FT : Nigeria ‘lost billions’ on oil deal with Shell and Eni

Nigeria ‘lost billions’ on oil deal with Shell and Eni
Analysis raises questions of structure of a deal at the centre of a bribery trial

A Nigerian oil deal at the centre of a landmark bribery trial involving Royal Dutch Shell and Italy’s Eni cut the African nation out of billions of dollars in potential revenues, according to a new analysis.

Resources for Development Consulting found that Nigeria stood to lose out on nearly $6bn in projected revenues because of the unusual structure of the 2011 deal for one of Africa’s most lucrative remaining oil concessions.

Campaign group Global Witness commissioned the consultants, who specialise in natural resource contracts, to scrutinise the impact on the Nigerian government’s finances.

The undeveloped deepwater plot, named OPL 245, is already at the heart of a corruption trial in Milan where prosecutors have alleged bribes of $1.1bn out of a $1.3bn deal were paid to public officials for the licence.

The report raises questions about why Nigeria would have agreed to such a deal and will be seized on by anti-corruption campaigners, who allege officials for years conspired with multinational companies to plunder the country’s oil riches.

Using publicly available contracts and industry methodology for assessing the value of the block, the authors found the 2011 terms for OPL 245 were hugely favourable to Shell and Eni.

“The fiscal terms that current govern Block 245 are not, in our view, consistent with the essence of a normal production sharing system,” said RDC in its assessment.

The new report found the companies would pay taxes to the government but the state would not receive royalty payments or an allocation of the oil produced after costs are taken into account, as is typical.

Assuming a $70 a barrel oil price, prior fiscal terms governing the plot from 2003 and 2005 would generate potential revenues of more than $14.3bn and $15.6bn respectively for the state. In the 2011 deal, this falls to $9.8bn.

The fallout of the 2011 deal has reached the top ranks of Shell, whose head has been subject to wiretaps, and Eni, whose chief executive is standing trial in Milan on charges of corruption.

Managers and middlemen from both companies are also standing trial. In September, a judge found two defendants — Nigerian Emeka Obi and Italian Gianluca Di Nardo — guilty of international corruption.

The Nigerian federal government has joined this case as the victim and is pushing for damages as part of the criminal trial. Prosecution evidence began in October 2018 and all the defendants have pleaded not guilty.

Global Witness, whose director was a witness in the Milan trial, has argued that the Nigerian government should revoke the OPL 245 licence as the country’s citizens are being “starved of funds”.

Shell said it could not comment in detail about the report given the Milan trial but said the deal was a “fully legal transaction”, adding there was “no case against Shell or its former employees”.

Eni said the analysis contained “incorrect technical and contractual assumptions” adding Nigeria has an option to take a share in the plot after costs have been recovered. It rejected any allegation of “impropriety or irregularity” in the deal.

The report comes as Nigeria has sought for decades to install a new framework to govern the petroleum sector, motivated in part by a sense that the state was not generating a fair revenue from deepwater oil blocks.

Shell’s chief executive this month maintained the deal’s legality but said the perception it was “unethical” had hit the company. “It is not [a position] that we would want to find ourselves in again,” said Ben van Beurden in a speech.

FT : YouTube and music industry are both wrong on EU copyright rules

YouTube and music industry are both wrong on EU copyright rules
Free expression is at risk in corporate fight over responsibility for infringement


YouTube and the music industry are battling it out over a section of the EU copyright directive, as the European Parliament and Council enter into final discussions about the proposed regulation. At issue is whether the streaming site and other internet platforms should be held responsible when their users post content that violates someone else’s copyright.

But the fight over article 13 is not just a corporate tug of war. Nothing less than our freedom of expression online is under threat from both sides. And as usual in copyright debates, while both sides talk a good game about the supposed interests of artists, it remains up in the air whether they will end up benefiting from the law.

YouTube has repeatedly warned that the European Parliament’s version of article 13 might force it to block millions of videos in Europe. That concern is valid. The parliamentary text would make internet platforms liable for all copyright infringements no matter what lengths they go to to prevent them.

Reducing copyright violations to zero is an impossible task. There is no global registry of copyrighted works, so platforms have no way of knowing for sure which content might get them in trouble. The only possible solution would be to allow only trusted parties such as big companies to upload works. The internet would cease to be a place to “broadcast yourself” and would come to resemble cable television.

This scenario has many video creators up in arms. Video titles such as “My channel will be deleted” are not just clickbait: they are also a realistic projection of what may happen if the parliament proposal becomes law.

At the same time, no one should make the mistake of assuming that YouTube is lobbying for a free and open internet. Instead it wants the EU to go with the council’s version of the text, which has been approved by the member states’ national governments. That version allows platforms to escape liability if, and only if, they implement state-of-the-art filters. In this version, every video user’s post must first be approved by algorithms looking for copyright infringements.

