Inquiry finds World Bank officials, including now-I.M.F. chief, pushed staff to inflate China data.

0

Daily Business Briefing

Sept. 17, 2021, 7:26 a.m. ET

Sept. 17, 2021, 7:26 a.m. ET

ImageKristalina Georgieva, the managing director of the International Monetary Fund, in August.
Credit…Pool photo by Clemens Bilan

WASHINGTON — An investigation into manipulation of an annual World Bank report has found that Kristalina Georgieva, the bank’s former chief executive, who now leads the International Monetary Fund, directed staff to alter data to placate China.

The findings of the investigation, which was conducted by the law firm WilmerHale at the request of the bank’s ethics committee, raised questions about the judgment of Ms. Georgieva during her time at the World Bank and underscored the pressure that the bank has been under to accommodate China, its third-largest shareholder after the United States and Japan.

The investigation focused on accusations that top bank officials pressured the team that conducts the Doing Business survey to inflate China’s standing in its 2018 report. There also were accusations that the 2020 report was manipulated to artificially bolster Saudi Arabia’s ranking.

The Doing Business report assesses the business climate in countries around the world. Developing countries in particular care deeply about their rankings, which they use to lure foreign investment.

At the time of the reported manipulation, World Bank officials were concerned about negotiations with members over a capital increase and were under pressure not to anger China, which was ranked 78th on the list of countries in 2017 and was set to decline in the 2018 report.

According to the investigation, the staff of Jim Yong Kim, then the bank’s president, held meetings to find ways to improve China’s ranking. Ms. Georgieva also got involved, working with a top aide to develop a way to make China look better without affecting the rankings of other countries.

The investigation found that Ms. Georgieva was “directly involved” with efforts to improve China’s ranking and at one point chastised the bank’s China director for mismanaging the bank’s relationship with the country.

Bank officials considered including Hong Kong, which once had relative independence that China has been trying to minimize, in its analysis of China’s business climate and giving more emphasis to Beijing and Shanghai. Ultimately, the staff of the survey gave China more credit for its new secured transactions law, and China’s ranking did not sink.

In late October 2017, before the report was published, Ms. Georgieva drove to the home of the official in charge of the Doing Business team to pick up a hard copy of the report. According to the investigation, she thanked the official for helping to “resolve the problem” of China’s ranking. Ms. Georgieva, who was interviewed for the investigation, said she could not recall why she felt the need to personally pick up the report rather than have it brought to her office.

Ms. Georgieva has been the managing director of the I.M.F. since October 2019. In that role, she oversees a vast amount of economic research and is responsible for deploying billions of dollars of financing to countries around the world.

The Treasury Department expressed concern over the allegations.

“These are serious findings and Treasury is analyzing the report,” said Alexandra LaManna, a Treasury spokeswoman. “Our primary responsibility is to uphold the integrity of international financial institutions.”

In a statement, Ms. Georgieva denied accusations that she had acted inappropriately.

“I disagree fundamentally with the findings and interpretations,” Ms. Georgieva said. “I have already had an initial briefing with the I.M.F.’s executive board on this matter.”

A World Bank spokesman said the report spoke for itself.

The bank said Thursday that it is discontinuing its annual Doing Business survey.

Credit…Jordan Strauss/Invision, via Associated Press

Piers Morgan, the British TV host and onetime tabloid editor, is back in the Murdoch fold.

In a news release on Thursday, Rupert Murdoch’s News Corporation and Fox News Media announced that Mr. Morgan will host a TV show on its new British channel, talkTV, which will start early next year. The program will also appear on the Fox Nation streaming service in the United States (though not on the Fox News Channel) and Sky News Australia.

A showman and journalist with a penchant for Twitter spats, Mr. Morgan, 56, has had a long and varied career, having put in time as a judge on “America’s Got Talent,” a prime time CNN host and the top editor of Mr. Murdoch’s now-defunct News of the World tabloid.

Most recently, he hosted ITV’s “Good Morning Britain,” a role that came to an end in March, when he stormed off the set after his co-host admonished him for his negative comments on Meghan Markle, the Duchess of Sussex. The day before his walk-off, Mr. Morgan suggested on air that she had lied in her bombshell CBS interview with Oprah Winfrey about her mental health issues and how other members of the royal family had treated her.

