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European Edition
11th June 2021
Morrisons boss suffers huge pay revolt
Shareholders in Morrisons have voted against plans to award bumper pay deals to the supermarket's bosses. Just over 70% of shareholder votes were cast against the firm's remuneration proposals, which included paying CEO David Potts a maximum £1.7m bonus despite profits plunging to £165m last year, from £435m the previous year. He was awarded a total pay package in the year to 31 January worth up to £4.2m, including the bonus. He made just under £4m the year before. The firm's remuneration committee had upgraded the chief's payout after it stripped out the cost of the pandemic when calculating whether a bonus would be appropriate. Shareholder advisory group Pirc said the revolt was one of the biggest on record. In assessing pay and bonuses, Morrisons said its remuneration committee felt that management should not be penalised by the costs of the crisis. It also pointed out that Mr Potts waived a basic salary increase for a sixth straight year.
World Bank says global wealth gap set to widen
Global inequality is likely to widen this year as a small number of major economies power the fastest recovery in 80 years while many poorer countries struggle to return to pre-pandemic income levels, the World Bank said. The global economy is set to grow by 5.6% this year, up from a January forecast of 4.1%, marking the fastest recovery from five post-World War II recessions, the bank said in its semiannual Global Economic Prospects report. While about 90% of advanced economies are expected to regain their pre-pandemic per capita income levels by 2022, only about one-third of emerging-market and developing nations are likely to do so, the bank said, in part because of uneven access to COVID-19 vaccines. Growth in the U.S., the world’s largest economy, is projected at 6.8% this year, up from the bank’s January forecast of 3.5%. Growth is forecast at 8.5% in China, the second-largest economy, 8.3% in India and 4.2% in the euro area.
Global Britain is 'shut for business'
Former Prime Minister Theresa May has criticised the UK government's COVID-19 travel policies, saying the country is sending the message that "global Britain is shut for business." Mrs May said:  "One year on we are no further forward, indeed what we have is a devastated industry, jobs lost and global Britain shut for business . . . . More than not being any further forward, we've gone backwards," adding "We now have over 50 per cent of the adult population vaccinated - a wonderful programme - yet we're more restricted on travel than we were last year."
UK economic recovery trails other G20 nations
The UK's recovery from the pandemic lagged behind other G20 economies in the first three months of 2021, figures from the Organisation for Economic Co-operation and Development (OECD) have revealed. Comparing Q4 2019 to Q1 2021, the UK and Italy recorded the largest falls in GDP, down 8.7% and 6.4% respectively, while Germany, France, the euro area and the European Union all recorded declines of more than 4%. China, by contrast, was up 7.1% and Turkey 6.8%.
Fragile US-led G7 tax compromise threatened by search for exemptions
The global tax accord drafted by G7 ministers could easily be derailed by “special pleading” from countries to exclude industries from the agreement, tax experts tell the FT.  Elsewhere in the paper, Chris Sanger, EY's London-based head of tax policy, reveals that companies are already looking at the cost of operating in countries with tax rates below 15% and seeing whether they "represent the best place to be invested." Tim Sarson, tax partner for KPMG, adds that as companies rethink the location of their operations it is likely to "lead to lots of rebalancing between countries and . . . to some restructurings of supply chains and value chains in the tech sector." Meanwhile, Switzerland is drawing up plans to provide big businesses with subsidies to offset any changes to headline tax rates.
France and Switzerland to trial wholesale digital currency payments
The Swiss National Bank and the Bank of France are to trial Europe's first cross-border central bank digital currency payments. Switzerland's UBS, Credit Suisse and France's Natixis are involved in the project, along with Swiss bourse operator SIX Digital Exchange, fintech firm R3 and the Innovation Hub at the Bank for International Settlements. The eurozone is adapting to a "strong trend" towards the digitalisation of payments," said Bank of France Deputy Governor Sylvie Goulard, adding "The Bank of France is convinced of the potential benefits of wholesale central bank digital currency to provide maximum security and efficiency in financial transactions."
Global banking regulator calls for toughest capital rules for crypto
The Basel Committee on Banking Supervision has called for cryptocurrencies to carry stricter bank capital requirements than any other asset, citing greater risk. It has suggested that the likes of Bitcoin be subject to the highest capital requirements as a result of the concerns. Stablecoins and other tokenised traditional assets would continue to be subject to the existing rules. Possible cryptocurrencies issued by central banks are not included in the proposed crackdown.
