TheChek News Flow

Tehran-backed Petrochemical Commercial Company operated from office near Buckingham Palace

Iran used two of the UK’s biggest banks to covertly move money around the world as part of a vast sanctions-evasion scheme backed by Tehran’s intelligence services.

Lloyds and Santander UK provided accounts to British front companies secretly owned by a sanctioned Iranian petrochemicals company based near Buckingham Palace, according to documents seen by the Financial Times.

The state-controlled Petrochemical Commercial Company was part of a network that the US accuses of raising hundreds of millions of dollars for the Iranian Revolutionary Guards Quds Force and of working with Russian intelligence agencies to raise money for Iranian proxy militias.

Both PCC and its British subsidiary PCC UK have been under US sanctions since November 2018. 

Documents, emails and accounting records show that during this time PCC’s UK division has continued to operate out of an office in Grosvenor Gardens in Belgravia by using a complex web of front entities in Britain and other countries.

Revelations about the Iranian sanctions-evasion operation in the heart of London come after the Royal Air Force recently joined US air strikes against Iranian-backed Houthi rebels in Yemen. This week the UK and US placed under sanctions what they called a “transnational assassinations network” overseen by Iranian intelligence that has targeted activists and dissidents, including British residents.

Documents analysed by the FT show that since being placed under US sanctions PCC has used companies in the UK to receive funds from Iranian front entities in China while concealing their real ownership through “trustee agreements” and nominee directors. 

One of these companies, called Pisco UK, is registered to a detached house in Surrey and used a business account with Santander UK. 

According to the UK corporate registry, Pisco UK is fully owned by a British national called Abdollah-Siauash Fahimi. However, internal documents, some of which have been leaked online by the Iranian opposition website WikiIran, show that Pisco is fully controlled by PCC and that Fahimi signed an agreement to own the company in trust on its behalf. 

Fahimi has used a PCC email address for correspondence with company officials in Tehran. He was a director of PCC UK from April 2021 until February 2022, according to UK corporate filings.

In 2021 Pisco’s Santander account received a transfer from a Chinese company called Black Tulip, which internal PCC records show is another trustee company controlled by a PCC employee. The US Treasury last year accused Iranian petrochemicals companies of using multiple front entities to evade sanctions by routing sales through Asia.

Santander said it was unable to comment on specific client relationships but was “highly focused on sanctions compliance”. A person familiar with the situation said the bank has closed Pisco’s account.

Another PCC front company in the UK is Aria Associates, which has an account with Lloyds. It is officially owned by Mohamed Ali Rejal, who according to internal emails is the deputy chief executive of PCC UK and has regularly communicated with company officials in Tehran.

Emails show that in July 2021 a PCC accounting official in Tehran emailed Rejal about a planned payment from China, telling him, “Please send us the safe account No. For payment.”

Rejal instructed the accounting official to transfer the money into Aria Associates’ Lloyds account, writing: “Please make sure that there should not be any indication of PCC or PCC (UK).” 

PCC UK, Rejal and Fahimi did not respond to requests for comment.

Lloyds Banking Group said it could not comment on individual customers but complied with sanctions laws, adding: “In addition, due to legal restrictions, we cannot comment on the submission of suspicious activity reports to relevant authorities when and if they occur.”

Alicia Kearns, Tory chair of the Commons foreign affairs committee, said: “For years I have repeatedly raised my concerns about our need to shut down cut-outs of the IRGC operating in the UK. This investigation proves once again that more needs to be done.”

Liam Byrne, Labour chair of the Commons business and trade committee, said: “This is, frankly, a shocking failure to act in lockstep with our allies to shut down the financing of a hostile regime. It beggars belief that a business sanctioned by the US is freely trading in London.”

David Asher, a senior fellow at the Hudson Institute and a former US state department official who has worked on sanctions and counter-terrorism operations relating to Iran, said the scheme showed how IRGC-connected entities “continue to use London as a financial centre”.

