Brazil Gov’t Acknowledges Pension Bill Going Nowhere

Brazil’s political affairs minister Carlos Marun said on Monday that passage of a bill to overhaul the country’s costly social security system has effectively ground to a halt in Congress and would become a campaign issue in this year’s election.

Marun spoke to reporters after the head of the Senate, Eunicio Oliveira, said the federal government’s military intervention in Rio de Janeiro would, by the rules of the country’s constitution, block any vote on pension reform or any other measure requiring a constitutional amendment.

But Marun acknowledged what President Michel Temer’s critics believe is the real reason for holding up a pension vote: the unpopular bill never gained enough support and the government faced certain defeat.

“We don’t have the votes. I couldn’t guarantee we would have the votes by the end of February,” he said. That was the government’s deadline for passing the bill before lawmakers turned their attention to securing their seats in the October general election.

Pension reform is the cornerstone policy in Temer’s efforts to bring a bulging budget deficit under control. Generous pension benefits and early retirement have turned social security into the main driver of a deficit that cost Brazil its investment grade.

Marun, the cabinet minister charged with mobilizing coalition support in Congress, said pension reform would become a key issue in the election campaign if Congress did not take it up again.

The legislation to streamline social security, which required amending the constitution, was lined up for a first vote in the lower house of Congress this week.

But on Friday the government ordered the army to take over command of police forces in Rio de Janeiro state in a bid to curb violence driven by drug gangs, an intervention that blocks any constitutional changes during its duration.

Temer decreed the Rio intervention through Dec. 31, his last day in office.


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Latvia’s Banking Sector Rocked by US Probe, Central Bank Chief’s Detention

Latvia’s ABLV Bank sought emergency support Monday after U.S. officials accused it of helping breach North Korean sanctions while the country’s central bank chief faced bribery allegations, turning up the spotlight on its financial system.

The Baltic country, which is a member of the euro zone and shares a border with Russia, has come under increasing scrutiny recently as a conduit for illicit financial activities.

Last year, two Latvian banks were fined more than 2.8 million euros ($3.26 million) for allowing clients to violate sanctions imposed by the European Union and United Nations on North Korea. Three others received smaller fines.

ABLV said it had sought temporary liquidity support from the central bank after depositors withdrew 600 million euros, about 22 percent of total deposits, following a warning by the United States that it was seeking to impose sanctions on the bank.

Latvia’s third-biggest lender denied wrongdoing.

“We don’t participate in any illegal activities,” ABLV Bank Deputy CEO Vadims Reinfelds told a news conference. “There are no violations of sanctions.”

The bank said it would not look for a bailout from the government and that it had adequate liquidity and capital.

The European Central Bank had earlier stopped all payments by ABLV, citing the sharp deterioration in its financial position in recent days and saying a moratorium was needed to allow the bank and Latvian authorities to address the situation.

A source close to the matter said the moratorium would be short, giving ABLV just a few days to assess its situation.

Only solvent institutions may receive emergency liquidity support and should the ECB determine that ABLV cannot meet its financial, liquidity and capital obligations, it could start proceedings that may lead to the bank being wound down.

Latvia’s own central bank said it had agreed to provide 97.5 million euros worth of funding to ABLV but that the bank has yet to receive the money.

The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) said on Feb. 13 that ABLV “had institutionalized money laundering as a pillar of the bank’s business practices.”

It linked some of the alleged activities to North Korea’s ballistic missiles program, saying bank executives and management had bribed Latvian officials to cover up their activities.

​Central bank governor

Separately, Latvia’s anti-corruption authority released central bank Governor Ilmars Rimsevics, an ECB policymaker, who was arrested Saturday on suspicion of having solicited a 100,000 euro bribe. Rimsevics denied the allegations.

The Corruption Prevention and Combating Bureau said its investigation was not connected to the probe into ABLV.

“[Rimsevics’ arrest] … is about demanding a bribe of no less than 100,000 euros,” the bureau’s head, Jekabs Straume, told reporters at a news conference Monday.

Neither the police nor the anti-corruption authority gave details of the alleged request for a bribe.

A lawyer for Rimsevics, who was arrested after police searched his office and home, said he would hold a news conference at 11:00 a.m. (1000 GMT) Tuesday.

“I disagree with it categorically,” Rimsevics told Latvian news portal Delfi following his release, referring to the bribery allegations.

Prime Minister Maris Kucinskis had earlier called on the central bank chief to quit, saying: “I can’t imagine that a governor of the Bank of Latvia detained over such a serious accusation could work.”

