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European Edition
5th May 2023
 
THE HOT STORY
IBM boss has a blunt message for remote workers
Arvind Krishna, IBM’s chairman and chief executive officer, has told the company’s 260,000 employees that remote work can be hazardous to career growth.  He said that staffers who aren’t coming in to the office would find it difficult to get promoted, especially into managerial roles. “Being a people manager when you're remote is just tough because if you're managing people, you need to be able to see them once in a while,” he said. “It doesn't need to be every minute. You don't need to function under those old ‘Everybody's under my eye’ kind of rules, but at least sometimes.” Krishna described IBM’s return-to-office policy as “we encourage you to come in, we expect you to come in, we want you to come in.” Three days a week is the number the firm encourages, he said. “It seems to me that we work better when we are together in person,” said Krishna.
REMUNERATION
Italy seeks to limit executive pay in listed state-run firms
Italy is pushing to limit the annual pay and golden handshakes of senior executives at listed state-controlled firms, according to a draft proposal seen by Reuters. Prime Minister Giorgia Meloni’s government plans to include the commitment in broader legislation on welfare and labour measures approved this week, at a time when top bosses' multi-million euro salaries and generous bonuses have come into focus as Italy's inflation rate exceeds the euro zone average.
TUC calls for cut to executive pay
Paul Nowak, the general secretary of the UK's Trades Union Congress (TUC), has called for executive pay to come down and for ordinary workers to be given a pay rise. "It's time to hold down pay at the top - not wages for everyone else,” he said, adding: “The government needs to clamp down on greedy pay and bonus culture by putting workers on company pay boards and introducing maximum pay ratios."
STRATEGY
Nokia starts redundancy talks in Finland
Nokia has announced the launch of redundancy talks with worker representatives in Finland, which could result in more than 200 job cuts. The Finnish B2B tech firm currently employs around 7,000 people in Espoo, Oulu and Tampere. The negotiations affect workers in all of its locations in Finland, with the exception of Oulu.
LEGAL
Steinhoff directors begin German accountancy scandal trial
Two former Steinhoff directors who worked at the retailer's European units appeared in a German court on Wednesday to stand trial on charges relating to the accounting scandal at the company. The Regional Court in Oldenburg opened the proceedings on Wednesday against Dirk Schreiber and Siegmar Schmidt, who are on trial for the same violations that ex-chief executive Markus Jooste was charged with a fortnight ago. Mr Jooste  failed to show up in court, and authorities are now deciding on a request to issue an arrest warrant for the 62-year-old. Mr Schreiber and Mr Schmidt were among eight people that were named by the company in 2019 following a forensic probe by auditor PwC that uncovered €6.5bn ($7.2bn) of irregular transactions with eight firms over eight years. After the indictment was read in the court the case was adjourned. The judges, prosecutors and defense then met for talks about how the trial will proceed, including a potential settlement.
UK trade bodies 'weak' in policing money laundering
The Office for Professional Body Anti-Money Laundering Supervision (OPBAS) says professional legal and accounting bodies in Britain have shown weaknesses in policing how their members apply anti-money laundering rules. OPBAS, housed within the Financial Conduct Authority, said that although there have been some improvements, anti-money laundering supervision is still not good enough, and flagged “significant weakness” in supervisory activity. OPBAS said the matter makes a “stronger case for more material supervisory system reform.” While the Treasury has consulted on potential reform, including the creation of a single anti-money laundering supervisor, OPBAS says significantly improving the supervisory landscape could take several years to implement. The regulatory body said it is “important that all participants continue to identify actions that will improve effectiveness within our current anti-money laundering framework.”
Kuwait’s sovereign wealth fund settles bonus dispute
The Kuwait Investment Authority, the Gulf country’s sovereign wealth fund, has settled a bonus dispute with former managers at its London office. Simon Hard, the ex-head of fixed income at London’s Kuwait Investment Office (KIO), sued the fund at a UK employment tribunal for whistleblowing and age discrimination. The suit was scheduled to start Tuesday. Prashant Vithlani, the KIO’s former head of equity and Caroline Taylor, its ex-head of human resources, also sued. A court official confirmed that all three cases were withdrawn, although details of the settlement were not made public. Bloomberg notes that earlier legal wrangling in the case had seen the UK’s Foreign Office getting involved to clarify whether some employees had diplomatic protection.
CORPORATE GOVERNANCE
Shareholders reject Unilever's pay report after
Nearly 60% of shareholders voted against Unilever’s remuneration report following recommendations from ISS and Glass Lewis, two of the City’s most prominent shareholder advisers, to vote against it. Hein Schumacher, who will take over as chief executive in July, was set to be handed an annual salary of €1.8m (£1.6m) before bonuses. The pay report recommended that current boss Alan Jope be given €1.6m in fixed pay. Glass Lewis said it had “severe reservations” about supporting the pay report because Mr Schumacher’s fixed pay “significantly exceeds both their predecessor's and peers.”
