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Lux Capital’s monthly risk games—inspired by traditional war game scenarios—have become hotly attended evenings full of billionaires, politicians, military officers and the technorati.

Two weeks ago, things turned dire in Hampton Roads, Va. A hurricane slammed into the main shipyard, one of the country’s most important naval bases, raising questions about the impact of climate change and the future of military contracting in the area. In the disaster’s wake, politicians, union leaders and millionaires rushed to lobby, bribe and connive their way into somehow benefiting from the catastrophe.

Such was the scenario prepared for me and five other participants a few weeks ago at the latest risk game night thrown by venture capital firm Lux Capital, which has been hosting these events almost every month since last February. Lux has modeled the experience after traditional war game simulations, imagining some conflict or crisis and letting participants assume different roles to consider how similar episodes might play out in real life.

Up in Lux’s 11th-floor Manhattan offices, I received the role of local union president and spent large parts of the evening bartering with Mike Koscinski, a startup software engineer, who played as a district congressman. I begged him to take my $2 million and in return support an increase in union jobs post-hurricane. I thought we had an agreement until he disappeared into a closed-door meeting with the CEO of the biggest company in town—my sworn enemy. When he finally emerged, he rushed to reassure me he hadn’t supported the CEO’s plan to cut jobs. “I’m standing up against some powerful entrenched interests,” he said. “They wanted me to go scorched earth, and I said, ‘No, sir!’”

Over the past year, Lux’s games have become a hit with some prominent names, attracting crypto billionaire Mike Novogratz, politicians like New York Congressman Ritchie Torres and military leaders like Lt. Gen. Stephen Sklenka, deputy commander of the U.S. Indo-Pacific Command. The games had been invite only, but Lux is opening them to the general public this week—so you too can spend Tuesday nights plotting against members of Congress if you want. The risk games represent the venture firm’s attempt to produce some “real intellectual excitement,” said Josh Wolfe, a founding partner who has led Lux’s widening interest in defense tech with investments in startups like Palmer Luckey’s Anduril, defense manufacturing startup Hadrian, and Saildrone, which builds oceangoing drones.

“But also a little bit of humility, like, ‘Wow, these things are not black and white,’” he said. “They’re complex and messy and hard.”

The games began as a way to get the Lux team together in 2023 after several pandemic years of on-and-off remote work. Danny Crichton, the firm’s head of editorial and a former TechCrunch editor, has captained them, crafting four different risk scenarios that range from how artificial intelligence might transform political elections to the ethics of doing business in China. The games have evolved from a means to reconvene Lux’s employees to a creative expansion of the firm’s reach and a networking venue—an opportunity for Lux to see potential investments, employees or connections in an entirely different setting.

“Inevitably, some of the people that we have brought in will be on the boards of our companies. They will be advisers to our companies,” Wolfe said. “They may inspire us to form a company.”

Last February, Lux pitched Mike Bloomberg on running a risk game for some of his Bloomberg employees and political contacts. Wolfe thought Bloomberg would appreciate some new-age war gaming: In 2022, the media tycoon got a plumb gig as chair of the Department of Defense’s Defense Innovation Board, a position previously held by former Google CEO Eric Schmidt. Bloomberg loved the idea, and let Crichton and Wolfe come and run a risk game, this one geared toward how AI will transform the government.

Camped out for four and a half hours in Bloomberg’s New York office, attendees included Torres, the New York Congressman; Bloomberg’s head of external relations, Kevin Sheekey; and Air Force Col. Dag Anderson, who commands the 58th Special Operations Wing. (Bloomberg himself did not participate, although he later invited Crichton to brief him personally on lessons he had learned from the risk game.) Wolfe played the president’s budget director, a role in which he was “slashing jobs left and right,” replacing humans with computers. “It’s this forced inducement of empathy,” he said. “I’m suddenly putting myself in the shoes of somebody with a different set of incentives.”

Uri Bram, CEO of The Browser, a newsletter that curates news articles, loved the risk game he played at Lux so much that he invited Crichton over to host one at his Brooklyn apartment for a group of his journalist friends last summer. He wondered how well the program can scale—only a handful of people can play at a time, and each game takes several hours—but he said the intimacy and intensity is the point for Lux. “There’s some sense where quite often putting the right two people together is worth more than reaching 100,000 random people for one minute each,” he said.

When I arrived to play out the Hamptons Road disaster, multiple Lux partners told me I should prepare myself for a possibly contentious evening. The games can get quite competitive: Players are scored after each round on how much progress they’ve made for their objectives. For example, since my objective was to increase union membership, my score increased if I convinced another player to run positive ads about the union. My score plummeted if jobs were cut. Sometimes the games have devolved into yelling matches when a party member has refused to negotiate, allocating their money in ways that ruin everyone else’s strategy. Such players have sometimes gone rogue, Crichton said, and “locked themselves in the bathroom and refused to negotiate.”