We know from experience that such filters are prone to making mistakes. They are guaranteed to take down perfectly legal content, since they are fundamentally unable to distinguish permissible works, such as parodies, from infringement. Creations that survive in a legal grey area today, such as cover versions and memes, will be the first to go.

These filters are biased towards big companies’ lists of what to block, while individual creators are treated as guilty until proven innocent. Such filters are easily abused by trolls and anyone else wanting to take content offline for malicious reasons. In short: upload filters are a serious threat to our freedom of expression.

YouTube and its owner Google have invested hundreds of millions of dollars in their “Content ID” upload filter and it still keeps making mistakes and causing creators headaches. Requiring all platforms to deploy such software will give YouTube a clear competitive advantage and secure its dominance for decades to come. Start-ups and other competitors who cannot afford to develop their own filters will either need to shut down — or license Content ID. Google could become the main arbiter of what Europeans may post or upload to the web.

Axel Voss, the MEP who wrote the parliament’s text, now suggests that the music industry and YouTube ought to sit down to hammer out a workable compromise between these two scenarios.

But I say no to both. Neither option is acceptable — and no compromise is possible without independent creators and users at the table. More than 3.1m people have signed a petition to protest against this development. The people of Europe do not want their freedom to post and upload online to end up as mere collateral damage in a corporate tug of war.

While the threat these scenarios pose to fundamental rights is obvious, it is much less clear how they would lead to additional revenues for creators — the goal that both sides keep claiming they want to achieve. At the same time, clauses that I believe would have brought actual improvements for artists, such as the protection from unfair contracts that were in article 14 of the parliamentary draft, are in danger of being quietly dropped in negotiations.

If the draft law continues to prescribe either inescapable platform liability or upload filters, Europeans will have no choice but to demand that their representatives reject the directive as a whole when it comes up for a final vote in the new year.

>>> Bayer discusses sale of some consumer brands, future of animal health-source

Bayer discusses sale of some consumer brands, future of animal health-sources - Reuters News

26-Nov-2018 16:22:48

FRANKFURT, Nov 26 (Reuters) - Bayer BAYGn.DE will discuss selling certain consumer health brands at a supervisory board meeting this week and will also deliberate options for its animal health division, people close to the matter said.

"Bayer is planning to divest consumer health brands in certain countries where it deems its business to be too small to thrive in the long term," one of the sources said.

Separately, the company will discuss strategic options, including a sale, for its animal health division at the meeting this week, as it seeks to bolster its finances after the $63 billion takeover of seeds firm Monsanto, the people said.

Bayer declined to comment.

>>> Aurubis(NDA GY) Guides initial FY18/19 EBT to be moderately lower y/y (impli

Aurubis(NDA GY) Guides initial FY18/19 EBT to be moderately lower y/y (implies €278.8-311.3M v €330Me)
The main reasons for this deviation are various unscheduled shutdowns at the Hamburg, Lünen, and Pirdop sites in Q1 of fiscal year 2018/19, which is currently underway.

Aurubis AG's first quarter, which is generally weaker due to seasonal factors, will be additionally strained as a result.

FT : UK equity market descends into ‘uninvestable’ zone

UK equity market descends into ‘uninvestable’ zone
Investors spooked by Brexit uncertainty and Corbyn government fears


Fears that the Conservative government’s pursuit of Brexit will cause lasting damage to the UK economy have battered the confidence of many investors who also view the alternative of Jeremy Corbyn as prime minister as a deeply unappealing prospect.
The toxic mixture of extreme uncertainty around Brexit and the risk that a hard left tax-raising Labour party could win a general election has prompted a massive retreat from UK equity funds.

Investors are voting with their wallets and have pulled $1.01tn from UK equity funds since the referendum vote in June 2016, according to EPFR, the data provider.

Asset managers and brokers have become increasingly alarmed at the possibility that the UK parliament will vote down Prime Minister Theresa May’s agreement with the EU, raising the threat of a chaotic no-deal Brexit.

Political instability has reached such an extreme pitch that investors are being warned to shun the UK equity market.

“The UK equity market is close to uninvestable in the sense that the near term movement is likely to be dominated by political forces that are very hard to model,” said Inigo Fraser-Jenkins, a senior analyst at Bernstein.

He added that any tactical call on the direction of the UK stock market or sterling is now just a “punt” because of the highly unpredictable political environment.

This view was echoed by Stefan Kreuzkamp, the chief investment officer of DWS, the $803bn German asset manager, who said that “extreme outcomes have become more probable” via a chaotic hard Brexit or a second referendum.

“We have previously advised clients to stay on the sidelines, until Brexit-related political uncertainty recedes. We can only reiterate that advice in light of recent events,” said Mr Kreuzkamp.