“For UK banks to continue doing business with them is not only a major risk but is inconsistent with stated policy towards the Iranian regime,” he said.

European banks found to have breached US sanctions on Iran have been hit with large penalties, with Standard Chartered paying more than $1bn and UniCredit $1.3bn in 2019.

Other documents seen by the FT show that as PCC continued to operate in the UK it also entered into contracts for equipment procurement with a Turkish company called ASB, which last year was placed under sanctions by the US government for working with senior IRGC officials.

Audit reports for PCC UK from 2021 seen by the FT also show the company has maintained large trading balances with PCC in Iran since being placed under sanctions by the US, allowing it to continue operating in spite of western banks being blocked from doing business with the company. 

PCC UK’s Belgravia office is also the registered address for NIOC International Affairs (London) Ltd, a division of Iran’s US-sanctioned national oil company, which Washington has for years claimed directly finances the IRGC and Iranian military activity.

Depuis le début de l’invasion russe en Ukraine, Ankara joue une partition délicate. Forte de son droit de contrôle des détroits du Bosphore et des Dardanelles, elle tient à l’écart ses alliés de l’OTAN et s’affirme face aux ambitions de Moscou.

Elon Musk’s drug use was widely known among some current and former board members at Tesla and the other companies he controls, according to The Wall Street Journal. His use of illegal drugs such as ecstasy led Oracle founder Larry Ellison to invite him to his residence in Hawaii to “dry out” in late 2022 after some friends encouraged him to go to rehab, according to the report.

During that period, Musk attended a party in the Hollywood Hills where he used liquid ecstasy, said the report, which cited a person who was there. He also took ketamine recreationally through a nasal spray bottle while partying at the Austin Proper Hotel, said the report.

The allegations, which build on the newspaper’s previous report of Musk’s drug use, could threaten federal contracts held by Musk’s rocketship company, SpaceX. Musk’s attorney Alex Spiro has disputed the reports, saying he has never failed a random drug test at SpaceX.

Spiro declined to comment, and Musk and an Oracle spokesperson didn’t immediately respond to a request for comment.

State officials warn of flooding, mudslides amid heavy rains

A massive storm system is hitting much of California, bringing prolonged downpours and high winds to the nation’s most populous state.

The deluge was expected to grow with intensity Sunday and last through at least Tuesday, causing widespread flooding to neighborhoods and roadways and raising the threat of mudslides across parts of the state. Officials in the state of 39 million people have issued evacuation orders and warnings for numerous areas, and they urged people to stay off roadways if possible. Schools and government offices have been closed in many areas.

“This is a particularly dangerous situation,” Ariel Cohen with the National Weather Service said at a Saturday press conference in Santa Barbara County. “I can’t stress enough the importance that everyone be at a very high state of readiness.”

Storm warnings have been issued from San Diego up past the San Francisco area. The National Weather Service for the Los Angeles area issued a warning Sunday morning stating, “All systems are go for one of the most dramatic weather days in recent memory.”

The heaviest rainfall is expected late Sunday and overnight into Monday, but high wind and precipitation will continue with varying intensity into Tuesday, according to Marc Chenard, a meteorologist with the National Weather Service’s Weather Prediction Center.

This is the second atmospheric river—a flowing column of condensed water vapor that can produce significant rain and even snow—to pummel California in recent days. The most powerful atmospheric rivers can generate extreme rainfall and damaging floods. Around 30% to 50% of the annual precipitation on the West Coast occurs in just a few atmospheric river events, according to the National Oceanic and Atmospheric Administration.

Meteorologists predict the storm will bring 3 to 6 inches of rainfall in the coastal and valley areas of south and central California, and 6 to 12 inches of rain in the foothills and mountains of the state, especially from Santa Barbara south.

California Gov. Gavin Newsom activated the state’s emergency operations center. Thousands of state workers, including national guard units, have been placed on alert.