We were a group of 12, although we got split in half since the game only needed six participants. (The other six played the same game in a different area of the office.) In our group: Koscinski, the software engineer; Cole Mora, chief of staff at Novogratz’s venture firm, Galaxy Interactive; Adrian Lo, a McKinsey associate partner; Beth Flippo, CEO of Denver-based Drone Express; and Nikhil Namburi, a Lux intern.

To assemble the evening, Crichton had posted an open call on X, receiving responses from 45 people that he cut down to the dozen who attended. Some were blatant about their intentions: They were there, at least in part, to get Lux’s attention. “We’re hoping to be a Lux portfolio company someday,” Flippo remarked playfully at one point in the evening. I later learned her startup, Drone Express, has been around for about two years and does drone delivery from stores like Kroger. Others are simply Lux superfans: Software engineer Koscinski, for instance, wrote in Wolfe for state senate on his 2018 ballot.

It takes Crichton about 40 minutes to explain the game—impressive considering it takes weeks to create materials, which include long backstories for each character, an equation to tally everyone’s success as the game goes on, and about 30 randomized events that can collapse even the best strategy at any moment.

We all randomly received a character, which included a mayor, congressperson, the shipyard’s union president, the CEO of a major military contractor, the shipyard’s admiral, and a hotshot local Substacker. We all received a page detailing our motivations and resources. My goal was to increase union membership, and my resources were $2 million in union dues. I quickly discovered that I was very poor—the CEO’s $100 million war chest dwarfed my funds.

The game unfolds in four rounds, each centering on a different event (say, a congressional hearing, a press conference or a local election). In each round, a different character holds slightly more or less power than the others. Crichton set us loose in the Lux office, letting us use the partners’ offices for our private meetings.

It wasn’t long before things got heated. Five of us teamed up against the CEO—Namburi, the Lux intern—for not donating enough of his money to shipyard repairs. He argued that spending $20 million of his $100 million was “a reasonable amount actually,” he said. “Quite generous.”

As we played, I could see everyone picking their strategy, whether it was to keep a low profile or try to ally with everyone. Crichton said he’s seen firsthand how revealing the game can be, particularly when he watches politicians and techies go head to head. “The politicians are much less likely to compromise upfront. They start very aggressive, and then they start to compromise long term,” Crichton said. “And tech is the opposite. They start cooperative, then realize they’re falling behind, and they get much more aggressive towards the end of the game.”

The politicians, he noted, almost exclusively put their money toward trashing their opponents. My fellow players only went negative in the last round, when the CEO targeted me. He decided to slash jobs at the shipyard, thereby increasing the CEO’s profit and cratering my union membership. “Just say you don’t respect workers’ rights!” I called across the table.

“I am playing a character and am not representative of Lux’s views,” he assured me jokingly.

By 8 p.m., the game was over and Crichton gathered us back in the conference room to review the winners. I lost by a landslide: Although my bribes got union membership up to nearly 100% (in Virginia, no less), it didn’t matter. The CEO cut almost all the jobs. Our mayor, who clinched his reelection, ended up winning.

But the broader point was that we all lost. The obvious best choice was to not rebuild a shipyard in an area that would predictably flood again and again, hit by increasingly ruinous hurricanes. Yet none of us even considered subordinating our character’s desires to the realities of our planet. It’s how the game’s designed. After each round, our scores got updated in front of everyone, so we could see in real time who was winning. But if we lobbied to move the shipyard, it would hurt the local economy and our individual chances at victory. “You can sacrifice yourself. There’s nothing in the game that says you can’t do that,” Crichton said. “But people want to win.”

Crichton said previous players have approached him after a game and asked for certain characters to have more power—in some of the scenarios, politicians have disproportionate leverage, while the businesspeople are helpless against Congress’s whims. Crichton has politely declined.

The game as it stands “actually re-creates the real world a little too well,” Crichton said. “The incentives are really whack.”

The Heathrow-to-Dubai flights have two big money-laundering features: One airport doesn’t scan outbound luggage for cash and the other welcomes sacks of it

Jo-Emma Larvin wheeled a baggage cart piled with suitcases through London’s Heathrow Airport in August 2020 and handed her passport to an Emirates Airline agent for a flight to Dubai.

Larvin was traveling business class with another woman and together they heaved seven heavy suitcases onto the conveyor belt. She exchanged texts with her boyfriend en route to the security line.

“Do you feel ok?” he asked.

“Yes phew,” Larvin wrote. The suitcases carried millions of dollars worth of British pounds wrapped with rubber bands and bundled in plastic.

The money was headed to an international money launderer who charged a hefty fee to clients to exchange cash for gold or other currencies. His preferred route was to Dubai from Heathrow, Nos. 1 and 2 of the world’s busiest airports for international passengers.

The U.K. requires passengers to tell customs authorities if they are leaving the country with more than the equivalent of around $10,000, but Larvin didn’t, risking arrest. The seven suitcases entered Heathrow’s baggage handling system and slid through a 3-D scanner that checked only for explosives and other potentially dangerous items.

