TheChek News Flow

One of the world’s best-known businessmen has become a fugitive

One of the world’s leading executives evades house arrest and 24-hour surveillance, jumps multimillion dollar bail and takes a private jet to freedom 5,500 miles away. The emerging details of Carlos Ghosn’s dramatic flight from Japan seem tailor-made for a Netflix thriller. Yet the former Nissan-Renault boss’s escape transforms a fallen star of business into one of the world’s most high-profile fugitives. Neither he nor the Japanese legal system come out with much credit.

The flight of a business leader from an impending trial — in a developed democracy — cannot be condoned. Yet there are legitimate questions about Japan’s judicial system and Mr Ghosn’s chances of a fair hearing. His case has already exposed many flaws. Prosecutors enjoy wide-ranging powers to detain suspects until, in many cases, they confess. The 99 per cent-plus conviction rate reflects the fact that prosecutors rarely go to court without an admission of guilt, obscuring deficiencies in building cases.

The charitable explanation is that this is motivated by a Japanese desire to make its courts as efficient as its famous trains. But the judicial system, with its need to balance evidence and make fine judgments on motive and fact, is not a railway.

The former car industry titan also has awkward questions to answer. He alleges Nissan and Japanese officials — fearing he planned to merge the Japanese carmaker with France’s Renault — conspired with prosecutors to bring him down. Some at the company and in government certainly had concerns about his plans for greater integration of the alliance partners. Others feared Mr Ghosn was making himself untouchable, positioning himself to become a hugely well-paid “chairman emeritus” of an enlarged group.

On top of the Japanese charges that he falsified financial statements by understating his pay by more than $80m, Mr Ghosn was accused by the US Securities and Exchange Commission of hiding more than $140m of his pay package. While the Nissan boss neither admitted nor denied any of the SEC’s charges, he agreed in September to pay $1m to settle them. The settlement bans him from senior positions in any US company for 10 years.

Mr Ghosn now plans to tell his story to the media, and has hinted he may attempt to clear his name by seeking a trial in Lebanon. It is unclear, however, whether there is any realistic prospect that such a trial could take place and be conducted in a credible manner.

His flight also takes away a chance for Japan’s judicial system to show, in a case under immense scrutiny, that it can conduct an open and fair trial. The former Nissan boss, unlike most defendants, had not admitted guilt. The spotlight would surely have forced authorities to follow procedures scrupulously, and ensured the judge did not give the benefit of the doubt to prosecutors over any flaws in their case.

Mr Ghosn’s disappearing act might actually harm further chances of reform. The authorities had agreed reluctantly, under external pressure, to grant bail of Y1.5bn ($14m), an unheard-of amount for Japan. They did so despite Nissan’s protestations that its former CEO’s wealth, connections, and penchant for private jets made him a flight risk. Courts may now conclude that decision was mistaken, and keep defendants locked up in future.

The Japanese judiciary should still seek to proceed, if at all possible, with the trial of Nissan and of Greg Kelly, Mr Ghosn’s former aide arrested on financial misconduct charges, which he denies. For all concerned, the best thing is for the facts of this extraordinary case finally to be aired in public.

DUBAI (Reuters) - Iran will be more determined to resist the United States, Iranian President Hassan Rouhani said on Friday, in response to the killing of Quds Force chief Qassem Soleimani in Iraq, Iranian state television reported.

“Soleimani’s martyrdom will make Iran more decisive to resist America’s expansionism and to defend our Islamic values. With no doubt, Iran and other freedom-seeking countries in the region will take his revenge,” said Rouhani in a statement.

- Initiated extensive structural measures to increase margin to at least 7% by 2022

- Daimler trucks and busses anticipates return on sales of 6% in 2019 and at least 7% in 2022

- Normalization of important markets for heavy trucks (NAFTA region, Europe and Japan) leads to decreases in orders

Average sale prices for co-ops and condos dropped 7.5% in the fourth quarter

Manhattan’s property slump deepened in the last three months of 2019, with sales falling for the eighth time in nine quarters and the average price dropping 7.5 per cent from a year earlier.