“If you don’t need to be on the roadways during this storm event, we’re asking you please, please postpone any nonessential travel,” Tony Tavares, director of the state’s department of transportation, said at a briefing Saturday.

Bill Brown, sheriff of Santa Barbara County, said at that county’s press conference that the storm in expected to be “one of the largest and most significant in our county’s history.” Strong winds likely will knock down power lines, he said. He urged people with cars in low-lying areas to move them to higher ground.

About 36,000 customers were without electricity early Sunday, according to PowerOutage.us.

China’s cull of EV overcapacity will bring little relief to Europe

Beijing’s tried-and-tested industrial policy has a track record of creating fierce export juggernauts

A senior official in charge of China’s industrial policy recently vowed to get serious about slashing excess capacity in the country’s electric-vehicle industry, seemingly taking to heart a key trade complaint from the EU. 

The bloc last October initiated an anti-subsidy investigation on imported EVs from China. European Commission president Ursula von der Leyen pledged to defend Europe’s auto industry against cheap Chinese exports driven by subsidy-fed overcapacity. But now Beijing is setting about making things right, trade tensions with Brussels will dissipate, surely? Not a chance. 

Overcapacity is a chronic affliction of Chinese industrial policy. Like an adaptable virus, it is difficult to eliminate and requires continuous suppression, which often takes the form of government-orchestrated industry consolidation. The treatment culls the weak. The companies that survive are fitter and meaner and become even more fierce in export markets. 

The Chinese government designated EVs a “strategic emerging industry” in 2009, and began flooding the sector with subsidies, sheltering the infant industry behind a protectionist wall. At the peak, one EV attracted up to $19,000 of consumer purchase subsidies, in addition to tax breaks, cheap land, energy and bank credits for manufacturers. Foreign carmakers and battery producers were mostly excluded by eligibility requirements. 

Government largesse and protectionism created fertile ground for abuse. Myriad companies emerged, churning out low-cost, low-tech vehicles with little appeal to consumers. Many sold their EVs to oversized municipal bus and taxi fleets, which often sat idle.

A bloated industry was the result. In 2014 alone, more than 80,000 companies registered in China to enter the EV sector, more than doubling the previous year’s number of new registrants. The strategic emerging industry appeared to be a textbook cautionary tale of waste, corruption, overcapacity, vicious price wars and low profitability. 

As a veteran practitioner of industrial policy, however, the Chinese government is familiar with this malaise and skilled at treating it. It began raising the bar for issuing production licences and withdrawing subsidies in phases. Vehicles with low driving ranges lost support first. The low-tech producers were either barred from entering the market or forced to exit it. Those who withstood both the price-war attrition and the government-engineered culling became ruthlessly efficient. 

When the government felt confident that its domestic industry was strong enough, it lowered the protectionist wall. In 2018, Beijing allowed Tesla to open a gigafactory in Shanghai making the Model 3 with Panasonic batteries and eligible for the full suite of government support. Even BYD, China’s EV leader, was on its knees: it sold 21 per cent fewer vehicles in 2019 and its earnings dropped by almost half. The company’s founder Wang Chuanfu said then that survival was the only objective. 

But instead, BYD thrived. It doubled down on research and development and produced a new battery called the Blade, which is more compact than earlier versions, charges faster and powers cars over greater distances. The company’s sales more than quadrupled from 2020 to 2022. Tesla adopted the Blade battery last year for its Model Y, produced in Germany. BYD sold more cars than Tesla in the fourth quarter of 2023 — although Tesla still outsold it over the year — and it is now the latter’s turn to brace for “notably lower” sales growth. 

China’s well-rehearsed industrial policy can be staggeringly wasteful but still produce stunning results. This same pattern of fattening up companies with subsidies and protection and then cutting support and introducing market discipline to weed out the weak has already produced domestic and export juggernauts in steel, shipbuilding and solar panels.