Latvia joined the European Union in 2003 and adopted the euro currency at the start of 2014, a move that gave its central bank governor a seat on the ECB’s interest-rate-setting Governing Council.

The European Commission said Monday that Rimsevics’ detention was a matter for Latvian authorities.

Boom time

The economy of Latvia, which gained independence from the Soviet Union in 1991, has boomed in recent years. Its commercial banking sector is dominated by Nordic banks alongside a number of privately-owned local lenders.

In its document detailing the allegations against ABLV, the FinCEN said the reliance of some parts of the Latvian banking system on non-resident deposits for capital exposed it to increased illicit finance risk. It said such deposits amounted to roughly $13 billion.

“Non-resident banking in Latvia allows offshore companies, including shell companies, to hold accounts and transact through Latvian banks,” FinCEN said, adding that criminal groups and corrupt officials may use such schemes to hide true beneficiaries or create fraudulent business transactions.

“[Former Soviet Union] actors often transfer their capital via Latvia, frequently through complex and interconnected legal structures, to various banking locales in order to reduce scrutiny of transactions and lower the transactions’ risk rating.”


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French Jazz Violinist Didier Lockwood Dies Suddenly at 62

French jazz violinist Didier Lockwood, whose eclectic career spanned more than four decades and the world’s most prestigious festivals and concert halls, has died. He was 62.

 

Lockwood’s agent, Christophe Deghelt, said in a statement on Twitter that Lockwood died suddenly Sunday, a day after he performed in Paris.

 

President Emmanuel Macron paid tribute Monday to the musician he called a “friend and partner of the greatest” and said possessed “influence, open-mindedness and immense musical talent” that will be missed.

 

As a composer and an improviser while performing, Lockwood enjoyed crossing musical genres, from jazz-rock to classical. He was known for experimenting with different sounds on the electric violin.

 

He’s survived by his wife, French soprano Patricia Petibon, and three daughters.


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Without City Jobs, Tech-savvy Kenyan Youth Head Back to Farm

When Francis Njoroge graduated with an engineering degree in Nairobi, he expected to earn a six-figure salary. Instead he found himself working as an electrician on a three-month contract, for 20,000 Kenyan shillings (about $200) per month.

Realizing permanent and well-paid jobs were hard to come by in the Kenyan capital, he decided to move back to his parents’ farm in Kimandi, a village about 150km away, and start his own business planting and selling tree seedlings.

“My parents are tea and maize farmers and always managed to pay our school fees,” Njoroge told the Thomson Reuters Foundation, walking around the farm in dark blue overalls.

“So I thought rather than be frustrated in my job or not even have one, why not go into something I know will bring me money?”

Njoroge is not alone. Kenya has the highest rate of youth joblessness in East Africa, according to the World Bank, with nearly one in five young people who are eligible for work not finding jobs.

Poor job prospects and low pay in cities are pushing thousands of unemployed young people to return home and take up farming, said David Mugambi, a lecturer at Chuka University in central Kenya.

“Young people are increasingly realizing that farming can pay off,” he explained.

Njoroge used his savings to buy seeds from the Kenya Forestry Research Institute after realizing there was a shortage of seedlings among local farmers.

“At first I was making 7,000 shillings ($70) a month by selling tree seedlings to a community organization,” he added.

“Three years later, I now earn more than 10 times that amount.”

Tech-savvy youth

Kenyan youth are not only turning to farming, they are bringing their digital skills with them to rural areas, according to Mugambi.

“For example, tech-savvy youth are very good at using mobile apps that tell them when to plant or what fertilizers to use,” he said.

Knowing very little about tree seedlings, Njoroge joined a WhatsApp group of 30 fellow farmers to learn about issues like growing conditions and fertilizers.

“I take pictures of my produce, upload them to WhatsApp with a price tag, and then take calls from interested buyers,” he explained.

Like Njoroge, Phillip Muriithi, a teaching graduate from Kenyatta University, left Nairobi to return to his parents’ farm about 200km northeast of the city, and now grow tomatoes and cabbages.

“I wanted to become a high school teacher but without a job or income I felt like a balloon drifting to nowhere,” he told the Thomson Reuters Foundation, standing in the middle of a field of green tomatoes in Mitunguu, central Kenya.

“Living in the city was so expensive,” he added. “But with farming I was assured of food, a small income, and didn’t have to pay rent.”

Muriithi also uses his mobile to keep a record of costs, fertilizers and profit, and to market his produce on WhatsApp groups.

“My phone allows me to reach a wider audience than if I were travelling to the market — it’s just made farming a lot easier,” he added.

