TheChek News Flow

Driving down costs is a top priority for the head of electric cars at the Detroit carmaker

The head of General Motors’ electric vehicle business is staking his reputation on an unproven battery chemistry to revive the Detroit-based carmaker’s EV fortunes following $7.6bn in writedowns.

Kurt Kelty said his “ambitious and risky” bet on becoming the first global carmaker to use a lithium manganese-rich battery technology, which critics regard as commercially unviable, is necessary to resuscitate US EV uptake. GM expects to deliver its first LMR-powered vehicles in 2028.

“If LMR has failed, then I have failed . . . but if you don’t take any risk, we’re just going to be making the same old thing and just have copycat vehicles out there, and that’s not what I was brought in to do,” said Kelty, an alumnus of Tesla and Panasonic, who was hired in 2024 to spearhead GM’s EV development.

“We need to make some significant improvements to really get that hockey stick growth eventually in EVs,” he added.

After a surge of American enthusiasm for EVs in 2021 and 2022, growth has fallen short of expectations. Slumping sales have resulted in costly write-downs for Detroit carmakers that misjudged the trajectory of EV adoption.

Stellantis and Ford have each recorded multibillion-dollar charges in recent months. GM in January disclosed a $6bn hit related to its stalled EV transition.

Reversing this trend may not be possible this decade, according to Kelty, who predicted EVs were unlikely to take off again until the 2030s.

Of the factors hampering EV adoption, the “biggest one of all”, Kelty said, was the change in regulatory environment under Donald Trump, whose term ends in 2029. Last month, the president announced proposals to slash fuel efficiency standards for US vehicles and withdrew a $7,500 EV consumer tax credit in September 2025.

But Kelty also acknowledged western carmakers had not worked out how to bring costs down sufficiently to spur mass adoption, unlike in China where battery and plug-in hybrid models accounted for more than 50 per cent of new car sales in 2025. In the US, EVs are forecast to account for about 8 per cent of vehicle sales this year, according to Cox Automotive.

LMR batteries would go a long way towards closing the gap, Kelty said, because their use of manganese reduces the need for pricier and harder to obtain critical minerals such as nickel and cobalt used in popular high-performance battery technologies.

He argued LMR offered a middle way between the cheaper but less energy dense “lithium iron phosphate” (LFP) batteries preferred by Chinese cell makers, and the more expensive high-nickel batteries produced by Korean companies that dominate the North American market.

Sceptics note more established EV and battery makers had shied away from LMR because of persistent technological hurdles including so-called “voltage fading”, when a battery’s capabilities decline steeply following multiple charges.

Kelty insisted his team had “solved” the voltage fading issue, although he has not explained publicly how.

The chemistry will give the company access to batteries comparable in cost to LFP batteries produced outside of China, but with a 33 per cent improvement in performance, Kelty said. GM’s LMR batteries would still be more expensive than LFP batteries produced in China, however.

As part of Kelty’s efforts to bring down prices, GM has reduced its reliance on its long-time Korean battery partner LG Energy Solution as it diversifies its roster of cell suppliers. The move also allows the company to use different forms of batteries, including so-called “prismatic” batteries that can be stacked more efficiently.

While GM has not started to procure materials for mass production of LMR batteries, Kelty is confident it will hit its 2028 target. He also confirmed that the group is in talks with other carmakers about the possibility of supplying them with cells for use in rival EVs.

“We are going to win the LMR race and in 2028 when we introduce our product we’re going to be kicking butt, we’re going to be selling a lot of these vehicles,” he said.

GM is up against Ford, which is planning to introduce its own LMR-powered EV by the end of 2029.

But Kelty added that even after LMR battery technology hits the road, western carmakers would need to do more to replicate China’s ability to produce EVs comparable in cost to gasoline-powered vehicles.

“Is [2028] the moment when we get that inflection point? To be upfront — no, I think we still have another big iteration to go after that to drive down cost even further.”

Waymo’s acceleration over the past 18 months is undeniable. The Alphabet-owned self-driving company now operates commercial robotaxi services in six markets, including the San Francisco Bay Area, Phoenix, Los Angeles, Austin, Atlanta, and Miami. It has plans to grow its fleet of driverless taxicabs this year to more than a dozen new cities internationally, including London and Tokyo.

