TheChek News Flow

Mohammed Zina is facing six counts of insider dealing and three counts of fraud

A former Goldman Sachs analyst on trial for insider dealing lied to investigators when he was arrested and thought he could “talk his way out of it”, the prosecution told the jury as his trial draws to a close.

Mohammed Zina, 35, declined legal representation in his first interview with the UK Financial Conduct Authority on the day of his arrest in December 2017, Peter Carter KC said in his closing speech for the prosecution at London’s Southwark Crown Court on Wednesday.

“Is it perhaps an indication that Mohammed Zina thought he could talk his way out of it?” Carter told the jury.

The jury was shown extracts from the interview in which Zina told FCA investigators he was “always worried” he did not have permission from Goldman to trade, but he was concerned that if the investment bank refused him permission it would have meant he “wouldn’t be able to fulfil my passion”, he said at the time.

“I was always sort of worried. I was always worried about it,” Zina said in the interview. “I just felt like if I told them, they would just restrict me.”

The trial, which started in November and is being prosecuted by the FCA, originally included Mohammed Zina’s brother, Suhail Zina, 36, who is a former Clifford Chance lawyer. The pair were charged with six counts of insider dealing between July 2016 and December 2017, as well as three counts of fraud related to loans obtained from Tesco Bank to fund the trading.

However, the judge directed the jury to acquit Suhail Zina on all counts on Friday, after ruling there was no case for him to answer.

Carter rebutted Mohammed Zina’s defence that he did not know he had inside information at Goldman, pointing to compliance training and witness accounts about the so-called material non-public information the bank held.

“He was an intelligent man, he knew what the job involved,” Carter said.

Brendan Kelly KC, acting for Mohammed Zina, responded in his closing speech with criticisms of the prosecution’s witnesses, questioning the evidence that his client knew he held inside information.

Kelly told the jury that one of the witnesses for the prosecution, Fergal O’Driscoll, head of Emea conflicts and reputational risk at Goldman, was interviewed by police for possible contempt of court after speaking to another witness. O’Driscoll was found not to be in contempt, Kelly said.

“There are rules in this building, there are rules in this court, and again and again we saw them broken,” Kelly told the jury.

“The real issue here is did [Mohammed Zina] know, did he know that the information that he had is inside information?” Kelly said. “The evidence on knowledge is as clear as mud.”

Prior to the closing statements, the jury heard from character witnesses for Mohammed Zina on Tuesday about how he and Suhail Zina were respected in their community and had both achieved successful careers, despite a challenging upbringing.

Even after he started working for Goldman in 2014, Mohammed Zina still worked at Sainsbury’s supermarket at the weekends for a while because “he missed working with ordinary people”, a school friend said in a witness statement read out to the court.

Negotiations between banks and highly indebted French IT services company hang in the balance

Negotiations between highly indebted IT services company Atos and its lenders are hanging in the balance after one of its biggest creditors, Crédit Agricole, signalled it wanted to walk away. 

Crédit Agricole has for several weeks said it no longer wanted to refinance the group, according to three people with knowledge of the talks, dealing a blow to debt negotiations aimed at pushing back €3.65bn in debt payments due by the end of 2025 by several years. 

Crédit Agricole “have been wanting to get out for some time now . . . it’s been at least three weeks that they’ve really wanted to get out”, said one person with knowledge of the situation. 

The setback points to growing fractures among creditors as Atos’ underlying business and financial situation rapidly deteriorate.

Under the leadership of recently appointed chair Jean Pierre Mustier, Atos is trying to refinance and avoid a wider debt restructuring that could wipe out shareholders. On Monday, the company appointed a mediator to oversee talks with creditors — a voluntary step before a potential court-supervised debt restructuring — which caused shares to plunge almost 30 per cent. 

Once a French corporate champion with prized assets such as supercomputers and sensitive contracts with the French military, attempts to split the group and sell assets to pay down debt have faltered after a series of strategic mis-steps and management changes. In the past three years, the company has had five chief executives, issued a series of profit warnings and shed 90 per cent of its market capitalisation.

A plan to split the company and sell its loss-making legacy business to Czech billionaire Daniel Křetínský is foundering. Talks have been at a standstill for weeks, though neither side is yet willing to declare the deal officially dead, according to multiple people with knowledge of the negotiations. 

As concerns over the debt burden at Atos have mounted and the Křetínský deal stalled, Mustier has explored a back-up plan by starting talks to sell the company’s prized big data and cyber security unit, BDS, to Airbus. A deal with Airbus would take time to finalise, however, since the parties only recently began due diligence.