His return to Mr. Murdoch’s empire comes more than three decades after he started his career on the celebrity beat for The Sun, a Murdoch tabloid. As part of his deal, Mr. Morgan will also write weekly columns for The Sun and Mr. Murdoch’s New York tabloid, The New York Post. HarperCollins, another Murdoch property, will publish his next book.

In a statement, Mr. Murdoch called him “the broadcaster every channel wants but is too afraid to hire.”

On Thursday, Mr. Morgan posted a photo on Twitter of himself next to Mr. Murdoch. “I’ve gone home,” he wrote. “Great to be rejoining Rupert Murdoch’s News Corporation after 28 years. The place I started my media career, with the boss who gave me my first big break.”

Credit…Melissa Phillip/Houston Chronicle, via Associated Press

The Federal Reserve is poised to overhaul the rules regarding what its officials are allowed to invest in and trade after disclosures last week showed that two of the central bank’s officials were active in markets in 2020, drawing an outcry.

Robert S. Kaplan, the president of the Federal Reserve Bank of Dallas, and Eric Rosengren, the president of the Boston Fed, bought and sold stocks and real estate-tied assets last year.

Those transactions complied with Fed guidelines, but they involved securities that could have been affected by Fed decisions and communications during a year in which it was actively supporting a broad swathe of financial markets amid the pandemic. Policy researchers and even some former Fed employees were upset by the disclosures.

In response to the scrutiny, both regional presidents announced that they would sell their holdings and move them to cash and broad-based funds. Still, the episode highlighted that the Fed’s rules governing its officials’ financial activity — although in line with what much of the government uses, and in some cases stricter — allow for considerable individual discretion. The central bank said on Thursday that it would re-examine those policies at the direction of Jerome H. Powell, the Fed chair.

“Because the trust of the American people is essential for the Federal Reserve to effectively carry out our important mission, Chair Powell late last week directed board staff to take a fresh and comprehensive look at the ethics rules around permissible financial holdings and activities by senior Fed officials,” a Fed representative said in a statement.

“This review will assist in identifying ways to further tighten those rules and standards,” the representative added. “The board will make changes, as appropriate, and any changes will be added to the Reserve Bank Code of Conduct.”

The statement came about an hour after Senator Elizabeth Warren, a Massachusetts Democrat, announced that she had sent letters to the Fed’s 12 regional banks urging them to adopt tougher restrictions.

“The controversy over asset trading by high-level Fed personnel highlights why it is necessary to ban ownership and trading of individual stocks by senior officials who are supposed to serve the public interest,” Ms. Warren wrote in the letters.

Retail sales increased slightly in August, the Commerce Department reported Thursday, highlighting an uneven pace for the economic recovery as spending behavior swings month over month.

The 0.7 percent climb in sales last month came after a 1.8 percent decline in July and gains earlier in the summer. The gains in August, which were better than what economists expected, were prompted by a rise in spending on clothing, electronics, and furniture and home goods.

Sales at bars and restaurants fell, after a rise in July.

That drop is “partly tied to the end of summer, but it’s also tied to fear of the virus when going into a bar,” said Beth Ann Bovino, the U.S. chief economist at S&P Global.

Sales of sporting goods and musical instruments and at book stores rose as students prepared to go back to school. Sales at nonstore retailers, which include e-commerce businesses, rose about 6 percent in August after falling in July.

“The resurgence of the virus resulted in households switching their buying options to hands-free transactions,” Ms. Bovino said.

Sales of cars and auto parts were down 4.5 percent in August. The auto industry has been hit by a shortage of computer chips, causing Toyota Motor to announce recently plans to slash production by about 40 percent.

Prices of consumer goods continued to climb in August, albeit at a slower pace, according to data from the Labor Department released this week. The Consumer Price Index rose 5.3 percent in August from a year earlier, the data showed, suggesting inflationary pressures were starting to ease.

The University of Michigan will publish its monthly consumer sentiment index on Friday, a key indicator regarding the economic recovery and consumer behavior. The index fell more than 13 percent in July because consumers expected price increases to continue.

With more employers announcing mandates, the pace of coronavirus vaccinations had been trending steadily upward through the Labor Day holiday, giving economists reason for optimism if cases and hospitalizations level off or decline in September.

