Archives for January 2016

President of Goldman’s Singapore operations since 2006 and chairman of its Southeast Asia operations since 2014, Leissner oversaw the bank’s operations in Malaysia, where it became the top international bank with a 20.3 percent market share since 2010.

Leissner was seen as a “key player” in cultivating the bank’s very profitable relationships with Kuala’ Lumpur’s banking and government elite, including Malaysian Prime Minister Najib Razak, the Financial Times reports.

Goldman worked on Malaysian mergers and acquisitions worth a total of $18.8 billion over the last five years, but it is the bank’s involvement with the state-owned investment and development company, 1Malaysia Development Berhad (1MDB), that has attracted scrutiny.

A number of investigations into 1MDB’s activities are being carried out in various countries, prompted by claims of corruption involving Razak, who chairs 1MDB.

Switzerland’s chief prosecutor, Attorney General Michael Lauber, said in a statement on Friday that he has asked for Malaysia’s help in investigating possible violations of Swiss law by 1MDB, Reuters reported. The suspected misappropriations reportedly amount to $4 billion and concern “bribery of foreign officials, misconduct in public office, money laundering and criminal mismanagement.”

It was discovered this week that Leissner has moved from Singapore to his Los Angeles home, calling it a “personal leave,” Bloomberg reports.

READ MORE: Goldman Sachs to pay $5bn to settle financial-crisis mortgages

Goldman orchestrated the $6.5 billion sale of three 1MDB bonds in 2012 and 2013, from which the bank earned $593 million in fees and expenses. The deal has raised questions, as such fees in Malaysia are usually much lower.

It has since emerged that Razak received a $681 million “donation” to his personal bank account, which his opponents say is linked to the deal.

The results of an investigation into the matter by Malaysian Attorney General Mohamed Apandi Ali, who was appointed by Razak in 2015, were published this week, but found no wrongdoing.  

The probe found that the money had come from a Saudi Arabian royal family and that $620 million was returned within the following five months. There was no indication in the report as to what happened to the unaccounted for $61 million.

State agencies in Hong Kong and the United States are also investigating other deals involving 1MDB.

Article source: https://www.rt.com/business/330665-goldman-leissner-malaysia-corruption/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Saudi Arabia tests water on oil production cut

In Friday morning trading at the Moscow Exchange, the ruble had strengthened, trading at 75 against the dollar and 82 against the euro. Last week the Russian currency hit record lows of over 85 against the greenback and 93 against the euro.

There has been a significant surge in oil prices having rebounded from last week’s 12 year lows of $26 per barrel. Brent crude was trading at $34.45 per barrel, while US WTI has risen to $33.66 as of 9:30am GMT on Friday.

Crude prices are rising on the back of a possible meeting between Russia with OPEC and other oil producers. The meeting would discuss the problem of low commodity prices and the coordination of possible production cuts, according to Russian Energy Minister Aleksandr Novak. The outcome could be a five percent cut in Russian and Saudi Arabian production.

However, Bloomberg has reported OPEC delegates saying the organization has no meeting planned with Russia. One of the delegates said Saudi Arabia has no proposal to trim production by five percent.

Russia, OPEC hint at oil production cuts

“It’s possible that Russia could be testing the waters to gauge how OPEC members would respond to the idea of cuts,” Jason Bordoff, director of the Center on Global Energy Policy at Columbia University and a former senior oil official at the White House told Bloomberg.

Saudi daily Al-Iktisadiya reported on Friday Riyadh had no plans to discuss production cuts with Moscow.

“The announcement made yesterday by Russian Energy Minister Aleksandr Novak about Saudi proposal to reduce production is incorrect,” a source in the oil sector told the newspaper, TASS reports.

Russia’s largest oil producer on Friday played down prospects of a coordinated output cut with OPEC. A Rosneft spokesman described the sharp rally in oil prices on speculation of such a move as “idiotic”.

Speaking to the Financial Times, spokesman Mikhail Leontyev said “nothing new has happened” to suggest a coordinated production cut is more likely.

“Consultations with OPEC happen all the time. All positions are well known, they have not changed in any way,” he told FT.

Igor Sechin, Rosneft’s chief executive and the most powerful figure in the Russian energy industry, has long argued that the structure of the country’s oil sector and its harsh winters would make it challenging to implement a government-mandated output cut.

