health emer- the IPFF to institutions developing pre- on the wrong side of the argument. Its case tends to
They include a treaty setting up a Glo- in Wuhan and then to warn the world gency of international concern until paredness and response capabilities in strengthen over time, by which point the reputational
bal Health Threats Council, more sur- about human-to-human transmission. January 30. It was officially called a pan- the event of another pandemic. damage is done. Vindication is hard to come by.
veillance power for the WHO to investi- “A precautionary approach should be demic on March 11. See Opinion First came the procurement. Brussels was too slow to
sign contracts and paid insufficient attention to ensuring
the production capacity was in place to meet them.
The European Commission was excoriated for its
Turkey. Politics botched purchases, especially in Germany. But had it not
been for AstraZeneca signing contracts with the EU and
UK which it could not simultaneously fulfil, the procure-
Kurdish activists resist Erdogan crackdown ment was largely a success. The bloc is on course to receive
400m doses by the end of next month. The EU should be
able to inoculate 70 per cent of its adult population this
summer, not long after the UK or US.
When EU fury boiled over at AstraZeneca’s missed deliv-
eries, the commission picked a fight with Britain and intro-
Left-leaning HDP remains duced export controls to countries that refused to show
second-biggest opposition reciprocity with supplies. The move did little to solve
AstraZeneca’s production problems but did a lot to portray
party despite bid to outlaw it the EU as a hoarder trying to cover up its earlier procure-
ment errors. The world’s second-biggest exporter of
vaccines after China has been trying to correct the percep-
AYLA JEAN YACKLEY — ISTANBUL
tion ever since.
As a teenager, Elif Bulut’s neighbours “They ended up
advised her family to keep quiet about labelled, largely unfairly,
her father’s Kurdish roots because “they as vaccines protection-
EU found itself
disliked Kurds” in the conservative ists,” said Jacob Kirke- wrongfooted when
Black Sea town to which they had gaard of the Peterson
moved. Institute for Interna-
Biden came out in
The warning was Bulut’s first realisa- tional Economics. It has support of waiving
tion that her background set her apart made it much harder for
in Turkey. “I wasn’t born into politics, the EU to present itself as
vaccine patents
but if you have an ethnic identity, if the “pharmacy to the
you’re a woman with dissenting views, world” as Ursula von der Leyen, commission president, is
you are thrust into politics,” said Bulut, trying to do. “Europe’s long-term interest is to be the big-
44, who is now the chair of the Istanbul gest vaccine producer in the world. The message has to be,
branch of the People’s Democratic party ‘Look, we’ll leave your supply chains alone’. That’s the
(HDP). European interest the commission should have articulated
Most of the 5.9m people who voted for from the beginning.” Then last week, the EU was wrong-
the left-leaning HDP, Turkey’s second- footed when the Biden administration came out in support
biggest opposition party, in a 2018 gen- of waiving vaccine patents, despite European opposition,
eral election are Kurdish. The party as a way of boosting supplies to poorer countries.
campaigns for a negotiated settlement The EU, which has shipped almost as many doses abroad
in a 36-year conflict between the state as the nearly 200m it has administered at home, was made
and the armed Kurdistan Workers’ to look the villain of the global community. The US has
party (PKK), which has been desig- “loaned” a few million to Mexico and Canada, although it
nated a terror group by the EU and US. has promised to share up to 60m doses.
Recep Tayyip Erdogan, Turkey’s pres- Whether the EU was taken by surprise or was unable to
ident, has accused the HDP of being the Support: were stripped of their seats in parlia- political movement for three decades, political scientist Sezin Ozey. “The dissuade Washington, it was a failure of diplomacy.
PKK’s political wing and said earlier this members of the ment and thousands of party activists said voters’ support for the HDP scapegoating produces the polarisation While some EU leaders do not want to appear intransi-
year there was no room in Turkish poli- pro-Kurdish have been jailed. Pro-Kurdish newspa- remained strong. that distracts from other problems dur- gent on the IP waiver issue, they mostly agree it is a distrac-
tics for a party that did not “wholeheart- People’s pers have been banned and Kurdish- The HDP is the latest incarnation of a ing the coronavirus pandemic,” she said. tion from the more pressing issue of expanding near-term
edly condemn” the militants. The HDP Democratic language schools and theatres shut. movement that began in 1990 to push “Demonising the HDP also helps neuter production capacity through licensing deals and sharing
denies links with the PKK, which wants party celebrate Both the EU and US have criticised for greater cultural and political rights the rest of the opposition.” technology. But that puts the onus on the EU to come up
greater political autonomy for Kurds in Persian new Ankara’s move to close the party, and for Turkey’s 14m Kurds. Five predeces- The prosecutor in the case to close the with industrial solutions for increasing production and for
Turkey. year in March. the Constitutional Court has asked the sors were banned, the last in 2009, and HDP is also seeking a ban from political sharing its own supplies, due to expand vastly in the sec-
The government’s campaign against The party is prosecutor to remedy deficiencies in the the HDP has vowed to reform under the life for nearly 700 HDP members, ond half of the year, with developing countries. When it
the HDP has been stepped up in recent pushing for indictment, which has delayed the start banner of a sister party or through including 24-year-old sociology major comes to a crisis between the rich world and poorer coun-
weeks, with the country’s top prosecu- greater rights of the trial. Another court began trying another alliance if it, too, is outlawed. Yagmur Yurtsever, who was drawn to tries over vaccine supplies, America has a talking point.
tor seeking to outlaw the party and sev- for Turkey’s 108 senior HDP politicians last month, Erdogan, whose stance towards the the party when she began university But Europe has to deliver.
eral of its senior politicians facing possi- 14m Kurds including Selahattin Demirtas, its jailed HDP hardened after the 2015 collapse of because of its pledge to promote gender Heather Grabbe, director of the Open Society European
ble life sentences if convicted in a sepa- Yasin Akgul/AFP/Getty
former leader, for allegedly inciting a peace process with the PKK, “thrives equality in its ranks. Since then, Yurt- Policy Institute in Brussels, said the EU message of vaccine
rate trial. The crackdown is testing the deadly riots in Turkey in 2014 to protest off crisis and enmity by disparaging the sever has been detained by police four openness to the world while supplying its domestic needs
commitment of the party’s grassroots against Isis’s siege of Kobani, a Kurdish- HDP”, said Bulut. times over allegations ranging from vio- had been compromised by the instincts of its own member
activists. The HDP has thousands of vol- run town in northern Syria, that year. Polls show the HDP’s support has lating protest bans to membership of a governments eager to keep supplies for themselves. “It is
unteers in Istanbul, a city with about 2m “People took to the streets in a cry for declined since the 2018 election but at a terrorist organisation. quite remarkable what the EU has achieved. But they
Kurdish residents. help when Kurds faced annihilation in slower rate than for Erdogan’s Justice “The state pushes people to war by never quite succeed in telling the story,” she said. “That’s
The legal blitz is the climax of a years- Kobani,” said Zubeyde Ince, 55, a retired and Development party (AKP), which shutting the space for politics. That because the member states don’t have much interest in
long campaign by the Turkish govern- teacher who volunteers in the HDP’s has historically attracted the second- frightens me, but what gives me comfort telling the collective story.”
ment, during which almost all of the voter outreach programme. Opening a highest number of Kurdish votes. is that the HDP’s commitment to peace- History will look more kindly on the EU’s vaccine suc-
HDP’s mayors have been expelled from court case more than six years later was Tightening the screws on the HDP ful struggle is resolute,” she said. “War cesses. But, for EU leaders, it feels like one long trial.
office across mainly Kurdish south- proof that “Turkey is hostile to Kurds”. helped brandish the AKP’s nationalist has failed to bring a new paradigm, but I
eastern provinces, several lawmakers Ince, who has backed the Kurdish credentials and stimulate its base, said believe democratic politics will.” ben.hall@ft.com
Appeals court ruling Property deal

FRIDAY 31 MARCH 2017
Trump vs the Valley A Five Star plan?

WORLD BUSINESS NEWSPAPER UK £2.70 Channel Islands £3.00; Republic of Ireland €3.00
Dear Don... Air France and Airbus to Vatican broker in extortion

stand trial over 2009 crash probe arrested by UK police
Tech titans need to minimise Italy’s populists are trying to woo May’s first stab at the break-up
political risk — GILLIAN TETT, PAGE 13 the poor — BIG READ, PAGE 11 letter — ROBERT SHRIMSLEY, PAGE 12
HMRC warns
UK £3.80; Channel Islands £3.80; Republic of Ireland €3.80 SATURDAY 1 APRIL / SUNDAY 2 APRIL 2017
Lloyd’s of Brussels Insurance market

THE END
Briefing
to tap new talent pool with EU base HOW DRIVERLESS
customs risks
i US bargain-hunters fuel Europe M&A
Europe has become the big target for cross-border
OF THE TECHNOLOGY IS
dealmaking, as US companies ride a Trump-fuelled
equity market rally to hunt for bargains across the
Atlantic.— PAGE 15; CHINA CURBS HIT DEALS, PAGE 17
CHANGING AN
being swamped ROAD
i Report outlines longer NHS waiting times
A report on how the health service can survive
more austerity has said patients will wait longer for
non-urgent operations and for A&E treatment while
AMERICAN WAY OF LIFE Censors and sensitivity
Warning: this article may be
by Brexit surge
some surgical procedures will be scrapped.— PAGE 4
FT WEEKEND MAGAZINE
upsetting — LIFE & ARTS
i Emerging nations in record debt sales
Developing countries have sold record levels of
government debt in the first quarter of this year,
Credit Suisse
taking advantage of a surge in optimism toward
emerging markets as trade booms.— PAGE 15
Art of persuasion Mystery deepens
3 Confidence in IT plans ‘has collapsed’ i London tower plans break records
A survey has revealed that a over disputed painting of Jane Austen How To Spend It
3 Fivefold rise in declarations expected
engulfed in
record 455 tall buildings are
planned or under construction
JAMES BLITZ — WHITEHALL EDITOR adjust its negotiation position with the in London. Work began on
EU, a Whitehall official said. “If running almost one tower a week
A computer system acquired to collect our own customs system is proving during 2016.— PAGE 4
fresh tax probe

duties and clear imports into the UK much harder than we anticipated, that
may not be able to handle the huge
surge in workload expectedonce Britain
leaves the EU, customs authorities have
ought to have an impact on how we
press for certain options in Brussels.”
i Tillerson fails to ease Turkey tensions
The US secretary of state has failed to reconcile
tensions after talks in Ankara with President Recep
Chic new lodgings
In a letter to Andrew Tyrie, chairman
admitted to MPs.
HM Revenue & Customs told a parlia-
of the Commons treasury select com-
mittee, HMRC said the timetable for
Tayyip Erdogan on issues including Syria and the
extradition of cleric Fethullah Gulen.— PAGE 9
in Scotland
the time blaming human error for the lent invoicing and tax offences. Ambra
mentary inquiry that the new system MAGAZINE
DAVID KEOHANE — PARIS MILES JOHNSON — ROME

delivering CDS was “challenging but
FEBRUARY 4 2017
i Toshiba investors doubt revival plan

needed urgent action to be ready by
March 2019, when Brexit is due to be
achievable”. But, it added, CDS was “a
complex programme” that needed to be 3 UK, France and Netherlands swoop
In a stormy three-hour meeting, investors accused
completed, and the chair of the probe
said confidence it would be operational
linked to dozens of other computer sys-
tems to work properly. In November, 3 Blow for bid to clean up Swiss image
managers ofhaving an entrenched secrecy culture
and cast doubt on a revival plan after Westinghouse
in time “has collapsed”. HMRC assigned a “green traffic light” to filed for Chapter 11 bankruptcy protection.— PAGE 16
Setting up a digital customs system CDS, indicating it would be delivered on RALPH ATKINS — ZURICH it followed “a strategy offull client tax
has been at the heart of Whitehall’s time. But last month, it wrote to the i HSBC woos transgender customerscompliance” but was still trying to
DUNCAN ROBINSON — BRUSSELS
crash, saying the “accident is evidently Giovene and Marco Franco, Torzi’s law-
Brexit planning because of the fivefold committee saying the programme had The bank has unveiled a range of gender-neutral gather information about the probes.
increase in declarations expected at been relegated to “amber/red,” which Credit
titles suchSuisse
as “Mx”,has been targeted
in addition by Miss HM
to Mr, Mrs, or Revenue & Customs said it had
British ports when the UK leaves the EU. means there are “major risks or issues Ms,sweeping
in a move taxtoinvestigations
embrace diversity in the
andUK,
cater tolaunched
the a criminal investigation into
About 53 per cent of British imports apparent in a number ofkey areas”. France
needs and the Netherlands,
of transgender customers.— PAGE setting
20 suspected tax evasion and money laun-
Air France and Airbus are set to go on A Mayfair-based broker who repre-
come from the EU, and do not require HMRC said last night: “[CDS] is on back Switzerland’s attempts to clean up dering by “a global financial institution
checks because they arrive through the track to be delivered by January 2019, its image as a tax haven. and certain ofits employees”. The UK
single market and customs union. But The Swiss bank said yesterday it was tax authority added: “The international
and it will be able to support frictionless Datawatch
Theresa May announced in January that international trade once the UK leaves co-operating with authorities after its reach of this investigation sends a clear
offices in London, Paris and Amsterdam message that there is no hiding place for
The lure of the exotic
due to a conjunction of elements that yers in Italy, said extradition proceed-

Brexit would include departure from the EU . . . Internal ratings are designed
both trading blocs. HMRC handles 60m to make sure that each project gets the wereattacks
Terror contacted by local
in western Europe officials those
Recent attacks — seeking to evade tax.” Robin Lane Fox on the flair
“concerning client tax matters”. notably the 2011 Dutch prosecutors, who initiated the
declarations a year but, once outside the focus and resource it requires for suc-
Dutch authorities
Highlighted attack said their counter-
Others massacre by action, said they seized jewellery, paint-
of foreign flora — HOUSE & HOME
customs union, the number is expected cessful delivery.”
parts in Germany were also involved, ingsinand gold ingots as part of their
Anders Breivik
trial over an air crash in 2009 that sented the Vatican in a deal to buy a
to hit 300m. HMRC’s letters to the select commit-
The revelations about the system, AFP while Australia’s revenue department Norway, the probe; while French officials said their
tee, which will be published today, pro-
called Customs Declaration Service, are Lloyd’s of London chose Brus- insurers to follow. Most of the EU, with Dublin and Luxem- said it was investigating a Brussels
Swiss bank.attacks in Paris
investigation had revealed “several
vide no explanation for the rating The inquiries threaten to undermine and Nice, and the
likely to throw a sharper spotlight on change, but some MPs believe it was sels over “five or six” other business written in Brussels bourg thought to be more likely Norway thousand” bank accounts opened in
efforts by the Paris country’s banking Brussels suicide
sector Switzerland and not declared to French
had never occurred before, and thus ings had begun. They said a request for
whether Whitehall can implement a caused by Mrs May’s unexpected deci- cities in its decision to set up an will be reinsured back to the homes for the industry. But Nice bombings — have
EU base to help deal with the syndicates at its City of London to overhaul business models and ensure tax authorities.
host of regulatory regimes — in areas sion to leave the EU customs union. Mr Nelson said the city won on
customers meet international bucked tax the trendThe Swiss attorney-general’s office
ranging from customs and immigration Timetable & Great Repeal Bill page 2 expected loss of passporting headquarters, picturedabove. its transport links, talent pool of generally low
requirements following a US-led clamp- said it was “astonished at the way this
to agriculture and fisheries — by the Scheme to import EU laws page 3 rights after Brexit. The Belgian capital had not and “extremely good regula- fatalities from
down on evaders, which resulted in operation has been organised with the
Editorial Comment & Notebook page 12 John Nelson, chairman of the been seen as the first choice for tory reputation”. Sources: Jane’s Terrorism and Insurgency Centre terror incidents in
killed all 228 people on board after a property development in London has
time Britain leaves the EU. billions of dollars in fines.
Philip Stephens & Chris Giles page 13 centuries-old insurance mar- London’s specialist insurance Lex page 14 deliberate exclusion of Switzerland”. It
western Europe
Problems with CDS and other projects The probes risk sparking an interna- demanded a written explanation from
essential to Brexit could force London to JPMorgan eye options page 18 ket, said he expected other groups after the UK leaves the Insurers set to follow page 18
tional dispute after the Swiss attorney- Dutch authorities.
general’s office expressed “astonish- In 2014, Credit Suisse pleaded guilty
highlighted dangers that could not have release on bail had been turned down. A
ment” that it had been left out of the in the US to an “extensive and wide-
Escape the taper trap
City watchdog sends a clear message as
actions co-ordinated by Eurojust, the ranging conspiracy” to help clients
EU’s judicial liaison body. evade tax. It agreedto fines of $2.6bn.
Credit Suisse, whose shares fell 1.2 per Additional reporting by Laura Noonan in How high earners can evade
banker loses job over WhatsApp boast

French appeals court overturned a pre- been arrested in the capital on money
cent yesterday, identified itself as the Dublin, Caroline Binham and Vanessa
subject ofinvestigations in the Nether- Houlder in London, and Michael Stothard a pension headache — FT MONEY
lands, France and the UK. The bank said in Paris Austen’s descendants insist the Rice portrait depicts her as a girl — see magazine Bridgeman Art Library
Brussels takes tough stance on Brexit

been perceived before this accident”. In hearing would be held “within 48 hours
LAURA NOONAN — DUBLIN Berrys after discussions with regulators. media at work, but banks are unable to
JENNIFER THOMPSON — LONDON
Christopher Niehaus, a former Jeffer- ban people from installing apps on their
A boastful WhatsApp message has cost ies banker, passed confidential client private phones.
vious decision not to push ahead with laundering allegations.

with Spain handed veto over Gibraltar
a London investment banker his job information to a “personal acquaint- Andrew Bodnar, a barrister at Matrix
and a £37,000 fine in the first case of ance and a friend” using WhatsApp, Chambers, said the case set “aprecedent
Shutdown risk as border regulators cracking down on commu- according to the FCA. The regulator said in that it shows the FCA sees these mes-
M Niehau had turn d hi d vic gin th erythi
2019, prosecutors had only recom- in order to give the defence the possibil-
charges.
mended putting Air France on trial. Gianluigi Torzi, an Italian businessman, ity of demonstrating there is no risk [of
MAKE A SMART INVESTMENT Air France flight 447, a twin-engined
Airbus A330, crashed into the Atlantic
“It is an immense satisfaction to have
the feeling of having finally been heard
was detained on Tuesday by UK police
acting on a request from Italian authori-
Torzi] fleeing”, they said.
A person close to Torzi said that he
en route from Rio de Janeiro to Paris on by the courts,” said Danièle Lamy, the ties, his lawyers said. The arrest is part had made himself available to the Brit-
Subscribe to the Financial Times today June 1, 2009 after the jet stalled during a president of Entraide et Solidarité of a criminal inquiry into the Vatican ish police and handed over his passport,
thunderstorm. It was the deadliest AF447, the main organisation for rela- property transaction. so he was not a flight risk.
Morning briefing. Midday analysis. Mobile updates. Subscribe to crash in the history of Air France, killing tives of the victims. “We regret, how- The Vatican has alleged that Torzi Torzi had been appointed middleman
the FT and you’re better informed all day. 216 passengers and 12 crew members. ever, that it took twelve long years to get extorted €15m in his role as a middle- to acquire the property on behalf of the
Yesterday, French judges said the two there,” she added. man appointed by Holy See officials to Holy See even though he had appeared
With newspaper delivery, you start the day prepared.* With FT.com, groups should stand trial for “involun- Both Airbus and Air France, which is acquire 60 Sloane Avenue, a develop- on an anti-money laundering watchlist.
you’re on top of the news throughout the day. And with mobile tary manslaughter”, according to a part of group Air France-KLM and ment in Chelsea. The deal was made in In December 2018, as he was negotiat-
and tablet access, you’re up to speed wherever you are. spokesperson for the appeals court. A 28 per cent owned by the French state, 2018 using charitable funds from the ing his fees for his work on the deal,
date for the trial has not yet been set, the said they would appeal against the rul- Church. Torzi denies any wrongdoing. Torzi was granted a private audience
spokesperson added. ing. Air France said that it “maintains Vatican prosecutors are investigating with Pope Francis in his residence.
Air France and Airbus, one of the that it did not commit any criminal fault payments made in connection with the The Vatican arrested and then
Visit FT.com/subscribenow world’s largest aeroplane manufactur- in this accident, tragic as it was”. deal, which they allege brought the Holy released Torzi last year after he pro-
ers, had been put under formal investi- Airbus said: “The court decision . . . See large financial losses. vided evidence about the deal. He has
gation in 2011 for the same charge. does not reflect in any way the conclu- The arrest warrant was connected to said he was appointed by Vatican offi-
*Terms and conditions can be found at www.ft.com/subscribenow Yesterday’s decision overturns a 2019 sions of the investigation that led to the money Torzi received from the Vatican cials in good faith and was paid for legiti-
ruling against a trial, with the judges at dismissal of the case.” and other allegations related to fraudu- mate work on behalf of the Holy See.
INTERNATIONAL
Israel pledges to step up campaign