The next morning, the women collected their luggage in Dubai without having too much to worry about: Any amount of cash is allowed to enter the United Arab Emirates, as long as it is declared. The women followed signs to customs and told authorities they had brought the equivalent of $2.8 million.

Most airports worldwide, including in the U.S., don’t scan passenger luggage for cash, a costly undertaking in equipment and personnel. Countries where all money is welcome have no obligation to report about suitcases full of cash arriving from abroad. The loopholes allow billions of dollars worth of cash to fly out of the U.K. and elsewhere to countries with fewer rules, law-enforcement officials said.

Money launderers surreptitiously introduce more than $2 trillion in proceeds from illegal enterprises to global financial systems every year, according to estimates. International airplane passengers likely ferry hundreds of billions of dollars worth of that in cash, according to figures from the United Nations Office on Drugs and Crime and the Financial Action Task Force, an intergovernmental agency that develops anti-money-laundering standards for countries.

One reason for so much airline smuggling is that penalties and scandals over customers engaged in money-laundering have prompted more banks around the world to report suspicious transactions. “You just can’t walk into a bank with this much money without being flagged,” said George Voloshin, of ACAMS, an industry group for financial crime-fighting professionals. “You will be arrested at the next branch.”

A U.K. government spokesperson said customs officers respond effectively with airport security to smuggling risks. A Heathrow airport spokesman declined to comment on its security equipment and practices. An Emirates Airline spokesperson said detecting cash smuggling was the responsibility of authorities where the cash originated.

A U.A.E. official said it was working to combat illicit financial flows, including through shared intelligence and joint operations with the U.K. The U.A.E., a global destination for the rich, was recently removed from a global financial watchdog’s list of places needing more monitoring.

Officials and industry groups said smuggling cash via airline is a relatively low risk for people hired to do the job. Larvin and her boyfriend were among an alleged three dozen smugglers working for a money launderer from the U.A.E. It seemed like easy money. Authorities believe they transported $125 million, largely from July to October in 2020.

“How the hell did they get away it—so much money in such a short space of time?” said Ian Truby, a senior investigating officer at the U.K. National Crime Agency. One answer, he said, is that airport security isn’t for crime detection, only flight safety.

Three weeks later, Larvin left for Heathrow with her boyfriend and a few million more dollars worth of cash in eight suitcases. Her boyfriend had worried about drawing undue attention with so much luggage. “It’s f—ing ridiculous,” he texted. “Talk about conspicuous.”

This account of the Heathrow cash-smuggling operation is based on documents and evidence released by U.K. authorities, court records that included text messages and photos, court testimony by money couriers, as well as interviews with investigators and people familiar with the matter.

Cash and carry

Abdulla Alfalasi started flying cash from Heathrow to Dubai around 2017 and expanded his operation during the pandemic.

On New Year’s Day 2020, Alfalasi left Heathrow with 11 cases, weighing 463 pounds, and reported the equivalent of $850,000 in Dubai. He told a former business partner he had connections with the royal family. His father-in-law ran Dubai airport customs back when it was a shed and a table. He developed the airport into a global hub as director-general of aviation.

Later that month, Alfalasi texted Michelle Clarke, an executive assistant looking to relocate to Dubai with her children and husband, a former pro soccer player. She belonged to a fun-loving crowd in the northern city of Leeds, where she worked for the pay TV group Sky.

Alfalasi sent Clarke a ticket for an overnight flight from Heathrow to Dubai, returning the same day. She had a text with the photo of a letter authorizing her to carry the cash for a company Alfalasi owned, lending a false sense of legitimacy to the job.

After Clarke landed, Alfalasi guided her in texts and voice messages to report the cash at an airport office, and said he was waiting outside. She flew three more times in February 2020 and Alfalasi enlisted other couriers.

In July 2020, Clarke texted a friend, saying she needed 12 people to work. The job criteria: “Can’t talk, trust, and reliable and fit!!!” A friend put Clarke in touch with Larvin, saying that Clarke worked for the U.A.E. embassy.

The women met over a coffee. Clarke’s teenage son sat at a nearby table. Clarke showed Larvin stamped certificates she would carry as a document courier and offered £3,000, around $3,750, to fly the suitcases. Clarke also would pay for Larkin to stay at a resort until she returned home with the empty bags.

Larvin had worked in digital marketing and done some modeling and wildlife photography. She had acted in a chart-topping British band’s music video in 2008. Her 2009 breakup with her world-champion boxer boyfriend, Joe Calzaghe, made the British tabloids after he started dating his partner on the TV show “Strictly Come Dancing.”

The following month, Larvin sent Clarke a photo of her passport and traveled by train to London’s King’s Cross station, on her way to Heathrow Airport. Her heart rate was going up, she texted her new boyfriend, Jonathan Johnson, an executive recruiter.

“Please be careful,” he wrote. “I’m beside myself here.”

Larvin headed to a Starbucks in an expensive shopping district and met her traveling companion, a 25-year-old woman from a town outside London. A driver picked them up in a black Mercedes and drove to an address nearby to collect the suitcases.