And now it has $16 billion to fuel that expansion. Is it enough?

Talking to a few industry watchers, the answer kept landing in the squishy “sort of” and “it depends” territory.

First the bull case. Alphabet is clearly committed to ensuring Waymo’s success; the parent company is, and continues to be, the primary investor. Which means Waymo isn’t exposed like other AV startups that suddenly lost funding after their backers (often legacy automakers) got skittish or pivoted.

Its ridership and autonomous miles driven stats are also exploding and will likely continue in that trajectory unless it is derailed by regulators. (Waymo provides 400,000 rides every week across six major U.S. metropolitan areas, and in 2025 alone, it more than tripled its annual volume to 15 million rides.)

This doesn’t guarantee success, though, especially if the gauge is set to profitability. Waymo still must solve several problems, including cost and increasing attention from regulators (the company’s chief safety officer just testified in a Senate Commerce hearing). If Waymo wants to simply be the licensor of its AV tech, it will have to move away from being the operator, which means giving up some control. That’s hard with a nascent technology under scrutiny.

And while some of you will fight me on this, it also lacks the in-house manufacturing that Tesla has. Yes, Waymo has automotive partners. But it doesn’t come with the same financial leverage or ability to drive down costs with scale.

The CVC conundrum: fund investors love it, public markets don’t

The private equity firm is good at buyouts, but in an era when diversity is prized, that might not be enough to prop up its shares

Last September, private equity firm CVC chalked up a rare achievement: a record year for cash returned to investors, at a time when the wider industry was still limping through a downturn.

Yet far from sparking celebration among the Amsterdam-listed group’s public market investors, shares fell 4 per cent that morning. Rather than rewarding the previous year’s returns, analysts were fretting about sparse detail on how CVC would deliver the big increase in earnings that the market was counting on.

“It felt like they were holding back,” said one analyst that day. “It might be because they prefer to be conservative . . . they’ve left us a little bit confused.”

That earnings-day disappointment is symbolic of CVC’s conundrum: how to satisfy the demands of two very different types of investor.

The firm is revered by its fund investors as a strong private equity performer. But among shareholders — the public market investors — it has received a muted reception.

The group’s shares have for months hovered around the €14 price at which it listed in April 2024.

This month, an industry-wide sell-off sparked by fears about the vulnerability of private capital groups’ software investments to AI pushed CVC’s share price below that level.

The firm dodged the worst of the latest drubbing because it has less exposure to software companies than some of its rivals. But over the past year, CVC’s shares have shed 44 per cent of their value — performance that is at least 10 percentage points worse than most peers.

“I’m as flummoxed as everybody,” said one shareholder of the firm, which manages €200bn in assets across private equity, credit and infrastructure. “On the fundamentals they’re absolutely roaring.” 

CVC declined to comment. 

CVC’s share price fall can in part be explained by poor liquidity for newly public European companies, according to analysts and shareholders. But there are more company-specific factors at play, too.

The group is widely considered among the best at buyouts: its European private equity funds have returned more than four times invested capital excluding fees since 2021. The firm sent back 15 per cent of its private equity portfolio to investors in 2024, compared with the industry’s 11 per cent. 

But unclear communication at the time of CVC’s listing set investors up for subsequent disappointment over its earnings from performance fees and investment income, which are generated when it sells portfolio companies. CVC’s IPO prospectus put these at €400mn to €700mn in the “medium- to long-term”, which the market took to mean by 2026, analysts said. 

Shortly after the 2024 listing, analysts were forecasting that CVC would deliver more than €500mn in performance-related earnings for 2025 and €650mn for 2026. But as time has passed without CVC reporting earnings to support that, the consensus for 2025 has reduced by half — with results for the year due in March — and by a third for 2026.

“Estimate downgrades relatively proximate to a listing — it’s generally a sign investors don’t like,” said one. 

Richard Clattenburg, portfolio manager at CVC shareholder T Rowe Price, said the firm had not changed its outlook and that its performance-fee earnings were “at the right place”. But, he added, “the way it was communicated at the IPO” had left room for misunderstanding.

