Saudi purge will quell critics but worry investors

Significance This follows unprecedented arrests of senior princes, ministers and businesspeople in an anti-corruption purge beginning on November 4. The move has alarmed many in the ruling family and business elite, who had enjoyed relative impunity. However, it is so far broadly popular among a youthful Saudi population, who blame high-level corruption for economic problems and unemployment. Impacts A slowdown in investment will make it even harder to meet the economic targets of Vision 2030 and launch the ambitious NEOM project. The combined strengthening and politicisation of anti-corruption mechanisms will complicate performing due diligence about Saudi partners. Opposition within the royal family is likely to be strong but muted in the short term, with an atmosphere of febrile rumour.

Significance The Kurdish administration is seeking to maximise benefits from much-improved relations with US President Joe Biden, compared with his predecessor. However, economic pressures are also rising. Impacts The SDF will be excluded from official Syria peace talks, but these are in any case unlikely to make progress. The AANES will focus on service provision as a means to placate discontented Arab tribal populations. Washington could step up financial assistance to help stabilise the situation in the northeast. Economic problems will boost emigration, to Iraqi Kurdistan or ultimately to Europe. Biden will try to keep the ongoing troop presence in Syria low-key in a domestic context.


Significance Mohammed bin Salman in 2016 spearheaded ‘Vision 2030’, a grand plan for a more diversified economy, accompanied by a step-by-step transformation programme. A key element is to attract financing by improving the business environment, reforming capital markets, privatising state-owned entities and facilitating foreign investment. Impacts If plans go well, new Saudi opportunities could divert investment flows away from more mature emerging markets such as Turkey and Malaysia. Although other Gulf markets might lose out in the short term, they will ultimately benefit if investors take more interest in the region. Failure of the privatisation drive would dent the crown prince’s reputation and undermine his spending plans.


Significance Medvedev and most of the faces in the new cabinet show a high level of continuity, although technocratic figures have replaced several political heavyweights at deputy prime minister level. The overall selection reflects a desire for political stability and careful economic stewardship in the face of domestic and international challenges. Impacts Demands from high-spending ministries will challenge the government's resolve to exert fiscal control. As Putin's term progresses, cabinet changes will be interpreted for signs of a succession process. Any unrest arising from economic problems or unpopular social reforms is likely to lead to the removal of the relevant ministers.


2020 ◽  
Vol 27 (1) ◽  
pp. 67-77
Author(s):  
Majed R. Muhtaseb

Purpose The loss of an amount in excess of $100m cash deposit can be disruptive to the operations, definitely the liquidity of the hedge fund. Should a hedge fund liquidity position deteriorate, its compromised solvency could impact its vendors, most notably creditors and prime brokers. Large successful hedge funds do make basic mistakes. Lawyer Marc Dreier committed the criminal act of selling fraudulent promissory notes to hedge funds and others. Mr Drier’s success in selling fraudulent promissory notes was facilitated by his accomplices who posed as fake representatives of legitimate institutions. Drier and team presented bogus “audited financial statements” and forged developer’s signatures, and even went as far as using the unsuspecting institutions’ premises for meetings to meet potential notes buyers to further falsely legitimize the scheme. He had the notes buyers send their payments to his law firm account, to secure the money. His actions cost his victims, who include 13 hedge fund managers, other investors and entities, $400m in addition to his law firm’s employees who also suffered when his law firm was dissolved. For his actions, he was sentenced 20 years in federal prison for investment fraud. This study aims to direct hedge fund investors and other stakeholders to thoroughly vet the compliance function, especially controls on cash disbursements, even if the hedge fund is sizable (in excess of $1bn). Investors and even other stakeholders also should place a greater focus on what is usually overlooked issue; most notably the credit quality and authenticity of short-term investments bought by their hedge funds. Design/methodology/approach A thorough investigation of a fraud committed by a lawyer against a number of hedge funds. Several important lessons are identified to professionals who conduct due diligence on hedge funds. Findings The details of the case are very remarkable. This case directs investors’ attention to place greater efforts on certain aspects of operational risk and due diligence on not only hedge funds but also other investment managers. Normally investors conduct operational due diligence on the fund and its operations. Investors also vet fund external parties such as prime brokers, custodians, accountants and fund administrators. Yet, investors normally do not suspect the quality of short-term fund investments. In this case, the short-terms investments were the source of unforeseen yet substantial risk. Research limitations/implications Stakeholders in hedge funds need to carefully investigate the issuer of and the quality of short-term investments that a hedge fund invests in. Future research can investigate the association of hedge fund manager failure with a liquidity position of the fund. Practical implications Investors must thoroughly the entirety of the fund including short-term securities. Originality/value Normally, it is the hedge funds that commit the fraud against investors. In this case, it is the multi-billion hedge funds run by sophisticated fund managers, who are the victims.