UBS hosted a meeting of large institutional investors earlier this month where Brexit was discussed. “The consensus among those investors is that the UK is uninvestable at this point because it is not amenable to rational economic analysis,” said Mark Haefele, global chief investment officer at UBS Wealth Management.

Aversion to UK equities is widespread among large international investors. The UK stock market rated as the least popular asset class in October among global fund managers, according to a widely watched survey conducted by Bank of America Merrill Lynch.

A net 27 per cent of 174 respondents that together manage $513bn in assets held an underweight position in UK equities last month, an increase of 8 percentage points from September.

Carolyn Fairbairn, director-general of the employer’s organisation CBI, warned last week that international investment was being withdrawn from the UK as a result of Brexit-induced uncertainty.

“Recently £100m which was to be invested in the North East has instead gone to eastern Europe, a pattern repeated elsewhere across the country,” said Ms Fairbairn at the UK business group’s annual conference in London.

Alex Wright, a portfolio manager with Fidelity International, said he has heard anecdotal evidence that US investors are refusing to buy UK oil companies simply because they are listed in London, even though their dollar-denominated earnings have benefited from weakness of the pound.

“Closer to home, I can’t remember the last time I met a UK-based client that was increasing their UK exposure,” said Mr Wright.

He believes this “unrelenting negativity” is misplaced and that attractive valuations can be found in large and small companies, both international and domestic-facing, across the UK market.

“Some clarification in the relationship between the EU and Great Britain would act as a catalyst for investors to revisit the UK equity market,” he said.

But Mr Fraser-Jenkins disagrees, saying that the continuing political uncertainty is likely to curtail investment in UK equities over the next two years.

“The instability of the government means there is also a risk for investors of a general election being called with the possibility of a Corbyn government. Such an outcome would likely be priced by risk assets as being even more of a problem than Brexit,” he said.

Valuations for UK equities have fallen this year, with the stock market currently trading on a price multiple of 12 times one-year forward earnings, down from 14.5 times at the start of the year. This is only slightly cheaper than the 13 time P/E ratio attached to the FTSE Europe ex UK index.

“One would be hard-pressed to say that a worst case is priced in for the UK,” said Mr Fraser-Jenkins.

Jonathan Stubbs, an equity strategist with the US bank Citigroup, believes that valuations suggest that “a lot of Brexit risk already appears priced into domestic shares”.

Over the past 25 years, the dividend yield on the FTSE All Share, currently at 4.2 per cent, has only been higher during the 2007-08 financial crisis.

But Citi also warns that the UK is descending into an “increasingly acute” constitutional crisis as neither the resignation of the prime minister nor a Conservative party leadership challenge or a general election is likely to lead to greater political stability.

“Risks and uncertainty have clearly risen and it makes sense for investors to tread carefully,” said Mr Stubbs.

WSJ : Carlos Ghosn Was Too Powerful, Nissan’s CEO Says

Carlos Ghosn Was Too Powerful, Nissan’s CEO Says
Mitsubishi Motors follows Nissan’s lead by ousting Ghosn as its chairman, the latest fallout from an arrest that has shaken the auto industry

TOKYO—Nissan Motor Co.’s chief executive told employees Carlos Ghosn had too much power as chairman, highlighting the tension that had been welling up between the two men before Mr. Ghosn’s arrest a week ago.

The fallout from the arrest spread Monday as Mr. Ghosn was ousted as chairman of Nissan partner Mitsubishi Motors Corp. , following his removal last week as Nissan’s chairman.

Nissan CEO Hiroto Saikawa was long seen as a close ally of Mr. Ghosn, but since Mr. Ghosn’s arrest he has painted a dark picture of the Brazil-born executive’s reign, saying he was improperly given the lion’s share of credit for Nissan’s revival in the 2000s instead of Nissan’s rank-and-file.

On Monday, Mr. Saikawa addressed employees for the first time since the arrest and said it was a problem that Nissan executives often communicated with their counterparts at alliance partner Renault SA RNO +3.21% through Mr. Ghosn. Now that Mr. Ghosn is gone, executives can communicate directly, which will better “ensure autonomy,” Mr. Saikawa said, according to a partial transcript reviewed by The Wall Street Journal.

Mr. Saikawa didn’t touch on the details of the accusations against Mr. Ghosn or propose specific revisions to Nissan’s alliance with Renault, said a person who listened to the discussion.

Prosecutors say they suspect Mr. Ghosn understated his compensation by a total of about ¥5 billion, or $44 million, in five years of Nissan financial reports filed to regulators through 2015. Separately, a Nissan investigation alleged Mr. Ghosn used money from a company fund intended for startups to have Nissan purchase homes for his personal use in Rio de Janeiro and Beirut, according to a person familiar with that investigation.

Mr. Ghosn has been jailed since his arrest and can’t be reached for comment.