China’s EV champions are focusing on the EU market, which is the biggest international prize since the US has effectively kept out Chinese EVs with its own protectionist measures of tariffs and origin requirements for subsidies. 

When it launched its anti-subsidy probe, the European Commission said that China’s share of EVs sold in the EU had risen to 8 per cent, from less than 1 per cent in 2019, and could reach 15 per cent in 2025. BYD is selling five models in eight European countries, including Germany, France, Italy, Spain and the UK, and gunning “to be in the top five” in Europe. Rubbing salt into the wound, Europe’s football federation Uefa has replaced Volkswagen with BYD as its official automotive partner for the Euro 2024 tournament. 

Overcapacity still dogs China’s EV industry. In the first four months of 2023, capacity utilisation of the top 10 sellers hovered below 70 per cent. Price wars have persisted, suppressing profits. Beijing’s pledge to squeeze excess capacity out of the industry was sincere. As with its culling exercises in other sectors, the Chinese government aims to mop up low-end producers to boost the profitability of the industry champions, so they can invest more in R&D and in conquering export markets.

The next round of consolidation in China’s EV industry will not deliver European carmakers a reprieve. It will produce even more formidable rivals.

Oil executives hit out at administration’s move to pause approvals for LNG export terminals

Top oil industry executives have hit out at US President Joe Biden’s decision to pause approvals for new liquefied natural gas export terminals, with Shell’s CEO warning it will “erode confidence” in an industry that has become a pillar of the global energy system.

The European energy major, the biggest shipper of LNG after state-owned Qatar Energy, has bet heavily on demand for the gas, which it expects to continue to grow even if consumption of other fossil fuels starts to decline.

“I don’t think the recent announcement by the administration necessarily impacts, in the short or medium term, the supply of LNG, but I do think it erodes confidence in the longer term,” Wael Sawan said in an interview.

In recent months, Shell has also become embroiled in a dispute with US-based Venture Global LNG, alleging the company is refusing to honour a multibillion-dollar supply contract. Alongside BP, it launched arbitration proceedings against the company in September. Venture Global has denied the allegations.

“You add [the Biden decision] to the behaviour of Venture Global in not honouring the contracts with their foundation buyers,” said Sawan, “All of that I think starts to just raise more questions on the stability and security of LNG from the US.”

Kathy Mikells, chief financial officer of ExxonMobil, also criticised the decision, saying it could damage efforts to wean countries off coal. “It means less US produced natural gas is available to replace coal around the world — that’s clearly a bad thing,” she told the Financial Times.

Exxon is building a $10bn LNG terminal in Texas, expected online in 2025, but it has already secured the necessary permits

Chevron CFO Pierre Breber said his company’s position was that energy policy should not be a question of politics. “The world needs affordable, reliable, ever-cleaner energy,” he told the FT. 

“US LNG exports are good for this country: it creates jobs, it helps the balance of trade. It’s good for our allies who are looking for sources of energy . . . And it’s good for the environment, because . . . in many instances the LNG is [replacing] coal.”

Chevron does not own LNG infrastructure in the US but has agreements to purchase supply due to come online in the coming years — including at Venture Global’s CP2 terminal, which has not yet been approved. 

The decision to pause approvals for LNG export plants has been widely interpreted as an attempt by the Biden administration to win support in an election year from climate-conscious voters, who argue that the multibillion-dollar plants will lock in reliance on fossil fuels for decades.

Europe, in particular, has become heavily dependent on US LNG to replace piped gas from Russia since its invasion of Ukraine in 2022.

Like other fossil fuels, LNG releases carbon dioxide when it is burnt. In addition, methane, which is the main component of natural gas, is a much more potent greenhouse gas than CO₂ when it leaks into the atmosphere.

However, Shell and other producers, argue LNG has a role to play in the energy transition because, when burnt, it produces half the CO₂ of coal for the same amount of energy and 30 per cent less than oil.