Subject Local elections and national politics. Significance Interim President Michel Temer is impeded not only by his interim status but also by local elections due in October. Politicians may fear losing further electoral support if they side with Temer and his Democratic Movement Party (PMDB) if he is unable to tackle major problems in the short term, particularly unemployment. Impacts The business elite will side with Temer and the PMDB, but other parties will offer muted support if the economic crisis is not addressed. However, failure to ease the crisis could benefit the Workers' Party, which conversely stands to lose if Temer is successful. Parties will prioritise municipal elections over national issues to boost their position before the 2018 general elections.


Significance COVID-19 lockdown measures and low oil prices are weighing on the economy, which the IMF expects to contract by 6.7% this year. According to the IMF, Ecuador’s gross financing needs will reach almost 14% of GDP, a high level for a dollarised country with low reserves and no market access. Impacts Government promotion of public-private partnerships will result in a moderate increase of infrastructure projects in the short term. Whoever wins the election may struggle to advance their agenda, especially if it involves austerity measures. The debt deal mitigates risks to the dollarisation regime, to which the authorities are fully committed.


Significance Prime Minister Theresa May's keynote address had been billed in advance as key to whether she would have the personal political authority to conclude any kind of deal with the EU before the end of this year and see it endorsed by the House of Commons. It was also viewed as a showcase for the support that former Foreign Secretary Boris Johnson might have with Conservative activists as his positions himself for the succession to May. Impacts Although a deal is likely, a high level of drama and market turbulence around the United Kingdom can be expected between now and end-2018. Ambiguity of outcome in the overall EU-UK relationship is likely to persist through 2020. External investment is thus likely to be paused in the short term, with an adverse impact on UK growth.


2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Fabian Maximilian Johannes Teichmann ◽  
Marie-Christin Falker

Purpose This case study highlights why and how the Swiss banking sector played a crucial role in the 1Malaysia Development Berhad (1MDB) corruption scandal. In particular, the paper illustrates how different actors in the Swiss financial sector neglected compliance guidelines and due diligence, thus effectively facilitating the laundering of misappropriated 1MDB funds. The purpose of this paper is to give bankers and compliance officers an overview of the methods money launderers use to circumvent compliance measures so that the Swiss banking sector can be protected more effectively from abuse. In addition, there is discussion whether current regulations, including banking secrecy, should be amended. Design/methodology/approach This paper used a content analysis methodological approach to collect data from media sources. Qualitative methods were used to analyze these sources. Findings The findings reveal that the Swiss banking sector played a major role in facilitating the siphoning and subsequent laundering of 1MDB funds by neglecting due diligence obligations. Practical implications This paper advocates a more consequential implementation of the existing anti-money laundering and corruption regulations. Social implications A reworking of the 1MDB scandal should be of interest to compliance professionals in the banking sector and citizens that have been negatively affected or are concerned by the involved high-level corruption. Originality/value This paper is the first of its kind to study the role of the Swiss banking sector in the 1MDB scandal.


2020 ◽  
Vol 65 (1) ◽  
pp. e01948-20
Author(s):  
Dalin Rifat ◽  
Si-Yang Li ◽  
Thomas Ioerger ◽  
Keshav Shah ◽  
Jean-Philippe Lanoix ◽  
...  