Pipeline hack
US petrol
prices hit
against Hamas militants in Gaza 7-year high
after run on
Islamist group launches 1,000 rockets overnight, forcing closure of international airport fuel stations
MEHUL SRIVASTAVA — TEL AVIV MYLES MCCORMICK AND DEREK BROWER
ANDREW ENGLAND — LONDON NEW YORK
Israel has killed several senior Hamas US average petrol prices jumped above
commanders in targeted air strikes in $3 a gallon yesterday, the highest level
the Gaza Strip as the Jewish state vowed in almost seven years, amid growing
to step up its campaign against the Pal- fears over fuel shortages as the shut-
estinian militant group in spite of global down of a big pipeline entered its sixth
warnings that clashes could trigger a day.
full-blown war.
“We’ll hit them like they’ve never The price increase comes as motorists in
dreamt possible,” Israeli prime minister states across the US south-east rushed
Benjamin Netanyahu said in a state- to fill up their tanks, triggering a run on
ment, adding that the operations in petrol stations despite pleas from fed-
Gaza were “just the beginning”. eral and state officials not to engage in
In the worst violence since 2014, the panic buying.
Hamas militant group that runs the North Carolina was the worst hit, with
Gaza Strip fired 1,000 rockets overnight a quarter of stations across the state
that shut Israel’s international airport, running dry yesterday morning,
lit up the sky over Tel Aviv and sent according to data provider GasBuddy.
much of the Jewish state into bomb shel- Fifteen per cent of stations in Georgia
ters. Israeli air strikes toppled high-rise and Virginia and 13 per cent in South
buildings in Gaza City. Carolina were also without fuel.
UK prime minister Boris Johnson yes- The problems were particularly acute
terday urged leaders to “step back from in big urban hubs. Outages hit more
the brink” as the furious volley of than 70 per cent in Charlotte, North
attacks left 49 people dead in Gaza and Carolina, and 60 per cent in Atlanta,
seven in Israel, including a soldier killed Georgia.
yesterday. Hundreds were injured in the “We have seen a panic on the scale not
Gaza Strip and dozens in Israel, accord- witnessed since the Iranian crisis of the
ing to medics on both sides. late 1970s,” said Tom Kloza, global head
For now, the hostilities appear to have of energy analysis at Opis, a division of
achieved their political ends for both IHS Markit. “Supply to about 12 states
Hamas and Netanyahu, analysts said. has been temporarily compromised,
Hamas has displayed its ability to strike but the widespread outages were has-
tened by panic behaviour from the mad-
dening crowd.”
‘Hamas did this to save The Colonial pipeline was shut on
al-Aqsa from the Zionists. Friday after a ransomware attack,
which the FBI said was carried out by a
No price is too high to group called DarkSide. The 5,500-mile
save our holy mosque’ network delivers petrol, diesel and jet
fuel from refineries on the Gulf of Mex-
deep into Israeli territory, as far south as ico to markets on the US east coast.
Beersheva and as far inland as the Ben Destruction: army chief. “We want to recreate this Ghassan Abu El-Said, who lived next friend’s injuries from a broken window The price gyrations will trigger more
Gurion International Airport. a collapsed deterrence that has been lost over time.” to one, said the buildings’ security guard near an Israeli air strike. In a sign of alarm in the Biden administration,
“Hamas wanted to show Israel that building in Gaza Kochavi was given the green light on had received phone calls from the Israeli spreading unrest, thousands of Israeli which is seeking to fix a crisis that ana-
the Palestinian resistance is a lot more City. Below, the Tuesday evening by Netanyahu to step military to evacuate everybody. He Arabs turned out for protests in the lysts say is less about actual shortages of
sophisticated, and in the last 48 hours, it aftermath of up the intensity of attacks. described half-dressed families, a per- Arab-dominated north of the country. supply and more about panic buying.
fired hundreds of [rockets] at Israel at riots in Lod, Overnight, the Israeli Air Force tar- son in a wheelchair and elderly people In Lod, a mixed town of Muslims and Average nationwide petrol prices
the same time,” said Mkhaimar Abu- Israel geted senior Hamas commanders, car- rushing down the street to get to safety. Jews, police called for reinforcements stood at $3.008 a gallon yesterday
sada, a professor of politics at Al-Azhar Mahmud Hams/AFP/Getty;
Heidi Levine/AP
ried out an 80-aircraft sortie that simul- Two hours later, a building was late on Tuesday, as protesters burnt cars morning, according to the automobile
University in Gaza. “Millions of Israelis taneously targeted 150 rocket launch destroyed, prompting a barrage from and a synagogue after the funeral of an association AAA. Prices in the south-
were in shelters, Ben Gurion airport was sites and, in two instances, toppled high- Hamas into Israel. “This is collective Arab man killed by a Jewish resident. east remained cheaper than many other
closed, and look at the state of uprising rise buildings that the Israel Defense punishment against civilians; so many “The sight of the pogrom in Lod and regions but were rising fast.
against Israel in the Arab Israelis.” Forces said were being used by Hamas. are now homeless,” he said. “The Israeli the disturbances across the country by Jennifer Granholm, US energy secre-
Netanyahu, who was on the cusp of occupation is meant to terrify us, and to an incited and bloodthirsty Arab mob, tary, said on Tuesday that pipeline
losing his premiership, has reasserted cause destruction.” injuring people and even attacking operators hoped to “be in a position to
himself as “Mr Security”, his nickname This bout of warfare between Hamas sacred Jewish spaces is unforgivable,” make a full restart decision” yesterday.
in Israeli media. Plans to build a coali- and Israel was preceded by days of hos- said Israeli president Reuven Rivlin. Ramping up operations would still take
tion to oust him, which required an tilities between Israeli police and Mus- Israel faces growing international “a few days” after that, however.
Islamist party to back a rightwing prime lim protesters at al-Aqsa mosque in pressure to show restraint, and its west- The administration has also loosened
minister, have been suspended. Jerusalem, a flashpoint between right- ern allies condemned Hamas for its rules on truck loads in some states to
The Israeli military’s aggressive new wing Jews and devout Muslims who indiscriminate rocket fire targeting ease transportation of fuel to affected
chief of staff, Aviv Kochavi, last year both cherish the site it is built on. civilians. Egypt, which has mediated areas. It has also temporarily waived
outlined a “Victory Doctrine” — Hundreds of Muslim protesters had between Israel and Hamas in previous some environmental requirements on
destroying the largest amount of enemy been injured over the weekend by conflicts, was sending two teams to help gasoline quality.
capabilities as rapidly as possible, with Israeli police, who cleared the mosque broker a ceasefire, according to an The federal government was also
the lowest number of casualties. with tear gas, stun grenades and rubber Israeli official. “ready to review any temporary Jones
“Between operations, the Israeli army bullets, and the Islamist Hamas, which The UN Security Council scheduled a Act waiver requests” from shippers
works very hard to build up a very large styles itself as the protector of the second emergency session on the crisis. seeking to send fuel between US ports,
bank of military targets that it can shrine, stepped in, by firing rockets that US president Joe Biden directed the White House said yesterday. The act
attack. The idea is to hit Hamas to such nearly reached Jerusalem. national security adviser Jake Sullivan otherwise prohibits non-US-flagged
an extent that the next time before they “Hamas did this to save al-Aqsa from and secretary of state Antony Blinken to vessels from doing so.
use such force, they will think twice,” the Zionists. No price is too high to save contact their Israeli counterparts, Contracts for June delivery have risen
said Amir Avivi, a retired brigadier-gen- our holy mosque,” said Zayed, a 19-year- according to Reuters. less than 2 per cent since the pipeline
eral who has worked with a previous old at a hospital in Gaza, tending to his See FT View closure to about $2.15 a gallon.
Global recovery. Commodities rally Luxembourg deals
Jump in China factory prices hints at inflation rise Brussels loses Amazon tax
case in third state aid defeat
gan Stanley. “It’s like a perfect storm.” gested any reaction from the People’s While the PBoC has not increased offi-
Policymakers are watching China’s PPI is made up of prices of pro- Bank of China to this week’s data was cial rates since lowering them last year,
closely to see if the increase ducer goods, such as wardrobes or wash- unlikely. The portion of PPI represent- the government has tightened credit MICHAEL PEEL AND VALENTINA POP In its Amazon judgment, the court
BRUSSELS
ing machines, that factories sell to shops ing prices at which businesses buy con- conditions over recent months. said Brussels was “incorrect in several
feeds through to CPI figures before they are sold on to consumers. It sumer goods, as opposed to raw materi- It has also taken measures to rein in EU judges have overturned a European respects” in its analysis of the 2017 case,
also includes the prices of raw materials als, was up just 0.3 per cent year on year. both its property sector, on concerns Commission order to Amazon to pay including that the company’s tax bill
and commodities, such as coal, when Analysts at HSBC said transmission that easier money would encourage back €250m in taxes to Luxembourg, was artificially reduced as a result of
THOMAS HALE — HONG KONG
extraction companies sell them to busi- from PPI to CPI would be “limited”, al- asset bubbles, and its steel sector, which in a further blow to Brussels’ efforts to overpricing of a royalty payment.
For investors and governments eager to nesses that use them to make goods. lowing policymakers to remain “accom- is producing at a rate that threatens Bei- curb sweetheart national tax deals. The online retailer said: “We welcome
spot any sign of inflation as the global It was the latter that drove the recent modative”. Ting Lu at Nomura forecast jing’s environmental commitments. the court’s decision, which is in line with
economy recovers from the coronavirus surge in Chinese producer prices. Global CPI inflation to rise to 2.8 per cent by the China’s gradual decarbonisation The ruling follows a heavy defeat for the our longstanding position that we fol-
pandemic, Chinese factories are a good commodity prices, which collapsed last end of the year, with “pass-through” ambitions — and any production cuts commission last year when judges lowed all applicable laws and that Ama-
place to look. year in the early stages of the pandemic, effects from PPI. But he suggested the they lead to within the country — are quashed its landmark state aid finding zon received no special treatment.”
The country this week released figures have rebounded. Iron ore this week hit its PBoC was unlikely to tighten in seen as constraints on supply, buoying that Apple owed Ireland €14.3bn in But Oxfam, the charity, said the judg-
showing that the price of raw materials highest level on record, while oil prices response to PPI, but that higher raw the price of commodities further. taxes and interest. The EU executive ment was a “blow” to efforts to make
and goods leaving its factories rose 6.8 have recovered sharply from last year. material prices posed a risk to Chinese Beyond raw materials, economists are yesterday won a separate ruling over its companies pay a fair share and to stop
per cent year on year in April, its fastest Xing estimated that 70 per cent of the demand and the wider recovery, given closely watching other shortages. Iris decision to force Engie, the French util- Luxembourg acting as a “tax haven”.
pace of growth in more than three years. April PPI increase was driven by com- controls on credit availability. Pang, chief economist for greater China ity, to pay €120m in back taxes. The Amazon ruling was the third time
For almost all of 2020, China’s pro- modities. That rally was also tied to at ING, said producer price inflation The two judgments handed down yes- that EU judges said the commission had
ducer price index was in negative terri- China’s recovery, which has been would be followed by chip inflation. A terday by the General Court, the EU’s failed to demonstrate a multinational
tory as Covid-19 suppressed demand. backed by strong industrial growth and Producer prices in China rise shortage of semiconductors, she said, second-highest court, related to agree- benefited from state aid. A multimil-
The recent and sudden rise was partly a construction boom that led to record at the fastest year-on-year was already beginning to drive price ments between the businesses and Lux- lion-euro case against Starbucks coffee
driven by the comparison with a year output of steel last year. pace since 2017 increases for consumer products such embourg which the commission said company was overturned in 2019. The
earlier and, with consumer price rises As such, the data reflected both the Producer price index as washing machines and laptops. amounted to illegal state aid. commission is appealing against last
still below 1 per cent, the overall infla- pace of China’s recovery as well as a glo- 110 Durable consumer goods were up 0.4 Brussels is pushing on with its cam- year’s Apple decision at the European
tion picture remained mixed. bal commodity rally that it helped fuel per cent month on month in April, the paign against bespoke tax deals as pres- Court of Justice, the highest court.
But the data were still a sign of pockets and now extends beyond it. fastest pace of growth since at least 2011, sure builds for companies and the rich The EU General Court did side with
of price rises emerging across China’s For policymakers, one crucial ques- 105 according to CEIC, a data company. to bear more of the burden for recovery Brussels in its pursuit of Luxembourg’s
rapid recovery, where higher overall tion is whether higher producer prices Part of the demand for raw materials from the effects of the pandemic. tax arrangement with Engie. Brussels
inflation is expected this year. It also will feed through to consumer prices. 100 has been to drive the production of Margrethe Vestager, EU competition had in 2018 ordered Luxembourg to
reflected a global commodity price rally China’s consumer price index was just goods for export to western countries. commissioner, said both rulings con- claw back €120m of alleged illegal state
that has been supported by China’s 0.9 per cent in April, its highest level in 95 Data on Friday showed Chinese firmed the principle that national taxa- aid from the former GDF Suez.
voracious demand and hopes that other seven months but far from a level that exports up 32.3 per cent year on year in tion laws had to be in line with EU state Rejecting that the commission had
big economies will bounce back, too. would generate immediate fears of April and about 16 per cent on an annu- aid rules. “We are close to achieving a over-reached and pursued “tax harmo-
“A combination of China and external broader inflation within China. 90 alised basis compared with April 2019, historic global agreement on the reform nisation in disguise”, the court said: “It
factors led to this PPI surge,” said Robin While economists expect a rise in CPI 2016 17 18 19 20 21 Morgan Stanley estimated. of the international corporate tax cannot be disputed that the Engie group
Xing, chief China economist at Mor- inflation in China this year, they sug- Source: CEIC data China reshapes retail see Companies framework,” she said. received preferential tax treatment.”
INTERNATIONAL
Spending talks Capitol Hill. Leadership ousting
present test of
Biden talent for
bipartisan deals
Democrats doubt Republicans will
take up invitation to work together
JAMES POLITI — WASHINGTON tive to pressure from his party’s left.
“Our nation is starving for more than
At the end of a virtual meeting with a empty platitudes. We need policies and
small group of state governors on Tues- progress that bring us closer together.
day, Joe Biden praised their bipartisan But three months in, the actions of the
co-operation in ensuring the US’s rapid president and his party are pulling us
vaccination rollout this year. further apart,” Tim Scott, a Republican
“It isn’t Democratic progress and senator, said in response to Biden’s joint
Republican progress. It’s American address to Congress two weeks ago.
progress,” the US president said. Republican leaders have shown little
Biden was yesterday seeking a similar inclination to warm to Biden. Kevin
cross-party result in negotiations with McCarthy, the top Republican in the
Congress. For the first time since taking House, has moved to align his rank-and-
office, he hosted all four congressional file closer to Donald Trump, while Mitch
leaders — two Democrats and two McConnell, the Republican leader in the
Republicans — at the White House to Senate, said last week that “100 per
begin to hammer out an agreement on cent” of his focus would be on opposing
spending plans that include a $2.3tn Biden’s agenda.
infrastructure package and a $1.8tn The early overtures were at least cor-
expansion of the social safety net. dial. “I think there’s an opportunity that
It will be a much tougher goal, given we could work together on infrastruc- Hitting out: Liz Cheney speaks to the media yesterday after she was removed by Republicans as a congressional leader — Kevin Dietsch/Getty
hardened divisions over economic pol- ture,” said McCarthy after the meeting.
icy and the aversion to any compromise Chuck Schumer, Senate majority leader
on Capitol Hill. Asked how he expected
to achieve that goal, he joked: ““Easy,
just snap my fingers, it’ll happen.”
and a Democrat, said: “We’ll see what
areas of agreement and commonality
there are, that’s the first step.” Republicans axe Cheney from senior
role over opposition to Trump
Biden, 78, advertised his experience But some Democrats doubt Biden will
as a bipartisan dealmaker when he ran find willing partners among Republi-
for president last year after honing skills cans even if he makes big concessions.
over four decades as a senator and two “Republicans don’t have a legislative
terms as vice-president. agenda. They have a ‘whatever keeps
Early in his White House tenure, he Trump happy’ agenda and that changes
made a quick bid to win Republican sup- by the minute,” said Josh Schwerin, a
port for his $1.9tn fiscal stimulus plan. Democratic strategist and president of into her fellow Republicans for their McCarthy, openly campaigned for her of where the Republican party is”. She
But he soon moved on to getting it Saratoga Strategies. “So you really can’t Congresswoman pledges to support of Trump, who continues to removal and said he would support her added: “I think that the party is in a
passed solely with Democratic votes, say, ‘OK, what do they support? Let’s go ‘lead fight’ against former repeat false claims that last year’s elec- being replaced by Elise Stefanik, the place that we have got to bring it back
dismissing the Republican response as work with that’, because they don’t sup- tion was stolen from him. New York Republican who is loyal to from, and we have got to get back to a
insufficient and underwhelming. port anything concrete.” president’s influence on party “Our duty is clear. Every one of us who Trump. McCarthy earlier this week position where we are a party that can
This time, Biden is expected to give Agreement cannot be ruled out. Biden has sworn the oath must act to prevent wrote to colleagues, saying: “It’s clear fight for conservative principles, that
more time and space to negotiations has signalled he is open to compromise LAUREN FEDOR — WASHINGTON the unravelling of our democracy,” that we need to make a change.” can fight for substance.
with Republicans, partly in the hope on the tax increases he plans to pay for Cheney told her fellow lawmakers in a Cheney’s expulsion from the Republi- “We cannot be dragged backward
that spending on infrastructure will his spending plans, suggesting he might Liz Cheney has been ousted from the blistering speech on the floor of the US can party leadership underscores the by the very dangerous lies of a former
appeal to them and partly to fulfil his accept a rise in the corporate income tax Republican congressional leadership House of Representatives. “Remaining enduring influence Trump has on the president.”
campaign pledge to work across the rate from 21 per cent to 25 per cent over her opposition to Donald Trump, silent, and ignoring the lie, emboldens Chuck Schumer, the Democratic Sen-
political aisle. A White House adviser rather than the 28 per cent proposed the latest dramatic development in an the liar.” ate majority leader, said Republicans
said the president was likely to stress the under his original plan. intraparty war over the former presi- She added: “I will not participate in
‘I will do everything I can had reached a “new and very dangerous
need for common ground to make the McConnell has said he might consider dent. that. I will not sit back and watch in to ensure that the former low point”, adding: “Congresswoman
US economy more competitive against infrastructure spending worth up to Party lawmakers voted overwhelm- silence while others lead our party down Cheney spoke truth to power, and for
economic rivals such as China. $800bn, far below Biden’s target but ingly to remove Cheney from its leader- a path that abandons the rule of law and
president never again that, she has been fired. Make no mis-
Even so, Democrats expect the White more than the $568bn recently pro- ship in a closed-door meeting on Capitol joins the former president’s crusade to gets near the Oval Office’ take. The congresswoman and I disa-
House will have limited patience for posed by a group of Senate Republicans. Hill yesterday morning. The vote was undermine our democracy.” gree on so many policy issues. But we
talks with Republicans and will be ready But McConnell yesterday described tax held by voice, rather than a recorded The Wyoming congresswoman’s rela- party heading into next year’s midterm both agree that truth matters.”
to again plough ahead unilaterally if no rises as a “red line”. ballot. tionship with fellow Republicans deteri- elections, when Republicans will jockey Despite being banned from most
real progress is made by the end of May. Biden spent the early part of this week Cheney, who is a staunch economic orated after the January 6 attack on the to regain control of both the House of social media platforms, Trump contin-
“I think there’s not a Democrat in the meeting pivotal moderate Democrats and geopolitical conservative, told US Capitol, which interrupted the certi- Representatives and the Senate. ues to release regular statements
White House or the United States Con- such as senators Tom Carper, Joe Man- reporters after the vote she was ready to fication of Joe Biden’s electoral victory Lindsey Graham, the Republican sen- through Save America, his fundraising
gress who wouldn’t prefer to do this with chin and Kyrsten Sinema to gauge their “lead the fight” against Trump’s influ- and left five people dead. ator from South Carolina and fierce vehicle.
bipartisan support,” said Eric Schultz, a stance on any deal. He is to meet centrist ence in the Republican party. Cheney, daughter of former vice-pres- Trump ally, said Cheney was a “solid Yesterday morning, the former presi-
former Obama official and Democratic Republican senators led by Shelley “I will do everything I can to ensure ident Dick Cheney, was one of 10 House conservative and strong voice on dent said House Republicans had a
strategist. “But I also think they under- Moore Capito to assess their willingness that the former president never again Republicans who voted to impeach national security” but had taken a “great opportunity” to “rid themselves
stand that failure is not an option.” to find a compromise. gets anywhere near the Oval Office,” Trump for his role in the riot. stance that was “out of the mainstream of a poor leader, a major Democrat talk-
Many Republicans dismiss Biden’s “This is crunch time but this is how Cheney said. “We have seen the danger She survived a confidence vote of her of the Republican party”. ing point, a warmonger and a person
overtures as a sham, saying he is not Biden operates: he is at his best when he that he continues to provoke with his peers in February, but her base of sup- Cheney told reporters she did not feel with absolutely no personality or heart”,
nearly as interested in a bipartisan deal is working across the aisle,” said Adri- language.” port has eroded in recent weeks. The betrayed by her colleagues, but added calling Cheney “bad for our country and
as he seems and that his policies are cap- enne Elrod, a Democratic strategist. The vote came a day after Cheney tore most senior House Republican, Kevin that the caucus vote was “an indication bad for herself”.
India Tokyo
Scientists concerned by impact of variant on vaccine efficacy Nissan feared losing ‘talented’
ANNA GROSS AND JOHN BURN-MURDOCH
LONDON
national president, said the association country, where an average of 388,000 within the expected margin of vaccine
Ghosn after pay cut, court told
AMY KAZMIN AND JYOTSNA SINGH
was in the process of verifying more people are testing positive every day. efficacy,” said Muge Cevik, a clinician
NEW DELHI details, including how long after their India had administered 171.1m vac- and researcher in virology at Scotland’s
second shot the doctors had died and cine doses by May 10, according to FT University of St Andrews. LEO LEWIS AND KANA INAGAKI — TOKYO Ghosn at the company had increased
Reports that fully vaccinated people which vaccine they had received. data, a combination of a locally Mehul Suthar, assistant professor of after the Brazilian-Lebanese business-
have become infected with Covid-19 in A former Nissan board member
The question scientists must answer produced version of the AstraZeneca paediatrics at Emory University in the man’s salary was reduced in 2009.
India have concerned some scientists, accused of conspiring to understate
is whether the so-called “vaccine break- shot and the Covaxin jab developed by US who has been conducting lab analy- “There was a retention risk,” Kelly
reigniting the debate over the threat Carlos Ghosn’s pay by $87m testified in
through” cases can be explained by the India’s Bharat Biotech. Only 2.6 per sis of new variants of concern, agreed told the court in response to questions
the mutating virus poses to global vac- a Tokyo court for the first time yester-
sheer number of people contracting cent of the population has been fully that there was little severe disease and from his own defence lawyer, adding
cination campaigns. day, arguing that he had acted in the
Covid-19 in India and the efficacy of the vaccinated. “Breakthrough infections death occurring in cases of vaccine that it was in Nissan’s best interest to
company’s interests as it fought to
Ravi Gupta, professor of clinical micro- shots — none of the jabs are 100 per cent are happening because the numbers are “breakthrough” but warned of the risks find ways to keep Ghosn from deserting
retain its star chief executive.
biology at Cambridge university and effective — or whether the new strains, so high,” Jameel said. of further mutations. the company for a competitor.
one of the leading scientists investigat- as with the variant first identified in Every country with advanced vacci- “The more these variants emerge, the In testimony that could stretch into July, Ghosn’s 2009 salary reduction, the
ing new strains of Sars-Cov-2, told the South Africa, have evolved to become nation programmes has recorded cases more opportunities they have to Greg Kelly, the former head of legal Tokyo court heard, had been a response
Financial Times he had identified “wor- more resistant to the vaccines. of “vaccine breakthrough”. In the US, mutate, cause infection and become affairs, told the Tokyo District Court to a landmark change in Japan’s rules on
rying” cases of post-vaccination infec- Indian virologist Shahid Jameel, a the Centers for Disease Control and Pre- more transmissible,” he said. that Nissan had been “fortunate to have salary disclosure, a highly sensitive
tion involving at least one of the new member of the Indian Sars-Cov-2 Con- vention had by April 26 received 9,245 While most scientists remain confi- a CEO as talented as Mr Ghosn”. issue in a country where top executive
variants first identified in India, sortium on Genomics, said severe cases reports of infections in people who had dent that the current crop of vaccines But as the session continued, Kelly’s salaries are generally lower than their
B.1.617.2. of Covid-19 after vaccination remained been fully vaccinated, including 835 would protect against severe symptoms defence shifted into an attack on the tes- counterparts in the US or UK. At the
At one care home in Delhi, 33 staff “very very rare” and that the few inci- hospital admissions and 132 deaths. and death, there is growing consensus timony of Toshiaki Onuma, the former time, Ghosn ranked as one of the high-
members who had been fully vacci- dents were drawing public attention “Getting infected after vaccination that at least one of the three descendant senior Nissan administrator whose est-paid executives in Japan.
nated with the Oxford/AstraZeneca jab because of the pervasive anxiety in the does not tell us anything, it could well be lineages of the B.1.617 variant initially cross-examination earlier in the trial A day before Kelly’s testimony, the
tested positive for the B.1.617.2 strain, found in India is partially vaccine-re- had formed a pillar of the prosecutors’ court heard excerpts from the state-
he said, though none became seriously sistant: B. 1.617.1. case. When asked about specific discus- ments that Ghosn made to prosecutors
ill. “We thought everyone would be pro-
The spread of B.1.617.2 A paper published this week by sions and requests referred to in during the 108-day imprisonment that
Total daily cases* by variant (’000)
tected [but] the virus was able to get Gupta’s lab that has not yet been peer- Onuma’s testimony, Kelly denied that followed his spectacular arrest at
around the vaccine,” Gupta said. India UK Germany reviewed found that the B.1.617.1 vari- they had ever happened. Tokyo’s Haneda airport in late 2018.
Gupta’s findings add to the many ant had “modestly reduced sensitivity” Kelly, who was arrested in 2018 and At the heart of the trial are questions
reports in the Indian media of fully vac- 300 6 20 to the BioNTech/Pfizer vaccine. has sat silently in court through eight on whether there was a formal contract
cinated doctors and medical workers Another paper by Suthar at Emory months of trial, is accused of conspiring to pay the deferred compensation to
testing positive for Covid-19 over the 15 found that antibodies were sevenfold with Ghosn to understate the former Ghosn, with legal experts divided over
200 4
past two months, as the country has less effective at neutralising or blocking Nissan chairman’s pay through a the interpretation of Japan’s disclosure
been slammed by a ferocious second Total 10 the B.1.617.1 variant in comparison with scheme of deferred compensation. rules. “The reason why I reduced my
wave of infections. the original Wuhan strain. That put Ghosn would have faced a trial on that compensation was due to public opin-
100 2
The FT has not corroborated individ- 5 B.1.617.1 “on a par” with the B.1.351 vari- and other financial misconduct charges ion, and to keep up the motivation of
ual press reports but the Indian Medical 46 ant first identified in South Africa, if he had not fled Japan for Lebanon in Nissan employees,” Ghosn told prosecu-
cases
Association told the FT that at least nine B.1.617.2
0 0 0
which has been found to reduce the effi- late 2019 in an escape orchestrated by a tors. “What I disclosed was the amount
of 194 doctors that had died of Covid-19 Mar Apr May Mar Apr May Mar Apr May cacy of some shots, Suthar said. Both the former US Green Beret, who will now that I received. If the deferred compen-
during the recent outbreak were papers stressed, however, that vaccines also be tried in Japan. Both Kelly and sation is conditional, then my under-
* Based on applying proportions of sequenced samples to total cases
believed to have been fully vaccinated. Source: FT analysis of data from GISAID, COG-UK, UK government Covid-19 dashboard and Johns Hopkins University demonstrated reasonable protection Ghosn have denied all charges. standing was that it falls under a
Dr Johnrose Austin Jayalal, IMA against the disease. Kelly said concerns over keeping grey zone.”
Taking account Improving health of European banks reflects a continent extricating itself from pandemic’s grip y LEX, PAGE 24
BlackRock’s Cocktail hour Moët Hennessy says customers

are ready to splash out in ‘revenge of pleasure’
Roche warns
patent waiver
China launch will not solve
jab shortages
to target vast HANNAH KUCHLER AND
DONATO PAOLO MANCINI
pool of savers
Roche chief executive Severin Schwan
has warned that waiving Covid-19 vac-
cine patents would be a “catastrophe”,
comparable to East Germany’s nation-
alisation of drugmakers.
Schwan said that the US-backed pro-
3 Bank-dominated market worth $19tn posal to allow free access to drugmak-

ers’ intellectual property in an effort to
3 Temasek and CCB in joint venture boost vaccine production would be