Average prices of Manhattan co-ops and condos fell to $1.8m in the fourth quarter, according to Douglas Elliman, the largest real estate brokerage in the New York City area. The price per square foot — a key metric — declined 6.1 per cent to $1,581, and the number of sales dropped 1.2 per cent, the brokerage said.

The Manhattan property slump is in sharp contrast to the rally on Wall Street, where stock markets have hit new records.

Steven James, chief executive of Douglas Elliman, likened 2019 to “a tale of two cities,” with the newly introduced New York mansion tax and President Donald Trump’s federal tax law changes putting a damper on the luxury market while apartments marketed for less than $5m were quicker to sell.

The mansion tax, which took effect halfway through the year, levied a sliding scale of charges on apartments selling for more than $1m. Mr Trump’s tax law limited the amount of state and local taxes households could deduct from their federal taxes.

The latter has been blamed for spurring a flight by wealthy New Yorkers to Florida, which has no personal income tax.

The new taxes, coupled with historically low interest rates, have also scared off cash buyers. Douglas Elliman reported the lowest overall share of cash buyers in the quarter since they started recording that data five years ago.

Properties also sat on the market for the longest time since 2011, according to the real estate broker Compass, as buyers waited for prices to fall further.

New developments fared the worst, spending an average of 377 days up for sale, 102 per cent more than the rest of the market, according to Garrett Derderian, the managing director for market analysis at Core, a New York real estate brokerage. Developers have responded by offering more concessions recently.

Mr Derderian said a pullback by foreign investors and the growing supply of luxury inventory, which has flooded the market in recent years, have also hit apartment prices.

Sellers sold for an average discount from the asking price of 9 per cent, according to Core data.

“It is a positive sign sellers are adjusting their prices to meet the market, and buyers are re-engaging,” Mr Derderian said. “Still, the upcoming presidential election puts a cloud of uncertainty over the market, which will probably result in a sales slowdown as we near the election.”

Nationwide survey shows values increasing by more than 1% for first time in 12 months

UK house prices grew by more than 1 per cent for the first time in a year last month, helped by a strong labour market that partially offset the negative effects of political uncertainty.

House prices rose 1.4 per cent in December 2019 compared to the same month the previous year, up from 0.8 per cent in November and the fastest annual pace since November 2018, according to Nationwide data released on Friday.

“Annual UK house price growth edged up as 2019 drew to a close, with prices 1.4 per cent higher than December 2018, the first time it has been above 1 per cent for 12 months,” said Robert Gardner, chief economist at Nationwide. “Healthy labour market conditions and low borrowing costs appear to have offset the drag from the uncertain economic outlook”.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics said the rise was “another sign that the housing market is getting back on its feet”.

The annual rate accelerated despite a sluggish monthly increase of 0.1 per cent and price contraction in London.

In the three months to December, London house prices dropped 1.8 per cent compared to the same period in 2018, the worst performance of any region. In contrast, in Scotland house prices grew at the fastest pace at 2.8 per cent over the same period, marginally narrowing the large regional house price divide

Despite the contraction, London house prices averaged £458,000 in the last three months of the year, compared to £152,000 in Scotland and £129,000 in the North of England.

Looking ahead economists expect some uptick in the UK housing market this year.

“With the UK General Election delivering a decisive result and the UK now set to leave the EU with Johnson’s deal on 31 January, the housing market may get a modest near-term leg up from reduced uncertainties,” said Howard Archer, chief economic adviser, at EY item club.

Assassination of Qassem Soleimani divides US political parties

Joe Biden said Donald Trump had thrown “dynamite into a tinderbox” with his assassination of General Qassem Soleimani, the Iranian military commander.