“We are . . . firmly of a view that demand for LNG will continue to grow,” Sawan said. “It plays into both energy security in regions like Europe but also Asia, and critically it plays into [the] energy transition, as countries like China and India use gas to decarbonise and move away from coal.”

Shell plans to invest $4bn a year in LNG projects until 2025 and to increase the volume it sells by 20 to 30 per cent by 2030. Its integrated gas division, which is dominated by LNG, generated half of Shell’s $28.3bn in profits last year.

The company’s focus on the fuel dates from the start of the industry. It shipped the first commercial cargo of LNG, from Algeria to the UK, in 1964 and later that decade was instrumental in developing the Asian LNG market as a partner in Brunei LNG. Before then gas was largely considered an unwanted byproduct of oil production and was usually flared on site.

The LNG industry has been built on “reliability [and] long-term security” Sawan added. “Anything that starts to undermine that . . . is just not good for the global markets.”

Kering will publish its annual results on Thursday that will reveal the extent to which the group is underperforming compared to peers Richemont, LVMH and Zegna Group. The miracle investors had hoped for with Gucci under designer Sabato de Sarno has not happened yet.

Since the former Valentino ready-to-wear designer took over Gucci’s creative leadership in May, there’s not been a huge buzz around the brand. It may take two to three years before it really takes off again – if it ever does, industry experts predict.

The group’s poor performance adds pressure on CEO François-Henri Pinault, 61, to pass on full executive powers to deputy CEO Francesca Bellettini, 53, the former Saint Laurent boss who runs all of the group’s fashion and jewelry brands. Pinault gave her the operational reins as part of a major group reorganization following the abrupt departure of Gucci CEO Marco Bizzarri last summer.

Some investors argue Pinault needs to become non-executive chairman to clarify the lines of command and the group’s corporate governance. Several industry sources say Pinault is planning to leave his post as CEO in the near to medium term to focus on the family investment company Artemis. François-Henri Pinault co-heads Artemis with his 88-year-old father François who founded the company and built Kering, previously a retail group called Pinault Printemps La Redoute (PPR).

Artemis owns the auction house Christie’s, cruise line Ponant, fashion brands Courrèges and Giambattista Valli as well as several French winemakers and magazines including weekly Le Point. In September, Artemis bought a majority stake in Los Angeles-based CAA (Creative Artists Agency) which represents hundreds of famous actors and athletes.

Over the years, Pinault has become less and less involved with the day-to-day management of Kering’s brands. Currently he looks after the group’s eyewear and beauty operations. He’s also in charge of sustainability policies, human resources, communication and audits. You do not see him often visiting boutiques or hear of him breathing down the neck of his CEOs like does his archrival Bernard Arnault, CEO and controlling shareholder of LVMH, industry sources say.

Pinault is known for letting his CEOs get on with their jobs. While he takes pride in the freedom he gives them, this is not without consequences. One of them is that Pinault does not fully control what is going on at his brands. That’s one of the main issues plaguing Kering, sources close to the group say. Somebody needs to be in charge and hold everyone accountable for their performance.

Such lack of control is starting to show in the numbers. Broker HSBC sees Kering’s luxury brands reporting a 5 percent drop in revenue in the three months to Dec. 31. The comparison between Kering and its rivals this week risks being brutal. In the fourth quarter, sales from LVMH’s fashion and leather were up 9 percent, Richemont’s turnover rose 8 percent and Zegna Group saw a 19.6 percent increase.

Kering shares are down 38 percent in the past year and the stock is trading at a discount to its rivals. Kering’s “low PE (price-earnings ratio) of 13.4 times 2024 expected earnings is a 35% discount to soft luxury peers,” HSBC explained. “We believe visibility on an improvement at Gucci and other brands is still limited and we do not see any short-term catalysts.”

Kering’s poor share price performance is making some senior managers think about pursuing other opportunities elsewhere, several industry sources told Miss Tweed. “Frankly, Kering’s two-year option plan is not looking particularly attractive,” one of the sources said. If Kering starts losing executives, that’s not a good sign.