“counterproductive” and would not
solve supply shortages.
The Biden administration’s decision
THOMAS HALE — HONG KONG management products after its venture to back a proposal to waive patents on
with Bank of China received regulatory Covid-19 vaccines during the pandemic
BlackRock has received approval to approval and began operating last year. surprised many and weighed on the
launch a wealth management business Beijing last year also began allowing stocks of vaccine makers.
in mainland China, as the world’s big- foreign businesses to fully own their The US sided with countries including
gest international investors push to mutual fund companies, for which India and South Africa, which believe
access the country’s vast pool of savers. BlackRock gained initial approval in that suspending the agreement known
A joint venture 50.1 per cent-owned August. Its wealth management venture as Trade-Related Aspects of Intellectual
by BlackRock and including China Con- is separate and will rely on distribution Property Rights, or Trips, could enable
struction Bank and Temasek, Singa- by China Construction Bank and will more manufacturers to produce the
pore’s state fund, gained approval from invest in domestic assets. vaccines.
the China Banking and Insurance Regu- The opening up of China’s investment The pharma sector has hit out at the
latory Commission according to an industry, which has included groups move, arguing that bottlenecks in raw
announcement yesterday. such as JPMorgan Chase announcing materials, a congested supply chain,
BlackRock, the world’s biggest asset that they would fully own their main- and a shortage of technical expertise are
manager, is one of several large interna- land fund business, is part of a wider limiting the number of vaccine doses,
tional investment groups seeking to wave of reforms that have made the not intellectual property.
expand in China and capitalise on grow- financial industry more accessible to Schwan said the alternative to incen-
overseas businesses despite tension tivising innovation was nationalising an
between Washington and Beijing. industry, which had failed in the former
Reforms have also hinted “The whole point of what’s going on at East Germany. “We had enough experi-
at the liberalisation of the moment [with Chinese reforms] is Moët Hennessy has noticed people ‘trading up’ in their choices as they return to bars and restaurants — Taylor Hill/Getty ments in the 20th century nationalising
for global companies to enter the fund the industry, and we know what came
China’s restrictions on management business in China,” said LEILA ABBOUD — PARIS began. In some countries, govern- Moët Hennessy sales contracted by out of that,” he said.
outbound investments Stewart Aldcroft, Asia chair of Cititrust,
Wine and spirits maker Moët Hen-
ment support schemes have also been 15 per cent to €4.8bn last year, while He accused those behind the plan of
an arm of Citigroup. generous, boosting disposable operating profit fell 20 per cent to trying to gain “brownie points with
nessy is anticipating a “post-Covid
ing savings and maturing markets as the JPMorgan in March said it would also income. In the US, this has led to a €1.4bn. But revenue rebounded to some institutions in the short term,
renaissance” as consumers flock to
country liberalises its financial system. take a stake in the wealth unit of China cognac boom that has left Hennessy €1.5bn in the first quarter of this year, even if it is very harmful for mankind in
reopened bars and restaurants and
“The Chinese market represents a sig- Merchants Bank. struggling to keep up with demand 12 per cent higher than in the same the long term. This will be harmful for
splash out on pricier brands on a
nificant opportunity to help meet the In November, China announced rules and pushed the valuation of smaller period of 2019 before the pandemic. my children and grandchildren when
quest for celebration.
long-term goals of investors in China making it easier for foreign investors to cognac maker Rémy Cointreau to his- Asked whether the company could I’m not CEO any more.”
and internationally,” said Larry Fink, tap into mainland futures markets. “People are clearly trading up,” said torically high levels. get back to pre-crisis levels this year, The original proposal included waiv-
chief executive. “We are committed to Overseas buyers last year flocked to buy Philippe Schaus, chief executive of the As one of the biggest makers of wine Schaus declined to give such a fore- ing intellectual property on other Cov-
investing in China to offer domestic Chinese assets on the back of a rapid LVMH-owned company. and spirits globally, Moët Hennessy cast, but said he was “cautiously opti- id-19 related products, including tests.
assets for domestic investors and look economic recovery from Covid-19. The outlook was similar in coun- competes with UK-based Diageo, Per- mistic” and added that it would “have Roche does not make vaccines but has
forward to creating a better financial Reforms have also hinted at the pros- tries where some pandemic-related nod Ricard and Campari in Europe, a good year”. played a role in providing Covid-19 tests
future for more people.” pect of the liberalisation of China’s restrictions were already being lifted, and Brown Forman in the US. Whether the pandemic will leave and drugs, including its anti-inflamma-
A report from Boston Consulting restrictions on outbound investments. such as Australia, the UK and the US, The sector proved surprisingly lasting marks on global drinking cul- tory Actemra, which has been used to
Group and China Everbright Bank The Wealth Connect programme, for and in places where they were still in resilient last year despite the “on ture remained to be seen. Some treat Covid-19 patients, and an antibody
showed that China’s wider wealth mar- which China released draft rules on Fri- effect, like Italy and France. trade” market of bars and restaurants changes such as the expansion of therapy with Regeneron.
ket was worth Rmb121.6tn ($18.9tn) in day, will allow households in southern “Some call it the revenge of pleasure being shut during lockdowns. Con- ecommerce were not likely to disap- The Dutch government accused
2020, up 10 per cent from a year earlier. China to buy investment products in or the new Roaring ’20s, but it’s clear sumers ended up buying more wine pear, said Schaus, but it was too soon Roche last year of hoarding the recipe
China’s wealth management sector is Hong Kong and vice versa. people are almost desperate to enjoy and spirits to drink at home. to tell if there would be a wave of needed to make reagent used for PCR
dominated by banks and BlackRock is “You have to believe, and I’m sure food and drink again,” said Schaus. After an initial slump in early 2020 bankruptcies among restaurants and testing. Roche has denied this, saying
an early overseas mover into the space. most of them [international asset man- Unlike a typical economic crisis, he as global stock markets swooned, the bars. “I think you probably have to the reagent is no longer patented, and
Amundi, the French asset manager, agers] do, that at some point they will said many people now had money to price-to-earnings ratios of the big wait until six months to be able to the shortages in supplies were caused by
became the first foreign majority- be able to start offering non-Chinese burn because spending opportunities spirits companies have recovered and know,” he said. “I mean, there will cer- a tight supply chain.
owned business in China to offer wealth products,” Aldcroft said. had been limited since the pandemic now exceed pre-pandemic levels. tainly be some form of reshuffle.” Opinion page 23
Rich remain sceptical about changing the world with their money Legal Notices
made their money from a global carbon- boosted demand for rare earths to make
INSIDE BUSINESS emitting boom. all those batteries?
The businesses they own and the mar- The complexity of constructing an
EUROPE kets they understand can often be the actually holistic ESG portfolio, rather
ones with the very worst environmental than one geared largely to vanity, deters
Sam records.
He recalls the awkwardness of the
all but the most engaged clients, admits
one senior ESG guru.
Jones Saudi Aramco IPO in 2019: at the
same time as preaching from the gospel
But there is a clear generational divide
on this, and perhaps that is what Swit-
of sustainability, private bankers were zerland’s bankers, with an eye on the
falling over themselves to pitch an children of their current clients, are
S
investment in one of the biggest fossil really gearing their ESG efforts towards.
witzerland used to be a place fuel producers. “There is a big shift happening right
where the rich came with Still, it is out of such politesse — others now,” says Nicole Curti, a Switzerland-
their money to escape the might call it moral plasticity — that based wealth adviser at Stanhope Capi-
world’s problems, not to con- Swiss banks were built. tal. Impact investing dominates the con-
front them. Indeed, even if ESG investing is still a cerns of her younger clients, she says.
These days, the private banks that dot relatively small part of what the rich do They will drive change among the
the pristine streets of Zurich and with their money in Switzerland, it is super-rich, Curti believes, particularly
Geneva are no exception when it comes growing extremely fast. as their voices come to play a bigger role
to the wave of enthusiasm that has bro- At UBS, the single biggest banker to in wealthy families’ future planning.
ken over the asset management world the wealthy, sus- In a stark illustration of that possibil-
for better environmental, social and tainable invest- While institutional ity, last week Michel Jabre, 34, son of
governance (ESG) standards. ments made up Philippe Jabre, 61, one of Switzerland’s
Yet for all the small forests that have 18.9 per cent of its investors are obsessed most prominent hedge fund managers,
been felled to produce the glossy bro- advised assets at with ESG, most wealthy and an arbitrageur long associated with
chures (containing, mostly, pictures of the end of last year. the hardest-charging side of finance, Businesses For Sale
forests) littering the lobbies of Switzer- That is up from 13.5 individuals still tend to launched a fund at his father’s firm to
land’s grand finance houses, many of
the very wealthy remain stubbornly
per cent in 2019.
ESG is in many
see it as philanthropy focus on “conscious capitalism”. Michel
said he had been “deeply put off by all
sceptical when it comes to changing the ways a bank’s marketing dream because the greed [he] had seen in the financial
world with their money. it is so loosely defined. Even done badly, system”.
“Private clients are behind the curve,” it can be sold easily. A cynic might regard such matters as
says a senior executive at one of Switzer- In the enthusiasm for “impact” an old story, of a younger generation
land’s biggest private banks. investing Swiss bankers are pushing, struggling to define itself against suc-
While institutional investors are where experts offer to tailor portfolios cessful parents. Curti disagrees. “It’s
obsessed with ESG, he says, most to concerned clients based on their own about an overall societal change taking
wealthy individuals and family offices specific environmental or social worries place,” she says.
still tend to see it as philanthropy rather — a sort of bespoke ethical package — Regardless, for Swiss bankers the
than investing. Putting 10 or 20 per cent there are no clear-cut moral choices. focus is unlikely to relent. Not least
of a portfolio into ESG strategies is one Credit Suisse’s list this week of the top because, beset with a sixth year of nega-
thing, he says, but all of it, quite another. ESG investments, sector by sector, for tive interest rates, risk-management
Another banker in Zurich is less cir- example, names Goldman Sachs as the disasters and a looming global deal on
cumspect: the entrepreneurs and oli- best stock to buy for “social” impact. tax, ethical investing is one of the few
garchs of the developing world that have Many might disagree. Likewise, electric positive things left to talk about.
been some of Swiss banking’s most cov- cars sound good, but what about the
eted quarry in recent years have often environmental impact of massively sam.jones@ft.com
COMPANIES & MARKETS
Technology Insurance
SoftBank profit breaks Japanese record Aon and Willis

smooth path to
combination
Conglomerate’s annual
earnings of $46bn driven
were many failed investments such as
WeWork, Greensill and Katerra,” Son
to $62bn, while shares in Uber and KE
Holdings, the owner of Chinese online
lier. That was well above the previous
record of a ¥2.5tn profit reported by
ing to reports that Vision Fund-backed
Mapbox is in talks to go public by merg- through $3.6bn
assets disposal
said yesterday. “But once we have property platform Beike Zhaofang, have Toyota during the 2017-18 fiscal year, ing with a Spac backed by SoftBank,
by vibrant US listings achieved it once, I’m not going to let this both fallen 15 per cent in six weeks. according to SMBC Nikko Securities. Boodry said: “They said the Spacs [are]
end as a one-off.” “We believe volatility is here to stay, SoftBank’s Saudi-backed $100bn not about Vision Fund companies going
KANA INAGAKI — TOKYO The profits for the year ending March and our view is that we need to have Vision Fund and its sequel fund, which public.
30 were driven by a vibrant US market a very disciplined strategy for monetisa- has grown to $30bn, reported a ¥6.4tn “But if that’s the first thing they’re
SoftBank has reported $46bn in annual for initial public offerings, which turned tion,” a person close to the Vision Fund gain in the value of their investments. doing, it makes me think that there isn’t IAN SMITH
net profits, the highest for a Japanese the group’s $2.7bn investment in South said. Kirk Boodry, an analyst at Redex anything out there for them. The Spacs
Aon and Willis Towers Watson have
company, as Masayoshi Son said the Korea’s Coupang into a $28bn stake Son said that the IPOs for Vision Fund Holdings, said investors had already cycle looks like it’s closing quickly.”
agreed to sell $3.6bn worth of assets to
blockbuster result was not a “one-off”. after the ecommerce company went companies would continue at a robust priced in a record quarter, and their When asked about the deal, Son said
rival Gallagher as they work to mollify
The record earnings mark a milestone public in March. pace, with investors expecting Chinese attention had turned to how the IPO such an arrangement could happen, but
European competition regulators over
for the founder of the Japanese con- Since the end of March, however, the car-hailing group Didi Chuxing, Chinese market would hold up and whether added companies backed by the Vision
their blockbuster combination.
glomerate after navigating a turbulent valuations of some of the Vision Fund’s start-up Full Truck Alliance and TikTok SoftBank would carry out further share Fund would consider proposals from
year when some of the Vision Fund’s holdings have fallen because of a sell-off owner ByteDance to float soon. buybacks to support its stock price. other Spacs and that a majority would Aon struck a $30bn deal with Willis last
largest bets were hit by the pandemic. in US tech stocks. For the full year, SoftBank reported a During the January to March quarter, seek to list on public markets without year, hoping to create the biggest com-
“We can’t be too proud, since a series Coupang’s valuation, which at one net profit of ¥4.98tn ($46bn), com- SoftBank also raised $1.15bn via special using a blank cheque vehicle. mercial insurance broker by revenues.
of coincidences led to this result. There point soared to $118bn, has since halved pared with a loss of ¥961bn a year ear- purpose acquisition companies. Point- See Lex Crucial regulatory signoffs are yet to be
received, particularly in Europe.
Aon and Willis announced yesterday
that Willis would sell Gallagher assets
Technology. Investing including its reinsurance broking divi-
sion Willis Re, excluding its operations
in mainland China and Hong Kong.
Northstar dealmaker leads foray into London Gallagher will pick up Willis’s aero-
space unit Inspace; its corporate risk
and insurance broking businesses in
France, Germany, the Netherlands and
Spain, excluding Affinity; and other
Naheta is no stranger to London’s cap- parts of the group that serve certain
Former Deutsche trader ital markets. He was recruited in 2017 companies in those four countries.
by Rajeev Misra, a former Deutsche The disposals also encompass Willis’s
Naheta negotiates SoftBank Bank colleague, for a role at SoftBank cyber business in the UK and its health
unit’s $730m bet on THG Investment Advisers, the London-based and benefits business in France, Spain
unit that manages the group’s $100bn and Germany.
ARASH MASSOUDI, ROBERT SMITH Vision Fund. Greg Case, Aon chief executive, said
AND JONATHAN ELEY In between Deutsche Bank and Soft- the deal “demonstrates strong momen-
Bank, Naheta spent five years managing tum on the path to close our proposed
Matthew Moulding, the UK billionaire his own hedge fund in London called combination with Willis Towers
and founder of ecommerce group THG, Knight Assets. In 2015, the company Watson”.
is clear who calls the shots at SoftBank. took an activist stake in New York-listed An $800m cost savings target for the
“Anyone who knows SoftBank will Bollywood film producer Eros Interna- merger remained on track, Aon said.
know that Masa [founder Masayoshi tional, which at the time counted Misra Gallagher chief executive Patrick Gal-
Son] has the final say,” Moulding told as a board member. lagher said the deal “will accelerate our
reporters on Tuesday, hours after Man- His stint at SBIA is arguably best long-term strategy by significantly
chester-based THG announced a $730m known for a 2019 bet on Wirecard, a expanding our global value proposition
investment from the Japanese group. trade that helped shore up confidence in in reinsurance, broadening our retail
The investment was one of a series of the payments group before it collapsed brokerage footprint and strengthening
deals that THG and SoftBank revealed last summer in one of Germany’s largest key niches and speciality brokerage
after the London stock market closed on corporate frauds. offerings”.
Monday. SoftBank’s $730m injection Although it was run out of SBIA, it was It would add more than 6,000 to the
made it the cornerstone investor in a later revealed that instead of SoftBank broker’s headcount, he said.
$1bn capital raise by THG, which went making the initial investment, the trade Gallagher said the acquired busi-
public to considerable fanfare in Lon- was funded entirely by Abu Dhabi’s sov- nesses generated $1.3bn in pro forma
don last September. ereign wealth fund Mubadala and a revenue in 2020 compared with its
It also marks the first major foray into handful of the SoftBank executives, $5.2bn of brokerage revenues, and
a London-listed company by SoftBank, including Misra and Naheta. would increase the company’s adjusted
the sprawling Japanese investment Naheta left SBIA last year for an exec- earnings per share by about 10 per cent.
group that has become one of the utive role at SoftBank itself, managing a It plans to finance the acquisition
world’s most powerful tech investors. It new internal hedge fund called SB using a combination of debt, cash and
was dubbed the “Nasdaq whale” last Northstar. The fund was briefly the equity.
year for its outsized bets on a handful of most talked about on Wall Street when The broker also announced a public
high-profile technology stocks. the Financial Times revealed it as offering of 9m of its shares, with a mar-
While SoftBank’s billionaire founder the Nasdaq whale, whose bets drove a ket value of about $1.3bn.
Son will have signed off on the invest- rally in stocks such as Facebook and Gallagher’s shares dropped 2.3 per
ment, Moulding said he negotiated the Amazon. cent yesterday. Aon’s were down 1.2 per
deal with Akshay Naheta and his team. These trades ended up being largely cent while Willis’s slipped 0.8 per cent.
Naheta runs SB Northstar, a unit of Soft- unprofitable, with Northstar booking Aon said the deal “resolves questions
Bank that Son set up last year to manage SoftBank’s deal one of the group’s more attractive units, ment of “smoke and mirrors” over the ‘Akshay’s big losses later that year and eventually raised by the European Commission
its investments in public equities. with ecommerce particularly as ever more consumers transaction given the lack of detail exiting them. SB Northstar reported and is intended to address certain ques-
The introduction of THG with Soft- group THG was shop online. Its sales, however, only hit around the option and the circum- stock has derivative losses of $300m for the first tions raised by regulators in certain
Bank came via Goldman Sachs, accord- agreed through £137m last year. stances under which it can be exercised. risen quite a quarter of the year, bringing total losses other jurisdictions”.
ing to a person familiar with the matter. its SB Northstar Under the terms of the unconven- Moulding told analysts the deal had to $5.6bn since September, SoftBank The commission last month shared
Naheta, who is based in Abu Dhabi, is unit, led by tional deal, SoftBank would have to been structured as an option because lot’, despite said yesterday. the remedies with other brokers in mar-
the architect of some of SoftBank’s most Akshay Naheta, spend $1.6bn to acquire the stake in THG Ingenuity is not a separate entity, his role in But in a sign of his growing influence ket-testing documents.
complex and controversial trades, below — Kiyoshi Ota/ THG Ingenuity, a price tag that values ringfenced from the rest of the business. within the company — and emergence Two people who had seen the docu-
including the Nasdaq whale and one Bloomberg; Lucy Nicholson/
Reuters
the division at £4.5bn. The dizzying He acknowledged that the company had Northstar’s from Misra’s shadow — Naheta has also mentation told the Financial Times that
tied to the now disgraced German pay- multiple attached to Ingenuity, whose no specific uses in mind for the potential Nasdaq played a major role as SoftBank the commission seemed to be pushing
ments company Wirecard. customers include Nestlé and UK DIY $1.6bn injection from SoftBank, which morphed from a conglomerate that for a non-private equity buyer that
A former Deutsche Bank trader, the retailer Homebase, sent THG shares up would dwarf Ingenuity’s recent capital Whale tech aimed to run the companies it owned already had a big insurance broking
39-year-old has gained expertise in 13 per cent on Tuesday. They gave up spend of about $100m a year. trades into an investment group. business, with one seeing Gallagher as
structuring transactions with deriva- some of those gains yesterday to trade at The option arrangement undoubt- Despite the tech trades, “Akshay’s the clear frontrunner.
tives at their heart. 639p, giving THG a market capitalisa- edly helped hand SoftBank an instant stock has risen quite a lot”, said a person The timeline of the merger has
As the London stock market opened tion of £6.2bn. gain on its $730m investment, made at familiar with the matter, adding that he slipped. Aon and Willis now say they are
on Tuesday, it was not the $730m invest- Wayne Brown, an analyst at Liberum, 596p a share, on a day when THG stock speaks frequently to Son. working to complete as soon as possible
ment that was enthusing investors. said the Ingenuity deal not only high- might have fallen given existing share- Naheta has been involved in UK com- in the third quarter, having previously
Instead, it was an agreement between lighted “the significant conglomerate holders were being diluted by the $1bn panies before. He had a key role in struc- aimed to conclude it by the end of June.
THG and SoftBank that gives the Japa- discount THG is on, but it leaves huge equity raise. turing the sale of Arm Holdings, the UK The brokers continue to pursue regu-
nese group the option to buy a 19.9 per upside especially when one considers SoftBank and Naheta declined to chip designer SoftBank acquired in latory approvals in other countries
cent stake in a division of the UK ecom- the commercial benefits that will comment. 2016, to US-based Nvidia. including the US, where a separate com-
merce company called THG accrue when working with While shares in THG, which changed But the deal struck with THG, which petition review is under way.
Ingenuity. THG Ingenuity, SoftBank’s portfolio”. its name from The Hut Group when it is touted by some as a rare UK ecom- It was possible that Gallagher would
which provides ecom- Not everyone was floated, remain comfortably above their merce success, means his first major need to “purchase additional opera-
merce and logistics for euphoric. Clive Black 500p initial public offering price, they foray into the London market will be tions” from Aon/Willis if required by
third parties, has been at Shore Capital said had sunk 25 per cent from a record high watched closely. regulators, the company said in a regu-
seen by analysts as there was an ele- of almost £8 in January. See Lex latory filing.
Oil & gas Technology
BP resists pressure for greater climate goals Delivery Hero rejoins battle in Germany
ANJLI RAVAL AND ATTRACTA MOONEY BP’s own fossil fuel production, third- resolution, saying its plans were already TIM BRADSHAW — LONDON At the same time, Berlin has — along- items in as little as seven minutes —
party products the company sold were “consistent” with the Paris goals. “Going side London — become home to several across the Middle East and Asia.
BP has fended off a call for greater Delivery Hero is relaunching in Ger-
not adequately scrutinised. back to the drawing board on strategy, fast-growing start-ups offering rapid “We don’t see anyone [else] combin-
action on climate change but investor many, two years after selling its opera-
Support for Follow This surpassed the targets and aims would disrupt our busi- grocery delivery. Gorillas and Flink are ing that into one experience,” offering
support for the activist group that pro- tions in its home country, in what is
more than 8 per cent it achieved in 2019 ness plans and set us back at the very both based in Berlin while Istanbul- instant grocery delivery and restaurant
posed it has more than doubled. rapidly shifting from a food-delivery
when it called for hard targets on its own time when shareholders are asking us to based Getir, the largest European opera- food on the same app, said Ostberg.
monopoly to one of Europe’s most
Nearly 21 per cent of votes at BP’s emissions and those of consumers, for focus on execution,” the company said. tor of rapid grocery apps, is planning to After a “soft launch” in Berlin starting
competitive markets.
annual meeting yesterday favoured the example users of its petrol and diesel. Calpers, the US pension fund that begin deliveries in Berlin this summer. in June, Delivery Hero will begin to roll
resolution by Follow This, the Dutch With more than a fifth of sharehold- chairs the Climate Action 100+ investor The Berlin-based company’s launch of Delivery Hero has already deployed out across Germany under its Food-
shareholder activist group that sought ers voting against management, BP will group, has came under fire over a deci- restaurant and grocery delivery services hundreds of its own “Dmarts” — small panda brand from August.
to make the oil major set targets aligned be required, under the UK corporate sion to vote against the Follow This reso- this summer will put further pressure local warehouses dedicated to deliver- Ostberg said the decision to relaunch
with the Paris climate goals, in opposi- governance code, to go back to investors lution despite its own assessment that on what has been a lucrative source of ing groceries and other convenience in Germany was made last month, after
tion to a recommendation by the board. and discuss their concerns. BP’s plans are not Paris-aligned. profits for Just Eat Takeaway.com. The the expiry of a two-year non-compete
While this fell short of the 75 per cent The company said it would publish an Big shareholders have been torn Amsterdam-based Just Eat group had, agreement that was part of the €930m
needed to pass, the vote piles pressure update within six months. “We will con- between how to reward companies for until recently, the market largely to deal with Takeaway.com in 2018, and as
on BP and big shareholders that have tinue to engage with our stakeholders as taking some action on climate change itself after agreeing to buy Delivery other competitors were arriving.
stood by its corporate strategy. our plans evolve over time,” it added. while continuing to push them to work Hero’s German business in late 2018. “We don’t see necessarily that we are
BP last year pledged to become a net- Mark van Baal, founder of Follow even harder. “It’s a big market and we still feel like going to go in and win the market in the
zero emissions business by 2050. Oil This, said: “Responsible investors have Bernard Looney, chief executive, said the [food delivery] service is sub-par,” next year or so,” said Ostberg. “This is a
and gas production is set to fall 40 per given a clear signal to the board of recent financial results showed the com- said Niklas Ostberg, Delivery Hero’s 10-year game.”
cent by 2030 and spending on renewa- BP . . . They’re saying we do not accept pany was able to generate cash, pay chief executive. Jitse Groen, Just Eat Takeaway.com
ble power generation will rise 20-fold. empty promises for the distant future down debt and be disciplined with Last month, Uber said it would roll chief executive, said in a tweet: “Competi-
Follow This argued that was not any more, we need you to act now.” spending while also “delivering cash for out its Eats delivery service in Germany, tion makes us stronger. We defeated
enough. Emissions would still rise until Ahead of the meeting BP pushed shareholders today and transforming after Finland’s Wolt arrived there ear- Delivery Hero faces Takeaway.com, them in Holland, the UK, Poland, Ire-
2030 and while attention focused on investors to vote against the Follow This BP for tomorrow”. lier this year. Uber and other rivals in the market land and Germany, and will do so again.”
COMPANIES & MARKETS
Innovative China shapes future of shopping