Colleagues of Mr. Ghosn who were questioned by Nissan told the investigators that he believed he was acting appropriately when he didn’t report millions of dollars in deferred compensation, people familiar with Nissan’s investigation said.

Japanese public broadcaster NHK reported Mr. Ghosn has denied the allegations. A person familiar with the matter said former Japanese prosecutor Motonari Otsuru is representing Mr. Ghosn. Mr. Otsuru’s office declined to comment.

Mr. Ghosn also has hired U.S.-based law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP, this person said. Brad Karp, the firm’s chairman and a defense attorney for major Wall Street banks, will represent Mr. Ghosn along with another of the firm’s partners, Michael E. Gertzman, the person said.

The Ghosn family believed the residences in Rio de Janeiro, Beirut and other locations were corporate housing, whose purchase went through the normal channels for Nissan approval, a person familiar with the family has said.

The arrest has jolted the three-way alliance of Renault, Nissan and Mitsubishi that was forged by Mr. Ghosn. The board of Mitsubishi, which is 34%-owned by Nissan, voted unanimously Monday to strip Mr. Ghosn of the chairmanship and named Mitsubishi CEO Osamu Masuko to the post for now.
Mr. Saikawa has said his immediate focus is making sure the revelations don’t impact Nissan’s operations. Nissan is working to raise prices in the U.S., which is proving difficult amid slowing sales in that market.

Another priority for Mr. Saikawa is the relationship between Renault and Nissan. While Renault holds a 43.4% stake in Nissan, Nissan holds 15% in Renault. The imbalance is the legacy of the circumstances under which the alliance was first formed, when Renault was the healthier car maker. Today, Nissan is the bigger and more profitable of the two. The French government is also a key player in the alliance because it holds a stake of just over 15% in Renault.

In 2015, the two companies revised their relationship when the French government sought to enforce recently granted double-voting rights for “long-term” shareholders in French companies. Mr. Saikawa led Nissan’s side in the talks. Ultimately, they agreed to limit the circumstances in which the French government could exercise double-voting rights in Renault, while Nissan gained the right to increase its stake in Renault if the government violated the agreement.

At the time, Mr. Saikawa called it “deterrence” and said: “We’ve been an equal partner based on mutual trust. But at the core, there were parts where we were not equal partners.”

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:

  • HMI +11.4%, JKS +11.4%, DSX +1.8%

Select EU financial related names showing strength:

  • DB +3.8%, HSBC +3.5%, CS +2.5%

Select China related stocks trading higher:

  • WB +2.8%, BZUN +2.5%, JD +2.2%, BIDU +1.9%

Select FAANG names showing strength:

  • AMZN +2.3%, NFLX +1.7%, GOOG +1.5%, AAPL +1.3%, FB +1.2%

Other news:

  • CTK +7.8% (announces $15 mln share repurchase program)
  • CLF +3% (announces $200 mln share repurchase program)
  • GWPH +2.6% (announces positive top-line results of the second randomized, double-blind, placebo-controlled Phase 3 clinical trial of EPIDIOLEX CV in the treatment of seizures associated with Dravet syndrome)
  • SSP +1.6% (positive Barrons article)
  • TGT +1.2% (positive Barrons article)
  • TSG +1% (enters agreement with Eldorado Resorts (ERI) hat grants it the option to operate online betting and gaming in the states where Eldorado currently or in the future owns or operates casino properties)

Analyst comments:

  • NVAX +9.3% (upgraded to Overweight from Neutral at Piper Jaffray)
  • DATA +3.6% (upgraded to Outperform at First Analysis Sec)
  • GME +2.6% (upgraded to Neutral from Underperform at BofA/Merrill)
  • SLB +1.6% (upgraded to Buy from Hold at HSBC Securities)
  • CTSH +1.4% (upgraded to Buy from Neutral at Goldman)
  • INTU +1.1% (upgraded to Outperform from Sector Perform at RBC Capital Mkts)
  • NVS +0.8% (upgraded to Outperform from Market Perform at Cowen)

>>> US Early premarket gappers

Early premarket gappers

Gapping up:

  • HMI +16.5%, NVAX +7%, USFD +5%, STM +4.1%, BOX +4%, DB +3.7%, CS +3.2%, WB +3.2%, VOD +3.1%, X +3.1%, TEF +3%, BZUN +2.9%, HSBC +2.9%, NOW +2.7%, JD +2.4%, SQ +2.4%, WPP +2.3%, ABB +2.3%, AU +2.3%, ROKU +2.3%, NFLX +2.1%, NVO +2.1%, BIDU +2.1%

Gapping down:

  • IIPR -5.9%, TANH -5.6%, PLT -2.7%, TSRO -2.3%, GOOS -1.8%, BBBY -1.2%, RIO -1.2%, GNC -1%, YNDX -0.9%, BHP -0.9%, TTM -0.7%, BSX -0.6%, CROX -0.5%