ABSTRACTThe nitroimidazole prodrugs delamanid and pretomanid comprise one of only two new antimicrobial classes approved to treat tuberculosis (TB) in 50 years. Prior in vitro studies suggest a relatively low barrier to nitroimidazole resistance in Mycobacterium tuberculosis, but clinical evidence is limited to date. We selected pretomanid-resistant M. tuberculosis mutants in two mouse models of TB using a range of pretomanid doses. The frequency of spontaneous resistance was approximately 10−5 CFU. Whole-genome sequencing of 161 resistant isolates from 47 mice revealed 99 unique mutations, of which 91% occurred in 1 of 5 genes previously associated with nitroimidazole activation and resistance, namely, fbiC (56%), fbiA (15%), ddn (12%), fgd (4%), and fbiB (4%). Nearly all mutations were unique to a single mouse and not previously identified. The remaining 9% of resistant mutants harbored mutations in Rv2983 (fbiD), a gene not previously associated with nitroimidazole resistance but recently shown to be a guanylyltransferase necessary for cofactor F420 synthesis. Most mutants exhibited high-level resistance to pretomanid and delamanid, although Rv2983 and fbiB mutants exhibited high-level pretomanid resistance but relatively small changes in delamanid susceptibility. Complementing an Rv2983 mutant with wild-type Rv2983 restored susceptibility to pretomanid and delamanid. By quantifying intracellular F420 and its precursor Fo in overexpressing and loss-of-function mutants, we provide further evidence that Rv2983 is necessary for F420 biosynthesis. Finally, Rv2983 mutants and other F420H2-deficient mutants displayed hypersusceptibility to some antibiotics and to concentrations of malachite green found in solid media used to isolate and propagate mycobacteria from clinical samples.


2020 ◽  
Vol 79 (Suppl 1) ◽  
pp. 920.1-921
Author(s):  
N. Stepanenko ◽  
E. Fedorov ◽  
S. Salugina ◽  
S. Feoktistova

Background:Monogenic auto-inflammatory diseases (mAID) are a group of severe chronic multisystemic diseases with recurring episodes of fever and other manifestations that significantly affect the patients’ life quality. Moreover, the hyper expression of pro-inflammatory cytokines (IL1β, etc.) observed in these patients may have a negative effect on the central nervous system.Objectives:to study the state of the cognitive and emotional spheres in children suffering from monogenic auto-inflammatory diseases.Methods:there were examined 22 children at the age of 7 to 17 years old diagnosed with CAPS-9, TRAPS-8, FMF-5. Among them there were 12 boys and 10 girls. The diagnosis in all the patients was confirmed through detection of pathogenic mutations in the NLRP3, TNFRSF1A and MEFV genes. The following methods were used: a clinical conversation; memory diagnostics (learning by heart of 10 words, a pictogram using cues taking into account the patients’ age); attention diagnostics (Schulte tables); thinking diagnostics (establishing a sequence of events, “four is a crwod”, simple analogies, interpretation of proverbs); emotional and communicative fields (the Eight-Color Luscher Test; CMAS (adaptation by A. Prikhozhan); STAI test, a drawing called “an animal that does not exist” and “a house-a tree-a man”).Results:The memory study revealed in all patients with TRAPS and FMF high and medium values of short-term and long-term memory, in patients with CAPS - a low level of short-term auditory-speech memory, information storage and indirect memorization in 1/3 of patients. In 100% of the examined patients with TRAPS, a significant decrease in all processes of attention and distribution of attention. In 1/3 of patients with CAPS, an increased exhaustion of attention was registered and in 11% - a decrease in its stability. In patients with FMF, attention disorders were not detected. In 44% of patients with CAPS, a decrease in the level of generalization and difficulties in establishing causal relationships were registered. In 25% of patients with TRAPS a decrease in the level of generalization, in 12.5%- difficulties in establishing cause-effect relationships, inertia of thinking in 37.5%. In 60% of patients with FMF: a decrease in the level of generalization, in 80%: difficulties in establishing cause-effect relationships, inertia of thinking in 20%. In the emotional sphere, patients with CAPS, TRAPS, and FMF demonstrated signs of aggression (11.1%, 20% and 20% of patients, respectively), communicative disorders (77.8% -80% - 80%), and reduced social adaptation (55.5% - 80% - 80%), a tendency to form neurotic fears (22% - 40% - 40%). A high level of personal anxiety was noted in 1/3 of patients with CAPS and 40% of patients with FMF.Conclusion:various psychological disorders in the cognitive and emotional fields were noted in the majority of the examined patients with monogenic auto-inflammatory diseases. In patients with TRAPS, attention processes are most significantly affected; in patients with CAPS, memory is more often affected. In patients with FMF, disorders in thinking processes are revealed more often. In the emotional sphere, most patients with all the three forms of AID note communicative disorders and social adaptation.Disclosure of Interests:None declared


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