At the airport, they went to Emirates Airline and put the seven suitcases on the conveyor belt. The luggage entered the mouth of a 3-D scanner that uses computed tomography, or CT, to find explosives. These images, unlike at passenger security, aren’t watched by people unless the software identifies an item that might set fire or explode. The machines can be programmed to find cash, but they aren’t because they are operated by airport-security agents, responsible for passenger safety, not customs and immigration officials.

Larvin and her travel companion settled into their business-class seats, and baggage handlers stowed their suitcases below them in the hold. The trip, there and back, went without a hitch.

Cashed out

In October 2020, two other women weren’t so lucky. They were questioned at a Heathrow departure gate by officers of the Border Force, the agency in charge of U.K. customs and immigration. One of the women told officers she checked five suitcases to Dubai because she wasn’t sure what to wear.

“Omg shel. We’ve been held,” the woman texted Clarke, who was in Dubai. “Wtf.”

The suitcases were unloaded from the plane. They contained nearly £2 million in cash, around $2.4 million. They also had videos of bundled notes being dumped from shopping bags for repacking. Investigators suspect that the timestamped videos were intended as proof of cash transfers for money-laundering clients. Authorities identified a woman in the videos as another member of the smuggling group from a tattoo on her forearm.

Investigators searched the phone of one of the women and from that information began piecing together how Alfalasi’s money-laundering operation grew to 36 international couriers.

In December 2020, Clarke was arrested with around $9 million worth of gold on a private plane in Zanzibar, off the coast of Tanzania, said Truby, the senior investigating officer in the case.

U.K. authorities arrested eight more alleged couriers in May 2021. Seven months later, Alfalasi unexpectedly visited London with his wife and children, staying at an apartment owned by his wife’s family on an exclusive Belgravia square.

One day around lunchtime, government investigators knocked on Alfalasi’s door. They seized three phones that revealed details of his operation, which later surfaced in court documents.

Before each trip, Clarke sent Alfalasi photos of the travelers’ passports so he could buy their airline tickets. He booked them in pairs in Emirates business class to take advantage of the extra baggage allowance. His couriers returned in economy class. Alfalasi paid with his credit card and collected the air miles.

Clarke paid the couriers for the work, as well as some expenses, such as Covid tests, from her U.K. bank account.

Alfalasi arranged for cash pickups from clients around the U.K., and managed the logistics of counting and packing the cash. He charged around 10% of the total. In Dubai, he exchanged the sterling notes into gold and local currency through banks, money changers and in parking-lot transactions.

Truby, the senior investigator in the case, said he suspected that Alfalasi and his operatives smuggled as much as $250 million from 2017 until his arrest in December 2021. Prosecutors said the cash came from criminal conduct. Alfalasi never identified his clients, according to authorities.

Alfalasi pleaded guilty in June 2022 to money laundering and was sentenced to a 9-year, 7-month prison term. The government seized around £3.5 million of Alfalasi’s assets, including a Mercedes G63, Ford pickup truck and three Rolex watches. His lawyer said in court that Alfalasi was a useful idiot for higher-ups, people whom Alfalasi never named.

Clarke is under investigation in Dubai for money laundering. U.K. authorities would like to question her and others in Dubai about their alleged involvement. Clarke’s husband launched a cryptocurrency company that sponsored boxing matches at a Dubai arena. Three of the couriers were sentenced to prison, and one was acquitted. A courier who flew $5 million in August 2020 died by suicide. Authorities said his phone contained texts with details about the operation.

Larvin and Johnson were found guilty of money laundering last year. In court, they sought to blame Heathrow, Emirates Airline and the U.A.E. for failing to ask questions. The couple and several other couriers received suspended sentences. Two other couriers were convicted in January and are scheduled for sentencing later this month.

Johnson said in texts to The Wall Street Journal that he and Larvin were two ordinary people who got hoodwinked, and he blamed corruption and politics for allowing so much cash to pass through Heathrow Airport to Dubai without detection.

If what they did was such a big crime, Johnson said, why don’t airports scan luggage for cash?

Comments from head of one of region’s biggest arms makers come as bloc debates first defence industrial strategy

Europe needs to be careful not to become “too protectionist” as it seeks to build up its defence industrial base in the wake of the war in Ukraine, one of the region’s biggest arms makers has warned. 

Micael Johansson, chief executive of Sweden’s Saab and vice-president of ASD, the European industry trade body, said it was important to allow companies from third countries to play a role on certain conditions. 

“We can’t become too protectionist — it can’t become ‘everything has to be done by European-owned and controlled companies’,” he told the Financial Times in Brussels.

“We must be able to look at foreign-owned companies as local and . . . they must be able to be involved in the defence capabilities development of Europe,” he said. 

Johansson’s comments come as EU member states debate proposals from Brussels for the bloc’s first-ever defence industrial strategy.

The initiative encourages everything from joint procurements to prioritising EU-based defence companies over non-EU suppliers. It has set a target for at least 50 per cent of its procurement by budget to come from European defence suppliers by 2030. 