Crédit Agricole’s stance on the company’s refinancing contrasts with the accommodating position often taken by French banks to big corporate clients. The country’s top lenders tend to extend lifelines during corporate blow-ups and remain longer than foreign banks, as with the slow-motion downfall of food retailer Casino. 

Crédit Agricole is one of the biggest French lenders to Atos in a group of banks that also includes BNP Paribas, Natixis, Credit Mutuel CIC and Société Générale. Together, the banks make up roughly 40 per cent of Atos’ creditors.

Other lenders were also disenchanted with Atos’ situation but more inclined to proceed with refinancing and find a solution by extending fresh funds, the people close to the talks said.

Crédit Agricole’s position could have a ripple effect on other smaller foreign bank lenders, which were also on the fence about re-extending credit lines to the group, the people added. If it fails to secure a voluntary extension of bank loans, Atos is likely to be forced into the French equivalent of a bankruptcy proceeding, which would involve a debt-for-equity swap. 

Distressed debt investors are now circling Atos, including hedge fund Attestor, which has bought some of the company’s debt. “Everyone is testing the market, but to date the prices have been too low for the banks,” the person with knowledge of the talks said. 

Crédit Agricole, Atos, Attestor and the French bank lenders declined to comment. Crédit Agricole’s stance was first reported by online publication L’Informé.

Securities commission chair Yi Huiman seen as ‘scapegoat’ for plunge in share prices in recent months

Beijing has removed the powerful Communist party boss and chair of its securities regulator as authorities battle plunging confidence in Chinese stock markets.

The Communist party’s central committee replaced Yi Huiman with Wu Qing, a senior official who made a name for himself cracking down on brokerages, as China Securities Regulatory Commission chair and party secretary, state news agency Xinhua reported on Wednesday.

The terse report did not provide any explanation for the decision to remove Yi. Before leading the CSRC, he was the chair of the state-owned Industrial and Commercial Bank of China (ICBC), whose past executives have been targeted in widespread corruption probes.

“He’s clearly gone down because of the market slump,” said Chris Beddor, deputy director of China research at Gavekal. “Part of his de facto job as securities regulator was to prevent exactly this from happening: a politically embarrassing market decline.”

A crisis in China’s property sector, which has worsened deflationary pressures, has hit equity valuations and led institutional investors to divest their holdings, further hurting retail investor sentiment.

One banker who has met Yi said he was taking the fall for recent losses in the market, which has suffered a particularly brutal sell-off since the start of this year. The benchmark CSI 300 index is down 44 per cent from its peak in 2021.

“At this point, someone needs to be made the scapegoat,” the banker said

Beijing this week intervened in the domestic stock market to stem prolonged falls, with a so-called “national team” of state-owned institutions buying shares.

The CSI 300, which tracks the largest and most liquid stocks listed in Shanghai and Shenzhen, is up 4 per cent this month following the state intervention after shedding more than 6 per cent in January.

Yi, who took over as chair of the CSRC in 2019, had become more vocal in recent months in his attempts to reassure investors that the regulator would stabilise the market, but sentiment continued to be volatile.

Analysts said Yi was still a relatively young official at 59 and was a member of the Communist party central committee, so another job might be found for him.

“It’s hard to say where he would be appointed next, but the leadership won’t appoint him soon as that won’t look good to angry investors,” the banker said.

Wu, who was previously executive vice-mayor of the city of Shanghai, was tipped early last year to replace Yi.

Wu, 58, headed the Shanghai Stock Exchange for almost two years before becoming Shanghai’s vice-mayor. During his time in the city, he worked alongside China’s number two leader, Premier Li Qiang, who was then Shanghai’s party secretary.

Before working at the Shanghai Stock Exchange, Wu served at the CSRC, where he specialised in “risk management”.

“During his tenure, he made a reputation for his no-nonsense work approach towards brokerage companies,” said Chinese media outlet Yicai Global, adding that Wu had penalised 31 brokerages for regulatory breaches.

Yi’s removal comes as authorities have also stepped up investigations into former officials of ICBC’s international arm in particular, leading one Chinese media site to recently headline an article: “Former executives at ICBC International are falling one after another”.

In November, the bank’s well-connected former vice-chair Zhang Hongli was detained in a corruption probe. His detention followed action against at least a dozen other former ICBC executives.

Senior Nomura banker Charles Wang Zhonghe, who had been at ICBC’s international arm, was banned from leaving mainland China last year. The president of China’s top tech-focused investment bank, Cong Lin, a veteran banker who had run ICBC International, was detained in 2022.

Gavekal’s Beddor said being a securities regulator in China was a “thankless task”.

They were expected to boost the market at critical moments but lacked effective tools, Beddor said, adding that the “national team” consisted of entities that were controlled by a mixture of other agencies and ministries and was probably outside the authority of the CSRC chair.