Analysts at Bank of America said on Thursday that spending for clothing increased 27 percent for the week ending Sept. 11 compared with the same period last year, based on credit and debit card data. The analysis also found that sales at department stores rose by 21 percent, while spending on furniture were up 9 percent compared with the same time last year.

“Households are sitting on a lot of cash,” Ms. Bovino said. “We expect to see a robust holiday spending season.”

Credit…Ian Langsdon/EPA, via Shutterstock

Marks & Spencer, the large British retailer that has been battling Brexit costs and delays for months, said on Thursday that it would close its 11 food stores in France.

The stores were supplied with products made in Northampton, near the middle of England, and shipped across the English Channel each day. At the start of the year, once Britain began its new trading relationship with the European Union, the stores’ shelves emptied out in Paris as new customs checks and tariffs upended the retailer’s supply chain.

“The supply chain complexities in place following the U.K.’s exit from the European Union, now make it near impossible for us to serve fresh and chilled products to customers to the high standards they expect,” Paul Friston, the company’s managing director for international business, said in a statement on Thursday.

At one store near the Bastille in Paris, it had become common to see bare refrigeration units devoid of Stilton cheese, British-grown broccoli or British-made sandwiches that appealed to the French, as well as expatriates from across the channel. Some of the M&S stores took to adding French foods to the shelves, but the import delays never eased enough to alleviate the shortages.

Rather than booming free trade with the European Union and countries farther afield, the post-Brexit trading rules have frustrated many companies with significant added costs. Rules of origin requirement have forced clothing retailers to move distribution centers to the European Union, businesses of all sizes have increased customs payments and food producers have to pay for health certificates. Supply chains have also been badly disrupted by the pandemic. Recently, the British government decided to delay the imposition of checks on goods imported from the European Union until mid-2022.

M&S reported more than £16 million ($22 million) in costs for the financial year ending in March, which included a digital track-and-trace platform and veterinary certification costs. It said the biggest Brexit impact was on supplying its stores on the island of Ireland.

The stores in France that are closing by the end of the year are run by a partner in a franchise agreement. Nine other stores in France, located in transport hubs and operated by a different partner, will stay open, the company said. The website, which sells mostly clothes and home products, will keep running.

M&S had already changed the supply of products in the Czech Republic because of Brexit. It stopped selling fresh and chilled food and increased the range of frozen products and those that could be stored at room temperature.

Brexit has been blamed for the closures, but the international business of M&S, which includes stores in India, the Middle East and Asia, has been hampered by the pandemic as well. Revenue dropped about 17 percent in the year to March.

The company was struggling with shifting consumer trends well before the pandemic and was trying to restructure its business away from clothing and home products to food sales, while closing stores and improving its online shopping experience. The pandemic forced an acceleration of this plan. Last year the company substantially increased the number of jobs it planned to cut to 7,000, from 950. In the end, more than 8,000 workers left its stores in Britain by March.

Liz Aldermancontributed reporting.

Credit…Andrew Kelly/Reuters
Credit…David Zalubowski/Associated Press

Lucid Motors, a start-up automaker, has unseated Tesla, the dominant maker of electric cars, as the producer of the electric vehicle that can travel farthest on a single charge.

Lucid’s top-of-the-line Air Dream Edition Range can drive 520 miles on a full battery, the Environmental Protection Agency said on Thursday, beating by more than 100 miles the Tesla Model S Long Range, previously the car that could go the furthest on a charge.

How far electric cars can travel before they have to be plugged in — a metric known as their range — is important because the infrastructure for charging the vehicles is in its infancy, and filling up a battery can take hours depending on the car and charger.

President Biden and other world leaders want people to switch to electric vehicles to fight climate change. But that is unlikely to happen until the auto industry eases the fears that drivers will be left stranded with no plug in sight or will have to wait hours for their cars to refuel.

Until there are more fast-charging stations, automakers are trying to come up with electric cars that can go longer distances on a full battery. Tesla, which makes about two-thirds of electric vehicles sold in the United States, has long won that contest, producing several cars that can travel more than 300 miles without recharging. Many automakers have struggled to hit that threshold or go much beyond it.

Lucid and its chief executive, Peter Rawlinson, a former Tesla engineer, have said for months that their cars will go further than Teslas because they are more aerodynamic and use smaller, more efficient motors and other components. The E.P.A. provided official confirmation of those claims.