Article source: https://www.rt.com/business/330559-russia-saudi-arabia-oil-ruble/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

ExxonMobil sues Russia claiming it overpaid $500mn in Sakhalin-1 tax

The pre-trial negotiations held with Exxon in 2015 failed, TASS reports, quoting the press service of the Russian Ministry of Finance.

“Exxon has not yet filed a detailed claim with all the arguments and evidence. We will start preparing a specific response to the claim together with our attorneys’ team after we examine all the material submitted by the claimant. The claimant and we will have enough time to present our arguments to arbitrators. The case is in progress and hearings may not take place earlier than spring 2017,” the Ministry of Finance told TASS.

According to the Ministry, the negotiations continue. “Negotiations held in 2015 did not deliver tangible results. Let us look at the developments in 2016; the year has just started,” it said.

In April 2015, ExxonMobil filed a complaint against Russia at the Stockholm arbitration institute claiming it overpaid $500 million in value added tax (VAT) on the Sakahlin-1 project, after the rate was reduced in Russia from 35 percent to 20 percent.

Exxon has been arguing it should pay the 20 percent tax rate for the last five years as the VAT rate was cut in Russia in 2008. Other participants in the Sakhalin-1 project continue to pay VAT at 35 percent based on the original agreement signed in 1995, despite the new rate, as the agreement implies no possible change in taxation.

Sakhalin-1 is a joint international project to develop oil and gas fields on the Sakhalin shelf in Russia’s Far East. American ExxonMobil and Japan’s Sodeco each control 30 percent of the project. Russia’s Rosneft and India’s ONGC each a have 20 percent share.

Article source: https://www.rt.com/business/330546-sakhalin-exxonmobil-russia-trial/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The French presidency estimates the total value of the signed deals is €30 billion ($32.8 billion). The accord with Airbus alone is worth €22 billion ($25 billion), according to AFP.

It covers the acquisition of 118 new airliners, 73 of them wide-bodied, including 12 A380 superjumbos, and 45 single aisle planes. The agreement also includes Airbus providing pilot and maintenance training as well as support services “to help the entry into service and efficient operations of these new aircraft.”

Another deal between Iran and Airbus envisages “comprehensive co-operation” inmodernization of the Iranian civil aviation sector, including the development of “air navigation services (ATM), airport and aircraft operations, regulatory harmonization, technical and academic training, maintenance, repair and industrial cooperation.”

“Today’s announcement is the start of re-establishing our civil aviation sector into the envy of the region and along with partners like Airbus we’ll ensure the highest world standards,” Farhad Parvaresh, Iran Air Chairman and CEO, said in commenting on the deals with Airbus.

“The skies have cleared for Iran’s flying public and Airbus is proud to welcome Iran’s commercial aviation back into the international civil aviation community. Today is a significant step in the overhaul and modernization of Iran’s commercial aviation sector and Airbus stands ready to play its role in supporting it,” Fabrice Bregier, Airbus President and CEO, said, according to the company’s press release.

In accordance with a separate agreement, French companies Aeroports de Paris and Bouygues SA will lend assistance to Iran in the construction of a new terminal at Tehran’s main Imam Khomeiny airport with another company, Vinci SA, renovating and running airports in Mashhad and Ispahan, which are the second and the third most populous cities in Iran respectively.

PSA Peugeot Citroen signed a deal with an Iranian automaker, Khordo, concerning the creation of a joint venture to produce cars in Iran, according to a press release published on the company’s website. The €400 million deal ($430 million) envisages the yearly production of 200,000 cars, with mass production expected to start in late 2017.

Iran on European shopping spree

Peugeot will have a 50 percent shares in the new plant, with Khordo holding the remaining 50. Peugeot was forced to break off ties with Iran and suspend its sales there in 2012 due to sanctions, thus losing its biggest market outside France, as well as 10 percent of its global deliveries, and interrupting a 50 year-long relationship, Reuters reports.

In addition, French oil giant Total SA signed a deal covering the purchase of Iran’s crude oil, Bloomberg reports.

French Prime Minister Manuel Valls said the two countries also reached agreements in the areas of agriculture, health, and the environment. “France is available for Iran,” he said to Rouhani in the presence of senior executives from French companies interested in doing business with Iran, AP reports.

“Let’s forget past differences and start anew,” Rouhani told the French-Iranian business forum, as quoted by Reuters.

Meanwhile, Air France and Dutch airline KLM have expressed readiness to resume flights to Iran. British Airways officials visited Tehran earlier this week to discuss the resumption of flights, AP reported, citing Mohammad Khodakarami, the deputy head of Iran’s civil aviation authority.