Policymakers are keen to reverse the long-standing practice of countries purchasing US-made equipment. Many have pointed to the fact that over the past two years, just as spending has surged in the wake of Russia’s full-scale invasion of Ukraine, 78 per cent of defence equipment acquired by EU member states was sourced outside of the bloc. 

The initiative, however, has sparked concerns among some EU capitals and industry executives that it could become too restrictive and risk excluding important defence capabilities. Executives said the focus right now should be on expanding the industry’s capacity to produce as well as on investing. 

Countries, including Sweden — which has deep and long-standing ties to the UK defence industry — Germany and Poland, are lobbying the European Commission not to hew too closely to the position advocated by France and others that the strategy should seek to promote only EU companies.

“The debate is about whether it is restrictive regarding non-EU states like the UK, US and Turkey . . . or actively encourages them to take part under certain conditions,” said one official involved in the negotiations.

Johansson said the strategy should not just consider the ownership of a technology but also “what kind of controls do we have over the content, the capabilities”. 

Policymakers, he added, should look at whether the so-called design authority — the company or organisation able to modify and evolve the design of a product and its capabilities — is in the region. 

“You nurture the capability in Europe even though maybe the mother company also benefits from that . . . on the other side of the Atlantic,” he said. “That doesn’t bother me that much.”

His comments echo those of Eric Beranger, chief executive of Europe’s missile defence champion MBDA, who recently told the FT the UK in particular should be considered part of “geographical Europe”. 

Industry executives said there was some concern among UK companies they might be excluded after Brexit. 

Kevin Craven, chief executive of ADS, the UK industry trade body, told a conference in Brussels last week that Britain was still “geographically and culturally part of Europe”. 

Europe, he added, “is stronger with the industrial capability of the UK”. 

But Timo Pesonen, director-general for the defence industry at the European Commission, stressed that British companies would be treated like others from third countries. 

Initiatives such as the European defence fund, he told the conference, were open for non-EU companies under certain conditions as long as they “operate on European soil”.

SGS expects to be able to cut vessels’ fuel consumption by up to 30 per cent with its wind-sail technology

The huge wing sitting in a corner of the Scottish port of Hunterston does not look like part of a ship — but the 20m-long device could be one of the shipping industry’s weapons to fight carbon emissions.

When bolted to a vessel’s decks and sitting upright, the wing, called FastRig, will act as a sail capturing the wind. Smart Green Shipping (SGS), the company that has developed the device, and some of the world’s leading shipowners are convinced that it can provide clean power to supplement ships’ engines.

The International Maritime Organization, the UN’s maritime body, is meant to introduce new, stricter emissions rules to come into force from 2027. Shipping currently accounts for around 3 per cent of global carbon emissions annually.

Di Gilpin, SGS’s founder and chief executive, argues that FastRig stands out among scores of efforts to reduce shipping’s carbon emissions because its technology has been developed in particularly close collaboration with shipowners.

The company’s backers include the bulk shipping arm of Japan’s Mitsui OSK Lines, one of the world’s biggest operators of ships for carrying commodities such as coal and iron ore. Denmark’s Ultrabulk, another big shipping company, and Drax, the UK power generator, are also shareholders.

SGS expects to be able to cut ships’ fuel consumption by as much as 30 per cent. That is more than some of the other wind-propulsion technologies being developed — a six-month trial by commodities trader Cargill on a bulk carrier fitted with sails by another developer, achieved average emissions savings of 14 per cent.

Among other means being tested to cut shipping emissions are the uses of methanol, ammonia and hydrogen as fuel. But in the absence of anything that created no emissions at all, Gilpin said FastRig represented vital progress for the sector.

The question is whether SGS can persuade enough ship operators to purchase or lease the company’s products. The start-up expects the system to be attractive to owners of ships and, potentially, to companies hiring them long-term. The wings could be bolted to the deck of the ship temporarily, for the duration of a charter.

While she declined to estimate the eventual price for each FastRig, Gilpin said each wing-sail should pay for itself through fuel savings. The aim, she said, was for the cost to be paid off in four years.

“After that, the energy harvested from wind is free at the point of use,” she added.

Equity investors have so far put £3.5mn into SGS, on top of the £5mn the company has received in public-sector grants. It is about to embark on a fundraising round seeking another £6mn in investment and valuing the company at £25mn.

Arsenio Dominguez, secretary-general of the IMO, stressed that the organisation was including wind power among the technologies it was considering as a means of cutting the sector’s emissions.

“We’re technology-agnostic on all of the options that are out there,” Dominguez said. “Wind propulsion is one.”

However, Jan Rindbo, chief executive of Norden, a big Copenhagen-based operator of dry bulk carriers, said the technology was likely to make financial sense for his company only once there were stricter regulations. Those could include a tax on ships’ carbon emissions.

“If you add carbon tax then it’s a technology that could have some significance,” Rindbo said.

The key moment in SGS’s genesis, according to Gilpin, came in 2015, when she met a group of shipowners at the Paris Climate Conference all concerned about the risks of buying ships reliant on new, untested green technologies.