More funds and support

The Kenyan government is trying to promote entrepreneurship among young people by improving their access to credit, said Mugambi.

The Uwezo fund, for example, provides youth with grants and interest-free loans of up to 500,000 shillings (about $5,000) to set up their own business.

But more investment is needed to make farming attractive to a wider range of young people, Mugambi added.

“Many youth still see returning home as a failure and farming as a lowly affair,” he said.

Njoroge agrees, saying his friends tried to discourage him from going into farming, which they saw as the preserve of “older, uneducated folk.”

Some regret making the switch to farming. Mary Wanjiku, a teaching graduate from Chuka University, who went home to grow tomatoes and onions, said her experience turned into a “nightmare.”

“The little capital I had got used up in buying fertilizers, manure and seeds, and I nearly lost my entire tomato harvest to an attack by bacteria wilt,” she said, adding that she now sells second-hand clothes instead.

Muriithi’s advice is to “start small” to minimize any disappointment.

“I was really scared of failing so started with only a small chunk of land for the first two years,” he said. “But now my father is convinced of my success, he lets me use most of his eight-acre piece of land.”


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Egyptian Firm to Buy $15 Billion in Israeli Natural Gas

An Egyptian company will buy $15 billion of Israeli natural gas in two 10-year agreements announced on Monday, marking a major export deal that Israel hopes will strengthen diplomatic ties.

The partners in Israel’s Tamar and Leviathan offshore gas fields said they have signed with private Egyptian firm Dolphinus Holdings to supply a total of around 64 billion cubic meters of gas over a decade – with half coming from each field and the proceeds split equally between them.

Israeli Prime Minister Benjamin Netanyahu said the agreements would “strengthen our economy (and) strengthen regional ties.” His energy minister Yuval Steinitz called it the most significant export deal with Egypt since the neighbors signed their historic peace treaty in 1979.

Israel’s Delek Group and Texas-based Noble Energy have led both gas projects.

“Egypt is becoming a real gas hub,” Yossi Abu, CEO of Delek subsidiary Delek Drilling, told Reuters. “This deal is the first deal of potentially more to come.”

The partners have also been trying to finalize a long-term export deal with a Royal Dutch Shell plant in Egypt.

An Egyptian government official, who declined to be identified, said the deal did not mean Egypt itself would import any gas from abroad.

“International private companies will import gas from abroad in the framework of their own needs, and will liquefy and export them again,” the official said, without elaborating.

Shares in Delek Drilling were up 23 percent on the news and Delek Group shares were up 17 percent. Barclays analyst Tavy Rosner said weakness seen in Israeli gas shares over the past several months was due to investors being skeptical that gas exports would ever take place. “We believe today’s announcement will pave the way to a re-rating of the shares,” he said.

Leviathan, located about 80 miles (130 km) west of Haifa, was discovered in December 2010 and is scheduled to start producing by the end of 2019.

Exports from Tamar, which began production in 2013, are expected to start under the deal some time between the second half of 2020 and the end of 2021.

Dolphinus, Delek said, is a natural gas trade company that plans to supply large industrial and commercial consumers in Egypt. It added that Egypt had amended regulations last week to allow private groups to import gas.

The companies did not give a date for when supplies to Egypt were expected to start. The means of delivering the gas to Egypt still needs to be settled.

One export option, Delek said in a statement, was to supply the gas through an old pipeline built by East Mediterranean Gas (EMG) originally designed to send gas in the other direction.

Egypt had once sold gas to Israel, but the deal collapsed in 2012 after months of attacks on the pipeline by militants in Egypt’s Sinai peninsula.

Another option would be to use a pipeline being built as part of a separate deal to sell gas from Leviathan to Jordan.

The export agreements are conditioned upon receipt of regulatory and government approvals in Israel and in Egypt.

Noble and Delek Drilling together control 85 percent of Leviathan, with the rest held by Ratio Oil.

They are joined in Tamar by Isramco Negev, Tamar Petroleum – a spin-off of Delek – and two other small partners.


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Anti-Corruption Police Arrest Latvian Central Bank Chief

Latvian Prime Minister Maris Kucinskis assured the country and Europe “there is no sign of danger,” after anti-corruption police arrested the head of the Latvian central bank Saturday.

“For now, neither I, nor any other official, has any reason to interfere with the work of the Corruption Prevention Bureau,” Kucinskis said.

Neither Kucinskis nor the police gave any reason why central bank governor Ilmars Rimsevics was arrested. But a police spokeswoman said there will be an announcement “as soon as possible.”