TECHNOLOGY
Co-founders of Google DeepMind and LinkedIn launch chatbot
Google DeepMind co-founder Mustafa Suleyman, LinkedIn founder Reid Hoffman and British scientist and DeepMind researcher Karén Simonyan, have launched an artificial intelligence chatbot called Pi, developed by their AI start-up Inflection AI. PI is touted as being more personal than OpenAI’s GPT-4, although it can also provide fact-based answers. “It’s really a new class of AI — it’s distinct in the sense that a personal AI is one that really works for you as the individual,” Suleyman said. Eventually, Inflection’s CEO added, Pi will help you organise your schedule, prep for meetings and learn new skills. The company was in discussions to raise up to $675m from investors earlier this year having raised $225m in seed money last May from venture capital firms including Greylock Partners, where Suleyman and Hoffman remain investors.
ECONOMY
ECB hikes rates and signals more hikes to come
The European Central Bank (ECB) increased interest rates to 3.25% on Thursday. The central bank’s president, Christine Lagarde, warned that further rises will be needed to tame inflation. Eurozone inflation remains well above the ECB’s 2% target after rising for the first time in six months to 7% in April, up from 6.9% in March.
INTERNATIONAL
US launches program to defend journalists around the world
The United States has launched a program to help journalists globally defend themselves against legal threats. U.S. Agency for International Development (USAID) Administrator Samantha Power announced the Reporters Shield program at an event to mark World Press Freedom Day at the United Nations. "Many independent outlets can't afford to be sued, so they are driven out of business or they try to self censor to avoid attracting the interest of those who might target them," she said. "Corrupt leaders know all this, which is why they're using lawfare more and more . . . To withstand lawfare, journalists and media outlets need robust protection, they need training in how to avoid lawsuits altogether, they need resources to hire lawyers and cover legal fees." USAID plans to work with Congress to provide up to $9m for the program, which will be jointly managed by the Organized Crime and Corruption Reporting Project and the Cyrus R. Vance Center for International Justice.
Bankers’ pay booms in Saudi Arabia
The expansionist policies of Wall Street firms and Saudi government agencies is boosting banker salaries in Saudi Arabia, reports Bloomberg, which says state vehicles like the $600bn Public Investment Fund are hiring at breakneck speed, often recruiting staff from foreign firms based in the kingdom such as Goldman Sachs and HSBC. Recruitment firm Hays estimates that most banking professionals in Saudi Arabia can earn roughly 20% more than their counterparts in Western financial centres. Saudi Arabia is taking steps to ease rules, such as those around strict dress codes, gender segregation and women driving as it moves to attract foreign workers for the long term, but Bloomberg says many foreigners are reluctant to move to a place “that lacks the infrastructure, thriving social scene and availability of alcohol that make other global finance centres appealing.” Robert Mogielnicki, a senior resident scholar at the Arab Gulf States Institute in Washington, observes: “Becoming a trusted financial centre will ultimately take time . . . Financial institutions and professionals want to be confident that all of the reforms and economic decisions add up to a favourable socioeconomic environment over the long run.”
How PwC executives tried to fight tax crackdown
Australia’s Department of Treasury has confirmed it did not refer the leak of confidential government proposals to combat tax avoidance to the Australian Federal Police to investigate potential criminal breaches, reports the Sydney Morning Herald, which says the statement came the same day as the Tax Practitioners Board (TPB) published some of the damning evidence that led to a former PwC partner being banned for leaking confidential government plans. A 148-page document submitted by the TPB to Senate estimates in response to queries from Senator Deborah O’Neill includes heavily redacted internal emails revealing that the sensitive information on plans to combat tax avoidance was widely shared with other staff and partners within PwC.
Hongkonger exodus isn’t affecting salary tax revenue, finance chief says
An exodus of Hongkongers is not having an impact on the city’s salaries tax revenue, said Hong Kong’s financial chief Paul Chan on Wednesday.  Chan’s speech at the Legislative Council (LegCo) came after the Inland Revenue Department announced on Tuesday that there were 2.73 million tax returns for individuals for the 2022/23 financial year, a decrease of 140,000 from the 2.87 million tax returns for individuals in the previous tax year. Commissioner of Inland Revenue Tam Tai-ping said on Tuesday that reasons for the decreasing number of individual tax returns issued included tax cuts, meaning that more people were falling out of the tax net.
 


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