As well as zero-carbon fuels for internal combustion engines, some naval architects advocate powering ships with nuclear reactors — a technology used in some submarines and aircraft carriers, as well as Russian icebreakers. What the ship owners wanted was retrofittable solutions, Gilpin said.

The prototype FastRig has been set up at Hunterston, 30 miles south-west of Glasgow, so that shipowners could see testing on the device, to be reassured about how it will work.

Four FastRigs should be fitted in September to the Pacific Grebe, a vessel used to transport spent nuclear fuel and other highly radioactive material around the world. The ship — owned by an arm of the UK’s Nuclear Decommissioning Authority — is one of the few suitable vessels that fly the UK flag: UK Innovation and Science funding specified the initial test installation had to be on a British vessel.

“In many ways, it’s ideal because it’s the most demanding ship in the world for installing safely and quickly,” Gilpin said.

FastRig has been designed to address many of the concerns among owners and mariners, according to Gilpin. The devices are now retractable after owners had raised questions about whether FastRigs might interfere with loading and unloading in ports.

They also queried how long a vessel would be out of action without earning for FastRig installation. The devices are relatively light aluminium, to ensure only minimal, time-consuming drilling into a vessel’s decks is needed. Installation time for different vessels would vary, Gilpin said, partly because bigger vessels would need more wing-sails.

The technology would be marketed mainly to operators of dry bulk ships and tankers because theirs were the main vessel types with enough clear deck space for the sails.

“The design was driven by the market need, rather than what we could achieve,” Gilpin said. “Having the shipowners at the table was crucial.”

Rindbo said he remained “sceptical” of the idea of putting sails on vessels. He pointed out that bulk carriers and tankers traded in a similar way to taxis, travelling wherever in the world customers needed cargoes delivered. That made it hard to predict how a novel propulsion method would work in different places.

However, Stuart Nicoll, a director at Maritime Strategies International (MSI), a London-based consultancy, insisted that wind power had clear benefits given steady growth in taxes on shipping emissions. Since the start of the year, ships entering EU ports have had to pay for the emissions on their journey under the bloc’s emissions-trading scheme.

“The context is that people need to do something now to reduce the fuel consumption,” Nicoll said. “There’s a lot of interest in little wins.”

On top of the sophisticated electronic controls to optimise the use of flaps and other controls, the company is developing technology that allows a ship to use wind power better by deviating slightly from the most direct route, according to Gilpin. Eventual savings might be still be higher than the projected 30 per cent, she suggested.

“We might improve that,” she said, adding: “This is a first iteration.”

Irish banks put crisis era behind them as state cuts holdings

Ireland’s AIB believes it could be fully back in private hands in 2025, as a buyback next month prepares to reduce the government’s stake in the country’s second-biggest bank to just over a third.

At the start of 2022, the state still held 71 per cent of AIB — a hangover from the government’s bailout of the sector in the global financial crisis, following reckless lending during Ireland’s Celtic Tiger boom.

Now, after what chief executive Colin Hunt calls the bank’s “transform, repair, restore” strategy, the books are cleaned up as Irish banks have laid to rest the shadow of their meltdown a decade and a half ago.

The state, which exited the country’s largest lender, Bank of Ireland, in 2022, holds less than 40 per cent of AIB. Its shareholders are expected to approve a €1bn buyback of shares from the state on May 2, the same day it releases its first-quarter results, and investors are watching for news of the pace of further reductions.

“If [the buyback is] approved, and I think it will be, the government’s shareholding will fall below 34 per cent,” Hunt said in an interview.

Analysts believe that if last year’s pace of reductions is continued, the state holding could hit the low 20s by year-end — likely fuelling calls for an end to a cap on executive pay that it still faces, despite the government relaxing some crisis-era measures in the industry, such as a ban on bank bonuses.

A total government exit in 2025 is “certainly within the bounds of possibility”, Hunt said.

Ireland’s banking comeback — the banks are now bigger and more profitable even than during the Celtic Tiger period — has been helped by shrinking competition among high street lenders. The exit of KBC and Ulster Bank from Ireland has left what Borja Ramírez, an analyst at Citigroup, has called an “oligopolistic” concentration.

Irish banks have also benefited more than European peers from high interest rates, which they were slower to pass on to customers, helping achieve stellar returns on tangible equity, a crucial efficiency measure, in 2023.

“The 2023 results were very strong, the most successful year in the history of the bank. But it’s a book end,” Hunt said. “It’s a chapter closing . . . We should never forget the [global financial crisis] because there are always lessons to be drawn from it, for we should no longer be defined by it.”

AIB posted a 2023 profit after tax of €2bn, while BoI turned a profit of €1.94bn before tax. PTSB, the smallest of Ireland’s remaining three high street banks, posted a 270 per cent increase in underlying profit, before a one-off gain and tax.

“The banks have done a really good job over the last couple of years in terms of positioning themselves — they all cleaned up their balance sheets, they were in a position to do consolidation and that did happen. They’re reaping the rewards,” said Diarmaid Sheridan at brokerage Davy in Dublin.