So why is Kering is doing so badly compared to its competitors? One explanation is that Pinault is having a hard time imposing his will on the group’s brands, several industry analysts and sources close to the group say. “Kering’s main problem is the lack of control the shareholder has over all of the group’s brands and particularly Gucci,” another senior source close to the group said. “Management knows and understands what needs to be done but does not do much about it.”

Another important issue is that Pinault does not appear to be au fait of everything that’s going on at his group. He relies on his first circle of lieutenants and it’s likely they don’t tell him everything. This first circle is made up Jean-François Palus, who was managing director of the group and now runs Gucci. There is also Bellettini and Cédric Charbit, CEO of Balenciaga. One joke Pinault may not be aware of is that some staff call Kering by its old name PPR, which stands for “Pinault, Palus and the Rest,” highlighting the extent to which Pinault, Palus and a few other executives are seen as disconnected from the reality of how some of the group’s brands are faring.

Sources close to the group have been saying for years that Pinault’s lack of control over his CEOs and brands was a problem. Several of them believe he would benefit from appointing external controllers to ensure the consistency of the figures presented by his group’s various brands.

Kering’s managers are remunerated depending on a brand’s sales growth. This creates incentives to inflate that number – at the expense of the brand’s image. Rival groups such as Richemont also use other performance indicators such as return on net assets to calculate executives’ bonuses. Kering’s remuneration policy encourages CEOs to artificially boost growth with outlets – stores that sell items at a discount. That has been an issue plaguing the group’s brands for years. While the market was strong, it could get away with it. In the current downturn, it’s a real problem.

Outlets are great for lifting sales, but they are deadly for brand desirability and the perception of exclusivity. The good news is that under Palus, Gucci has started downsizing its network of outlets, sources close to the brand have said. Investors may want to grill Pinault and Palus on that point.

PALUS TO STAY AT GUCCI

Another question investors may want to ask Kering is about the search for a new CEO for Gucci. Palus is in no hurry to hire a replacement, as Miss Tweed reported. He was named interim CEO following Bizzarri’s exit last summer. He intends to remain in charge for at least two years and retire afterwards. “Palus is part of the old guard,” one source close to Kering said. “You can’t build something new with someone like him who’s been part of the group for more than 30 years. Gucci needs a new drive, a new vision and it’s not going to happen with Palus.”

Kering declined to comment on the matter.

When Palus, 62, moved to Milan in September, he benefited from the flat tax Italy has introduced to encourage high earners to move to the country. That’s another reason why Palus is not in a rush to leave, industry sources say.

Since he’s arrived, he has been working hard on improving the company’s processes. He’s hired a new brand image director and a new head of production. Palus is a great manager and a fantastic troubleshooter, but he has no track record in brand building and storytelling: what Gucci needs to reconquer the hearts and minds of customers.

Its Christmas ad campaigns were sparkling and elegant but lacked originality and audacity, experts say. Sabato has been asked to turn Gucci into a timeless, chic brand, but after the maximalism and zany creativity of his predecessor Alessandro Michele, it looks plain and institutional. It will take time for consumers to adopt the brand’s more subdued aesthetic and for sales to pick up again – if they do, fashion experts predict.

MISSED OPPORTUNITY

Another frustration investors have about Gucci concerns the brand’s missed opportunities in watches, jewelry and beauty. Pinault has publicly complained about the inability of license partner Coty to bring Gucci’s beauty revenues beyond the €1 billion mark. They are currently estimated at around €700 million and Kering gets a small percentage of that amount in royalties. It’s hoping to take Gucci’s beauty business in-house once it has built a strong presence in that field. But that will take a few years.