CVC has recently hired a senior Morgan Stanley analyst to beef up shareholder relations. But its hazy forecast and hesitation to give more bullish guidance last September also speak to a culture of restrained communications. It is “typically more conservative and cautious in its guidance” than close peers, said Nicholas Herman, equity analyst at Citi.

He said the firm also marks its books conservatively relative to its average exit values, which can appear to investors like value creation is weak compared with less cautious competitors.

Bolder rivals have also built up bigger funds beyond the core private capital business of buyouts. CVC in contrast remains heavily weighted towards its flagship private equity funds, which has caused lumpy growth in management fees.

When big funds exit investments, as CVC has done, they lose management fees on those assets. Meanwhile, CVC’s next flagship vehicle is yet to start raising funds, causing a lull in fee growth. Private equity also produces more episodic performance fees than credit and infrastructure.

“If you want a smoother profile for fees, having a broader range of products raising on an ongoing basis will make a difference,” said Michael Sanderson, an equities analyst at Barclays.

Investors tend to reward smoother fee profiles with higher valuations. CVC’s shares have suffered as a result of its more volatile fee structure, adding to pressure on the firm to diversify away from one core private equity strategy. That pressure was “very keenly felt”, one person familiar with the group said.

Half of its fee-paying assets are now outside traditional private equity, and in January, CVC announced the purchase of Marathon Asset Management, a New York firm with $24bn in assets that specialises in asset-based, liquid and opportunistic debt.

CVC said buying Marathon would fit its growing wealth and insurance channels, and that acquisition came soon after a deal to manage up to $3.5bn for insurer AIG. But neither transaction moved CVC’s share price significantly, and after the Marathon purchase closes, a third of the total fee-paying assets will still come from three outsized flagship buyout funds. The latest of these raised €26bn in 2023; most other CVC funds are smaller than €10bn.

The firm has been looking for other firms to buy, but talks with high-profile US direct lenders HPS and Golub Capital led nowhere.

A person close to CVC said it expected organic double-digit growth to take fee-paying assets to €200bn by 2028, with Marathon providing additional growth.

The firm’s hunt for a direct lender and a real estate group continues, however. Meanwhile, shareholders hope the market will soon price in its 2027 flagship buyout fundraising.

As one shareholder put it: “the question is when will that crossover happen”?

Novo Nordisk faces more gloom from price cuts in crowded anti-obesity drugs market

Danish group’s challenges mount despite winning reprieve after Hims & Hers withdraws plan to sell copycat Wegovy pill

Novo Nordisk endured a turbulent 2025 marked by a sliding share price, intensifying competition and divisions that led to a board exodus. The start to this year shows there is no end in sight to the company’s woes.

The anti-obesity pioneer issued a dismal sales and profit forecast on Wednesday last week that pushed its share price down by almost 20 per cent. The following day, it was hit by news that the US telehealth group Hims & Hers was launching a much cheaper copycat version of its Wegovy pill.

While Novo received a reprieve on Saturday when Hims & Hers said it would no longer offer the discounted product following “constructive conversations with stakeholders across the industry”, the episode highlighted the challenges facing the company.

News of the copycat had enraged the Danish group, which has threatened legal action. It followed Novo’s announcement on Wednesday that it expected net sales to fall by as much as 13 per cent this year — gloomier than what the most bearish analysts had expected.

Mike Doustdar, who in August was appointed chief executive of the maker of the Ozempic and Wegovy blockbuster drugs, was already grappling with how to find new growth areas. He has warned of further losses in Novo’s shares after a drop of more than 50 per cent in the past year.

“I don’t disagree with the notion of some short-term pain to come,” said Markus Manns, a senior portfolio manager and healthcare specialist at Union Investment, who described Novo’s guidance as “shocking”.

“With this kind of guidance, it’s very difficult to see any light at the end of the tunnel,” he added.

In addition to competition in an increasingly crowded obesity market, Novo is facing price cuts in the US that Doustdar has described as “painful” as well as expiring patents in some key markets.

Novo, which was once Europe’s most valuable company, ousted its former chief and suffered board departures last year after a dispute with its majority shareholder, the Novo Nordisk Foundation, over how to stem declines in profit growth and the share price. The company risks falling further behind US rival Eli Lilly, whose share price rose on Wednesday after saying its 2026 sales would jump to at least $80bn, from $65bn last year.