While global banks reaped record profits last year from rising interest rates, analysts believe those windfall gains are unlikely to be repeated. US banks have already started to report a squeeze on margins in their lending business as depositors switch to higher-yielding accounts, while markets are preparing for central banks to start cutting interest rates again later this year.

AIB is now under pressure to deliver on ambitious green energy targets. The fastest-growing part of its balance sheet is investment in renewable energy and Hunt said 45 per cent of all mortgages last year were lower rate loans for more energy efficient homes. “That’s going to further increase this year,” Hunt said.

He added: “Ultimately, we want 70 per cent of our new lending to be green or transitional in nature by 2030. Within that number, practically the entirety of our new mortgage lending would have to be green.”

Sector pushes to harness latest tech tools as competition from hedge funds intensifies

The world’s largest commodity traders are investing heavily in data processing and analysis in a race to develop a technological edge over rivals.

Groups such as Vitol and Trafigura, which traditionally relied on political connections, handshakes and logistical skill to move natural resources from remote locations to willing buyers, are increasingly focused on how to apply artificial intelligence in the most physical of industries.

“In a way it’s an arms race,” Russell Hardy, chief executive of Vitol, the world’s biggest oil trader, told the FT Commodities Global Summit in Lausanne this month. Trading houses were seeking to use AI in two main ways, he said — to improve business efficiency and to develop a trading “edge” by having more analytical power than competitors.

“I think we’re all trying to get to the moon first,” Hardy said. “But I would say that it’s helping with business efficiency today more than cracking the code of what the market is going to do this afternoon.”

Privately held Vitol, which employs about 1,800 people, made a record $15.1bn in net profit in 2022 and about $13bn in 2023, making it one of the most profitable companies in the world on a per capita basis.

The push to harness the latest technological tools is partly a reaction to competition from hedge funds and other data-led trading teams, which move fewer physical commodities but have built lucrative businesses trading commodity-linked securities and other financial products.

The most advanced data-led trading operation in the sector is arguably found at the Miami-headquartered hedge fund Citadel, which hired commodity trader Sebastian Barrack from Macquarie in 2017 to lead a bigger push into energy and raw materials.

In the hunt for an informational advantage, one of Barack’s first moves was to hire a 20-strong team of weather forecasters. The broader commodity trading team has since swelled to more than 300 people including analysts and engineers.

Oil and refined products is one area where the available data on supply levels, demand patterns and logistical variables has ballooned in recent years, Barrack told the Financial Times. “The prolific growth of the data that’s becoming available to us is literally making us better-informed investors.”

For data-led trading strategies the energy transition promises to be a boon because it will increase complexity and require more sophisticated tools to model markets, particularly when there is a lack of historical information in a new area, he added. “The more detail, the more complexity, the more there is a lack of backward-looking data, the better for us.”

Citadel made a record $16bn in 2022 to displace Bridgewater as the most successful hedge fund of all time, according to research by LCH Investments. Approximately half of that came from commodities as the firm, like other traders, profited from the extreme volatility in energy markets following Russia’s invasion of Ukraine, the FT has reported. Citadel declined to disclose its 2023 performance.

The ability to process large volumes of data is particularly important in the fast-growing area of power trading, where the regulated nature of electricity markets produces large amounts of information. 

Consultants McKinsey estimate that data-driven trading firms captured a quarter of gas and power trading profits globally in 2022, up from less than 5 per cent in 2021.

That competition has forced traditional commodity traders such as Trafigura, which made a record $7.4bn in 2023, to invest to keep up. It set up a power trading division three years ago.

Richard Holtum, head of gas, power and renewables at Trafigura, said his team “uploads several billion discrete bits of data into the cloud” every day. “The challenge there is using AI to interrogate that data in a better, more efficient way to improve the trading decisions that we are then making,” he said. “I think right now we are at the very tip of the iceberg on what AI can do.”

Switzerland-based Mercuria, founded in 2004 by Marco Dunand and Daniel Jaeggi, was predominantly an oil trader but bolstered its power trading operations in 2014 through the acquisition of part of JPMorgan’s physical commodities business.

Dunand told the FT that the informational advantage accumulated by data-led players such as Citadel was helping them take larger positions in the market, but that AI could help Mercuria bridge that gap.

“If you wanted to mirror Citadel as an example for collecting data, I think it would take a lot of time, a lot of money . . . so we are spending a lot of time and effort trying to develop our own AI machines in order to kind of close those gaps,” he said. Mercuria made approximately $2.7bn in 2023, he added, slightly down from the record $3bn set the previous year.

However, the physical traders are not about to stop getting their hands dirty.

“You can actually be a player in the market without trading physical but that’s not for us,” Dunand said. “I think ultimately, the world needs energy and we’re energy traders, so if you don’t move this stuff, you know the world doesn’t work.”

The measure, requiring ByteDance to sell the popular app or stop operating in the U.S., now heads to the Senate

In the yearslong technology fight between the U.S. and China, the Americans are poised to land a major punch.