Rivals Chanel, Louis Vuitton, Dior and Hermès have built much bigger businesses in beauty, watches and jewelry, as Miss Tweed reported in 2021. In watchmaking, these four brands have become respected players with sharp designs and innovative movements. At Hermès, watches represent one its fastest-growing product categories. The brand makes around €800 million in annual sales and looks set to join the watchmakers’ €1 billion club soon, like rival Breitling, industry experts predict.

Gucci could have capitalized on its fashion edge to produce original collections. But that side of the business appears to lack momentum. Gucci’s watch sales are estimated to be around €200 million.

Gucci has launched a new collection of watches for women that features steel bracelets and pastel tinted dials similar to some Rolex models. They are sold on the brand’s website next to models that were launched more than two years ago featuring Michele’s trademark bees.

Then there’s jewelry. Gucci has a tiny jewelry shop at Place Vendôme. Its collection is limited to a few chains and ultra-thin necklaces, matching bracelets and few earrings. Nothing to brag about. Like watches, Gucci has not been actively promoting that business.

Everyone knows that hard luxury is not Kering’s forte. Best not remind the group of its misadventures with watchmakers Ulysse Nardin and Girard-Perregaux, which it sold to management in 2022 after financing losses for many years.

BALENCIAGA

Another mystery at Kering: why is Cédric Charbit still CEO of Balenciaga? Sources close to the group say he has Pinault’s support, but they wonder for how long. Bellettini and Charbit are said to be at loggerheads. Pinault’s father François Pinault has long been in favor of sacking Charbit for what happened, as Miss Tweed first reported last year. In October, Laura du Rusquec, a former Morgan Stanley analyst and Kering veteran, was appointed deputy CEO of Balenciaga. At the time, the group said we should not read anything into this nomination.

Balenciaga’s annual sales are estimated to be around €1.8 billion or 15-20 percent below their peak from two years ago. It has not recovered from the PR fiasco of December 2022. There seems to be fatigue around the provocative creations of Demna Gvasalia. The talented Georgian designer tried to reburnish the brand’s aura with an Haute Couture collection in July and a ready-to-wear one in October featuring some of his best-selling outfits. But the story remains the same, one that has been tarnished by the absence of moral filter that the brand displayed when it put out an advertising campaign a little over a year ago involving toddlers dressed in what looked like BDSM attire. And it handled the debacle disastrously. Balenciaga blamed the photographers and threatened to sue them, a threat it later retracted.

For investors, it was yet another sign that there was a lack of control at Kering, a point already raised by Miss Tweed a year ago. Since that communications mishap, luxury leaders such as Richemont Chairman Johann Rupert and LVMH’s Bernard Arnault have commented publicly on how such a thing would never happen at their group since every ad and move was vetted by several people. Kering said at the time it would hire someone in charge of “brand safety” but it never gave his or her name afterwards.

Kering has been building internally what it calls a “Brand Book,” a sort of creativity map to set in stone its brands’ DNA and heritage. That may sound like a good initiative, but the group needs to be careful that it does not kill good ideas or alienate designers like Sarah Burton, who left Alexander McQueen in September after more than 20 years. Kering has denied there was any falling out between the group and the designer. It will be interesting to see what the new creative director Seán n McGirr, coming from JW Anderson and previously Dries Van Noten, produces for McQueen at Paris Fashion Week on March 2.

Gucci, McQueen and Balenciaga – that’s a lot of brands on which investors have little visibility. It’s a time of reckoning for Kering.

The pro-reformist’s absence from the running for the Assembly of Experts highlights the hardliners’ grip on power

As Iran’s best-known moderate Hassan Rouhani was being blocked from the powerful body with responsibility to appoint the country’s supreme leader, his hardline successor as president, Ebrahim Raisi, was handed a clear run at the same authority.

The publication late last month of the list of eligible candidates for the elected Assembly of Experts rammed home to Iran’s pro-reform forces that their influence was badly waning, as hardliners consolidated their grip on power. The blocking of a raft of reformist candidates for parliamentary elections and the predicted low turnout for both votes on March 1 has only added to their disillusionment.