The Latvian government plans an emergency meeting Monday.

Along with heading the Baltic nation’s central bank, Rimsevics is also one of 19 governors on the European Central Bank.

The U.S. Treasury Department has proposed sanctions against a major Latvian bank for alleged money laundering linked to North Korea’s weapons program.


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US Commerce Department Urges Curbs on Steel, Aluminum Imports

The Commerce Department is urging President Donald Trump to impose tariffs or quotas on aluminum and steel imports from China and other countries.

Unveiling the recommendations Friday, Secretary Wilbur Ross said in the case of both industries “the imports threaten to impair our national security.”

As an example, Ross said only one U.S. company now produces a high-quality aluminum alloy needed for military aircraft.

Raise US capacity

The measures are intended to raise U.S. production of aluminum and steel to 80 percent of industrial capacity. Currently U.S. steel plants are running at 73 percent of capacity and aluminum plants at 48 percent.

Ross emphasized that the president would have the final say, including on whether to exclude certain countries, such as NATO allies, from any actions.

China’s Commerce Ministry said Saturday that the report was baseless and did not accord with the facts, and that China would take necessary steps to protect its interests if affected by the final decision.

Last year, Trump authorized the probe into whether aluminum and steel imports posed a threat to national defense under a 1962 trade law that has not been invoked since 2001. He has to make a decision by mid-April.

Three options

Ross is offering the president three options:

To impose tariffs of 24 percent on all steel and 7.7 percent on aluminum imports from all countries.

To impose tariffs of 53 percent on steel imports from 12 countries, including Brazil, China and Russia, and tariffs of 23.6 percent on aluminum imports from China, Hong Kong, Russia, Venezuela and Vietnam. Under this option, the U.S. would also impose a quota limiting all other countries to the amount of aluminum and steel they exported to U.S. last year.

To impose a quota on steel and aluminum imports from all sources, limiting each country 63 percent of the steel and 86.7 percent of the aluminum they shipped to the U.S. last year.


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Massive Fraud at Indian State-Owned Bank Linked to Celebrity Jeweler

The uncovering of one of the biggest frauds at a state-owned bank in India has rocked the country’s financial sector and brought scrutiny to a billionaire jeweler who counted Hollywood stars among his customers.

The nearly $1.8 billion fraud reported at India’s second-largest state-owned bank is a blow to the government’s efforts to revive the state-owned banking sector, which is already staggering under a mountain of bad debt.

Nirav Modi, whose jewelry boutiques span high-end streets from Hong Kong to London to New York and whose diamonds have been worn by Hollywood stars such as Dakota Johnson and Kate Winslet, is being investigated for the fraudulent transactions. His brand ambassador is Bollywood star Priyanka Chopra, who has also carved a niche in the United States.

The fraud, which officials say had been going on from a single branch of Punjab National Bank in Mumbai, went undetected since 2011. Calling it a “cancer,” the bank’s chief executive, Sunil Mehta, told a news conference earlier this week that it had been removed. “We will resolve it and we will honor all our bona fide commitments.”

Officials at the bank have accused Modi and his companies of obtaining unauthorized letters of undertaking from junior employees to secure credit from overseas branches of Indian banks. 

Modi has not responded to the allegations and, according to some reports, left the country last month. His home, stores and offices were raided by Indian investigators. His passport is being revoked, according to the Law and Justice Minister, Ravi Shankar Prasad.

“No one will be spared,” he said. “The taxpayers’ money will not be allowed to be lost. The investigation is proceeding with great speed and pace.”

Modi, whose worth is estimated at about $1.74 billion, is the 85th richest man in India, according to Forbes. Belonging to a family of diamond traders, the soft-spoken businessman founded a company called Firestone Diamond in 1999 — later rechristened Firestar Diamond — and quickly made a name in the business. He later set up his own jewelry design brand and won the rich and famous among his customers.

In January, he attended the economic summit in Davos, where a large Indian business delegation was present, along with Prime Minister Narendra Modi. The two are not related. 

The fraud, which went undetected for years, has reignited concerns about governance standards at Indian banks and norms that are used for lending to corporate customers. Questions have been raised as to why audits failed to detect the fraud for years.

It came to light weeks after the government announced a $14 billion bailout for state banks. These banks, which account for about two-thirds of all bank assets in the country, are the backbone of the financial system, but are saddled with bad debt estimated at $147 billion.

Economists have warned that this mountain of bad loans threatens India’s efforts to accelerate its economy as it slows down efforts by banks to lend to potential investors.


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