Mr Biden, who is leading the Democratic race to challenge Mr Trump’s in the November presidential election, criticised the air strike as a “hugely escalatory move in an already dangerous region”. He added that the US could be “on the brink of a major conflict across the Middle East”.

“I hope the administration has thought through the second and third-order consequences of the path they have chosen. But I fear this administration has not demonstrated at any turn the discipline or long-term vision necessary — and the stakes could not be higher,” he added.

The former vice-president’s warning came amid a flurry of statements from congressional Republicans celebrating the air strike in Baghdad against Soleimani — and just days after Mr Trump blamed Tehran for an attack on the US embassy in the Iraqi capital.

“The president acted decisively to protect our country, diplomats, service members and citizens,” said Michael McCaul, the top Republican on the House foreign affairs committee. “For months, President Trump exercised restraint in the face of repeated hostility. Iran’s aggression continued to escalate.”

Reactions to the strike reflected divided party lines as the US heads into the 2020 election and in the wake of the president’s impeachment by the House of Representatives in December.

Nancy Pelosi, the Democratic House speaker, lamented that Mr Trump had failed to consult Congress on the action and also suggested that the president had acted recklessly. “Tonight’s air strike risks provoking further dangerous escalation of violence. America — and the world — cannot afford to have tensions escalate to the point of no return,” she said.

Iranian officials were quick to condemn the US actions as incendiary and warn of regional destabilisation. Javad Zarif, Iran’s foreign minister, warned that “the US bears responsibility for all consequences of its rogue adventurism” in a post on Twitter.

Mr Zarif was among those who also pointed out that Soleimani was one of the regional masterminds of the years-long fight against Isis, whose defeat ranked as one of the big foreign policy goals espoused by Mr Trump. The US effort has awkwardly relied on unacknowledged Iranian actions against the group.

“Had it not been for Qassem Soleimani, Baghdad would have fallen to Isis,” said Trita Parsi, who has written several books on Iran and is executive vice-president at the Quincy Institute, a think-tank. “He is seen in the region as the person who took the most action against Isis, no questions asked.”

Iranian state television ran footage of Soleimani’s activities in Iraq and Syria and said that neither would have kept hold of their territories without his command.

Although Tehran vowed “tough retaliation”, analysts said its leaders would probably refrain from any immediate military response and instead use the events as a rallying point for national unity, which has taken a dent in the wake of a series of riots against the regime. A Revolutionary Guard statement said it would let people know about the date of the funeral. Tehran announced three days of mourning.

Mr Zarif is due to visit the US, where Iran has an embassy to the UN in New York, next week but has yet to be issued with a visa, according to Iranian officials.

The tensions on Capitol Hill over Mr Trump’s approach to Iran — which were already apparent over his move to abandon the nuclear deal negotiated by Barack Obama — boiled over again on Thursday as lawmakers reacted to the killing.

After Chris Murphy, the Democratic senator from Connecticut on the foreign relations committee, asked whether Mr Trump had “knowingly” set off a “potential massive regional war”, Ben Sasse, the Republican senator from Nebraska, retorted on Twitter that these concerns were “drunk partisanship”.

“Gen Soleimani has killed hundreds and hundreds of Americans, and was actively plotting more. This commander-in-chief — any C-in-C — has an obligation to defend America by killing this bastard,” Mr Sasse wrote.

England, Scotland and Wales all have different student loans systems, but greater simplicity is needed

Free higher education in Scotland has never failed to make me feel patriotic.

As a Scot, I consider myself lucky to have avoided the £9,250 annual tuition fees that were introduced in England some years before I enrolled as an undergraduate.

Finding myself as a student again — this time in England as a trainee reporter at the Financial Times — my southern classmates have commented on how good it must feel being debt-free. I have had to correct them on this point. I still owe a hefty sum to the Student Loans Company — just not as much.

Looking at fees in isolation paints a deceiving picture of Scottish students’ finances. According to the Student Awards Agency for Scotland, students borrowed £534m in maintenance loans to cover day-to-day living costs in 2018/2019 — an average of £5,300 per Scottish student.