FT series Country’s largest ecommerce apps have developed mobile retail in a way that is starting to spread
TIM BRADSHAW — LONDON from orders placed with Shopify stores.
HANNAH MURPHY — SAN FRANCISCO
Until recently, venture capitalists in
Tech entrepreneur Dan Dan Li has been Silicon Valley have been reluctant to
waiting years for the smartphone gener- back new online retail concepts, outside
ation to rediscover a venerable US pas- specific verticals such as food delivery.
time: the shopping channel. “Nobody wanted to go up against Ama-
The idea of selling products through zon,” Khan said.
video demonstrations dates back to the Popshop’s Li also found that it took a
1980s, when the Home Shopping Net- pandemic, and a younger cohort of ven-
work and QVC first appeared on US tele- ture capitalists, to convince investors
vision. Fast forward to 2021 and live that the world needed a new approach
video has become a core feature of to ecommerce.
China’s biggest ecommerce apps such as Although adoption of live-streaming
Taobao Live, JD.com and Pinduoduo. and video shopping apps remains small,
Shopping is also becoming an integral that has not deterred two of the largest
part of China’s most popular social video social media groups from making a big
apps, Kuaishou and Douyin, Byted- push into ecommerce recently.
ance’s Chinese version of TikTok. TikTok plans to roll out live-streamed
Yet consumers in North America and shopping, where its influencers or “crea-
Europe are often left with flat, static tors” push products to their millions of
online stores that look more like followers, and is introducing features to
miniaturised versions of their desktop allow brands to showcase product cata-
websites. logues.
“Almost everything else is mobile- After Facebook added dedicated
first,” said Li, who lives and works in shopping tabs to its main app and Insta-
Hollywood. “Entertainment is mobile- gram, it recently announced plans to
first, social is mobile-first, but ecom- introduce creator-hosted shops. The
merce is in the Stone Age.” company is building out a platform for
That is something Li hopes to change retailers that Facebook executives say
with her start-up Popshop Live, one of a will soon extend to its other apps, Mes-
new generation of mobile shopping apps senger and WhatsApp.
that look to harness the smartphone’s “It’s very early but we are seeing a lot
most essential features — cameras and of traction,” said Ashley Yuki, director
communication — for commerce. of product management at Instagram.
Inspired by the rapid expansion of As well as making product and
mobile commerce in China, new ven- retailer recommendations more per-
tures including Popshop, Verishop, Share of ecommerce sales Mobile shopping increased during The growth of retail ecommerce sonalised, adding shopping links to live
OOOOO and NTWRK are vying with the from smartphones videos was a big focus, she said. “People
likes of Instagram and TikTok to rede- 2020’s key retail season Ecommerce sales Share of global retail
are looking to discover products from
Q1 2020 vs Q1 2021 (%) Share of orders from mobile devices from ($tn) sales market (%)
fine online retail for a new generation of people that they trust — the people
2020 2021 pre-Black Friday to post-Boxing Day 8 22
consumers. Forecast around them, but also creators.”
Imran Khan, a former banker and 0 10 20 30 40 50 60 Nov 19 Dec 29 Inspired by China’s all-in-one app
Snapchat executive, wants his US-based Japan 40 50 60 70 80 90 20 WeChat, Facebook has for years sought
6
online retail start-up Verishop to to turn its various services into a “super
become a “digital mall”. Japan app”. George Lee, Facebook’s director of
UK 18
Amazon is great for finding “conven- Australia and product management, conceded that
New Zealand 4
ience” items, he said, but for the fastest- 16 the American and European shopping
Australia UK
growing categories in ecommerce, such apps “continue to lag” behind their
as fashion, beauty and homeware, “peo- Global 2 Asian rivals due to their heritage in
France 14
ple want to hear others’ opinion and desktop computing.
understand the story of the product”. US It may take years more for American
In the UK, the app OOOOO is pitching US France 0 12 and European consumers to embrace
2019 20 21 22 23 24
itself as “QVC for the TikTok genera- fully the modern version of the Home
Sources: Adobe Analytics; Salesforce; eMarketer
tion”, with dedicated video channels for Shopping Network.
handbags, cosmetics and perfume.
Popshop’s Li was spurred to reboot Shopatainment: oped during coronavirus lockdowns will
the shopping channel for the social- Leanna Lin’s soon resemble China’s ecommerce apps
media era after attending South by Wonderland, a the world over.
Southwest in Austin in 2016. Festival Los Angeles gift Their logic is that if Amazon delivers
goers were broadcasting events featur- shop, has a the basic necessities, start-ups or social
ing the likes of Barack Obama through livestream on networks offering video chats and the
Snapchat and Twitter’s live-stream app Popshop Live ability to shop virtually with friends will
Periscope. drive more recreational ecommerce —
She began work on pivoting what had which Connie Chan of the venture firm
been an app for trading second-hand Andreessen Horowitz has dubbed “sho-
items into a video-centric experience. patainment”.
But it would be several years before the Taobao Live has become one of the
idea of using a live, interactive feed fastest-growing parts of Alibaba, gener-
would begin to catch on with US con- ating more than Rmb400bn ($62bn) in
sumers. consumer spending in 2020, the Chi-
“It took a while to figure out the nese ecommerce group has reported.
product experience,” Li said. “Video Similar models have taken off in Japan,
by itself isn’t going to change South Korea and south-east Asia, where
shopping that much . . . We have a a smartphone is many consumers’ first
much stronger focus on entertainment and only computing device.
and community.” But internet companies in the US and
Today, retailers from New York’s Mid- Europe are seen as lagging behind.
town Comics and Lee Lee’s Valise, which “Curated exploration is the future of
sells crystals and tarot cards, to Minne- mobile-social commerce, and right now
sota’s Mall of America, the biggest shop- the big companies in the US just aren’t
ping mall in the US, schedule Popshop good at it as they don’t have commerce
shows to exhibit their wares, answer chops,” said Steve Sarracino, founder of
questions from customers, give live per- US-based Activant Capital, which spe-
formances or just chat with viewers. cialises in ecommerce investment.
Often they are shop owners who had “China is way ahead of us in this
to shut their doors to real-world cus- respect.” ‘Curated
tomers during the past year, turning
their empty stores into studios.
Not everyone is convinced. Studying
China for retail trends is “super-inter-
exploration
“I think Covid is helping a lot of people esting”, said Harley Finkelstein, presi- is the future
to better envision what the future will
look like,” said Li.
dent at Canadian ecommerce group
Shopify, but it is not always clear which
of mobile-
In November, Popshop was valued at ideas will cross over to other markets. “I social
$100m in a funding round led by Bench-
mark, an early investor in Uber, Insta-
don’t know [yet] if live video is going to
be one.”
commerce,
gram and Snapchat. Time spent on The kinds of shopping apps that west- and the big
retail apps globally rose 30 per cent in
2020, according to App Annie.
Future of Retail
This article is the
ern consumers have adopted hitherto
have tended to be more utility than
companies
Much of the renewed interest in live- second part of
an FT series
entertainment. Shopify’s year-old app in the US
streaming from investors, as well as big
companies such as Facebook, is driven
examining the Shop tries to combine the two. More
than 24m people use Shop every month,
just aren’t
future of retail
by a belief that shopping habits devel- primarily to track parcel shipments good at it’
Technology
Vinted valued at €3.5bn in EQT-led raising

JONATHAN ELEY quickly than before.” He declined to give and Vestiare Collective, in which French
figures for the value of product sold on luxury group Kering owns a minority
Online used clothing marketplace
the app — the last available is €1.3bn for stake. US operator ThredUp floated on
Vinted has raised €250m in a funding
2019 — or the revenue from sellers’ fees Nasdaq in March; its shares have since
round led by Sweden’s EQT that values
and added value services. risen 34 per cent.
it at €3.5bn, underscoring investor
But he said the proceeds will be used The pandemic disrupted the clothing
interest in sustainable fashion.
to enter new markets and improve serv- industry but also led to a decluttering of
The Lithuanian company last raised ices such as payments and shipping. wardrobes, bringing a wave of new sell-
funds in November 2019 at a valuation Previous investors including Accel, ers to online platforms.
of €1.1bn. Thomas Plantenga, chief Burda, Insight Partners, Lightspeed and Research by Boston Consulting Group
executive, said the jump reflected entry Sprints will also participate in the last year suggested the global pre-
into new markets, sales growth and a round. owned apparel market is worth up to
“very favourable” investment climate. Vinted is one of several ventures look- $40bn a year, or about 2 per cent of the
“When we did the last round, we were ing to bring used clothing into the main- total, and that figure could grow by
operating in France and Belgium and stream, as younger consumers in partic- 15-20 per cent per year for the next five
were off to a good start in Spain,” he said. ular become increasingly motivated by years. Boston also expects the “share of
“Now we are also running in markets sustainability concerns over low prices. closet” taken by second-hand clothes to
like the UK and Italy and we’ve shown Others include Depop, backed by increase to more than a quarter by 2023.
that we can enter new markets more investors including General Atlantic, See Lex
UK COMPANIES
Diageo cash return plans need not drive us to drink MPs say Financial services
Exceptional post-lockdown trading has often gets the blame for long-term cor- much clearer incentive to artificially A potential combination of Pernod
Greensill may
Bryce combined with easy credit conditions
and an uncertain outlook to favour
porate under-investment versus the US,
which shows up both in relative acquisi-
boost earnings-per-share metrics ahead
of their stock options vesting.
Ricard and US distiller Brown-Forman
looks like the sector’s only remaining have misled
Elder
parliament
repurchases, which are much easier tion firepower and capital expenditure All of which brings us back to Diageo. mega merger. By contrast, Diageo’s
than dividends to switch on and off at as a proportion of sales. The latest leg of its buyback comes as recent spending has been organic
short notice. Can prioritising buybacks over divi- shares nudge towards a record, having expansion of ready-to-drink cocktails
So far, Wall Street has been the pace- dends make European companies more rallied 35 per cent from the March 2020 and bolt-on deals for makers of hard
H
setter. US companies spent a record nimble and opportunistic? It’s an idea trough. Management will struggle to seltzers, a market still valued in millions
ow best to spend £9bn? $484bn on share buybacks in the first that’s counter to one of the most com- claim they look undervalued by any rather than billions having not existed KAYE WIGGINS AND ROBERT SMITH
According to Ivan De Men- four months of 2021, according to Gold- mon criticisms put forward by the type before 2015.
Lex Greensill may have misled parlia-
ezes, Diageo chief execu- man Sachs. But European peers of all of investor who talks about repurchases And Diageo is not funding its capital
tive, it’s on Diageo shares. sizes are now following suit. as a form of stock manipulation.
The resumption of returns by forgoing investment oppor-
ment when he said his company did not
lend money to its shareholders, two
The biggest distiller said Unilever’s first-quarter update in Buybacks are nothing more than a buybacks came about a tunities. Mostly it’s swapping equity for
MPs have said, citing a €300m loan
yesterday that it was resuming a cash April included a pledge to spend €3bn drain on cash that would otherwise cheap debt on which interest payments
return plan paused last April at the start on buybacks by end 2021. Mike Ashley’s stimulate economic growth, they argue.
year earlier than analysts are tax-deductible.
that Greensill Capital made to its pri-
vate equity backer General Atlantic.
of the pandemic. Forecast-beating profit Frasers Group, which since its last Management’s job is to find investment had been forecasting Diageo’s biggest future costs likely
growth in the year to date justified the update in December has called repeat- opportunities, not to speculate on when relate to the possible tidying up of part- Labour’s Angela Eagle and Conservative
resumption of share buybacks, which edly for more state aid for retailers, last their own shares are undervalued. measures, already trading at the upper owned divisions including the Moët Harriett Baldwin raised the concerns
came about a year earlier than analysts week pleased investors and baffled ana- Other common complaints include a end of the long-term range at about 25 Hennessy joint venture and United Spir- after Greensill told a Treasury select
had been forecasting. Shareholders can lysts by launching a £60m buyback. lack of clear disclosure around new times next year’s earnings. its of India. Locking in higher dividends committee hearing on Tuesday that
expect another £3.25bn returned by The coming wave of cash returns share issuance for bonuses, which can Yet what else can De Menezes do? Dia- might stymie its negotiating position. “none of the two large institutional
mid-2024 on top of the more than promises a compensation of sorts after refill the equity bucket as quickly as it’s geo’s acquisition targets are few and far Menezes’s cash return policy has shareholders that we have borrowed
£5.75bn Diageo has spent on repur- Covid-19 gave European corporates an being drained. And whereas investors between: more than half of the top 100 looked pretty shrewd so far; investors money from Greensill Capital”.
chases in the previous four years. excuse to reset ordinary dividends. are asked to believe in the hypothetical spirit brands are owned by it, Pernod owe him the benefit of the doubt. The largest institutions backing
Buybacks are in vogue on the back of a Europe’s historic prioritisation of a fat future benefit of swapping their cash for Ricard of France, and China’s Baijiu, Greensill, the supply chain finance com-
blowout first-quarter earnings season. and relatively reliable dividend yield a reduced share count, directors have a according to HSBC research. bryce.elder@ft.com pany, were Japan’s SoftBank and US-
based General Atlantic.
General Atlantic bought a minority
stake in Greensill in 2018 and borrowed
Support services €300m from it the following year.
Quintessentially
Greensill’s remarks “raise concerns
about the potential for having misled
parliament”, Eagle said. “He’s flatly
denied that any shareholders in Green-
sill were lent money, when it’s clear that
paid unlawful
they lent General Atlantic money, so I
would want him to correct the record
and explain his replies.”
Baldwin said it was “possible that Mr
dividends
Greensill did not have a full recollection
of all of these instances” of what she
called “close relationships” that “do not
to me seem to pass a smell test”.
She said: “I’m sure that he would not
wish to have inadvertently misled the
committee, and he may wish . . . to cor-
Delayed report shows The latest accounts identified seven rect the record.”
categories of error in its 2017 and 2018 Both MPs are members of the com-
concierge group made reports that required correction, mittee investigating the collapse of
£7m accounting errors amounting to about £7m. It made prior- Greensill Capital, which has created a
year adjustments totalling £10.7m,
which included group restructuring
TABBY KINDER — HONG KONG
MICHAEL O’DWYER AND costs, that had a net effect of £2m on its
‘He’s flatly denied any
DANIEL THOMAS — LONDON balance sheet. These included incor- shareholders were lent
Quintessentially, the concierge com- rectly booking revenue before complet-
pany run by Ben Elliot, the Conservative ing contracts.
money, when it’s clear they
co-chairman, made accounting errors The restatements mean that Quintes- lent to General Atlantic’
of more than £7m and paid £1.4m of sentially was in negative equity as early
unlawful dividends, according to its as 2017. The company adjusted its financial and political scandal embroil-
long-delayed 2019 financial report. £1.5m net assets for 2017 down to a ing David Cameron, the former British
BDO, Quintessentially’s auditor, £470,000 net liability in its latest prime minister who became a paid
which took over from PwC last year, accounts, a £2m drop in value. adviser, and GFG Alliance, a metals
warned the group faced a “material PwC audited the company from 2014 group left teetering after the insolvency
uncertainty” over its ability to continue to 2018. Some of the errors relate to of its biggest lender.
operating, as pandemic restrictions on companies that were not part of the Lex Greensill said: “I would be happy
travel and events could further hit sales group or were not required to be audited to provide further clarification or expla-
at the time. PwC declined to comment. nation of my testimony . . . if asked to
Quintessentially said: “In restructur- do so by the Treasury select committee
The accounts identified ing our group and consolidating 30 com- or any of its members.”
seven categories of error in panies . . . we identified gross historical Internal Greensill documents relating
balance sheet adjustments, including to the General Atlantic loan say Lex
its 2017 and 2018 reports corrections of £5.6m and impairments Greensill was the “relationship owner”
that required correction of £1.9m. Our business . . . is well and describe the deal as a chance for
and force it to raise emergency cash.

placed for a rebound.”
The accounts also showed that Quin- Holiday mood Tui, Europe’s largest tour operator,
predicted a boom in foreign summer
average price of bookings was up
22 per cent on 2019.
the now-collapsed group to “strengthen
its relationship with a significant
Tui forecasts
The 20-year-old “exclusive lifestyle tessentially paid distributions to some holidays this year and expected to be Fritz Joussen, chief executive, sponsor”.
management” company has attracted shareholders for three years while it profitable again by September despite said British customers risked losing The private equity group has since
scrutiny for controversies including a “did not have sufficient distributable continuing lockdowns across Europe. out on “the best seats to the best refinanced the loan in an expensive
£1.4m government contract to intro-
duce Whitehall officials to wealthy indi-
reserve” to do so. It paid out £1.4m more
than it should have, according to the summer lift The Anglo-German group, which
yesterday reported a €1.5bn pre-tax
places” unless the UK government
relaxed its cautious stance on travel.
arrangement with Goldman Sachs.
At the hearing, Greensill initially said
despite curbs
viduals and allegations about its work- accounts. The Companies Act states loss for the six months to March, said Tui has received €4bn of German there were no cases of firms that were
ing culture and accounting practices. companies must make distributions bookings for summer were still 69 per state-backed loans and last month both using his company’s supply-chain
Quintessentially published its 2019 only out of realised profits. cent below the same point in 2019, but issued a €400m bond. Net debt was finance product and also investing in
accounts this week, blaming a 15-month Shareholders include Elliot, Aaron that a pick-up in demand had been €6.8bn at the end of March. Greensill Capital, or in the funds
delay on a restructuring of its 30 subsid- Simpson, chair, and Paul Drummond, “clearly evident” in recent weeks. James Ainley, Citi analyst, said Tui through which the supply chain finance
iary companies into its main business. co-founder. The company refused to Significant increases in bookings by would need to raise at least €2bn to deals were sold on to investors.
The restructuring brought its net- name the shareholders who had Germans and Belgians in the past five restore its balance sheet. When Baldwin challenged him with a
work of businesses, including an art received the payments. weeks have been offset by cancellations Tui reported an 89 per cent drop Bloomberg report that said Vodafone
dealership, florist, estate agency and BDO signed off the accounts on the and deferrals by customers in the UK in revenues to €716m in the first had invested in the funds that profited
chauffeur service, under one company. basis its directors said they could obtain where the government said it would half of its financial year, compared from its own late payments, he said he
The latest accounts showed Quintes- more funding if needed. reopen travel from May 17 but to only with the same period in 2020, which had “forgotten that one instance”.
sentially reported losses of £4.4m in Quintessentially turned to World Fuel 12 countries, several of which are not was largely unaffected by Covid-19. But he stressed that there were
2019 on revenues of £50m. They also Services, its US shareholder, for a £6.8m open to international travel. Pre-tax losses came to €1.5bn, no cases where “people were invested
revealed that losses in 2018 had to be loan in August. As a result, the New Total bookings declined from 2.8m in against an €849m loss in 2020. in the equity of Greensill Capital and
restated to £5m, compared with the York-listed energy and aviation com- February to 2.6m. But Tui said the Alice Hancock we were then financing the same
£3.1m previously reported. pany now holds security over its assets. company”.
Phil Noble/Reuters
Financial services Travel & leisure
Ebay takes on banks with business loan offer Premier League to boost ‘pyramid’ funding
NICHOLAS MEGAW The programme will be closely established relationships with small MURAD AHMED AND NIC FILDES England’s top tier clubs were keen to teams further down the football “pyra-
RETAIL BANKING CORRESPONDENT
watched by executives at mainstream businesses, giving them a head start on accept the government-brokered com- mid”, a person familiar with the matter
The English Premier League has agreed
Ebay will start offering loans to busi- banks, who have long worried about the start-up lenders. promise as the new media contract said. Details of the broadcast contract
to government demands to provide
nesses that sell through its market- potential impact large tech companies He said: “It’s certainly a relevant com- guarantees TV income over coming could be announced as early as today,
more funding to lower division teams
place in the UK, pitting the ecommerce could have on the sector. petitive threat for us, we’re very alive to years. But the deal needed approval another person said.
in return for clearance to roll over its
group against high street banks and its Although eBay is a minnow compared it.” But “the downside [for tech groups] from the government, which could The Premier League declined to com-
existing £5bn broadcasting contract
former subsidiary PayPal. with Amazon and Apple, its $41bn mar- is banking isn’t their core business”. block a private sale of TV rights on comment. Its plan comes as TV deals
with Sky, BT and Amazon.
ket capitalisation is about 50 per cent Amazon has operated a similar busi- petition grounds. recently struck in Italy and Germany
“We think this is a field ripe for innova- higher than that of NatWest, the UK’s ness lending to companies that sell The 20 member clubs in English foot- According to people familiar with show the diminished power top leagues
tion, and there’s a lot of unmet demand largest small business lender. through its marketplace for a decade, ball’s top division approved a deal yes- the discussions, ministers have, in have to set terms.
for better service for online businesses,” but progress has stuttered in recent terday designed to protect their fragile Last month, Italy’s Serie A approved a
eBay UK general manager Murray Lam- years. finances that have been hit hard in the new media rights sale between 2021 and
bell said. “We think eBay is well posi-
‘We think this is a field ripe Growth in its outstanding loanbook pandemic, according to people familiar The Premier 2024 to sports streaming service DAZN
League is to sell its
tioned to deal with this.” for innovation, and there’s rebounded in 2019 after two years of with the talks. domestic TV rights for about €810m a season, a fall from its
The company will today announce slowdown, but was curtailed again dur- The Premier League wants to sell its existing domestic TV deal worth close to
the launch of its Capital for eBay Busi-
a lot of unmet demand’ ing the pandemic. domestic television rights covering the
covering three
seasons to its €1bn a season.
ness Sellers programme, the group’s Murray Lambell, UK head Lambell said eBay would look to work three seasons between 2022 and 2025 to existing partners Last June, Germany’s Bundesliga foot-
most significant step yet into financial with specialists rather than develop its its existing partners Sky, BT and Ama- ball league raised €4.4bn over four
services. David Duffy, chief executive of FTSE own in-house credit expertise. zon. The new deal would be on roughly principle, agreed to approve the Pre- years from 2021 from the sale of domes-
CEBS will initially offer loans of 250 bank Virgin Money, said last week “We can partner with companies that similar terms to those in the current mier League’s plan as long as it also tic TV rights — 5 per cent less than the
between £500 and £1m to the 300,000 that “payments and big tech firms offer solutions and what we can give deal that was signed in 2018, according includes more money for lower division previous deal.
small and medium-sized businesses invading the banking space” were a them is unrivalled access to data and to people with knowledge of the talks. teams which have been hit even harder Richard Masters, chief executive of
that sell on its UK marketplace, through “much more relevant” concern than fin- information which helps them get the That move is a marked departure by the coronavirus crisis. the Premier League, has warned that
a partnership with lender YouLend. tech start-ups. best loans.” from past tactics of pitting broadcasters At a meeting yesterday, Premier clubs are set to miss out on £2bn of reve-
Lambell said eBay was working on An executive at another high street Ebay’s decision to move more directly against each other in regular Premier League clubs agreed to an additional nues across the two seasons disrupted
further lending options targeted at bank said moving into lending was “a into financial services came after it sev- League rights auctions, helping to stoke £100m for lower league teams, on top of by the pandemic, due to lost ticket sales
larger companies, which will be natural evolution” for groups such as ered ties with PayPal, which was spun the steady inflation of its multibillion- the near £140m provided in so-called and rebates paid to TV companies for
announced in the coming months. eBay, which have extensive data and out in 2015. pound television deals. “solidarity payments” each season to postponed fixtures.
COMPANIES & MARKETS
Crypto. Regulation Equities
Covid alarm
Rapid rise of stablecoins leaves takes toll on
watchdogs straggling behind tech-heavy
Taiwan index
Issuers of the collateralised KATHRIN HILLE — TAIPEI
Taiwan’s stock market, home to some of

