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North American Edition
10th June 2021
U.S. businesses warn crumbling infrastructure is hurting the economy
Business executives warn that an under-developed infrastructure is holding America back economically. A new survey by RSM of middle-market executives, conducted in partnership with the U.S. Chamber of Commerce, found that 63% of respondents say that an aging infrastructure is restricting growth of the national economy. When asked about 21 specific initiatives, such as improving interstate highways, bridges, ports and railways, at least 63% of executives said those improvements would have minor, moderate or significant benefits to their company's day-to-day operations. There was even stronger support for modernizing certain elements of infrastructure: telecom network security (95%), local roads or highways (94%), telecom networks such 5G (94%) and the energy grid (90%). "The middle market is signaling to the political authority that we need to improve overall efficiency and productivity because the roads, bridges, waterways and conditions of broadband technology are holding us back," said RSM chief economist Joe Brusuelas. "We need to invest in the future." The findings come as President Joe Biden works to convince Republicans in Washington to support his $2tn American Jobs Plan that would aim to modernize roads, bridges and broadband and invest in clean energy.

JBS USA paid $11m to resolve ransomware attack
JBS USA Holdings chief executive Andre Nogueira has disclosed that the firm paid an $11m ransom in bitcoin to cybercriminals who last week temporarily knocked out plants that process roughly one-fifth of the nation’s meat supply. “It was very painful to pay the criminals, but we did the right thing for our customers,” he said, adding that the payment was made after the majority of JBS plants were up and running again. The subsidiary of Brazilian firm JBS SA halted cattle slaughtering at all of its U.S. plants for a day last week in response to the cyberattack, which threatened to disrupt food supply chains and further inflate already high food prices. A Russia-linked hacking group is behind the cyberattack against JBS, a source familiar with the matter said. The Russia-linked cyber gang goes by the name REvil and Sodinokibi.
Hybrid workplace poses cybersecurity challenges
Corporate security teams that were able to focus on protecting remote workers during stay-at-home orders will find it increasingly difficult to do so when staff are in the office for certain days of the week and at home for others, according to Rick McElroy, principal cybersecurity strategist at VMware’s Security Business Unit. “It’s hard to maintain a security staff that looks one way in the data center or one way in an office, and then one way for remote employees,” he says. Basic problems that security teams face include getting their machines up to speed with the latest software updates to ensure that security vulnerabilities aren’t left open for hackers, and trying to ensure that employees don’t get increasingly lax about security practices while being at home.
New framework offers guidance on when to charge chief compliance officers
A proposed framework guiding decisions to bring enforcement actions against financial sector chief compliance officers aims to address growing concern over the individual liability of compliance professionals. The measure, introduced by the New York City Bar Association, asks regulators to evaluate 12 affirmative factors and three mitigating factors in deciding whether to charge chief compliance officers for conduct relating to their job-related duties under federal securities laws. Concerns over personal liability have grown in the past five years over enforcement actions brought against compliance officers for alleged derelictions of their duties under securities laws, according to Patrick Campbell, chairman of the New York City Bar Association’s compliance committee, which wrote the framework. The questions raised by the framework include whether charging the compliance officer over his or her conduct helped fulfill the SEC’s regulatory goals; whether the officer made a good-faith effort to fulfill his or her responsibilities; and in cases where obstruction or false statements were discovered, whether those actions were repeated. Mitigating factors include questions such as whether structural or resource challenges hindered the compliance officer’s performance.
Over half a million people in rich countries lost their jobs in April
More than half a million people in rich countries became jobless in April as the economic fallout of the pandemic continued, according to the latest data from the Organisation for Economic Cooperation and Development (OECD), which reported that the joblessness rate in the OECD’s 30 member states rose to 6.6% during the month, from 6.5% in March. The total number of unemployed in OECD countries reached 43.781 million in April, up by 722,000 from the previous month.  The jobless population in seven major countries - Canada, United States, France, Germany, Italy, Japan and the United Kingdom - increased by 234,000 to 21.7 million. The global economy is expected to grow faster this year following the rollout of COVID-19 vaccines and fiscal stimulus in major economies, the OECD said. “Global economic growth is now expected to be 5.8% this year, a sharp upwards revision from the December 2020 Economic Outlook project of 4.2% for 2021.”