With Scottish degrees lasting four years, this would leave the average student with debts of £21,200 (plus interest) at graduation.

Nick Hillman, director of the Higher Education Policy Institute, says these numbers “pour a barrel of cold water on the idea that higher education in Scotland is free and works for all.”

True, this is a lot less than the average debt of £50,000 that English graduates face, according to calculations by the Institute for Fiscal Studies in 2017. 

But aside from the grim reality of £9,250 fees, one of the most interesting differences is how maintenance loans are treated. 

The maximum annual maintenance loan available in Scotland is £5,750. If your household income is over £34,000, it is capped at £4,750. There is no differentiation made for those living at home or away.

In England, the maximum amount the poorest students can borrow is much higher.

Students with a household income of £25,000 or less can borrow a maximum of £7,529 if they are living at home, £8,944 if they are living away and £11,672 if they’re living in London.

These thresholds reduce the more your parents earn, but even the richest English students living away can borrow £4,168 per year, rising to £5,812 in the capital. In both England and Scotland, an ‘implied parental contribution’ is expected to plug the gap.

So how does the cost of living compare to the level of maintenance available? London aside, the cost of renting in university towns and cities across England is not massively different from Scottish ones. 

Students in St Andrews, where I studied, face average rents of £527 per month, and those in Edinburgh pay £519, according to the Royal Bank of Scotland’s Student Living Index.

This is not much more than the monthly cost of renting in Brighton (£570), Oxford (£545) or Cambridge (£535), begging the question of how the poorest Scottish students can be expected to cover rent and living expenses on the maximum maintenance loan of £5,750.

Even grants and bursaries will not plug the gap. 

Lucy Hunter Blackburn, a researcher on student funding at the University of Edinburgh and a former senior civil servant, says: “Grants in Scotland are very low in two ways: in its absolute amount, and low in how quickly it falls away to nothing at [a household income of] £34,000.”

Scottish students with a household income below this can be awarded between £500-£2,000 per year, and may also be able to apply for additional bursaries from their university. 

But taking all of this into consideration, I am not surprised that Scottish students are more likely to live at home while studying.

Just over a third (35 per cent) of Scottish students do so, compared to 23 per cent for the UK as a whole according to a Sutton Trust report. 

I went to a state secondary school in Glasgow, but I was one of the only students in my year who moved away for university. The majority of my school friends stayed with their parents. With a number of good universities a commutable distance from Glasgow, they were able to study, take on a part-time job and take out a maintenance loan. 

Even if they gave their parents some kind of rental contribution, many were comfortably off and could even afford to run a car to drive in to university every day.

Moving away for university meant I had to manage my finances much more carefully, but I don’t regret my decision.

Studying at the University of St Andrews opened up my world; I had to live independently, make new friends and encountered all kinds of people from outside of my usual social background. 

Moving away has long been an escalator for social mobility. If I had not been one of the few who did so, I doubt I would have had the confidence to apply for a course in London.

The maintenance loan disparity makes it harder for Scottish students to contemplate moving away, but the tuition fee disparity means many are unlikely to venture beyond Scotland.

Ms Hunter Blackburn says she is “absolutely sure that there are some young people who are discounting going south of the border to study because of the narrative behind fee debt.”

Both systems should perhaps look towards Wales, which introduced the UK’s most generous financial support package in 2018. 

Every student, regardless of household income, gets £1,000 per year as a maintenance grant.

In addition, annual maintenance is set at £6,885 for home students, £8,100 for those living away, and £10,124 for Welsh students living in London with the threshold household income of £45,000 deciding whether this is made up of mainly grants or loans.

What the popularity of the Welsh system tells us is that policymakers should be focusing more on living costs, as well as making it clearer for students — and their parents — to know exactly how much a university education will cost them wherever they choose to study.