“Crucially, this landmark has been achieved by Lucid’s world-leading in-house E.V. technology, not by simply installing an oversize battery pack,” Mr. Rawlinson said in a statement.

Tesla is expected to soon face much more competition, including from Lucid and from Rivian, another start-up that is expected to begin delivering electric pickup trucks to customers this month. Traditional automakers such as General Motors and Volkswagen are also accelerating their efforts. Ford Motor is planning to sell an electric version of its F-150 pickup truck, the most popular vehicle in the United States, next spring.

But Lucid’s cars will occupy a luxurious niche in the market. The Air Dream Edition starts at $169,000 before federal and state incentives, though the company has said it will eventually offer more affordable versions of the Air, including one that will sell for about $77,000. The company is also working on a sport-utility vehicle.

Credit…Gregor Schmatz for The New York Times

Manufacturers in Britain have warned in recent weeks that soaring prices for natural gas would force them to shut down factories, and that prediction is now coming true.

CF Industries, a global producer of agricultural fertilizer, said late Wednesday it would halt operations at two plants in northern England because of high natural gas prices. The company said it did not know when production would resume.

CF uses large volumes of natural gas to produce hydrogen in a process that makes ammonia for fertilizers.

Wholesale prices for natural gas are at their highest in years, and have more than doubled since the spring. The main causes are a resurgence of global demand, especially in Asia, and worries that European countries are not putting enough fuel in storage to prepare for winter.

The jump in natural gas prices is in turn leading to very high electricity prices because the fuel is used at many power stations, putting pressure on both consumers and industry.

UKSteel, an industry group, said on Wednesday that its members were facing “extortionate” electric power prices and said that some steel makers were being forced to shut down during periods of extremely high rates.

On Wednesday, a fire that shut down a cable bringing electricity from France led to a further surge in electric power prices. Kent Fire and Rescue, which used as many as 12 fire engines to fight the blaze, said Thursday that firefighters had finished their work at the scene, and that cause of the fire had not been determined.

National Grid, Britain’s main electricity supplier, said the part of the cable damaged by the fire would be out of service until March. Another part of the cable was offline because of planned outage, and will be back online Sept. 27. Together, the cable can provide enough electricity to power two million homes.

Credit…Brendan Mcdermid/Reuters

Nearly a decade ago, Lloyd Blankfein, then the chief executive of Goldman Sachs, said he hoped to turn the elite investment bank into something akin to the Walmart of Wall Street.

The firm started a consumer-focused lending operation called Marcus and set a goal of generating at least $6 billion in annual revenue from lending activities by the end of 2020. It came up more than $1 billion short.

The head of Marcus, Omar Ismail, left the firm earlier this year to head a fintech company backed by Walmart, prompting some to say Walmart was more interested in becoming a bank than Goldman was interested in courting retail customers, the DealBook newsletter reports.

But Goldman isn’t ready to give up its consumer banking ambitions, as a new acquisition makes clear. On Wednesday, the bank announced that it would buy GreenSky, which arranges consumer loans for large purchases like home renovations or cosmetic surgery, for $2.2 billion in one of Goldman’s largest-ever acquisitions.

The “buy now, pay later” sector is hot right now, with Amazon, Square and others recently getting into the fast-growing market via deals and partnerships.

GreenSky, though, has struggled. It went public at a valuation of around $4 billion in 2018. In July, it paid a $2.5 million penalty to the Consumer Financial Protection Bureau for allowing retailers to take out loans for thousands of people who did not request them.

Goldman hopes that GreenSky will do better as part of one of the world’s largest financial firms. Making loans in-house with Goldman could give the service an advantage over its competitors, which rely on partner banks. But the jury is still out on whether the Wall Street stalwart can make meaningful inroads on Main Street.

Three House Democrats on a key committee who voted down a measure that would link the prices of certain prescription drugs to those paid overseas on Wednesday could represent a significant barrier to passing a broader, big social spending bill.

The measure, which could still be put back in the final bill, could save the government around $500 billion over a decade, estimates suggest, with that money coming out of the pockets of the pharmaceutical industry. But health industries are large and powerful lobbies, and they do not enjoy having their revenues cut, Margot Sanger-Katz reports for The New York Times.