Novo blamed its guidance on what Doustdar called “unprecedented pricing pressure” in the US — its largest market — where efforts by President Donald Trump to lower prices will weigh on how much the company can charge.

As part of the most favoured nation agreement, pharmaceutical groups have to peg US drug prices at the lowest price paid in other developed countries.

For Novo, this means cutting the price of injectable Ozempic and Wegovy drugs from at least $1,000 a month to $350 when purchased on TrumpRx, the president’s new direct-to-consumer website.

The company will also reduce prices for patients covered by the Medicare and Medicaid government insurance plans.

Karsten Munk Knudsen, Novo’s chief financial officer, said the new US pricing models would hurt sales on two fronts: cash-paying consumers and insurance reimbursements. But lower prices can also boost volumes.

“Clearly, what we need to show as a company is that lower pricing in the self-pay segment opens up for more patients starting on our products,” he told the FT.

The US slowdown only tells part of the story.

The company expects growth in international sales to slow to “mid-single digits” this year from about 10 per cent in 2025, due to expiring patents for Wegovy and Ozempic in markets such as Canada, Brazil, India and China. That will allow generic manufacturers to sell the drugs at lower prices.

Novo had been hoping for a boost from January’s introduction of the pill version of Wegovy in the US. It began retailing for $149 at the lowest dose and has already been bought by about 170,000 people.

That optimism was put to the test by Hims & Hers’ attempt to offer a treatment that would have retailed at just $49 a month. Hims & Hers said it remained “committed to the millions of Americans who depend on us for access to safe, affordable and personalised care”.

The withdrawal of the competing product does not necessarily mean the end of Novo’s troubles.

Analysts at Jefferies last month warned that the company faced challenges such as the entry of similar products and the possibility of customers switching from the more expensive injectable Wegovy to the pill version.

Lilly is awaiting regulatory approval for its own anti-obesity pill orforglipron, though it has underperformed Novo’s oral medicine in efficacy and tolerability in trials.

Other major groups, including Pfizer and Roche, are also preparing to launch anti-obesity drugs to challenge Novo and Lilly.

Investors have long complained about Novo’s limited pipeline compared with its peers as well as its dependence on obesity and diabetes treatments, which accounted for more than 90 per cent of its 2025 sales.

One analyst said Novo, which last year lost out to Pfizer in a bid to buy obesity-focused biotech Metsera, needed to acquire new assets to boost its pipeline, adding that business development was a significant weakness.

Knudsen said the company would be interested in adding a GLP-1 drug that could be taken once a month — instead of daily or weekly — to its portfolio.

Novo has also announced two more departures among its senior ranks, with the head of its US business and the boss of product and portfolio strategy both leaving.

It has hired Jamey Millar from Optum, a subsidiary of insurance company UnitedHealth Group, to take on the role of running the US division.

Optum is one of the largest pharmacy benefit managers that act as intermediaries in the industry, and Novo hopes that Millar’s experience in the sector, as well as a three-decade career that included stints at GSK and Procter & Gamble, will benefit the company.

But UBS analysts said the turnover of senior staff “does not provide confidence in the company’s direction”.

Executives face choice between cutting returns to shareholders, raiding reserves or tapping the markets

Big Tech companies will have to raise tens of billions of dollars to fund their skyrocketing investments in artificial intelligence this year, as capital spending outpaces cash flows even among some of the world’s most profitable companies.

Google’s parent Alphabet, Amazon and Meta all surprised investors with the scale of their AI spending plans over the past two weeks. A total of more than $660bn is set to be ploughed into chips and data centres this year as they race to dominate what many in Silicon Valley believe will be the biggest wave of innovation since the internet.

The unprecedented infrastructure build-out will force Big Tech executives to choose between stemming capital returns to shareholders, raiding their cash reserves or tapping the bond and equity markets more than previously planned, analysts say.

“The upside implications for [high-grade debt] issuance are clear from this,” said analysts at JP Morgan, who forecast that tech and media companies would issue at least $337bn in high-grade bonds this year.

Big Tech stocks sold off sharply in recent days as shareholders balked at the gargantuan capex plans and fretted over when the spending was likely to generate a return, although some rallied on Friday.