Former Bombardier employee charged over rail deal
A Swedish prosecutor has charged a former employee of a subsidiary of Canadian aircraft maker Bombardier, now owned by French firm Alstom, on suspicion of bribing an Azerbaijani official to win a $340m rail equipment contract in 2013. The prosecutor said Bombardier’s Swedish railway unit had secured the contract by steering $100m to an Azeri company run by an official linked to the Azerbaijan railway authority with oversight of the tender. An Alstom spokesperson said : “This matter concerns a former Bombardier Transportation employee, and it does not concern in any way Alstom or any Alstom employees.”
Italian tax police seize funds from local DHL unit
Tax police in Milan have seized assets worth more than €20m ($24m) from the local unit of logistics company Deutsche Post DHL as part of a tax fraud investigation. The seizure order said two top executives of the company's Italian business were being investigated for tax fraud. Under Italian law, companies can be held responsible for crimes committed by their executives.
AbbVie faces tax grilling from Senate Finance chair
Pharmaceutical company AbbVie is facing new questions from the Senate Finance Committee chairman over how it consistently loses money in the U.S. and doesn’t pay more in taxes. Senator Ron Wyden, the Democratic chairman, noted in a letter to AbbVie chief executive officer Richard Gonzalez that the company reported a U.S. pretax loss of $4.5bn in 2020 and foreign pretax profits of $7.9bn. The drugmaker generated 75% of its global sales last year, a total of $34.9bn, in the U.S. “It appears that AbbVie shifts profits offshore while reporting a domestic loss in the United States to avoid paying U.S. corporate income taxes, and that the current U.S. international system seems to encourage that,” Wyden wrote. The senator said he’s investigating the impact of the 2017 law, and whether companies avoid taxes by shifting profits overseas. 
U.S. travel firm repays COVID-19 aid after Dutch criticism
Booking Holdings has said it will repay $110m in assistance it received from governments during the pandemic, following criticism in the Dutch parliament about the U.S. travel company's 2020 executive pay. Dutch politicians had criticized 2020 total compensation for CEO Glenn Fogel of $7.1m and $24m for CFO David Goulden. “While the decision to accept this assistance was made during a period when the Company’s business was severely impacted and the timing and pace of the recovery of the travel industry was very uncertain, the Company is now encouraged by the improving booking trends,” the travel firm said.
Frontier Communications exits bankruptcy with new CFO
Frontier Communications Parent Inc. has hired a new executive to take charge of its finances just weeks after the telecommunications company emerged from bankruptcy. Norwalk, Conn.-based Frontier, which operates in 25 states, said on Wednesday that Scott Beasley would become its new chief financial officer, effective June 14th. Mr. Beasley is taking over Frontier’s finance function after the company in April completed its bankruptcy restructuring, which began in April 2020. Under Chapter 11 protection, Frontier cut its debt by about $11bn and reduced its annual interest expense by approximately $1bn, the company said. Frontier is currently reviewing its operations, costs and organizational structure as it works to reduce its reliance on copper-based legacy networks and lay more fiber-optic cables, the company said in a statement.
Instagram to help businesses handle customer service
Instagram is to allow developers and businesses to integrate messages received from consumers on its platform into the outside tools used by many companies to manage customer communications. Messenger API for Instagram,  the platform’s new tool, is designed to help customer service agents and social teams achieve a more holistic perspective in respect of  their increasingly digital customers. The Wall Street Journal notes that consumers have an increasing number of choices when they interact with companies. Adrian McDermott, chief technology officer at Zendesk, a customer service platform provider that helped test Instagram’s new tool, says this can be a plus for companies that respond effectively wherever consumers find them.
U.S. to remain world’s ultra-rich hot spot
The U.S. will remain the global hot spot for the world’s super-rich in the near future even as the fortunes of the wealthy in Asian countries such as China and India continue to grow, according to research from Boston Consulting Group. The firm’s 2021 Global Wealth Report says the number of U.S. ultra-high-net-worth individuals will increase 36% to about 28,000 in 2025 compared with last year. China and India are expected to lead percentage growth of fortunes worth $100m or more for the same period by almost doubling their number of ultra-wealthy individuals to 13,600 and 1,400, respectively, according to the report. There are currently 60,000 ultra-high-net-worth individuals worldwide with a combined wealth of  $22 trillion.

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