assets provide varying levels the world’s biggest tech companies,
of disclosure and protection suffered one of the largest drops in its
history as investors were rocked by a
SIDDHARTH VENKATARAMAKRISHNAN
worsening Covid-19 outbreak.
The Taiex fell as much as 8.55 per cent
The stablecoin market, a crucial link yesterday, the index’s worst intraday
between crypto and traditional fall since 1969, according to Bloomberg.
currencies, is facing calls for tougher It finished down 4.1 per cent.
oversight with regulations on both sides Construction, rubber, automotive
of the Atlantic lagging behind the rapid and financials — sectors retail investors
growth in digital assets. had been shifting into from technology
Stablecoins claim to represent a safe in recent months — were the worst hit in
harbour for traders to stash funds, the sell-off.
making them a central part of crypto- The world’s largest contract chip-
currency trading in a similar way maker, Taiwan Semiconductor Manu-
money market funds are used by typical facturing Company, which has a 30 per
investors. cent weighting in the index, fell 9.3 per
A patchwork of disclosure standards, cent before recovering ground to close
the overall lack of consumer protections down 1.9 per cent, while Apple supplier
and stablecoins’ potential role as a less Hon Hai Precision Industry, also known
traceable form of money have sharp- as Foxconn, dropped 9.8 per cent before
ened calls for tougher oversight as the paring losses to close down 4.7 per cent.
market has rapidly expanded along While Taiwan’s sell-off was related to
with broader digital asset industry. domestic Covid problems, it followed
“Certainly the direction of travel is to recent declines in global markets as
look at regulating them,” said John investors worried about possible infla-
Salmon, who leads law firm Hogan tionary pressures.
Lovells’ blockchain and cryptocurrency The falls came as Taiwan was
practice. expected to partially close down public
Policymakers in the US, UK and life to contain a worsening coronavirus
continental Europe are all weighing up outbreak — something the country had
potential plans for closer oversight of managed to avoid for more than a year.
stablecoins, which are “pegged” to
traditional currencies, commodities or
other digital assets in order to reduce
‘The market before today
volatility. Most stablecoin issuers say their coins are fully backed with reserves, usually traditional currencies or cryptocurrencies — FT montage was already at [the stage]
Most stablecoin issuers say their
coins are fully backed with reserves,
where the index was at
usually traditional currencies or crypto- ‘All of the unregulated or e-money category, a lot The state AG said in February that Tether and several other major an inflection point’
currencies. of regulatory oversight and conduct Tether’s “claims that its virtual currency stablecoin issuers like USD Coin backer
A group of US members of Congress variations of rules fall away,” said Eddis. “That’s why was fully backed by US dollars at all Circle publish so-called “attestations” “The reason that triggered the esca-
late last year proposed legislation that stablecoins you’re seeing a lot of regulators wanting times was a lie”. by third-party accountants to provide lated sell-off during the trading session
would require stablecoin issuers to to assert regulation.” Tether and affiliate Bitfinex were also some level of disclosure into holdings. is the new [Covid] cases to be reported
obtain a banking charter, follow bank- are just Last June, the Financial Action ordered to provide quarterly reports, However, these statements can differ this afternoon, and probably the raising
ing regulations and receive approval shadow Taskforce, which sets global standards providing details on what kinds of assets from traditional audits in terms of what of the pandemic alert level,” said Patrick
from the US Federal Reserve and on money-laundering and terrorist are being used to back Tether coins. they disclose with considerable variety Chen, head of Taiwan research at CLSA.
Federal Deposit Insurance Corporation. banking’ financing, released its draft report to the The groups said they “admit no between companies. “On top of that, the market before today
“Digital currencies, whose value is G20 group of nations on stablecoins. wrongdoing” in the matter. “As the most trusted dollar digital was already at a point where the index
permanently pegged to or stabilised It noted that mechanisms for stabilis- Tether now says its coins are “fully” currency in circulation, Circle remains was at an inflection point.”
against a conventional currency like the ing the assets could present avenues for backed by the company’s reserves but it committed to high standards of Taiwan’s strict border controls and
dollar, pose new regulatory challenges market manipulation. has provided scant details about the mix transparency and accountability for quarantine system and meticulous
while [they] also represent a growing The regulatory debate comes as many of assets it holds besides saying that USD Coin,” the company said. contact tracing measures had helped it
source of the market, liquidity and investors in the crypto market are it can include everything from “tradi- Amy Kim, chief policy officer at avoid community spread of Covid until
credit risk,” the group, which included closely scrutinising Tether, the biggest tional currency” to “receivables from industry group the Chamber of Digital recently.
Rep. Rashida Tlaib and Rep. Stephen stablecoin with some $56bn in circula- loans made by tether to third parties”. Commerce, said that, if companies took That success, which allowed Taipei to
Lynch, said. tion, according to CoinMarketCap.com. “The fact that they still have not a “more unified approach”, it would forego lockdowns, helped boost the
Rohan Grey, a law professor at The stablecoin — which is “pegged” at [released] this [information] so late “build consumer confidence and help local economy, which grew about 3 per
Willamette University who helped draft $1 — is in focus partly because it has con- into the game but have $50bn coins the industry grow more responsibly”. cent last year and 8.2 per cent in the first
the bill, added that “there is this long tinued operating in many jurisdictions issued is preposterous,” said Tim Last week, the group released a report quarter of 2021.
history of new entrants into the and grown rapidly even after a censure Swanson, founder of technology suggesting a cohesive standard, to But health authorities announced 16
financial sector using a technological by New York’s attorney-general. advisory firm Post Oak Labs. counter the “uneven and inconsistent locally transmitted confirmed cases
edge . . . to offer a variation on bank methods”. yesterday, for three of which the infec-
money and to avoid regulation in the Tether has grown rapidly with the cryptocurrency market Stablecoins also face a longer term tion source was unclear — a sign of wid-
short term as a bank so that they can Value in circulation ($bn) challenge from central bank digital ening spread in the community. Author-
establish market share”. currencies, which would offer a digital ities had confirmed seven untraced
He added: “All of [the variations of 60 payment system separate to commer- cases on Tuesday, and domestic media
stablecoins] to me are just shadow Tether and Bitfinex agree to pay cial banks and payment companies. reported that the government might
banking, which should have been regu- $18.5m penalty after New York inquiry Different proposals include allowing introduce partial lockdown measures.
lated . . . as part of the banking system.” 40 individuals to maintain digital accounts Taiwan’s stock market had risen
Harry Eddis, partner at law practice at a central bank or a digital token. almost 80 per cent over the past year,
Linklaters, pointed to the European “This is going to be the big geopolitical peaking at a historical high late last
Commission’s Markets in Crypto-Assets 20 discussion over the next decade,” said Our global month. It is now down 8.5 per cent from
proposal and the UK Treasury’s consul- Jonathan Knegtel, co-founder and chief team gives you that mark.
tation into stablecoins, both of which executive of blockchain analysis com- market-moving Retail investors have moved out of
call for greater regulation in the sector 0 pany Blockdata. “Are the regulators news and views, technology stocks in recent weeks,
and which note the ambiguity Jan 2020 2021 May
going to be comfortable with stablecoins 24 hours a day reducing the sector’s weight in trading
surrounding the status of stablecoins. Source: CoinMarketCap.com
coexisting with central bank digital ft.com/markets volume from almost 80 per cent at its
“If a stablecoin falls into the currencies?” height to just over 50 per cent.
Commodities Equities
Glencore warns cobalt supply chains Blockbuster earnings push US groups

give China upper hand in electric cars to prepare share buyback bonanza
NEIL HUME export electric vehicles. Where are the nese companies control about 40 per AZIZA KASUMOV — NEW YORK Howard Silverblatt, senior index Big tech groups whose businesses
NATURAL RESOURCES EDITOR SIDDHARTH VENKATARAMAKRISHNAN
batteries going to come from?” cent of the DRC’s output and have also LONDON
analyst at S&P Dow Jones Indices, have accelerated under the pandemic
The car industry in the US and Europe The warning comes as a global chip signed long-term supply agreements said companies were becoming more have been among the companies
risks being left behind by Chinese shortage puts the car supply chain with Glencore, the only major western Companies are preparing to launch a confident in their outlook, even if expanding buyback authorisations
rivals unless they secure supplies of under the microscope and follows miner operating in the country. record wave of share buybacks as uncertainties remain. most aggressively.
cobalt, according to the biggest pro- a 50 per cent rise in the price of cobalt in China has built a dominant position in executives get comfortable with spend- “Things are getting better, and com- Apple and Alphabet announced an
ducer of the battery metal. the past six months. cobalt processing and is investing ing excess cash following a blockbuster panies have a little bit better cash flow,” additional $90bn and $50bn in repur-
Produced as a byproduct of copper directly in mines. Earlier this year earnings season and greater clarity on he said. “Before, you had a thousand chase plans, respectively, last month.
Glencore chief executive Ivan Glasen- and nickel mining, more than 60 per CATL, the Chinese battery group that the trajectory of the world economy. scenarios, and now maybe you have The planning for buybacks is
berg told the FT Future of the Car Sum- cent of the world’s annual cobalt output has a market value of $130bn, paid widespread across industries, however.
mit yesterday that western carmakers of 130,000 tonnes comes from the DRC, $137m for a 25 per stake in China Moly- US companies announced $484bn in “We did suspend the buyback last year
would be naive to think they could one of Africa’s poorest countries. Chi- bdenum’s Kisanfu copper-cobalt mine. share buybacks in the first four months
Jamie Dimon said because of uncertainty,” said James
always rely on China to supply the bat- Glasenberg said Glencore would con- of this year, the highest total in at least JPMorgan was ‘buying Saccaro, chief financial officer of
teries for electric vehicle fleets. sider selling a stake in one of its DRC two decades, according to Goldman healthcare group Baxter, but it returned
Glasenberg said Chinese companies mines to a western carmaker, although Sachs.
back stock because our to the market in the fourth quarter last
had been quick to realise the vulnerabil- it had not received any approaches. The figure foreshadows a big accelera- cup runneth over’ year. “We like doing it.”
ity of their supply chains and “tied up” “It hasn’t come yet, surprisingly. Per- tion in the pace of buybacks, which have Analysts said banks were also eager to
lots of cobalt from the Democratic sonally, I believe it would be a great idea. already begun to rebound from their
s
only a hundred, so it’s a little bit easier to return to the practice at scale as the US
Republic of Congo. If you look historically, Henry Ford did nadir last year when the pandemic think.” Federal Reserve loosens pandemic-era
Cobalt is a metal needed in the lithi- it. He tied up his supply chain, whether encouraged companies to hoard cash. For companies, share buybacks can restrictions on returning cash to share-
um-ion batteries used in longer-range it was rubber plantations . . . or iron In what its analysts dubbed a “buy- be an enticing alternative to dividends holders.
electric vehicles. supply in Brazil.” back bonanza”, Goldman projected when it comes to returning capital to Jamie Dimon, chief executive of
“The western companies have not Glencore is expected to produce shares repurchases by US companies shareholders. JPMorgan, whose board gave the green
done it. They either don’t believe this is about 35,000 tonnes of cobalt this year, would rise 35 per cent this year from Unlike dividends, buyback pro- light to a $30bn buyback programme in
an issue or they believe they are defi- a figure that could increase by 25,000 to 2020. grammes can be easily increased or December, said last month his bank was
nitely going to get the batteries from 30,000 if the company decides to Europe appears to be lagging behind halted depending on the need, allowing “buying back stock because our cup
China,” Glasenberg said. develop a new ore body at Mutanda, a but Société Générale predicted that companies to deploy them more runneth over”.
“But what happens if that doesn’t mothballed mine in the DRC. “I think buybacks on that side of the Atlantic opportunistically. They also reduce Companies in both the US and Europe
occur and the Chinese say we are not Ivan Glasenberg says western that will come on stream in the next 18 could eclipse their pre-pandemic levels outstanding shares, which helps to have been reporting blowout first-quar-
going to export batteries, we are going to carmakers risk being left behind months,” said Glasenberg. next year by some 25 per cent. boost earnings per share. ter earnings over the past few weeks.
COMPANIES & MARKETS
Investors fret as The day in the markets

inflation adds to What you need to know
wall of worry 3 Price of government debt falls after US
prices rise at fastest pace since 2008
US Treasuries sell off after inflation surprise
3 Wall Street’s Nasdaq Composite more 10-year government yields (%)
Katie Martin than 7 per cent below April record peak

3 London’s energy-heavy FTSE 100
tracks oil prices higher
1.70
Markets Insight Wall Street stocks and US government

bonds dropped after data showed the
1.65
country’s inflation rate jumped to a 13-
F
year high, heightening concerns that the
or too long, more than a year, secretary’s words as a volatility-stoking come up with all the potential excuses. Federal Reserve will be forced to tighten
managing money has been mis-step. Cooler heads saw it as a state- The reality is that the only question that monetary policy. 1.60
relatively plain sailing with ment of the obvious. The market reac- matters is whether the reopening is The S&P 500, which hit an all-time high
stocks rising higher. This is tion just underscores how thin-skinned going OK or not. And it’s going OK. And last Friday, sank 1.7 per cent by lunchtime
instilling an anxious sense that some investors have become and how Europe is pulling it together.” in New York to take the blue-chip index’s
something has to go wrong and putting carefully monetary and fiscal policy- The reasonable assumption always fall for the week to more than 3 per cent.
1.55
pressure on some of the stock markets’ makers need to choose their words. runs that the Fed likes delivering unex- The Nasdaq Composite index, which is
frothier elements. “Markets seem determined to live in pected stimulus. It does not like shock- stacked with highly valued tech
Earlier this month, Janet Yellen was the past,” wrote Paul Donovan, chief ing the system with unforeseen tighten- companies that are seen as more
responsible for flicking away a little of economist at UBS Wealth Management. ing measures that constrain financial sensitive to changes in monetary policy,
that froth. At an event hosted by the “Consumer price inflation in every conditions. lost 2.3 per cent to trade more than 7 per 1.50
Atlantic magazine, the former Federal economy is telling us about the oil price So while the central bank has commit- cent below its April 27 record close. 3 May 2021 12
Reserve chair, now US Treasury a year ago. This is not a concern but ted to keeping policy super accommo- US government debt also sustained Source: Refinitiv
secretary, uttered words that struck markets want to worry about some- dative even in the event of above-target selling pressure, sending the yield on the
fear in the hearts of some market thing.” inflation, some rate setters have started 10-year Treasury note up 6 basis points
participants: “It may be that interest Market movements this week again mentally preparing the market for an to 1.69 per cent. cent in April from March, the largest accommodation,” said David Stubbs,
rates will have to rise somewhat to make eventual return to normal. The past few More vigorous inflation makes bonds monthly increase since 1982, according to global head of market strategy at
sure our economy doesn’t overheat.” days and weeks show that investors are less appealing because it erodes the the US labour department. JPMorgan Private Bank.
It is almost comical that this should ‘Consumer price inflation going to have to learn to live with this. value of the fixed coupon payments they Global equity markets have been under Brent crude, the international oil
cause any market reaction at all. The is telling us about the The volatility is centred in whizz-bang provide. The dollar, as measured against pressure this week as concerns mount benchmark, rose 1.7 per cent to $69.69 a
Fed slashed rates to zero and turned on tech stocks, which feels like the right a basket of trading partners’ currencies, that rising consumer prices fuelled by the barrel, its highest level in more than week.
the stimulus hose in the teeth of the oil price a year ago. place. This is bad news if you are, for rose 0.7 per cent. strong economic rebound from the Covid- London’s FTSE 100, which has a large
coronavirus crisis last year. Now, This is not a concern’ example, Ark’s Cathie Wood. Her flag- Data yesterday showed consumer 19 crisis could lead the Fed to reduce its concentration of energy stocks, gained
happily, vaccination rates in the US are ship Innovation fund tracking technol- prices in the US advanced 4.2 per cent in $120bn of monthly bond purchases that 0.8 per cent while the pan-continental
high and infection rates are falling. ogy stocks has dropped by more than April year on year, the most rapid price have boosted asset prices throughout the Stoxx Europe 600 index added 0.3 per
Business is getting back to normal, suggested that urge to fret is strong. On one-third from its peak in February. increase since 2008 and higher than pandemic. cent, with its oil and gas sub-index
quickly. Quickly enough, in fact, to Tuesday, high-growth tech stocks fell Stocks closely tied to bitcoin and analysts’ expectations of a 3.6 per cent “Markets are intensely focused on gaining 2 per cent.
cause bottlenecks and supply problems in anticipation that yesterday’s US newly listed US stocks are also suffering gain. inflation because, if it really does The euro retreated 0.6 per cent to
in everything from lumber to labour. inflation reading would be high. They a rough run. This is all a catch-up with Core inflation, which strips out changes accelerate into this time next year, that purchase $1.2073 of the US currency.
It does not take a rocket scientist to dropped again when inflation was the bond market shock of the first in energy and food prices, rose 0.9 per will force central banks into removing Naomi Rovnick
see how this might pan out. Making indeed shown to be running hot. quarter. Fixed income specialists, a
predictions is foolish but I am prepared The latest assessment of US consumer dour bunch at the best of times, moved
to stick my neck out here: the next move prices showed a 4.2 per cent ascent in to price in a pick-up in inflation earlier Markets update
in US interest rates will be higher, not April from a year ago — the chunkiest in the year. Notably, while 10-year US
lower. And yet: bring out the smelling reading since September 2008. Some of yields did rise after the inflation data
salts. After Yellen’s comments, some of the details were even more striking; release, they did not hit new highs.
the technology stocks that sparkled prices for used cars and trucks jumped Investors in companies that are not US Eurozone Japan UK China Brazil
over the past 12 months swooned and 10 per cent in April alone. yet turning a profit are on shaky ground Stocks S&P 500 Eurofirst 300 Nikkei 225 FTSE100 Shanghai Comp Bovespa
the Nasdaq Composite ended the day Again, none of this should be a huge after a spectacular run. Level 4086.79 1686.27 28147.51 7004.63 3462.75 120590.04
down by nearly 2 per cent. surprise. “It looks like Wall Street is For everyone else, aside from those % change on day -1.57 0.40 -1.61 0.82 0.61 -1.93
Yellen herself quickly clarified her climbing the wall of worry,” said Gregory who truly believe the inflation pick-up Currency $ index (DXY) $ per € Yen per $ $ per £ Rmb per $ Real per $
remarks. She was not “predicting or Perdon, co-chief investment officer at will get out of hand, now is the time to Level 90.316 1.208 109.375 1.410 6.442 5.236
recommending” a rise in rates, which is private bank Arbuthnot Latham. “The brace for frequent tests of nerve. % change on day 0.194 -0.658 0.820 -0.283 0.237 -0.043
no longer in her domain anyway. bears are constantly looking for signs Govt. bonds 10-year Treasury 10-year Bund 10-year JGB 10-year Gilt 10-year bond 10-year bond
Some analysts described the Treasury that the world is going to end. They katie.martin@ft.com Yield 1.676 -0.126 0.075 0.885 3.124 9.123
Basis point change on day 6.260 3.800 0.360 5.200 -0.800 9.000
World index, Commods FTSE All-World Oil - Brent Oil - WTI Gold Silver Metals (LMEX)
Level 454.58 69.38 66.15 1829.10 27.48 4402.20
% change on day -1.36 1.20 1.30 -0.62 -0.92 0.55
Yesterday's close apart from: Currencies = 16:00 GMT; S&P, Bovespa, All World, Oil = 17:00 GMT; Gold, Silver = London pm fix. Bond data supplied by Tullett Prebon.
Main equity markets

S&P 500 index Eurofirst 300 index FTSE 100 index
4320 1720 7200
7040
4160 1680
6880
4000 1640 6720
| | | | | | | | |
3840 || | | | | | | | | | | | | | | | || | 1600 || | | | | | | | | | | | | | | | || | 6560 | | | | | | | | | | |
Mar 2021 May Mar 2021 May Mar 2021 May
Biggest movers
% US Eurozone UK
Nortonlifelock 7.02 Commerzbank 8.56 Bp 3.51
Occidental Petroleum 6.78 Aegon 7.52 Diageo 3.40
Ups
Valero Energy 5.01 Bayer 7.24 Royal Dutch Shell 3.32

Diamondback Energy 4.51 Fresenius 3.78 Royal Dutch Shell 3.04
Hollyfrontier 4.47 Royal Dutch Shell 3.73 Pearson 2.22
%
Applied Materials -5.56 Alstom -4.09 Just Eat Takeaway.com N.v. -8.32
Gap (the) -5.47 Infineon Tech -3.27 Flutter Entertainment -4.46
Downs
Lam Research -4.90 Thyssenkrupp -3.20 Renishaw -3.47

Expedia -4.87 Vivendi -2.52 Aveva -1.83
Twitter -4.84 Merck -2.27 Entain -1.69
Prices taken at 17:00 GMT Based on the constituents of the FTSE Eurofirst 300 Eurozone
All data provided by Morningstar unless otherwise noted.
Wall Street Europe London