Amazon signalled with a regulatory filing on Friday that it could soon look to raise fresh capital in debt or equity, though it did not specify an amount or timetable for any such deal. Its shares closed the day 5.6 per cent down after the announcement.

Its planned $200bn capital spending this year is likely to outstrip its cash from operations of $180bn, according to estimates from S&P Capital IQ.

Oracle last week raised $25bn in a bond offering to bolster its huge bet on AI, easing investors’ fears about how it would fund a $300bn deal to provide computing power to OpenAI, the lossmaking ChatGPT maker.

Analysts at TD Securities said the coming week could see as much as $80bn in investment-grade corporate bond issuance, twice the “normal seasonal pace”, driven by potential “mega deals” from the likes of Amazon, Meta and Alphabet.

US investment-grade credit spreads have widened in recent days in anticipation of Big Tech tapping the market, TD said in a note to clients.

The scale of capital investment in building new facilities to train and run AI systems such as ChatGPT, Google’s Gemini and Anthropic’s Claude threatens to overshadow profits at what have until now been some of the world’s most cash-generative businesses.

Analysts at BNP Paribas said that free cash flows at Oracle, Alphabet, Amazon and Meta were starting to “plummet toward negative territory”, with only Microsoft appearing “more resilient, at least for now”.

Meta’s guidance of up to $135bn in capital spending this year compares with analysts’ expectations of $130bn in cash from operations. The Facebook and Instagram parent raised $30bn in October in the social media group’s biggest bond sale to date.

Alphabet is forecast to generate $195bn cash from operations to cover its projected $185bn capex plans, though it must also pay for planned share buybacks and dividends. Its long-term debt jumped from $10.9bn in 2024 to $46.5bn last year, but it ended the year with total cash and equivalents of $126.8bn.

Concern that these internet groups were “moving from an asset-light business model to a more capital-intensive one” had hit tech stocks in recent days, said Russ Mould, investment director at broker AJ Bell, making their cash flow “less visible or predictable than before”.

“Growth in capex is massively outstripping growth in sales” at AI-focused tech companies, Mould said. “The first signs of this are increased use of debt and a reduction in share buyback programmes. A drop in this largesse lessens near-term returns from shareholdings in these firms.”

‘What do you do with all that money?’ Tether plots its global expansion

One of crypto’s biggest players has grand plans to deploy its large profits

Tether has expanded its eccentric venture capital portfolio and launched a hiring spree as it seeks to move beyond its roots as a secretive provider of crypto-financial plumbing and create a global conglomerate built around “freedom”.

The world’s largest stablecoin issuer has long been run by a small circle of executives, who manage its $185bn token USDT, which serves as the main bridge between crypto and dollars.

The group, registered in El Salvador but with a base in Switzerland, has begun to deploy its large profits to build a sprawling portfolio that now spans 140 investments from a South American agricultural producer to a stake in Italian football club Juventus.

It has also more recently expanded its headcount to about 300, with plans to add another 150 staff over the next 18 months, largely engineers.

Chief executive Paolo Ardoino took the stage at a conference Tether hosted recently in San Salvador to explain the burst of activity.

He clicked through AI-generated images of a “world descending into darkness” — thunderous clouds, stormy seas and a woman being devoured by metallic cables — and explained Tether’s mission to “bring stability” through a “freedom tech stack” in finance, intelligence, communications and energy.

Ardoino said the company was focused on creating peer-to-peer tools to counter Silicon Valley behemoths. “If we build everything with centralised technology, freedom will fall,” he said.

It is an ironic stance for the company that acts as the biggest centralised cog in the $2tn global crypto market.

Observers have been left baffled by the strategy behind Tether’s empire building, which is still shaped by the personal influence and ideology of a small group of executives who have forged close ties to members of the Trump administration.

“How much of this is marketing and how much is held belief?” said Austin Campbell, managing partner of crypto advisory firm Zero Knowledge Consulting.

“How do you square ‘the world is ending’ with ‘we’re reinventing tech and everything is going to be great’? . . . Internal consistency has never been a strength of the crypto space,” he added.

Tether was also diversifying its revenues beyond stablecoins as competition from rivals and traditional financial companies heats up, Campbell said.