Without the drug pricing provision, Democrats will have a tough time financing their other priorities, which include new coverage for poor Americans without insurance, extra subsidies for people who buy their own coverage and new dental, hearing and vision benefits for older Americans through Medicare.





Corporate taxes $946 billion

Individual taxes $999 billion

Potential drug price savings

>$500 billion

Increase corporate tax rate

to 26.5%

Expand net

investment

income tax

Limit business

loss deductions

Capital gains

and carried

interest

Medicare rebate rule

~$150 billion

Changes to international

and other tax rules

Assumed economic growth

$600 billion

Surtax on

income above

$5 million

Limit pass-through

deduction

Estate tax and

other increases

Tobacco and

nicotine taxes

Corporate taxes $946 billion

Individual taxes $999 billion

Potential drug price savings

>$500 billion

Increase corporate tax rate

to 26.5%

Expand net

investment

income tax

Limit business

loss deductions

Capital gains

and carried

interest

Medicare rebate rule

~$150 billion

Changes to international

and other tax rules

Assumed economic growth

$600 billion

Surtax on

income

above

$5 million

Limit pass-through

deduction

Estate tax and

other increases

Tobacco and

nicotine taxes

Individual taxes $999 billion

Capital gains

and carried

interest

Expand net

investment

income tax

Limit

business loss

deductions

Surtax on

income above

$5 million

Changes to

international and

other tax rules

Increase corporate

tax rate to 26.5%

Potential drug price

savings

Medicare rebate rule

~$150 billion


They are passing their bill using a special budget procedure to avoid a Republican filibuster. But that process means their bill has to hit specified budget targets. If the savings from drug price regulation are reduced, so, too, is the pot of money that can be spent on other goals. Democrats have already abandoned plans for some other revenue-generating policies, like a wealth tax.

Naturally, the pharmaceutical industry is not happy about the prospect of large price cuts. And lowering drug prices does come with trade-offs. READ THE ARTICLE →

Video

Video player loading
In a nod to a popular internet meme, Codex generates a website for “a cat that’s an attorney,” providing a biography, a phone number and a small avatar.

“This is a tool that can make a coder’s life a lot easier.”

That’s the takeaway for one seasoned programmer about Codex, a new artificial intelligence technology that writes its own computer programs built by OpenAI, one of the world’s most ambitious research labs.

Though a wide range of A.I. technologies have improved by leaps and bounds over the past decade, even the most impressive systems have ended up complementing human workers rather than replacing them, Cade Metz reports for The New York Times.

Codex can generate programs in 12 computer languages and even translate between them. But it often makes mistakes, and though its skills are impressive, it can’t reason like a human. It can recognize or mimic what it has seen in the past, but it is not nimble enough to think on its own.

Sometimes, the programs generated by Codex do not run. Or they contain security flaws. Or they come nowhere close to what you want them to do. OpenAI estimates that Codex produces the right code 37 percent of the time.

Tom Smith, who oversees an A.I. start-up called Gado Images, used the system as part of a “beta” test program this summer. He said the code it produced was impressive. But sometimes, it worked only if he made a tiny change, like tweaking a command to suit his particular software setup or adding a digital code needed for access to the internet service it was trying to query.

Codex may help experienced programmers do their everyday work a lot faster or help novices learn to code. READ THE ARTICLE →

  • United Airlines, one of the first major companies to announce a vaccine mandate, said Thursday that nearly 90 percent of its employees were vaccinated, including more than 95 percent of management. The airline’s strict companywide vaccine requirement begins on Sept. 27.

  • U.S. stocks fell slightly on Thursday, a day after the S&P 500 logged its biggest gain in weeks. The S&P 500 closed 0.2 percent lower, while the Nasdaq composite ticked up 0.1 percent.

  • Retail sales rose in August, the Commerce Department reported Thursday. The 0.7 percent climb in sales last month came after a 1.8 percent decline in July and gains earlier in the summer, highlighting an uneven pace for the economic recovery as spending behavior swings month to month.

  • Initial jobless claims in the United States rose by 20,000 to 332,000 last week, the Labor Department reported on Thursday.

  • European stocks were higher, with the Stoxx Europe 600 closing 0.4 percent higher.

  • Oil prices were flat a day after crude oil futures jumped more than 3 percent.

source linkUSMAIL24

Leave A Reply

Your email address will not be published.