Risk Channel delivers the latest, most relevant and useful business intelligence to key decision makers and influencers, each weekday morning.

Recent college graduates are having their nascent tech careers upended even before they begin as companies revoke job offers amid belt-tightening in response to four-decade-high inflation, the broad consequences of the war in Ukraine, and the ongoing pandemic. At least 40 recent college graduates have lost job offers in the past few weeks, according to LinkedIn posts and Google spreadsheets that circulated online to help those affected find new roles. As of Tuesday, 22 recent graduates were listed as having offers revoked by Twitter and nine people were listed on a separate spreadsheet for cryptocurrency trading platform Coinbase. Organizations may be saving money in the short term, but they risk “potentially catastrophic” reputational damage, said Brian Kropp, distinguished vice president of Gartner's human resources practice. “Just think about how unfair that is to people you’re rescinding the offer from,” he said. “You’re putting them in a painful situation.”

 

U.S. News

Federal Reserve Chairman Jerome Powell said the central bank’s battle against inflation could lead it to raise interest rates high enough to cause a recession, offering his most explicit warning this year. The central bank is under growing pressure to combat inflation, which hit a four-decade high of 8.6% in May. “We’re not trying to provoke, and don’t think that we will need to provoke, a recession,” Mr. Powell said while testifying before the Senate Banking Committee on Wednesday. “But we do think it’s absolutely essential that we restore price stability, really for the benefit of the labor market, as much as anything else.” Mr. Powell and several colleagues have signaled that another increase of that magnitude could be warranted at the Fed’s next meeting, July 26th-27th. “We’re looking for . . . compelling evidence that inflation is coming down, and we don’t have that,” said Mr. Powell. “There are lots of stories out there about how this should happen, and some people think it’s very clear that it will. Until we actually do see it happen, we need to keep moving.”

 

CNBC

NPR

New York Times

Wall Street Journal

Ford has chosen a plant in Valencia in Spain to build its next generation electric vehicles in Europe. The U.S. automaker selected the site over a rival facility in Germany. The company plans to only sell electric cars in Europe by 2030, ahead of a planned EU ban from 2035 on the sale of new petrol and diesel vehicles. There will be "significant" job losses as part of its changing strategy, a Ford spokesperson told Reuters. Facilities that do not secure production orders for electric vehicles, such as the overlooked Saarlouis facility in Germany, which employs 4,600 workers, face the threat of closure once the EU ban comes into force. Ford has warned there will still be staffing cuts even for plants that are selected for electric vehicle assembly - including the Valencia plant, which employs 6,000 workers. Jim Farley, Ford's president and chief executive, said the automaker’s pivot to electric vehicles in Europe would require tough decisions. "The European auto industry is extremely competitive, and to thrive and grow we can never settle for less than unbelievably great products... [and] ultra-lean operations," he said.

 

BBC News

Financial Times

Reuters

California officials have recovered $1.1bn in unemployment insurance funds as part of a continuing investigation into widespread pandemic-related fraud. Most of the money, on about 780,000 inactivated benefit cards, will be handed to the federal government because the claims went through the emergency Pandemic Unemployment Assistance program, according to a statement from Gov. Gavin Newsom's office. “Fraudsters and criminal organizations ripped off California, along with every other state, during one of the worst crises in history,” Newsom said. “We're taking aggressive action to return that money to the taxpayers.”

 

Los Angeles Times

The Supreme Court has agreed to decide how steep the penalties are for people who fail to file required reports with the federal government listing their foreign bank accounts. The justices said they will hear arguments from Alexandru Bittner, a businessman who was assessed a $2.72m penalty for not filing timely reports for five years when he was living in Romania. Bittner contends the maximum fine under federal law is $50,000. The case centers on the Bank Secrecy Act, a law designed to combat tax evasion and money laundering by requiring U.S. citizens and residents to report on their foreign holdings. For unintentional violations, the law authorizes penalties of as much as $10,000. The IRS concluded that Mr. Bittner violated the law 272 times, once for each account that was not reported in each of those five years. Mr. Bittner says he violated the law at most five times, once for each annual report he failed to file. The Biden administration argued in court papers that his reading would undermine the law by “significantly curtailing the deterrent effect of the penalties.”

 

Accounting Today

A court in Sweden has acquitted four former Ericsson employees of corruption charges in connection with a contract in Djibouti. The charges related to alleged bribes paid to three people in 2011 and 2012 for the Swedish telecom network company to supply Djibouti Telecom with equipment. “The prosecution has failed to prove that two of the three alleged recipients of bribes or irregular rewards fell within the limited scope of corruptible persons defined by the legislation in force at the time,” the Solna District Court said in a statement, adding “With regards to the third beneficiary, the prosecution has failed to prove that any bribes or undue payments were made to them.”  According to the court, for the charges to be upheld “the bribe or reward must be related to the recipient's performance of his or her work or duties in such a way that he or she was able to exert influence in a way that promoted the donor's interests.” Ericsson has already agreed to pay $1bn to U.S. authorities to settle corruption cases in Djibouti, China, Vietnam, Indonesia and Kuwait in 2019, and says it expects to pay further penalties related to corruption uncovered in Iraq.