The elections come at a critical juncture for Iran, where the 84-year-old Ayatollah Ali Khamenei has held sway as the political and religious authority since 1989. His death over the next eight years would hand the assembly the job of picking a successor, determining the country’s future for decades to come.

The Guardian Council that vets Iran’s electoral candidates gave no reason for preventing Rouhani, president for eight years until 2021, from standing for the 88-member assembly. As he was being disqualified in the Tehran constituency, Raisi was approved as the only candidate in South Khorasan, meaning he would run unopposed in the electoral process.

“When a single vote is enough for Ebrahim Raisi to enter the Assembly of Experts, why should that be called an election?” asked Ahmad Zeidabadi, a reformist activist. It was all part of a hardline plan “to take control of the ruling bodies and transform [themselves] into a hegemonic power with the final say on political matters,” he said.

The question of whether the hardline-run Guardian Council would sideline Rouhani was viewed as a test case for how far the prevailing forces would go to exert their dominance. Rouhani, who signed the landmark 2015 nuclear accord with world powers, is a two-term president with a seat on the Assembly of Experts since 1999.

Former vice-president Eshaq Jahangiri questioned the decision to reject a candidate who six years ago won 24mn electoral votes, while former minister Ali Jannati deemed it a “scandalous move” and an affront to Iran’s constitution.

Raisi has not commented on the fate of his rival, but his deputy for political affairs, Mohammad Hosseini, noted how Rouhani had sought to distance himself from the policies of the Islamic republic since his presidency ended.

Mohammad-Taqi Naqdali, a conservative member of parliament, said the disqualification had been influenced by parliamentary reports submitted to the judiciary highlighting Rouhani’s alleged non-compliance with the law.

Rouhani has been target for hardliners since the nuclear deal with world powers collapsed three years later when then-US president Donald Trump withdrew his country from the agreement.

Hardliners view this as a national embarrassment, all the more so because it was accompanied by swingeing international sanctions that have undermined the economy and made life very difficult for ordinary Iranians.

Raisi loyalists also hold the previous Rouhani government accountable for high inflation, a housing crisis and poor oil sales.

Mahmoud Vaezi, a senior politician close to the former president, said the hardliners had “been putting the blame for all the Iran’s shortcomings on Rouhani’s administration, even while they’ve been in power for more than two years.”

Raisi’s position as the sole candidate in his assembly seat has also drawn scrutiny, leading to speculation that a token challenger will be drafted in. But such suggestions have only added to the sense of pessimism around the elections.

Many reformists already view the process as a lost cause, pointing to the disqualification of a raft of candidates linked to Rouhani’s party. Reformists say that only about 30 moderate and pro-reform figures remain in the race.

Younger Iranians in particular have soured on voting, which contributed to the mass protests that erupted after the death in police custody of 22-year-old Mahsa Amini in 2022. Vaezi cited recent polls to suggest that fewer than a third of voters would cast a ballot, dropping as low as 13 per cent in Tehran.

“If we vote, we’d give a legitimacy that this regime doesn’t deserve,” said Amir-Reza, a private sector employee. “And it will have no impact anyway, because hardliners aren’t giving up. Let’s at least show through a boycott of the election that their policies have no popular support so as to discredit them.”

Ahmad Khatami, a Friday prayer leader who sits on the Assembly of Experts, recently warned that “antirevolutionaries” were seeking to turn March 1 “into a referendum against the establishment,” underlining the tensions around the election.

These forces were “encouraging people not to vote, so they can achieve at the polls what they couldn’t” in the 2022 protests, he added.

The disqualifications have also extended to senior clerical figures from the conservative camp, with two former intelligence ministers barred from running for the elections, domestic media reported.

Vaezi said stopping the rot would require a radical shift from the Guardian Council to open up the vote, while insisting the ballot box was the only option. “Those who argue in favour of not voting won’t win, because that will only help the minority in power to continue to rule.”