FuboTV, the live sports streaming Strong first-quarter results sent UDG Healthcare soared after announcing
platform, rallied after posting what it said Technicolor surging, with the visual and that US private equity firm Clayton,
was its “strongest first quarter in its sound production group reporting Dubilier & Rice was buying the
history” with total revenue hitting adjusted earnings before interest, taxes, pharmaceuticals services group for £10.23
$119.7m, up 135 per cent year on year and depreciation and amortisation of €43m, a share, a 21 per cent premium on
above consensus estimates of $104m. up 71.7 per cent year on year on a Tuesday’s closing price.
The New York group added 43,000 constant currency basis. The transaction values the Dublin-
subscribers during the period, taking its The French company said it was based company at £2.6bn.
total subscriptions to 590,000. benefiting from a rising need for CD&R already owns healthcare and
The performance prompted FuboTV to domestic broadband access, growing communications group Huntsworth, said
raise its full-year 2021 revenue guidance appetite for catalogue DVDs and higher RBC Europe analyst Charles Weston, who
to between $520m and $530m, up from demand for original content from studios raised his share price target for UDG as
the $460m to $470m range stated a few and streamers. he highlighted the “potential cross-selling
months ago, while end-of-year “Live-action production is ramping up, synergies” from the deal and the
subscribers were forecast to reach and more than 90 per cent of our 2021 expected cost efficiencies that “could be
830,000 to 850,000, higher than the visual effects and animation pipeline is driven out”.
760,000 to 770,000 previously estimated. already secured,” said Richard Moat, chief A return to profitability in the second
Pharmaceutical group Minerva executive. half of last year helped lift housing
Neurosciences soared on news that a A miss on earnings results sent Ambu maintenance and management company
phase 3 trial suggested that its tumbling more than a fifth. Mears Group, which reported a full-year
roluperidone drug could, according to The Danish medical equipment maker 2020 loss before tax of £3.4m against a
chief executive Remy Luthringer, reported quarterly revenue of DKr1bn profit of £32.4m in 2019.
“potentially improve negative symptoms ($162m), lower than the mean estimate of For the second half of 2020, trading
of schizophrenia and social functioning DKr1.05bn forecast by analysts polled by improved with the group delivering a
over the long term”. Reuters, while ebit came in at DKr100m, pre-tax profit of £4.8m.
An increase in dividends alongside an falling short of the DKr129m expected. Food-delivery group Just Eat
upgrade to outlook sent Wendy’s higher Salvatore Ferragamo rallied after an Takeaway sank on news that rival
before a broad-based sell-off wiped out acceleration in sales from China, South Delivery Hero was re-entering the
its gains. Korea and the US helped lift the Italian German market.
The fast food chain said that, for the fashion group’s results. The Netherlands’ Just Eat had, until
full year, it expected adjusted earnings For the first quarter, the company recently, kept the market largely to itself
per share of between $0.72 and $0.74, up reported revenue of €245m, up 10.3 per after agreeing to purchase Delivery
from the $0.67 to $0.69 range stated in cent from the €222m posted during the Hero’s German business for €930m in
March. Ray Douglas same period last year. Ray Douglas 2018. Ray Douglas
MARKET DATA
WORLD MARKETS AT A GLANCE FT.COM/MARKETSDATA

Change during previous day’s trading (%)
S&P 500 Nasdaq Composite Dow Jones Ind FTSE 100 FTSE Eurofirst 300 Nikkei Hang Seng FTSE All World $ $ per € $ per £ ¥ per $ £ per € Oil Brent $ Sep Gold $
-1.57% -2.30% -1.31% -1.61% -1.36% -0.658% -0.283% -0.349% -0.62%

0.82% 0.40% 0.78% 0.820% 1.04%
Stock Market movements over last 30 days, with the FTSE All-World in the same currency as a comparison
AMERICAS EUROPE ASIA
Apr 13 - - Index All World Apr 13 - May 12 Index All World Apr 13 - May 12 Index All World Apr 13 - May 12 Index All World Apr 13 - May 12 Index All World Apr 13 - May 12 Index All World
S&P 500 New York S&P/TSX COMP Toronto FTSE 100 London Xetra Dax Frankfurt Nikkei 225 Tokyo Kospi Seoul
29,730.799
7,004.63 15,234.36 15,150.22
4,141.59 19,203.70 19,138.11 3,169.08 3,161.66
6,889.12 28,147.51
4,086.77
Day -1.57% Month -0.99% Year 42.40% Day -0.71% Month -0.33% Year 28.60% Day 0.82% Month 1.74% Year 16.92% Day 0.20% Month -0.14% Year NaN% Day -1.61% Month -5.35% Year 38.17% Day -1.49% Month 0.95% Year 63.36%
Nasdaq Composite New York IPC Mexico City FTSE Eurofirst 300 Europe Ibex 35 Madrid Hang Seng Hong Kong FTSE Straits Times Singapore
13,996.10 48,971.50 9,007.70
1,686.27 28,497.25 3,187.90
13,081.45 47,503.71 1,676.68 8,525.10 28,231.04
3,123.26
Day -2.30% Month -5.54% Year 45.33% Day -1.38% Month 3.40% Year 30.69% Day 0.40% Month 0.69% Year 26.69% Day 0.23% Month 5.57% Year 33.20% Day 0.78% Month -1.69% Year 14.68% Day -0.67% Month -2.03% Year 19.47%
Dow Jones Industrial New York Bovespa São Paulo CAC 40 Paris FTSE MIB Milan Shanghai Composite Shanghai BSE Sensex Mumbai
120,590.04 6,279.35 24,600.355 49,591.32

24,452.93 3,482.55 3,462.75
33,677.27 33,821.40 118,811.74 6,184.10 48,690.80
Day -1.31% Month 0.24% Year 42.34% Day -1.93% Month 1.45% Year 54.79% Day 0.19% Month 1.91% Year 40.40% Day 0.23% Month 0.14% Year 39.49% Day 0.61% Month 0.35% Year 19.62% Day -0.96% Month -1.82% Year 54.27%
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ARTS
Monologue with immaculate interiors

The Human Voice
FILM Pedro Almodóvar
AAAAE
Danny
Leigh Those Who Wish Me Dead
Taylor Sheridan
AAEEE
F
Servants
uture historians seeking a Ivan Ostrochovsky
Covid-era time capsule should AAAAE
set aside half an hour for
Pedro Almodóvar’s The Some Kind of Heaven
Human Voice. It isn’t just that Lance Oppenheim
the film — shot during the pandemic — is AAAEE
a model of social distancing, its star
Tilda Swinton a virtual solo act. Neither
is it the role it now takes in Britain at
least, glittering bait for reopened cine- Once someone moves to The Villages, it
mas. The relevance is more particular. is said with a manic gleam in the docu-
This is film-making in the style of a mentary Some Kind of Heaven, they
Zoom call with the colleague whose on- have no reason ever to venture outside
screen interiors are a deluxe act of war. again. The location is real, a giant self-
Every room is a masterclass of colour contained retirement community in
choices and just-so objets. The books, of central Florida. The sense remains of a
course, are perfect — Tender Is the Night fantasyland, sealed off and strange.
and Breakfast at Tiffany’s, large-format Here, another resident beams, Villagers
monographs on Ingrid Bergman. If simply “become younger”. By the time
Almodóvar has made an advertisement you see a squad of aged cheerleaders
for moviegoing, he has also created a twirling batons, you expect the air to
fine one for redecoration, or ideally liv- quiver with the famous four notes of The
ing in a show home. Twilight Zone theme tune.
The charm is how knowing it is all is, Director Lance Oppenheim makes all
tongue subtly in cheek throughout. The this the stage for an artful slice of non-
very material has been pulled from a fiction. As the sun sets pink-blue
shelf, the film a loose update of Jean Coc- through the palm trees, the issue of
teau’s 1930 play in which a heartbroken Above: Tilda Swinton (and from casual deceptions to impassioned sculpting reality is central. When devel-
woman shares a last phone call with her Dash the dog) in Pedro pleas — is the stuff of performance, oping The Villages in the 1980s, we
ex-lover. Near the start of his career, Almodóvar’s ‘The Human quote marks left in. A grande dame deals learn, its founder Harold Schwartz con-
Almodóvar used it as inspiration for his Voice’. Right: Angelina with tragedy, we realise, by making it a sidered a basic question: what will the
breakthrough Women on the Verge of a Jolie in ‘Those Who Wish turn, the same way they armour them- story be for this place?
Nervous Breakdown. Now it becomes a Me Dead’ selves with couture and soft furnishings. Oppenheim has asked himself the
Bluetooth monologue, Swinton grab- The bookshelves are at the modest same thing. His conclusions are firm.
bing AirPods. For all but a scene, the cast end of a smorgasbord of flawless taste. After some modest scene-setting, his
is simply her and the couple’s dog, also The credits give thanks to brands film cherry-picks three sets of residents
distraught. The hound — Dash, an affa- including, but not limited to, Hermès, to focus on. Self-effacing widow Barbara
ble scrap — is a gifted performer too, as Balenciaga, Fornasetti homeware, Nani- has found herself marooned here, a mis-
befits this mischievous film. The exqui- marquina textiles, Tumi, Loewe, fit with a thick Boston accent. Sun-
site apartment turns out to sit inside a Chanel, Tom Ford and Cartier. You may baked drifter Dennis brings a secret
movie soundstage, in the middle of ply- feel you should take out a second mort- inside the community. And then there is
board corridors. gage just to watch them. Anne and Reggie Kincer, a couple in
Where better for Swinton to be? But if a lot of luxury is packed into 30 their seventies whose marriage creaks
Almodóvar puts his spin on Cocteau by minutes, so too is all kinds of subtext. when Reggie moves from the spiritual
making her character an actress. Every The sly point being made is that it’s pos- breakthroughs of tai chi into frequent
splendid line delivery — and they are, sible — maybe even unavoidable — for recreational drug use.
Light and shade coexist, sometimes
wonderfully. If the film can seem deeply
everything to be two things at once. exists at one remove from the state. tickled by itself, there are also moments
High-end consumer goods can’t make Beneath the surface, collaboration is of melancholy strong enough to knock
us happy but we still love to gaze at rife, a queasy give-and-take between you off your feet. But prepare to leave
them. A person can be sincerely belief systems. with more questions than you came
wounded and grandly milking the Another movie would make itself a with. Clearly those of us closer than we
moment. And you can ponder such tale of heroic dissent. Servants is might like to our own retirement com-
quirks of the psyche while also realising less optimistic. Here nothing can be munity risk looking silly second-guess-
you want to buy a new coffee machine. trusted and nothing is untainted. You ing Oppenheim, who made this much-
Or an axe. An especially stylish one of taste a corrosive drop of Le Carré, so too applauded film at 24. Still. His outliers
those — courtesy of toolmaker Bellota — a trace of Pawel Pawlikowski (with are compelling, but are they really so
is sold in a hardware shop that is pure whose Ida the film shares a co-writer, much more so than mainstream life in
Almodóvar, pretty as a chocolatier. Rebecca Lenkiewicz). The Villages, a place whose cultish vibe
Swinton arrives with Dash and leaves On screen the story belongs to the the film barely glances at? Or the untold
with the murder weapon. Actress, dog worst of the lot, a secret policeman sim- story of how Schwartz turned a ragbag
and hatchet make some trio, but Swin- ply doing his job, played by the master- of Florida land tracts into what was for
ton is the centrepiece — the human fully grim Vlad Ivanov. The camera two recent years running the fastest
voice of this witty, teasing movie and the sometimes rises above the souls on the growing city in America? Thanks to
human pulse as well. ground. The air still feels as short as it Wikipedia for that nugget, by the way —
In UK cinemas from May 19 would locked in the car in that fearful Oppenheim is too much of a young man
thehumanvoicefilm.co.uk opening scene. in a hurry to tell us.
On Curzon Home Cinema and other digital On Dogwoof On Demand and other digital
How times change. Formulaic enough to platforms in the UK from May 14 platforms from May 14
have come from a packet, Those Who
Wish Me Dead is exactly the kind of Left: Teenagers
banged-out action thriller that would at a Czech
have once starred Sylvester Stallone or a seminary in
smirking Bruce Willis, cast as a rowdy ‘Servants’.
firefighter with a past. Now the role goes Below:
to Angelina Jolie, playing a veteran retirement
“smokejumper” — a wildfire first village
responder — unable to find peace in documentary
rural Montana, her party-hard exterior ‘Some Kind of
a mask for bad memories. Heaven’
And how they stay the same. The
1990s are no more but their methods
remain, down to the portrait of that
back-story. Slabs of flashback land like
breezeblocks. So too the old Hollywood
endgame: redemption.
The movie arrives with a pedigree.
The director is Taylor Sheridan, whose
credits as a writer include the well-re-
garded Sicario and Hell or High Water,
gnarled tales of moral complexity. Here,
the evil that men do is neatly contained
in the person of two hired killers played
by Aidan Gillen and Nicholas Hoult. For
reasons of plot (convoluted), their
quarry is a young boy. Fires are duly
started, mostly digitally. And “Action”.
It has been a long time since Jolie
ascended to the kind of celebrity where
her acting career feels like a vestige
from another life. By now, she makes as
plausible a firefighter as she would any-
thing else. That much is the problem:
she is doomed to be Angelina Jolie and
that alone, the rest of the film so over-
awed it seems on the brink of asking for
her autograph.
In UK cinemas from May 17
Hard-to-shake Czech drama Servants

opens like a dream at the very point it
tips into nightmare — car headlights on
a gloomy road, a body in the boot. The
dread never lets up in Ivan Ostrocho-
vsky’s slim, cold arthouse noir of God
and the Soviet bloc. The year is 1980 but
pristine black and white gives the film
timelessness. Time has its own rhythm
anyway in the seminary where we meet
a pair of small-town teenagers arriving
to train as priests. Officially, the church
FT BIG READ. TECHNOLOGY
Emotion recognition systems aim to assess an individual’s mood through the analysis of facial
expressions. The market is growing rapidly despite scientists’ doubts that the algorithms work.
By Madhumita Murgia
The AI tools that try to read your mind

F ‘After
or most of the past year, Home-schooling installed in Xinjiang, the north-western circumstance, exhibit the same set of six applications. HireVue claims to have he says. “Psychologists agree . . . that
students at True Light College, in Hong Kong, Chinese region where an estimated 1m universal emotions: fear, anger, joy, more than 700 customers, including emotions are a social label applied to
a secondary school for girls in below right. The mostly Uyghur Muslims are being held sadness, disgust and surprise. large employers such as GE, Hilton and researching physiological states.”
Kowloon, Hong Kong, have number of the in detention camps. Li Xiaoyu, a polic- This framework has been used by a Delta, for its AI-based system. Human Ekman himself has studied cultural
been attending classes from territory’s ing expert and party cadre from the number of companies to train machines counts Unilever among its clients. the history differences in how emotions can be
home. But unlike most children around
the world forced into home-schooling
schools using
4 Little Trees’
public security bureau in Altay city in
Xinjiang, told the FT in 2019 that the
in the language of human emotion.
“Many machine-learning papers cite
However, critics believe that using AI
in this way can perpetuate biases that
and shaky expressed, showing in a seminal experi-
ment in the late 1980s that there are
during the pandemic, the students at AI software rose technology was deployed mostly at cus- Ekman as though his categories are already exist in the data used to train scientific differences between how American and
True Light are being watched as they sit
at their desks. Unblinking eyes scruti-
from 34 to 83
over the past
toms to “rapidly identify criminal sus-
pects by analysing their mental state”.
unproblematic, often ignoring the more
complex issues of context, conditioning,
these algorithms. For example, a team
of reporters at Bavarian Public Broad-
foundation Japanese students react to violent films.
The differences, he found, were based
nise each child’s facial expressions year, according No matter the application, the goal is relationality and culture,” says Craw- casting tested the software of Retorio, an of these on whether someone from their own
through their computer’s cameras. to its founder the same: to make humans less inscru- ford. “The ‘universal emotion’ theory AI hiring start-up in Munich, and found culture was in the same room or not. In
The “eyes” belong to a piece of soft- Vicky Lim table and easier to predict at scale. With fits the tools.” that the algorithm responded differ- tools, I’m students at the University of California
ware called 4 Little Trees, an artificial
intelligence program that claims it can
Main image: FT montage office staff and students working
remotely during coronavirus, business
Ekman, now 87 and retired, still
defends his research but claims it is
ently to the same candidate in different
outfits, such as glasses and headscarves.
convinced at Berkeley, there was no difference in
their reactions whether there was
read the children’s emotions as they is booming: the emotion detection being misused by companies trying to The company said this was partly that they another American in the room or not,
learn. The program’s goal is to help industry is projected to almost double build commercial products. “I don’t because the video-based assessment but for the Japanese, “there was a huge
teachers make distance learning more from $19.5bn in 2020 to $37.1bn by think much of the latest research, it’s system had been trained based on how a should be difference. Particularly if it was some-
interactive and personalised, by
responding to an individual student’s
2026, according to market research firm
Markets and Markets.
not been replicated and it seems to be
ideologically driven,” he says, referring
chosen group of recruiters perceived
jobseekers and their personalities, so
strongly one in an authoritative position, they
showed a completely different set of
reactions in real time. “During the pandemic, technology to companies being motivated by profit. the algorithm was reproducing their gut regulated’ expressions,” Ekman says.
The 4 Little Trees algorithm works by companies have been pitching their “It’s yet to be demonstrated that algo- feelings and innate biases. He adds: “The Japanese were follow-
measuring micro-movements of mus- emotion recognition software as a way rithms can be trained accurately as The fundamental flaw with the out- ing their own rules about who can show
cles on the girls’ faces, and attempts to
identify emotions such as happiness,
to monitor workers and students
remotely,” says Kate Crawford, co-
facial measurement tools. It takes a
human 50-100 hours to get trained on
puts of emotion-tracking systems,
Venkatasubramanian believes, is that
‘We can what emotions to whom, and when it
can be shown. People in every culture in
sadness, anger, surprise and fear. The founder of the AI Now Institute at New our [analysis system] in a reliable and machines can’t adjust their behaviour draw the world learn those rules, about what
company says the algorithms generate York University. “Similar tools [to 4 Lit- consistent fashion.” like humans do. “When you’re interact- emotions can be displayed and when.”
detailed reports regarding each stu- tle Trees] have been marketed to pro- Beyond measurement, he says coming with one person and you make a certain
Privacy problem
dent’s emotional state for teachers, and
can also gauge motivation and focus. It
vide surveillance for remote workers,
and are already used in remote job
panies need to invest in research to
prove links between expressions and
mistake about their feelings, you can get
feedback and very quickly adjust your
signals Despite concerns about the current
alerts students to “get their attention interviews. [Emotion detection] is going behaviour. “Simply measuring the face internal model,” he says. “But a about what accuracy and biases of emotional AI,
back when they are off track”.
Its founder, a former teacher, Vicky
to have a significant impact on the
world, from workplaces to schools to
doesn’t tell you whether your interpre-
tation of it in that instance is correct or
machine can’t do that, it is building a
model from some data and scaling it to
I’m feeling, many scientists are confident the tech-
nology will improve as the data used to
Lim, says it reads the children’s feelings public places.” incorrect. Most of what I was seeing was thousands more people, it doesn’t have but if I’m train algorithms are better suited to the
correctly about 85 per cent of the time. ability to adjust in the moment if it applications, and as companies begin to
The popularity of the software has ‘Universal’ emotions? misread what you said.” not smiling design country-specific solutions.
Paul Ekman, a
exploded during the pandemic, with the
number of schools using 4 Little Trees in
As corporations and governments
enthusiastically roll out emotion recog-
pioneer of studying
In 2019, US non-profit Electronic
Privacy Information Center filed a com-
it doesn’t McStay says companies are already
using cultural awareness as a way to dif-
emotions, sees a lot
Hong Kong growing from 34 to 83 over nition on the public, critics point out a of ‘pseudoscience’ in plaint against HireVue with the Federal mean I’m ferentiate their products. “Empath, a
the past year, according to Lim. major flaw with the technology: for Trade Commission for unfair trade company in Tokyo, sees a real market
4 Little Trees uses one of a family of many scientists, there is little evidence
the tools, with more
research necessary practices by “using biometric data and not happy. opportunity because they recognise
new algorithms that its creators claim
can recognise human emotion and state
to show it works accurately. Research
suggests that while they might be able to what I would call pseudoscience — they
secret algorithms in a manner that
causes substantial and widespread
So there’s a that people do emote differently, behav-
iour is different in Japan and the UK,
of mind through the analysis of facial decode facial expressions, that doesn’t weren’t doing the research to show the harm.” They claimed the AI tools “were lot of noise there are different levels of acceptability
expression, micro-gestures, eye track- necessarily translate to what a person is interpretation of the measurements was unproven, invasive and prone to bias”. in terms of degree to which emotion
ing and voice tones. really feeling or thinking, or what they correct,” he says. “If I tell you that you In January, HireVue announced it in the should be expressed,” he says.
The technology is a natural evolution
of facial recognition systems, which
plan to do next.
In a review commissioned by the
just activated the ventalis muscle —
what does that mean? Well, it depends
would no longer use facial analysis to do
job assessments, and recommended
system’ Meanwhile, Hong Kong-based 4 Little
Trees uses Chinese faces to train its stu-
identify individuals but is far more inva- Association for Psychological Science in on when you did it, who you are, you other AI recruitment firms do the same. dent surveillance systems, to improve
sive — it claims not just to understand 2019, five distinguished scientists from need evidence. You have to separate It said it had “concluded that for the sig- local accuracy. “I think we are going to
how someone is feeling in the moment, the field were asked to scrutinise the measurements from significance.” nificant majority of jobs and industries, see more start-ups and companies push-
but also to decode their intentions and available evidence. Over two years, the The problem with inferring intention, visual analysis has far less correlation to ing back against the idea that expres-
predict their personality, based on fleet- reviewers looked at more than 1,000 according to critics of the technology, is job performance than other elements of sions are universal, companies are find-
ing expressions. different studies of emotion recognition that it results in error-filled and biased our algorithmic assessment”. ing local opportunities to interpret the
Hundreds of firms around the world technology. They found that emotions decision-making in highly sensitive The company will, however, continue local people and context,” McStay says.
are working on emotion-decoding tech- are expressed in a huge variety of ways, areas such as education, policing, hiring using job applicants’ language to assess But even if facial expression algo-
nology, in an effort to teach computers which makes it hard to reliably infer and border controls. employability, which it said had consid- rithms become highly accurate, many
how to predict human behaviour. how someone feels from a simple set of “Any time you want to use an auto- erable “predictive power”. It added: critics question whether machines
American tech giants including facial movements. mated system to do decision-making, “Our algorithms do not see significant should ever make decisions about how
Amazon, Microsoft and Google all offer “People, on average, the data show, you need training data. And that has to additional predictive power when non- humans will react, particularly without
basic emotion analysis, while smaller scowl less than 30 per cent of the time be labelled by someone — someone has verbal data is added to language data.” our permission. This question of a per-
companies such as Affectiva and Hire- when they’re angry,” wrote Lisa Feld- to make judgments about what each Another widespread criticism of emo- son’s right to privacy about their feel-
Vue tailor it for specific sectors such as man Barrett, a psychologist at North- facial expression means,” says Suresh tion recognition by algorithms is that it ings was addressed by the EU’s pro-
automotive, advertisers and recruiters. western University and one of the Venkatasubramanian, a machine learn- is not universally applicable; people of posed AI regulations published last
Disney has used the software to test reviewers. “So, scowls are . . . an expres- ing scientist at the University of Utah, different cultures express their feelings month. The proposal defined emotion
volunteers’ reactions to a range of its sion of anger — one among many. That who specialises in bias and discrimina- in unique ways. Andrew McStay, a pro- recognition technologies as “high-risk”
films including Star Wars: The Force means that more than 70 per cent of the tion, and sat on the ethics board of US AI fessor at Bangor University in Wales, has and called for explicit consent from
Awakens and Zootopia. Car companies time, people do not scowl when they’re recruitment start-up HireVue until he spent half a decade exploring emotional those it is used on.
like Ford, BMW and Kia Motors want to angry. And on top of that, they scowl resigned in late 2019. “We have no relia- AI technologies and how they have been “After researching the history and
use it to assess driver alertness. Market- often when they’re not angry.” ble indicators for that. No doubt we can used. “The premise that there are six shaky scientific foundations of these
ing firms like Millward Brown have The authors added that it was “not draw certain signals about what I’m basic emotions is profoundly problem- tools, I’m convinced that they should be
tested it to gauge how audiences possible to confidently infer happiness feeling, but if I’m not smiling, it doesn’t atic, it is a very western-centric view,” strongly regulated,” says Crawford. “In
respond to advertisements for clients from a smile, anger from a scowl, or sad- mean I’m not happy. So there’s a lot of many cases, we won’t know the full
like Coca-Cola and Intel. ness from a frown, as much of current noise in the system.” extent of how many companies are
And it has already begun creeping technology tries to do when applying using these tools, as they are often used
into public spaces too. Emotion recogni- what are mistakenly believed to be the Reproducing bias without transparent disclosure or
tion systems have received funding for scientific facts.” One of the areas where bias in an emo- employee consent.”
use by Lincolnshire police in the UK to Those “scientific facts” that Barrett tional AI system can be particularly high Ekman, the founding father of
identify suspicious people, while cam- Reading your and her colleagues refer to, which form stakes is recruitment. These algorithms emotion interpretation, agrees. “Watch-
eras were once deployed in London’s mind the basis of much of emotion recogni- track the facial expressions of jobseek- ing someone’s facial expressions is an
Piccadilly Circus to analyse people’s Use this QR code tion software, are mostly the work of a ers to draw conclusions about their invasion of privacy, especially if it’s done
to open an
emotional reactions to the adverts on interactive tool single man — American psychologist employability, including assessments of without their knowledge,” he says. “I
the large billboards. that assesses Paul Ekman. In the 1960s, Ekman trav- their dependability, conscientiousness, strongly believe there should be laws
While the technology has been piloted feelings based elled to Papua New Guinea to perform a emotional intelligence and cognitive passed that prohibit the recording of
for several years, it is only now becom- on your facial series of experiments to prove his ability. Companies in this space include facial expression, let alone its interpre-
ing more sophisticated. Emotion recog- expressions hypothesis that all humans, regardless HireVue and London-based Human, tation or measurement, without
nition-enabled cameras have been of culture, gender, geography or whose software analyses video-based informed consent.”
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Labour’s route to power involves coalition with smaller parties