 

The Local

A Black former Tesla worker, who said he was the victim of racial abuse, rejected a $15m award after the amount was drastically cut by a judge. Owen Diaz, who worked at the electric carmaker’s plant in Fremont, California, said he faced "daily racist epithets."  Diaz was originally awarded $6.9m in damages for emotional distress and $130m in punitive damages in the case. A judge reduced that award by nearly 90% to $15m. Rejection of the award could mean a new trial in the case.

 

U.S. News

Shifting political winds during the U.S. November mid-term elections could spell trouble for automakers' hopes of getting billions of dollars in consumer tax credits that would help the United States compete with Chinese and European rivals. General Motors, Ford, Stellantis and Toyota have pledged to invest more than $170bn through 2030 to bolster EV development, production and sales. They are making a final effort to convince Congress to approve an extension of EV incentives before Republicans, who are largely opposed to doling out EV subsidies, could potentially take over both houses of Congress next year. Without those incentives, particularly an extension of a $7,500 EV purchase tax credit, the U.S. auto industry will fall behind on the Biden administration's goal of 50% EV sales by 2030, auto executives, lawmakers and consultants say. In January, the 14 Republicans on the tax-writing Senate Finance Committee harshly criticized proposed EV tax credit expansions, pointing to data suggesting "that nearly 80% of the existing EV tax credits have gone to taxpayers earning more than $100,000." Republican Senator Deb Fischer, who wants to limit tax credits to those earning less than $100,000 and to vehicles costing less than $40,000, questioned "why we're subsidizing this industry at all" and said lawmakers should deny "taxpayer subsidies for the rich." Michigan Democrat Senator Debbie Stabenow said Fischer's proposal would mean the Ford and Chevrolet electric pickup trucks made in her state would not be eligible for credits. Automakers and their supporters are now holding intensive discussions on Capitol Hill to try to win support, with backing from the White House, said U.S. Representative Debbie Dingell, a Democrat whose southeast Michigan district is in the state's automotive heartland.

 

Reuters

A criminal investigation by the Canada Revenue Agency of KPMG's use of an offshore tax haven ended more than a year ago without any public announcements, sources have told Radio-Canada. The status of the case is uncertain. The Canada Revenue Agency (CRA) declined to comment on the file, as did federal prosecutors with the Public Prosecution Service of Canada, which has been following the file closely over the years. The Isle of Man-based tax avoidance scheme had been active as far back as 1999 and, according to documents filed in Tax Court by the CRA in 2015, was "intended to deceive" the government. The scheme enabled wealthy clients to dodge tens of millions of dollars in taxes in Canada by making it look as if they had given away their fortunes to anonymous overseas shell companies. They received their investment income back as tax-free gifts.

 

CBC

Bloomberg profiles Melanie Dawes, the chief executive officer of U.K. media regulator Ofcom, who will soon be in charge of regulating social media in Britain. The U.K. is preparing to introduce new legislation designed to protect the public. The Online Safety Bill gives Dawes and Ofcom significant new powers, including to demand information from social media and search engine companies about how they’re tackling illegal and other so-called harmful content. Financial penalties and criminal charges will be handed out to senior managers who don’t comply. Dawes has experienced trolling online, and almost never uses Twitter. “I decided that it wasn’t something that was going to be worth it, to be honest,” Dawes said of Twitter and other social media platforms. “There are a lot of people in public life, including a lot of women in public life, who’ve had a worse time of it than I have.”

 

Yahoo! Finance

Bloomberg

China’s internet watchdog has proposed that social media platforms review all user comments before publishing. The draft law from the Cyberspace Administration of China (CAC) also proposes for the first time that the person who uploads a post is also responsible for the comments made by others. The draft rules instruct platforms to hire a content moderation team, “commensurate with the scale of the service,” to review all user comments and filter out “harmful” ones before publishing. All types of comments, including original posts, replies and real-time comments that appear on top of a video, fall under the requirements.

 

South China Morning Post

An investigation by Reuters reveals that Unilever privately lobbied against a ban on plastic sachets used for soap while publicly describing the packaging as “evil” because it could not be recycled. The CEO of the consumer goods giant, Alan Jope, said the business “had to” stop using the sachets to package small portions of soap, detergent and shampoo two years ago but behind the scenes, the company privately lobbied against bans on the packaging that had been proposed in India, the Philippines and Sri Lanka, where they were contributing to mountains of plastic waste and pollution. Separately, Jesse Fried, the Dane Professor of Law at Harvard Law School, writes in the Telegraph on how Unilever’s capitulation to the demands of an anti-Israel lobby group to stop selling Ben & Jerry’s ice cream in the Jewish state has led to the collapse of the business set up by licensee Avi Zinger, who employs hundreds of Arabs, Jews, and Sudanese refugees in Israel to distribute and sell the product.

 

Reuters

The Daily Telegraph

The Daily Telegraph