Beyond engineers, Tether also wants to hire AI filmmakers in Italy, venture investment associates in the United Arab Emirates and regulatory affairs leads in Ghana and Brazil, according to job listings on LinkedIn. 

Tether, founded in 2014, has grown to 500mn users and expanded USDT’s market value from $5bn in 2020 to roughly $185bn. But it has still struggled to shake the secrecy, unorthodox governance and tensions with authorities that defined its first decade.

At the conference, employees sported name tags with only first names, which one member of the team said was for “privacy” reasons. 

People close to Tether describe an internal drive to add corporate structures and financial discipline, with a focus on “profit and loss”.

A small team in London now oversees finance and operations under a new chief financial officer, Simon McWilliams. Employees have little visibility into the work of other teams, outside occasional gatherings in El Salvador or the Swiss city of Lugano.

Giancarlo Devasini, the intensely private Italian and former plastic surgeon who owns a large stake in the company and has for years been the driving force behind it, floated around the conference in all-white clothing. But he declined all interviews. “I don’t speak with journalists,” he said.

Even as it seeks to expand in the US market under new regulations passed by the Trump administration, Tether last year shifted its headquarters to El Salvador, where it has been welcomed by the authoritarian, pro-crypto president, Nayib Bukele. Earlier bases include the Isle of Man and British Virgin Islands.

Its chief stablecoin rival Circle, by contrast, has its headquarters at One World Trade Center in lower Manhattan and went public in the US last year.

Tether’s effort to cement its financial credibility in the US with a $15bn-$20bn funding round has run into pushback from some investors, who object to its $500bn valuation target.

Stablecoins also face scrutiny for their use in illicit activity. Nearly all payments into entities and jurisdictions under sanctions were conducted using these tokens, with Russia’s stablecoin and Tether’s USDT making up the majority, a report by intelligence firm TRM Labs said.

A recent letter sent by the New York district attorney alongside state attorney-general Letitia James to Democratic lawmakers raised concerns that both Tether and Circle were not doing enough to assist in fraud investigations.

Tether provided assistance only in limited circumstances and “law enforcement has been left to [its] mercy”, the letter said.

Tether said it did not have a blanket legal obligation to comply with state-level civil or criminal processes in the way a US-regulated financial institution would, but it voluntarily works closely with American enforcement agencies.

Greater US scrutiny of Tether looms if Democrats retake control of either chamber of Congress in this year’s midterm election.

In 2021, Tether reached a multimillion-dollar settlement with state and federal US authorities over claims it lied about the assets that back the value of USDT to ensure it retains its 1-to-1 peg with the dollar.

Concerns about Tether’s reserves have not gone away. It publishes quarterly attestations of its assets from accounting firm BDO Italia, but still does not provide a full audit.

Ratings group S&P has expressed concern about the presence of gold, bitcoin and other risky assets in the reserves. Tether has rejected the analysis.

Tether has also increased its supply of more reliable assets, including as a large buyer of US debt, making it an important link between traditional finance and cryptocurrency. It has stockpiled land and gold to build a “fortress” to guard against societal collapse. 

The returns on its trove of assets, which Tether keeps rather than paying to token-holders as interest, has given it tens of billions of dollars in annual profit to fund its wider ambitions.

The conference, hosted at the Sheraton Presidente and the Museum of Art of El Salvador, displayed the range of Tether’s connections and sprawling financial interests.

Booths featured Tether products with an alphabet soup of letters and names. Young employees pitched the company’s latest operating system for bitcoin mining (MOS), a platform that would run AI agents (“the QuantumVerse Automatic Computer” or QVAC), and wallets for those AI agents to accept Tether (WDK). 

The company’s push into crypto-related software bets is mirrored by “moonshot” investments, including in robotics, AI and satellites.

One of Tether’s biggest public investments is the roughly $775mn it invested in Rumble, the right-leaning challenger to YouTube.

Rumble’s cloud also hosts Truth Social, the social media platform owned by the Trump family’s media company, TMTG. In El Salvador, Rumble’s founder Chris Pavlovski told attendees the company had worked with Tether to build a wallet that enabled users to tip creators with crypto.