Labour claims, parroted by many well Conservatives, Labour garnered 8.6m with 12,752 votes. Labour under all the 56 seats won by Labour in 1997
positioned commentators, that the votes, whereas Labour under Corbyn in Corbyn twice won Hartlepool, securing in Scotland make a Labour majority
party’s woes are all due to Jeremy 2017 got 12.88m votes and 10.27m in 21,969 votes in 2017 and 15,464 in government almost impossible in the
Corbyn do not stand up to objective 2019. 2019, holding off the Conservative foreseeable future.
scrutiny (“Horror show in Hartlepool General elections follow a similar challenge, although in 2019 the However, the Conservatives could
spells trouble for Starmer”, Report, pattern in Hartlepool, where Boris Conservative and Brexit party vote easily lose overall control and Labour
May 8). Johnson’s Conservatives triumphed in combined was 22,472. and the smaller parties could take
THURSDAY 13 MAY 2021 If you go back to Labour’s vote in last week’s by-election. In 1974, the This is not to say that all was well power in a coalition. But this requires a
1983, when Margaret Thatcher roundly year the constituency was created, the under Corbyn but neither was it under different kind of politics and there is no
beat Michael Foot in the wake of the votes were 26,988 for Labour, and New Labour. Moreover, Social sign that anyone around Starmer is
Falklands war, it was 8.46m. In Tony 22,700 for the Conservatives. By the Democrat parties are losing outright capable of thinking about this.
Blair’s last election in 2005, Labour time of the 2004 by-election when across Europe. The conclusion must be Clare Short
The risk of a new war won with 9.55m votes. Under Gordon
Brown in 2010, when the party was
outpolled by David Cameron’s
Peter Mandelson stood down as the
local MP to become an EU
commissioner, Labour held the seat
that Sir Keir Starmer is unlikely to find
a way forward if he simply imitates
New Labour. In fact, the loss of almost
Former Secretary of State for
International Development, 1997-2003
London SW4, UK
in the Middle East Decades of Jeffersonian Bitcoin adoption will grow Why increased spending is
Hamas and Israel must de-escalate the latest tensions ideology look set to end despite governor’s concern not a cause for celebration
Gideon Rachman (Opinion, May 11) The latest comments on You write (Report, May 11) that UK
The long-simmering conflict between to Palestinians. It is a strategy that implies that industrial strategy — cryptocurrencies by Andrew Bailey, consumer spending has risen above
Israel and the Palestinians has boiled enabled him to become Israel’s longest intended to produce better-paying jobs governor of the Bank of England, fail to pre-pandemic levels for the first time
over once more as Israeli jets pound the serving prime minister, while steering and a more productive economy — mention the significant benefits of such in 2021. I strongly suspect it’s all the
hemmed-in Gaza Strip and Palestinian the country to the right. went out of fashion for the good reason investments (“Big banks move into result of inflation. Today I renewed my
militants launch hundreds of rockets He has been aided by the meek that it was generally ineffective and a crypto services”, Report, May 7). home insurance at a 20 per cent price
into the Jewish state. A repeat of the responses of the US and European cap- waste of resources. He warns that the Despite the notable levels of increase on 2020 (after much shopping
2014 Gaza war, when more than 2,000 itals to the creeping colonisation of return to industrial policy is motivated volatility that crypto markets exhibit, around). I booked two midweek
Palestinians and 73 Israelis, mostly sol- the West Bank, as well as Gulf states not by economic efficiency but by the it’s hyperbolic to warn investors about cinema tickets for almost £18 each and
diers, were killed, is a real threat. Both that engaged with Israel to serve their US and China seeking geopolitical losing “all their money”. As within any paid an extra 20 per cent VAT bill to
sides need to de-escalate and avoid a own interests of countering Iran. The advantage through “protectionism”. market, investors must perform due release an internet order from Europe.
conflict that will serve hardliners in United Arab Emirates’ decision to Some perspective is needed. The diligence on investment targets and Brexit dividend, anyone?
each camp, heap more misery on long- normalise diplomatic ties with Israel tension between two ideologies — assess all risks — this doesn’t only In short, I am spending way more
suffering Palestinians trapped in Gaza last year formalised the Middle East’s “government is inherently inefficient” apply to crypto. while still consuming less than a year
and expose Israelis’ vulnerability. worst-kept secret. The so-called Abra- and “effective government is needed That said, I do share the sentiment ago. Hardly to be celebrated and
The latest violence did not begin in ham accords — Bahrain, Sudan and for providing public goods and that such hype investments as today’s stock markets seem to share in
Gaza, controlled by Hamas, the mili- Morocco followed the UAE’s lead — promoting new activities” — is endemic dogecoin have limited fundamental my gloom . . .
tant group. Instead its roots are in were sealed in the final throes of across the centuries. See Thomas purpose and investors should avoid Lucie Chaumeton
Jerusalem where Israeli police entered Donald Trump’s presidency, during Jefferson and Alexander Hamilton at basing strategies on trends. However, London N2, UK
the compound that houses al-Aqsa which he pursued an unabashedly pro- the start of the American Republic. The to claim that assets such as bitcoin and
mosque, Islam’s third holiest site, using Israeli stance towards the conflict. paradigm prevailing at a point in time form of wealth tax will best preserve ethereum have no intrinsic value Contrasting views on the
rubber bullets and “skunk” gas against Palestinians are now more margin- has been reached by moving away from desirable incentives for a well- disregards the noteworthy strides
stone-throwing Palestinian protesters. alised than ever. Lingering hopes of a what was clearly not working, crossing functioning market economy. towards legitimacy that the market has PM’s dirigiste makeover
The compound, known to Muslims two-state solution have been dashed. the river by feeling the stones, not He also mentions the unequal taken in recent months. Robert Shrimsley (“Political shift Tory
as the Haram ash-Sharif or Noble Sanc- But there is no victory for Israel. building a machine. treatment of taxpayers under current For instance, the public listing of gain aggravates Labour pain”, Opinion,
tuary and Jews as Temple Mount, is Instead, its actions trickle fuel into The four-decade reign of the forms of wealth taxation, such as the cryptocurrency exchange Coinbase and May 8) attributes part of the
sacred to both religions and one of the a highly combustible environment. Jeffersonian ideology is coming to an property tax. the increasing institutional Conservative success in the local and
conflict’s most emotive flashpoints. Explosions can happen any time. And, end because it is clearly not working The distributional unfairness of the endorsement from the likes of PayPal mayoral elections to their support for
Tempers were already inflamed over as the rapid escalation proves, Hamas even without reference to geopolitics current system should in my view be and Citigroup signify the market “greater interventionism and
Israeli plans to evict Palestinians from will be quick to exploit crises as it seeks and pandemic. We are moving brought forward as a main reason for infrastructure is improving, with commitment to state spending”. Yet
their homes in occupied East Jerusalem to bolster its claims of Palestinian lead- unsteadily towards a more wealth tax reform, to weigh in equally increasing mainstream adoption from how can one reconcile such a view with
to make way for Jewish settlers. Images ership. But riots by Arabs in Israeli Hamiltonian, steering role for the state. with reasons of efficiency. In the US, a retail traders and traditional your report (“Confusion over ‘levelling
of Israeli police using force against towns also underscore the pent-up But this time we must remember that house or an apartment constitutes the institutions. up’ plans prompts Johnson to hire new
Palestinians protesting at restrictions anger of ordinary Palestinians. to be done wisely rather than badly, largest part of a typical middle class Surely it would be ludicrous for some adviser”, May 4) in which a senior
near al-Aqsa mosque in the holy month When the Abraham accords were state support — such as trade family’s wealth. This is overwhelmingly of the world’s most established Cabinet Office official refers to the
of Ramadan were always going to signed they were hailed in Israel and protection and subsidies — must be true for young people. Why should organisations to continue integrating “widespread cluelessness” within
further incite tensions. Hamas sought western capitals as representing a sig- given to activities which boost resilient these groups pay a wealth tax in the assets with “no intrinsic value” into government as to the meaning of the
to capitalise on the anger and fired nificant step towards ending the pro- supply chains and deliver significant form of property tax on a large part of their services? If anything, we can key “levelling up” policy.
rockets towards Jerusalem, Tel Aviv tracted Arab-Israeli conflict. Yet this future growth benefits. their gross wealth (without deduction continue expecting wider adoption The article goes on to refer to this
and Israeli cities close to Gaza. week’s violence shows there can be The state should receive some of the for mortgage debt), when wealthy from other traditional market players, policy as a “running joke” among
For Israelis, the worst violence in no peace as long as the Palestinians are profit made with state assistance, as people do not pay a wealth tax even on despite Bailey’s claims. Number 10 staff who apparently
seven years should shatter the percep- sidelined and under occupation. would a venture capitalist. Hardly their net wealth? Of course, wealthy Anton Chashchin consider it “a slogan without a
tion fostered by Prime Minister Ben- The Biden administration has sought simple, but we have accepted for too people also pay property taxes, but in Managing Partner, CEX.IO Prime Trading purpose”.
jamin Netanyahu that the occupation to reverse Trump’s pro-Israeli bias. long the accumulating economic, social their case property is a small fraction London SW1, UK Tony Cutler
of the West Bank and the siege of Gaza Now it and its allies must exert pres- and political costs of the Jeffersonian of their wealth. London SW1, UK
do not have consequences for Israel’s sure on Israel and the Palestinians to approach. Knud Z Ross Facebook must be treated
security. Netanyahu has spent a decade end the killing. The tougher challenge Robert H Wade Development Finance Consultant
like a print publisher Mencken has a word of
convincing voters that Israel can be is to find a viable way to revive the Professor of Global Political Economy Bethesda, MD, US
safe and enjoy healthy international moribund peace process. The status London School of Economics The FT letters editor decides daily warning for Tory voters
relations without making concessions quo only promises bloodshed. London WC2, UK Levy would hit Germany’s what correspondence to publish. You write in your editorial that “in
Despite a fair degree of success in truth, areas such as Hartlepool have
Reform wealth taxes to fix family-owned companies getting my own letters published, I do been trending away from Labour for
By advocating a net wealth tax not regard a reluctance to print all my decades as the traditional industrial
distributional unfairness (Opinion, May 10), Martin Sandbu letters as a denial of free speech. working class has aged and shrunk”,
Martin Sandbu hits the nail on the completely misses the point of any Facebook should be bound by the (FT View, May 8).
Crypto’s prime time head in pointing out that a

strengthening case for wealth taxation
is emerging (“The toughest capitalist
possible benefits. In Germany, the
backbone of economic activity and
wealth creation is the medium-sized
same constraints as print publishers
(“Don’t leave framing free expression
to Facebook’s ‘supreme court’”,
The post-industrial working class in
Hartlepool is substantial. They appear
to have put their trust in the prime
prompts watchdog’s glare should root for a wealth tax”, Opinion,

May 10). As he explains, the ratio of
wealth to gross domestic product has
family-owned company. For the
owners, that involves making smart
investments over several generations.
Opinion, May 7). No one has the right
to demand that any particular journal
or broadcaster publicise their views.
minister, regardless of how he let down
Northern Ireland’s Democratic
Unionist party over the customs border
doubled since the 1980s. Wages have Introducing a net wealth tax would Free speech is the right to express in the Irish Sea.
International co-ordination will be vital as an asset class comes of age largely stagnated. He concludes that reduce investments by these families, one’s views, without inciting violence It was HL Mencken who wrote that
the best form of wealth tax is an annual with all the negative effects that would or hatred, not the right to have them “democracy is the theory that the
“But what is dogecoin?” Elon Musk, the — are loose when it comes to crypto. levy on taxpayers’ net worth — their have on employment. published. Donald Trump incited common people know what they want,
self-avowed “technoking” and founder That matters when regulators tend to total assets less their debts. Erik Hallmann violence and hatred. and deserve to get it good and hard”.
of Tesla, was asked repeatedly to comic be siloed into supervisors of commodi- Sandbu reaches this conclusion Chief Executive Officer, Deprag Ian Maitland Cathal Rabbitte
effect during his cameo on Saturday ties or securities or money. The nomen- mainly on efficiency grounds. This Amberg, Germany London SW1, UK Villars-sur-Ollon, Switzerland
Night Live last week. American comedy clature does not help: central bankers,
shows are not the only ones having a developing their own digital coins, pre-
hard time defining what crypto assets fer the term crypto assets rather than
are. Dogecoin is perhaps their most
bizarre manifestation: starting as a
cryptocurrency. The SEC has acted
where crypto tokens fall within the The diplomatic One diplomat couldn’t find his shoes.
Another had forgotten how to tie a tie.
during the Reagan administration and
late stalwart of Washington, who
Although DC’s diplomatic rank and
file yearn to see the capital’s must-
gimmick, its value has surged more
than 10,000 per cent in the past year,
only to plummet by over 30 per cent
legal definition of a security. But the
watchdog ruled that bitcoin — which
accounts for about half the $2tn crypto
dance resumes But there was no question about the
direction of travel: the masks have
come off in Washington’s diplomatic
likened diplomacy to gardening,
arguing that only regular tending saw
relationships flourish. “If you plant a
meet people, ambassadors have been
able to hold elite gatherings at grand
residences that include outdoor space.
while Musk, an enthusiastic propo-
nent, was on air joking it was a “hustle”.
market — is not a security.
What is clear is that international co- after Covid whirl.
The reprise of garden parties,
garden and go away for six months,
what have you got when you come
Paula Dobriansky, former under
secretary of state for global affairs,
If crypto assets have reached the
mainstream — or at least primetime
television — it is reasonable to ask
ordination is needed. Investors are
based all over the world and crypto
exchanges are peripatetic: Coinbase is
closures lunches, dinners and ever more
sizeable in-person events for
Washington insiders marks the revival
back? Weeds,” he once said.
Alterman says Washington is more
than ready to clear out those weeds,
says the resumption of vigorous
diplomatic life will “give hope that a
broad range of foreign policy issues
whether they need to be better regu- shuttering its headquarters, while of traditional diplomacy in the especially because much of the city is can be well managed”. She singled out
lated. Ironically for a decentralised Binance, the exchange that raised the superpower capital. I’ve now attended “still trying to figure out the Biden UK ambassador Dame Karen Pierce
ecosystem that came into being as a German markets watchdog’s hackles three meetings with diplomats in the administration”. That offers for “her terrific diplomatic activism”
snub to traditional finance, regulation over whether the tokens it offers are space of a week — almost as many as I opportunities to canny operators: “I during the pandemic, adding she had
would confirm its coming of age. actually securities that need a prospec- racked up in more than a year spent think there’s going to be a euphoria of attended outdoor events at the British
Gary Gensler, the new chair of the US tus, claims it has no official main office. social distancing. people connecting and embassies that residence in line with CDC and DC
Securities and Exchange Commission, International accord is hard and slow That comes thanks to an increase in seize on that can get an outsize health protocols during lockdown.
has asked lawmakers to explore because of differing approaches to vaccinations and loosening Covid-19 benefit,” says Alterman. “Despite Covid, she has been on top of
whether the markets watchdog needs crypto: China is draconian, offshore guidelines. Nearly 40 per cent of One western diplomat mused that her diplomatic game,” she says.
new legislation to tackle the crypto centres such as Gibraltar are welcom- Washington’s residents have received prolonged lockdown even gave the Stuart Holliday, chief executive of
boom, which has been further boosted ing, and the US, UK and Europe sit in at least one dose, and the capital will Biden team a pretext to work beyond Meridian International Center, a
by institutional investors opening between. In 2018, the Financial Stabil- return to normal life from May 21, prying eyes. “They’re really hard to Washington-based diplomacy
crypto desks, ostensibly as a hedge ity Board of G20 policymakers and when restaurants reopen at full pin down,” they complained. venue, says embassies stand to benefit
against inflation. Laws dating back to
the 1930s may not be up to the task.
finance ministers pledged scrutiny.
Mark Carney, the FSB’s then chair, Washington capacity.
Jon Alterman, a foreign policy
As the practice of diplomacy has
atrophied, some of its most skilled
most from DC’s reopening, arguing
they will be “more important” to
There are parallels with the frenzy in
trading “meme” stocks this year. Tech-
argued that crypto exchanges should
be brought within “the regulatory Notebook expert setting off for his first lunch
with a foreign minister in more than a
practitioners fear that its return could
be clunky — even for those whose job
diplomacy before the return of
regular long-distance travel to foreign
nology has upended finance, and social tent”. Not much has happened since. year, says the return of regular face- it is to master social niceties. capitals.
media is encouraging a new breed of Also needed is better oversight of by Katrina Manson to-face meetings is essential to the “People are going to be rusty,” says Not everybody is expecting life to
retail investor, frustrated with puny how the crypto ecosystem has an work of the capital, not least because one European diplomat who forgot to return entirely to normal. Eric Rubin,
interest rates, through the gamification impact on our actual environment. it is still adjusting to the new give out a single business card at an president of the American Foreign
of trading. The question is whether Mining bitcoin can use up vast administration of Joe Biden. event and admits to having drunk one Service Association, has spent part of
these new investors — many of whom amounts of energy, much of it the “Diplomacy is a game of inches,” he glass too many. Conversations now the pandemic teleworking from
are aware of or indeed attracted by the cheaper, fossil-fuel variety. There says, adding that players often want to start and end with unusually intimate Colorado. Last month he held
highly volatile nature of crypto — need should not have to be a trade-off snatch only three minutes on the health discussions, and some fear a meetings at the state department
new protections. between the so-called democratisation sidelines of larger events to trade lack of clarity around new rules of without a suit and tie for the first time
Gensler is right to focus on market of finance and the climate emergency. morsels of information. “People just social interaction. Alterman panicked in his life. “I can tell you right now, I
manipulation, and deceitful market- A similar balance must be sought by don’t want to have essentially private when offered an unexpected will not be wearing a suit and tie again
ing. There are also valid concerns lawmakers weighing new markets conversations over Zoom.” handshake between fist bumps going forwards,” he says.
about lax money-laundering controls. rules. Investors do not want the stabil- That speaks to the approach of and elbow touches: “I missed two
The problem is that the normal regula- ity of the graveyard, but neither do George Shultz, secretary of state fingers,” he says. katrina.manson@ft.com
tory anchors — geography and product they deserve a “hustle”.
Opinion
An uphill race for Peloton as gyms reopen To save Scotland,
Johnson should
BUSINESS
homebound customers: the company
struggled to meet demand, had to
back old customers and woo new ones.
US revenues have rebounded to more
still like going to stores and the same is
true for gyms.”
Their classes, personal services and
social experiences cannot be easily rep-
stop competing
Brooke
splash out on expedited shipping and
posted an $8.6m net loss.
than 80 per cent of 2019 levels, though
visits are lower, says Daxko which
While Peloton has 2m subscribers,
not everyone can afford — or has room
licated. The moneyed clientele may
have purchased Pelotons to get through with nationalists
Masters Meanwhile gyms suffered badly:
industry group IHRSA estimates that 17
provides IT to clubs. “There’s a real feel-
ing of positivity in the gyms right now,”
for — such bulky equipment. Planet
Fitness, the largest listed US health club,
lockdown, but they can afford to do
both. Indeed Equinox, the luxury chain
per cent of America’s 40,000 health says Richard Darwin, who heads Brit- has 14m members on its own, and 73m frequented by financiers, has gone from
clubs closed last year including several ain’s The Gym Group. Americans went to the gym in 2019. shutting locations last year to pondering
T
high-profile bankruptcies and others Digital providers, from apps such as Some companies are better posi- whether to go public. Jim
he timing for Peloton was
dreadful. Last week, the
are suffering. In the UK, DW Sports went
into administration and Virgin Active is
MyFitnessPal to connected rowing tioned to capitalise on the new environ-
ment. No-frills chains, such as Planet
Peloton’s hot streak may be fizzling
out after last year’s fivefold stock price
Gallagher
high-flying digital fitness trying to restructure. Fitness, Gym Group and Europe’s Basic- rise. Bike sales are “tapering”, the shares
company recalled 125,000 Worldwide spending on physical While health clubs try to Fit, have low prices that appeal to have dropped 40 per cent since January
D
treadmills after reports that activity topped $828bn annually before customers who want to combine digital and the company just ran its first promo-
they pulled in children and pets, leading the pandemic, with just under half going win back customers, digital and in-person experiences. Several now tion since 2019. Optimists say its obses- ivining the will of the people
to injuries and at least one death.
The $165m outlay hobbles Peloton’s
on active participation and the rest on
clothing, equipment and technology,
providers need to build on offer their own apps.
Continued hybrid working will chal-
sive audience — the average subscribing
household screens 26 workouts a month
from an election result
resembles the ancient
efforts to move beyond connected sta- says the Global Wellness Institute. their lockdown growth lenge smaller chains as well as mid- — sets it up to woo advertisers and Roman inspecting the
tionary bicycles just as competition But exercise depends on routine, and priced options: fewer people will want to become a broader streaming platform. entrails of slaughtered ani-
ramps up significantly. Not only have the pandemic shattered all that. Some machines and mirrors, need to build on pay up for a location that they only visit I can’t help remembering all the exer- mals. It’s easy to see what suits you polit-
gyms reopened in the UK and increased people improved their fitness during their explosive lockdown growth, a couple of times a week. And early US cise detritus my family has accumulated ically. After the Scottish election, Nicola
capacity in the US, but outdoor activi- lockdown: downloads of the NHS’s attract more customers and, in most data suggests central city clubs are over the years, from blocks for step Sturgeon sees that, since a majority of
ties beckon and rival digital offerings “Couch to 5K” app shot up 92 per cent cases, find ways to be profitable. recovering more slowly. “There’s going aerobics to adjustable weights to the MSPs again support another independ-
have proliferated. last spring. But two in five Americans “There is this notion that connected to be a shift away from fairly expensive cross-trainer turned clothes rack. ence referendum, it is the will of the
Peloton was a big Covid-19 winner. reported putting on unwanted weight, fitness devoured the gym. That didn’t annual membership gyms toward a net- Maybe the digital element gives these people. She has a mandate, and Boris
Revenue jumped 141 per cent year on with a typical gain of 15 pounds. happen,” says Simeon Siegel, analyst at work of low-cost options,” says Anna gadgets more staying power. Personally, Johnson must give her the legal powers.
year for the quarter ending in March As societies reopen, fitness compa- BMO Capital Markets, who compares Barnfather, leisure analyst at Liberum. I would rather go for a hike. Those entrails actually divide neatly
and subscriptions more than doubled. It nies have a rare chance to foster new the rise of digital fitness to the growth of High-end health clubs are likely to into halves. Half of Scotland voted SNP,
could have done even better with habits. Health clubs are moving to win ecommerce. “The reality is that people thrive as well, as the market bifurcates. brooke.masters@ft.com half didn’t. Poll them, and only half
want another referendum within five
years. Sturgeon’s politics are obvious.
Promise what she has no legal power to
Ellie Foreman-Peck deliver, demand and be denied that
Labour’s worry
power. Best of all, make Johnson stop an
illegal referendum in court. Many may
resent that, so up goes her support.
The prime minister is not obliged to
keep Sturgeon’s promises for her, but
is that Starmer
the ball is in his court. A flat no plays
into her hands. Some suggest calling her
bluff with an early referendum, but he
cannot simply hand control over the
UK’s future to those campaigning to end
it. He can say neither yes nor no. The
is no Blair
solution to his dilemma is one he may
find unpalatable.
It begins not by arguing fruitlessly
about precise results, legalities and
mandates, but with the underlying con-
stitutional and political reality. The UK
is a multinational union of consent,
which in the end the Scottish people
working-class towns. He holds the polit- could choose to leave, and there is unde-
BRITAIN ical centre ground with an agenda of an niable dissatisfaction in Scotland.
active state and cultural conservatism. As UK prime minister, responsible for
Robert Labour in England is a party of the big
Shrimsley cities and college-educated middle-
classes with an unhelpful set of progres-
sive prejudices.
There isn’t going to be
The malaise has seen Starmer another referendum any
O
ne of the myths of British
attacked both by the hard left arguing
for a return to socialism and the Blair-
time soon — as even
politics is the two-party ites calling for more muscular centrism. Sturgeon says
system. The last 40 years On Wednesday, Tony Blair himself
have mostly seen not two wrote a long essay on his party’s malaise For Labour’s lost northern “red wall” voters who pay little heed to opposi- into strengths. They do not duck hard the whole union, he can neither ignore
closely matched rivals but lamenting Labour’s failure to be both voters are not some new anthropologi- tions. And here Blair sees the “culture fights as Starmer has done on unpopular that dissatisfaction, nor give the SNP
one obvious party of power and one “radical and serious”. His clarity high- cal grouping. They want the same things wars” as a chance to show leadership issues like Brexit. Even in difficult areas, carte blanche to exploit it. His duty to
beleaguered opposition with pundits lighted a hard fact. After 10 years in as other voters: a sense of hope, a decent and tick the “shares our values” box silence is worse than conviction. the people of Scotland and the rest of the
offering obsequies over its corpse. opposition, Labour’s true problem job, a home in a town in which they can with lost voters. Starmer has ducked the Blair had the advantage of becoming union is to promote a measured, orderly
In 1992 it was common to wonder if remains a crisis of leadership, and feel pride and where their children issue, sensing a trap but, says Blair, this leader when Labour was in the ascend- and stable resolution of the question.
Labour could ever win again. By 2000 Starmer is no Blair. might live, good transport and decent means the left’s message is defined by ant and so had the political capital to Scotland cannot sustain more constitu-
one observer had written The Strange For all the left’s fatalism, it is worth public services. They do not want to be opponents and the most hardline “woke drive change. But leaders make their tional uncertainty, nor should the rest of
Death of Tory England. In Westminster remembering the falling Tory popular- sentimentalised or fed a diet of pity poli- warriors”. luck. While Blair fought to change his the UK be obliged to endure it.
(and Scotland too) lengthy alternating ity before the vaccine rollout. Delivery cies. Where voters are responding to the Labour, he writes, must be “intolerant party, Starmer stood as a unity candi- Here comes the unpalatable bit. To
hegemonies are the norm. Even in still counts far more than tactics. And Tories, as they have to the Tees Valley of intolerance”, and against those who date. What was conviction for Blair save the union, Johnson cannot be sim-
recently hung parliaments, the Tories while Johnson’s strategy is working well, mayor Ben Houchen, it is because they would topple statues, defund the police, looks like tactics for him. Voters sense ply an English — by courtesy, British —
had over 50 seats more than their rival. Tories admit that he faces headwinds see them getting things done. deride the flag or cancel people with timidity and wonder if it is political nationalist competing with Scottish
Even so, with the next election possibly from the aftershocks of the pandemic. This interventionism has stolen many conflicting views. “People like common weakness, inexperience or a lack of nationalists for the allegiance of Scots.
two years away, Labour is now facing But Labour still has to look like a cred- of Labour’s best lines but does mean it sense, proportion and reason. They dis- belief in the changing of his party. He can only lose that contest. Instead he
five successive defeats. ible alternative. And while the demo- no longer needs to make the case for an like prejudice; but they dislike extrem- The scale of the challenge has always has to take responsibility for helping the
After a series of disappointing results, graphic issues are a challenge, it is fall- active state. But on economic strategy or ism in combating prejudice.” It is a clas- militated against victory at the next Scottish people make up their collective
the last rites are again being read over ing short in three key areas: a hopeful the challenges of the future, Labour has sic Blair line — much like his “tough on election. Labour is not even moving for- mind on a stable, long-term relationship
Labour and also its leader Sir Keir economic vision; the sense that it shares no story to tell. crime, tough on the causes of crime” slo- wards. There is no demographic dialec- with the rest of the UK.
Starmer, whose botching of an ensuing the values of the voters it needs; and, But it must first win the attention of gan which first aligned the party with tic that says Labour is doomed, but This may be easier than it sounds:
reshuffle left him looking both inept and most pressing, strong leadership. voters’ instincts before pursuing a pro- there is no right to thrive either. Any there isn’t going to be another referen-
weak. The arguments are well The only viable route to power is gressive path. Leaning into this fight will route back requires courageous, confi- dum any time soon — as even Sturgeon
rehearsed. While the decline of organ-
ised labour has undermined left parties
reclaiming or reshaping the centre
ground, and for all the declinist talk,
The opposition help Starmer show Labour has changed
and help get him a hearing on other
dent leadership that Starmer is simply
not showing. He will be more convinc-
says — so there’s time to explore all pos-
sibilities thoroughly. Look in depth,
across Europe, Boris Johnson has built a there is no reason why the right leader leader’s botching of issues. ing to voters if he looks like he has con- objectively and independently, at what
new coalition on the foundations of the
Brexit divide, marrying comfortable
cannot rebuild a coalition of both pro-
gressive middle-class voters and the
a reshuffle left him One does not have to wish for a rerun
of Blair’s 1990s agenda to see his
vinced himself. independence would actually mean —
for the pound, the border with England,
suburbs and county and northern aspirational working class. looking weak and inept broader point. Leaders turn weaknesses robert.shrimsley@ft.com the very difficult fiscal situation and so
on. Despite decades of debate, there
remains a hunger in Scotland for facts
about independence.
But look too at the other options. Not
Intellectual property must not be an obstacle to fair vaccine supply just more devolution — the Scottish par-
liament is already powerful — but how
to fix the real problems in relationships,
representation and voice at the centre of
the UK. Johnson has a potential trump
pandemic efficiently and effectively. urgently be sought, as some countries the transmission of the necessary obstacle to trade, including import card: those are not just devolved
Pedro By the end of May, 2bn Covid vaccine have entreated, on the US proposal technology and expertise, lift all barr- duties and export bans, along the manu- nations’ problems. As decentralised
Sánchez doses will have been produced globally.
But we need around 11bn doses to
for a temporary waiver of certain oblig-
ations under the Trips intellectual
iers to ramping up production and
accelerate vaccine distribution.
facturing value chain, covering finished
vaccines and the raw materials and
power accelerates within England, he is
meeting the same demands from Metro
immunise 70 per cent of the world’s property agreement for Covid vaccines. First, until agreement is reached at components necessary to produce mayors and others — some his political
population. In the meantime, Covax, Moreover, in preparation for future the World Trade Organization, we need them. allies. He can make improvements now,
C
the World Health Organization’s vac- health emergencies, we should look at to deploy all available mechanisms to Third, the transportation, distribu- but a principled review of the UK terri-
ovid-19 has affected the cine procurement programme, will adapting global rules on intellectual incentivise pharma companies to enter tion and delivery of vaccines needs to torial constitution is inevitable.
world profoundly. But as deliver just 145m doses by the end property rights. into voluntary licensing agreements, be accelerated, both between countries Johnson can argue a referendum
we mourn the millions of of June, 100m short of initial expect- Intellectual property rights are just as well as the pooling of all forms of and within them. Covax must be given might possibly come at the end of that,
victims, we can now see the ations. Production and access to vac- knowledge related to the virus, includ- the financial and non-financial support not kick it off. It could still mean inde-
light at the end of the tunnel cines must increase exponentially, and ing through the WHO’s Covid-19 Tech- it needs to meet the goal of delivering pendence, but a substantial majority of
thanks to the speeding up of vaccination
campaigns. Never before has humanity
urgently.
The debate about how to ensure
In preparation for nology Access Pool. The upcoming
G20 global health summit and the
at least 2bn doses by the end of the
year. Likewise, the “health systems
Scots might endorse a reformed rela-
tionship. Even if half might vote yes
developed safe and effective vaccines this happens remains polarised. The future health emergencies, World Health Assembly should be used connector” pillar of the WHO’s global today, about two-thirds still feel at least
against a new disease in such a short
space of time. Scientific progress
costs of drug innovation are very
high, while those of imitation are rel-
we should look at to encourage the industry to transfer
the necessary knowhow.
collaborative framework should be
buttressed to build the necessary
partly British, and three-quarters want
Britain’s governments to co-operate
brought us hope. atively low. Medicine development adapting global rules Second, it is critical to make full processing, storage, distribution and more.
Yet this feeling of hope is unevenly takes 10 years and over $2.5bn on aver- use of existing manufacturing capac- delivery capacity. Johnson must change from bucca-
distributed. We still lag way behind in age. In normal times, patents play a key one part of the equation, however. ities while removing trade obstacles Delivering vaccines for all is the first neering Brexit nationalist to measured
the aim of ensuring fair and affordable role in fostering innovation. But these More than 80 patents are involved and ensuring the proper functioning step to building back better. Scientific constitutional statesman. Minister for
access to vaccines for all around the are not normal times. in the creation of an mRNA vaccine, of supply chains. We must avoid the progress has given us the tools to bring the union, not just unionists. A big ask,
world. The virus continues to spread We are in the midst of a major whose production involves 280 diff- existence of underutilised resources the deadliest pandemic in generations maybe, but otherwise the next entrails
unchecked in several countries and pandemic, and we need to use all the erent components sourced from 86 and quickly identify both surpluses under control. Now, both governments examined will be of the career of the
regions, increasing the risk of dangerous means at our disposal to end it as soon suppliers in 19 countries, and whose and shortages of essential items, helping and the private sector must rise to the man who did not take back but lost con-
new mutations. as possible. In this context, intellectual storage and distribution requires very optimise the distribution of supplies. challenge. We all must play our part. trol of Britain.
No one will be safe until everyone property cannot be an obstacle to ensur- complex logistics. Specific and urgent trade facilitation There is no alternative.
is safe. This is not only a matter of ing equitable and universal access to This is why Spain is proposing a measures are also needed. All countries The writer is a former director-general of
justice — it is the key to fighting the vaccines. This is why consensus must comprehensive initiative to facilitate should commit to ease or remove every The writer is prime minister of Spain devolution at the UK Ministry of Justice
UDG Healthcare: winning formula