The House on Saturday easily passed a bill that would force a sale or ban of TikTok, which is owned by China–based ByteDance, bringing closer to reality a law that could remove the popular app and deepen the internet divide between the two countries.

The measure, which passed 360-58 and was tied to a sweeping aid package for Israel and Ukraine, would give ByteDance up to a year to sell the app—compared with the six-month period proposed in a prior bill.

If ByteDance can’t find a buyer within that time, TikTok—which has 170 million users in the U.S.—would be banned.

The Senate could vote on the bill in coming days. President Biden has previously said that he would sign such a bill into law.

TikTok on Saturday reiterated a statement it gave when the package was introduced that called it “unfortunate that the House of Representatives is using the cover of an important foreign and humanitarian assistance to once again jam through a ban bill.” The company has said the legislation is effectively a ban, since completing a deal would be difficult.

The Chinese government has signaled it wouldn’t allow a forced sale of the company. TikTok says it has never been asked to provide U.S. user data to the Chinese government and wouldn’t do so if asked to.

Passage of the legislation, which targets China’s most internationally successful app, comes as China steps up its longstanding campaign against U.S. and other foreign messaging and social-media services.

Earlier this week, Beijing forced Apple to help close a loophole that some Chinese users had been exploiting to access already-banned services, including two of Meta’s apps, WhatsApp and Threads.

To some experts, it was seen as a small move—given that the country has already banned many outside social-media services and messaging apps—but indicative of China’s intentions to further push foreign companies out.

“The direction is clear,” said Dan Wang, a visiting scholar at Yale Law School’s Tsai China Center. “The walls are going up.”

Social media and messaging apps are in the crosshairs in particular because they have such a powerful ability to transmit information broadly and influence public opinion, as well as potentially to collect data about their users.

Some lawmakers who supported the TikTok bill argued that it’s fair game to ban the app since U.S. social-media apps are banned in China.

China more than a decade ago banned Facebook, Google, Twitter, YouTube and most other sites on the mainstream Western internet. People in China got around the bans by using a virtual private network to make their phones think they were accessing the internet from a country where the sites and apps weren’t blocked.

On Friday, China took action to stop that from happening, ordering Apple to take certain apps off the app store entirely to prevent them from being downloaded via VPN.

Over the past decade, Instagram, X, Facebook, YouTube and WhatsApp were collectively downloaded from Apple’s app store in China more than 170 million times, according to estimates from market intelligence firm Sensor Tower.

China cited national-security concerns—the same reason U.S. lawmakers have given for trying to separate TikTok from ByteDance. They say they’re worried that Beijing could use the app to gather intelligence on U.S. users or promote China’s preferred messages to users on a range of sensitive issues, including the Israel-Hamas war.

U.S. social-media apps like Instagram and YouTube would likely be the biggest beneficiaries of a TikTok ban. The same proved true in China: WeChat, a Chinese-owned app, has become the most popular social-media platform there in the absence of Western ones.

Still, U.S. tech executives have had differing views on a potential TikTok ban. In 2020, Meta Platforms Chief Executive Mark Zuckerberg stoked fears in Washington about TikTok’s foreign ownership. He has since taken a more nuanced stance, saying in 2022 that it’s a complicated matter. Elon Musk, owner of the social-media platform X, tweeted Friday in support of the TikTok app.

“TikTok should not be banned in the USA, even though such a ban may benefit the X platform,” he wrote. “Doing so would be contrary to freedom of speech and expression.”

There are political risks for both parties in pushing the TikTok legislation, given how popular the app has become, especially among young people who have been a reliable voting bloc for Democrats. President Biden’s campaign recently joined TikTok. Former President Donald Trump, who previously tried to ban TikTok via executive order, says he is now less sure of how the app should be handled.

A TikTok ban could face legal challenges from the company or from video creators who depend on the platform for their livelihoods. China could take retaliatory action.

Wang, the Yale visiting scholar who previously lived in China, described the action this week by the Chinese government as “a signal that China might do more if the U.S. does move ahead with a TikTok ban,” though the country’s escalation path is fairly limited.

“They’ve already done everything they can to squeeze out information platforms,” he said.

Beyond the TikTok ban, tensions over technological reliance and influence have been brewing between the U.S. and China for some time, with both sides periodically making moves to distance themselves from each other.

Huawei, which for a time was the No. 1 smartphone maker in the world by volume, was devastated by U.S. sanctions in 2019 that prevented U.S. companies from selling directly to the Chinese-owned telecommunications company. The move effectively meant Huawei could no longer buy wireless-communications chips from U.S.-based Qualcomm and had to find a new source.

On the flip side, China earlier this year told the nation’s largest telecom carriers to phase American chip makers out of their devices by 2027—a move that would affect U.S. chip giants Intel and Advanced Micro Devices.

Eventually, there could be little overlap between the technology allowed and used in each of the two countries, industry experts say.

“The divide is coming,” said Andrew King, a venture capital partner at Bastille Ventures who works with the House Select Committee on the Chinese Communist Party.