BrewDog boss under attack for 'toxic' workplace culture
The UK's largest craft brewer has come under fire from over 60 former employees who say in an open letter to founder and CEO James Watt that the businesses had created a culture of fear that made staff feel afraid to speak out. In their letter to BrewDog, they claim workers have been subject to harassment, assault and treated "like objects" and that Watt had “become a lightning rod for some of the worst attitudes present on both the internet, and in real life."
Woman wins tribunal appeal over transgender tweets
A woman who lost her job after saying that people cannot change their biological sex has won an appeal against an employment tribunal. Maya Forstater did not have her contract renewed after posting tweets on gender recognition. She lost her original case at a tribunal in 2019, but a High Court judge ruled her "gender-critical" beliefs fell under the Equalities Act. She claimed she was discriminated against because of her beliefs, which include "that sex is immutable and not to be conflated with gender identity." In the initial tribunal, employment judge James Tayler said that her approach was "not worthy of respect in a democratic society." But the Honourable Mr Justice Choudhury said her "gender-critical beliefs" did fall under the Equalities Act as they "did not seek to destroy the rights of trans persons."
Deloitte sued by Hin Leong Trading
Hin Leong Trading, a failed oil trader in Singapore that owes creditors more than $3.5bn, is suing Deloitte alleging the firm failed to detect “serious irregularities” in its financial statements for more than a decade. “The material misstatements in the plaintiff's audited financial statements led to various banks and financial institutions being grossly misled as to the financial health and state of affairs,” Hin Leong claimed in the suit. “Deloitte knew or ought to have known that these banks and financial institutions were intended users of the plaintiff's audited financial statements and would have relied on the same to extend financing.”
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.”
Court ruling could cost Deutsche Bank €100m
Deutsche Bank expects to book a €100m charge in the second quarter after a court ruled some of the lender's clients could challenge fee hikes. The German regulator has warned the judgment could see half of the bank's annual profit wiped out by compensation claims.
Goldman bankers ordered to report vaccine status before return to office
Goldman Sachs bankers in the US have been ordered to disclose their Covid vaccine status ahead of a return to the office. While the firm has strongly encouraged employees to get vaccinated, a memo to staff said: "We understand that the choice to get vaccinated is a personal one." The bank went on to say that registering vaccination status would help plan for a safer return to the office.
BA puts thousands of staff back on furlough
British Airways is to place thousands of staff back on furlough as the company awaits a meaningful return to international travel. The carrier has already cut more than 8,000 jobs in a bid to cut costs amid the worst downturn in aviation history. BA had begun to bring people back ahead of the easing of restrictions on foreign holidays on 17 May, but only a small number of countries have been put on the government's green list. Moreover, official advice remains not to visit amber countries for leisure, leaving the travel industry almost at a standstill.
GE to freeze pension benefits for 2,700 UK employees
General Electric has announced that it will freeze pension benefits for around 2,700 UK employees from January 2022. As a result, the company said it will record a non-cash curtailment charge in the second quarter of 2021. GE said that affected employees will automatically be enrolled into the company’s existing defined contribution scheme. City AM notes that GE’s pension benefit obligation in the UK was about $14bn at the end of 2020.
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 US 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.
Altice swoops on BT
French billionaire Patrick Drahi has bought a 12.1% stake in BT. The Altice founder is thought to be targeting Openreach, BT’s broadband infrastructure business which Drahi believes is undervalued. Analysts say that if Openreach is spun off it would slow down Britain’s fibre broadband rollout.
Mizuho boss to resign after tech problems
The CEO of Japan's Mizuho Bank, Koji Fujiwara, is to step down this month after taking the rap for a series of technology problems this year, including a massive cash machine outage at the end of February.
Toshiba and government colluded to undermine shareholders' rights
An independent probe into whether Toshiba applied pressure on shareholders over voting at a meeting last year has found the Japanese conglomerate worked with government officials to effectively undermine shareholders' rights. The report describes how senior figures at the Ministry of Economy, Trade and Industry collaborated with Toshiba’s senior management to prevent executives being voted out of their positions. The investigators conclude that the plot included “acts suspected to be against laws” and represented an attempt to unfairly restrict the exercise of shareholder rights.
Ted Baker delays results again
Ted Baker has delayed its full-year results for the third time due to pandemic-induced disruptions on the audit process, the Telegraph reports. The fashion retailer is due to release final results on June 14th.

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