A US buyout firm is hoping to acquire medical outsourcer UDG Healthcare. Clayton, Dubilier & Rice could join
UDG’s Ashfield division with Huntsworth, which it acquired last year. Lifting group margins and exiting at a
similar multiple would net a healthy return for the private equity group.
Twitter: @FTLex Potential returns scenario Revenue and earnings

£bn estimates
5 5 2021 estimate (£m)
Revenue Ebitda
Ebitda margin (%)
Commerzbank: charge should be €550m, before
tapering off. Buying European bank 4 4 700 25 Victoria’s Secret:
Teutonic tussles shares still requires more hope than comfort break-up
sense. But their improving health Equity 600
3 Huntsworth Return 3 20
Judging by the share price trajectory of reflects a continent slowly wrenching on equity A year ago, Victoria’s Secret looked like
Equity 500
Germany’s Commerzbank, which has itself from the grip of the pandemic. of 102% a lost cause. The lingerie brand, best
nearly doubled in a year, turmoil in 15 known for its racy runway shows, was
executive suites is of limited interest. 2 2 400 plagued by image problems and sliding
New chief executive Manfred Knof
had hardly organised his desk drawers
SoftBank: UDG
Healthcare
Debt Debt
300 10
sales. The low point came when parent
company L Brands’ deal to offload a
before newly appointed chair Hans- sharper Vision 1 1
200
majority stake to Sycamore Partners
Jörg Vetter had to resign for health for $525m fell apart.
5
reasons. The exit followed top tier In 1981, in a small town in Fukuoka, 100 Yet this turned out to be a blessing in
0 0
bickering that led to the resignation of SoftBank chief executive Masayoshi Buyout Assuming Sale value assuming disguise. L Brands this week
the former CEO and chair. Clearly Son told two employees that his enterprise two-thirds of group margins rise 0 0 announced plans to spin off Victoria’s
things are livening up at this formerly company would one day be valued at value that is paid to 21% and 17 times UDG Huntsworth UDG Secret into a separate, publicly traded
moribund bank. billions of dollars. According to the in debt exit multiple Ashfield Sharp company. The lost deal with Sycamore
Sources: S&P Capital; FT research
Germany’s largest listed banks have story he gave during an earnings call valued the chain at $1.1bn. A spin-off
fought a long, losing battle to maintain yesterday, the employees did not stick now will fetch considerably more. Citi
international relevance while around. Even Son may not have Big pharma is good at coming up with pattern. It has plans to integrate Huntsworth and Ashfield should believes it could be worth as much as
squeezing more profit from local expected SoftBank’s market value to new and specialised treatments to Ashfield with Huntsworth, a similar prove a profitable pairing for CD&R. $6bn — or five times estimated 2021
customers. Last year’s turmoil at reach $174bn. Now the conglomerate improve healthcare. Getting products UK business that it acquired last While the latter is a bigger business, ebitda — as a standalone company.
Commerzbank reflected the struggle. has returned to profit it could climb into the hands of patients, however, March. This will add clout in a ebitda margins of 16 per cent lag A strong stock market certainly
There are some signs of recovery, even even higher. can be difficult and costly. Specialists consolidating sector. The modest price behind those of its smaller future helps. But the bump up in valuation
if its stated aim of achieving a 7 per Record net profit of ¥4.99tn offer a way to outsource the problem. that paid for Huntsworth probably partner by two percentage points. also reflects a turnround at Victoria’s
cent return on tangible equity looks ($45.9bn) for the year to March came A growing propensity to do just helped UDG receive a better offer. Improving Ashfield by a similar Secret over the past year. During the
meek compared with rivals. mostly from SoftBank’s Vision Fund that has attracted the attention of CD&R’s offer represents a 30 per cent amount would take the blended pandemic, the chain has been quietly
Costs show signs of long-promised investment unit. Net asset value has private investors. London-listed UDG premium to UDG’s three-month share group margin to 21 per cent. Once moving away from its dated,
decline in first-quarter results. Even grown $36bn from the previous year to Healthcare agreed yesterday to a price, or about 17 times market complete, and assuming two-thirds oversexualised image. It has added
after a big decline year on year, the $236bn. Son is no longer beset by £2.8bn all-cash offer from US buyout expectations for this year’s ebitda. of the initial £3.3bn price was paid in more workout wear and comfort
cost-to-income ratio finished the first criticism that Alibaba is his only firm Clayton, Dubilier & Rice. The Its shares have traded at that level in debt, and a 17 times exit multiple, clothes like sweatpants, pyjamas and
quarter at 72.5 per cent. That helped winning bet. Alibaba, which at one price could do with a shot in the arm. the past — but not since 2018. It looks CD&R would double its initial equity leggings to its product assortment.
the bank report an operating profit of point made up as much as 60 per cent UDG is more sharp suits than white generous compared with the £524m investment. That might take five It has also started to feature more
€538m, nearly two-thirds higher than of SoftBank’s net asset value, is now coats. It deals with aspects of drug CD&R paid for Huntsworth — equal to years to do but it would be about a plus-sized models — a demographic
expectations. A cost-ratio target of worth 43 per cent. delivery such as licensing and less than 10 times forward ebitda. quarter above the total return UDG that it once shunned and a decision
66 per cent looks achievable. Knof cut Yet the shares fell 3.5 per cent communications through its Ashfield UDG’s valuation is boosted by Sharp, shareholders receive if they accept that younger customers applaud.
a deal this month with his unions to yesterday, reflecting concern that most division. Growth has come via bolt- its packaging manufacturing division CD&R’s offer. With that in mind, the The result: like-for-like sales for the
reduce employment by a third, only of SoftBank’s profits remain unrealised. on acquisitions from fragmented that represents a third of revenues and right course of treatment for UDG brand rose 1 per cent last year despite
four months into his tenure. Of the 125 portfolio companies in markets. CD&R will continue that higher margins than Ashfield. investors is to push for a higher price. the pandemic. Meanwhile, a move to
True, the bank’s results did have SoftBank’s two Vision funds, gross close stores and reduce discounts has
temporary boosts. Healthy stock returns depend on just a few helped to boost operating margins.
trading in what remains of its companies. Coupang, DoorDash and L Brands has nothing to lose by
investment bank lifted commission Uber make up 80 per cent of the first important part of SoftBank. For has become Europe’s most valuable acquisitions, says venture capital group spinning off Victoria’s Secret and
income. Mortgage loan volumes had a fund’s gross return. investors, a further round of buybacks start-up with a $31bn valuation. Atomico. But countries are striving locking in a higher valuation. Potential
record quarter, funded by very cheap This is why SoftBank share moves in would prove more convincing. Historically, the build-up of Europe’s harder to keep the businesses they investors, however, may want to check
financing from the European Central the past year have closely tracked tech sector was hampered by the build. Witness the UK’s push for more their expectations.
Bank. The last two lifted revenues by announcements of its buyback limited supply of large, late-stage risk tech floats and its probe into the recent Victoria’s Secret is still a long way off
more than €200m. As for its equities
business, a looming “partnership” with
schedule instead of being focused on
earnings. Shares doubled in the past
Tech start-ups: capital pools. That is changing and not
just because European funds are
deal between Arm and Nvidia.
There are also hurdles for Europe’s
its former glory days and it faces fierce
industry competition. These include
French-German rival Oddo BHF year after it started a ¥2.5tn buyback herd instinct stepping up their investments. There is entrepreneurs not faced by US start-ups ThirdLove and Lively, and
suggests that Commerzbank will have programme that has now ended. growing interest in European tech from counterparts — including borders, American Eagle’s Aerie brand.
fewer surprises, either way, from Replicating the past year’s results Europe punches well below its weight US and Asian funds, attracted by lower languages and smaller talent pools. But The urge to stockpile sweatpants will
market movements. depends on continued strength in US when it comes to tech. The market valuations. Some $28bn has been the remote working of the past year has also slow as more Americans return to
Yet the bank’s capital cushion gets tech markets, which have dipped in value of its quoted tech companies is invested in European start-ups in the shown that tech workers do not need to the office. Having stitched together a
plumper by the quarter. Its common recent weeks, though the moves may just 6 per cent of the global total. But year to March, according to Dealroom. be concentrated in a single hub. credible comeback story, Victoria’s
equity tier 1 ratio is 13.4 per cent, about not be sustained. Returns from other the start-up scene is flourishing. That compares with $36bn all last year, Europe will continue to trail a long Secret must find new ways to keep the
140 basis points higher than its parts need a boost, too. Despite a rally Lithuania’s second-hand clothes itself more than double the 2016 total. way behind the US and China. But the tills ringing or risk seeing its hard work
internal target. in stock prices, the SB Northstar marketplace Vinted was valued at Reluctance to list in Europe limits blight that followed the bursting of the come undone.
That leaves a big buffer of more than trading arm and the broader group €3.5bn in its latest funding round this the share of the future value these dotcom bubble has lifted. Young
€2.4bn to ride out the remaining booked a $233bn loss on investments week. Estonia, with just 1.3m people, start-ups create. The US accounts for companies are scaling up rapidly. Lex on the web
restructuring one-offs, plus any in listed stocks and derivatives. recently upped its count of billion- slightly more than half of the exits of There are signs of a virtuous circle For notes on today’s stories
expected capital adjustments required Money is just a tool, says Son. He dollar start-ups to seven. Sweden’s $1bn-plus VC-backed European boosting the confidence of go to www.ft.com/lex
for Basel IV regulations. Next quarter’s believes his vision is the most Klarna, a buy now, pay later fintech, companies, through IPOs and entrepreneurs and investors alike.
CROSSWORD
No 16,784 Set by ALBERICH
} y ACROSS
1 From which you can pay someone’s
u electricity bill? (7,7)
10 Youngster’s boxing ring fills up (5)
¸ 11 Nothing in school guaranteed
calmness (9)
12 Chicken roll contains mayo at last (7)
13 Garment that’s found in Benetton but
not Burton (7)
14 What’s smelt? First off, a type of fish
(5)
16 Spooner’s finest clothes for one
} y making limited appearance in pub?
(5,4)
19 Understand bar staff’s first, sadly, to
become superfluous (9)
u ¸ 20 He scored Australian runs after leg
breaks (5)
22 Copper’s tackling sailor about naval
weapon (7)
25 This great novel is one of love that
reigns (7)
27 Drawing out European legal ruling?
Not half (9)
} y 28 Drop a stitch when talking (5)
29 And isn’t she soon ordered to do
nothing? (3,2,4,5)
DOWN
u 2 No unread novel grabs daughter,
that’s plain (9)
3 One interrupts holiday to do test
again (5)
4 Country fresh air can ultimately bring
you stamina (9)
JOTTER PAD 5 Husband leaves injured, carrying
weapon (5)
6 Following game, endless tea and
savoury cake (9)
7 University in America with large
common (5)
8 Speaker, one using social media? (7)
Solution 16,783 9 Wine collection lacks the Spanish and
French red (6)
} } } æ Ô Ú 15 Put up with heretic’s language (9)
ã Ý
N
B
Ú
Ú N
Ï
B
~
7 æ
Ú
Ý 7 × N
} Ý
17 Alienates sergeants in mess (9)
7 N × × < N × E N B Ý 18 Country houses artist turned up to
} æ N Ð N } decorate florally (9)
19 Disease caught off insects (7)
E B N Ý Ý ~ E 7 Ú Ú N Ý
7 × B } ×
H B 7 Ú × × E N H Ý B 7 21 Government welcomes politician to
æ
à Ô 7
E
H æ
×
B 7 Ú
æ 7
7 B × ª
fold (6)
7 Ô 7 E H Ý 23 Nelly catches second wind (5)
Ú × Ý æ : æ H N Ý E N 8 24 Sickie regularly taken by working
æ Ô
: × N
} ×
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offspring (5)
} } Ý 7 } } } 26 A somewhat experimental phase (5)

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THURSDAY 13 MAY 2021 NEWS PROVIDER OF THE YEAR UK £2.90 Channel Islands £3.20; Republic of Ireland €3.

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Developing countries have sold record levels of

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Lloyd’s of Brussels Insurance market

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DAVID KEOHANE — PARIS MILES JOHNSON — ROME

i Toshiba investors doubt revival plan

due to a conjunction of elements that yers in Italy, said extradition proceed-

banker loses job over WhatsApp boast

Brussels takes tough stance on Brexit

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Israel pledges to step up campaign

Global recovery. Commodities rally Luxembourg deals

Spending talks Capitol Hill. Leadership ousting

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Glencore warns cobalt supply chains Blockbuster earnings push US groups

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Katie Martin than 7 per cent below April record peak

Markets Insight Wall Street stocks and US government

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Mar 2021 May Mar 2021 May Mar 2021 May

Valero Energy 5.01 Bayer 7.24 Royal Dutch Shell 3.32

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Wall Street Europe London

WORLD MARKETS AT A GLANCE FT.COM/MARKETSDATA

-1.57% -2.30% -1.31% -1.61% -1.36% -0.658% -0.283% -0.349% -0.62%

120,590.04 6,279.35 24,600.355 49,591.32

STOCK MARKET: BIGGEST MOVERS UK MARKET WINNERS AND LOSERS

UK RIGHTS OFFERS UK COMPANY RESULTS UK RECENT EQUITY ISSUES

$GYHUWLVLQJ )HDWXUH 3HUIRUPDQFH :HLJKWLQJV $V RI 7RS +ROGLQJV $V RI

0XOWL $VVHW 2SHQ $GYHQW :$&&*%3 e