Their relationship underscores Tether’s increasing alignment with rightwing political causes. One Rumble creator at the conference said he had left “Commie Canada” for the “free state of Florida” and complained that Canadians were among “the most propagandised in western civilisation”. 

“They look at me and say, I’m the crazy one. I look at them and I say, no, you are all crazy ones,” he said.

Tether executives enjoy close relationships with the Bukele administration in El Salvador, where it is building a gleaming office tower. Ardoino missed one conference session after being summoned by the president, the event’s emcee said.

Ardoino attributes much of Tether’s growth to increased use by people in countries with unstable local currencies, including in Venezuela.

Tether also has strong ties to the Trump administration, particularly commerce secretary Howard Lutnick. The bank Lutnick ran until taking office, Cantor Fitzgerald, serves as a custodian for Tether’s trove of US Treasuries and is an investor in Tether. 

Brandon Lutnick, who took over from his father as chair of the bank, attended the conference in El Salvador. He has called Ardoino “one of Cantor’s closest partners and a close personal friend”.

For its US expansion, Tether has hired experienced American lobbyists and recruited former members of US President Donald Trump’s administration to join its ranks.

Even as Tether launches its products in the US, it envisions a much grander future. “The question is what do you do with all that money?” said one person familiar with Tether’s business. “Their ambitions are large. They see themselves as a decentralised central bank.”

UK utility that left 30,000 households without water has no internal audit function

South East Water, the utility that left tens of thousands of customers without water for several days, still has no internal audit function nearly two years after an industry body warned regulators that this could lead to service and financial failures.

The Chartered Institute of Internal Auditors told Emma Hardy, the minister for water and flooding, that it was “deeply troubling” that no action had been taken to force the utility to appoint an internal function, despite the body flagging concerns in February 2024.

Unlike other regulated sectors, such as banking or energy, there is no requirement for English water companies to have an internal audit function. This is despite the high-profile failings at Thames Water, the UK’s biggest water company, which is struggling under a £20bn debt pile and is trying to avert renationalisation through a controversial rescue plan from creditors.

South East Water is also on regulator Ofwat’s watchlist of financially at-risk companies.

“The ongoing failures at South East Water, which have caused significant disruption to customers, demonstrate why this gap in the governance framework can no longer be ignored,” Anne Kiem, chief executive of the Chartered Institute of Internal Auditors, wrote in the letter dated last week and seen by the FT. 

She added: “It is deeply troubling that nearly two years after we first flagged issues, South East Water continues to operate without internal audit […] and is now experiencing the sort of failures robust internal audit can help prevent.”

The complaint comes after about 30,000 South East customers, including hospitals, schools and care homes in Tunbridge Wells, were hit by water outages for two weeks before Christmas, with many losing water again for several days last month.

The company, which serves about 2.2mn water customers in Kent and surrounding areas, has a £1.3bn debt pile and paid out £1.2bn in interest and dividends between 2011 and 2025.

This is almost as much as the £1.5bn it spent on its capital investment — including pipe networks and storage capacity — during that 15-year period. South East Water has previously said that no external dividends have been paid since 2019 and that “interest payments are a normal cost of doing business”.

The company is owned by the Utilities Trust of Australia, which has a 50 per cent share, Canadian financial group Desjardins, with 25 per cent, and the NatWest Group Pension Fund, with 25 per cent.

South East Water said it “commissions a number of internal audits each year which are undertaken by an outsourced internal audit provider”.

It added: “These reports are reviewed by the audit and risk committee, which is chaired by an independent non-executive director.”

The CIIA urged Ofwat to make internal audit a regulatory requirement for all water companies. An internal audit would provide the utilities with independent assurance over risk management, operational resilience and business continuity, the CIIA said. It also claimed that had South East Water had such a function, it would have alerted its board to key risks so that action could have been taken more quickly.

Publicly owned Scottish Water and Northern Ireland Water have an internal audit requirement, the CIIA added. “Yet despite the critical nature of water supply, no equivalent requirement applies to water companies in England and Wales.”

Ofwat confirmed that it had not introduced a requirement for internal auditors at water companies.

It said: “All water companies are required to have an appropriate system of internal controls and to report their governance frameworks, including their leadership, audit and risk control.”