Iran plans to export natural gas to Europe

All of the deals were signed during a ceremony in the Elysee Palace after talks between Iranian President Rouhani and his French counterpart, Francois Hollande.

“A new era in our relationship starts today,” Hollande said at a press conference with Rouhani.

France’s president stressed that the relationship between the two countries would depend on Tehran keeping its commitments under the nuclear deal with six world powers. In response, Rouhani assured his French counterpart that Iran would stick to its commitments.

Earlier this week, Iran and Italy signed deals worth up to $18 billion, which included agreements in oil exploration, agriculture, infrastructure development, and automobiles.

The trip to Italy and France was the Iranian leader’s first visit to Europe since the EU lifted the sanctions against his country on January 16 after the UN nuclear watchdog confirmed that Iran had fulfilled all its obligations under the nuclear agreement.

Iran regained access to some $32 billion in frozen assets shortly thereafter.

Article source: https://www.rt.com/business/330513-iran-deal-airbus-peugeot/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“The entry into force of these reforms will reinforce the credibility, effectiveness, and legitimacy of the IMF,” read the IMF statement.

Enter the Dragon: Chinese yuan to become global reserve currency

“The reforms represent a major step toward better reflecting in the institution’s governance structure the increasing role of dynamic emerging market and developing countries,” it added.

China will have the third largest IMF quota and voting share after the United States with 16.74 percent and Japan with 6.23 percent.

IMF chief Christine Lagarde on Wednesday commended members “for ratifying these truly historic reforms.”

“These reforms will ensure that the Fund is able to better meet and represent the needs of its members in a rapidly changing global environment. Today marks a crucial step forward and it is not the end of change as our efforts to strengthen the IMF’s governance will continue,” she said.

The 2010 IMF reforms called for an increase in China’s voting share from 3.8 percent to 6 percent, while the US would see its share shaved from 16.7 percent to 16.5 percent and preserve its veto.

The reforms were part of President Obama’s effort to keep China happy and within the Bretton Woods system, but stalled in Congress over Republican concerns.

The US is the biggest member of the IMF and is the only one to have a veto, as 15 percent is a blocking share.

Despite the increased quotas, BRICS countries will still only have a 14.7 percent voting share, not enough for a veto.

According to Russia’s Deputy Finance Minister and BRICS Bank Russia director Sergey Storchak, Moscow will work to get the veto right for the five major emerging economies.

Article source: https://www.rt.com/business/330438-imf-quota-brics-russia-china/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Russia, OPEC hint at oil production cuts

“Saudi Arabia has taken the initiative, came out with a proposal to discuss the prospects of cutting production. In addition, there will be an OPEC meeting in February, where we [Russian oil authorities and producers] will participate,” said Tokarev, who heads the Russian state-owned oil transportation monopoly.

He added that cutting production is one way to push up prices and Russia can do that, but only in summer, as it’s technically impossible to do that in winter because of the cold.

Both Riyadh and Moscow have softened their stances regarding the current policy of boosting exports to compensate for cheaper crude, according to Iraq’s Oil Minister Adil Abdul-Mahdi on Tuesday, speaking on the sidelines of a conference in Kuwait.

“We should first see confirmation of this flexibility,” he added, when asked about the prospects for the world’s two biggest oil exporters cooperating on output cuts.

OPEC Governor Nawal al-Fuzaia hinted on Tuesday that OPEC is ready to cut production in an effort to slow down the plunge in oil prices. The governor told an energy forum in Kuwait that OPEC is ready to “cooperate” with others to stabilize the crude market.

READ MORE: Russia could cut oil exports by 6%

“OPEC is willing to cooperate with producers outside the group if they show that they are serious about cooperating with OPEC. Non-OPEC producers keep on making statements that they are willing to cooperate, but the reality is different,” she said, quoted by Dow Jones Newswires.

Brent crude was trading at $33.19 per barrel, while US WTI cost $32.29 as of 8:45am GMT on Thursday.

Article source: https://www.rt.com/business/330414-saudi-arabia-oil-prices/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The authorities intend to restructure the economy by investing more in other sectors, particularly in healthcare, tourism and IT. Saudi Arabia also says it intends to liberalize the market in order to attract foreign investors.

Saudi Arabia reports record high $98bn budget deficit on low crude prices

“It’s going to switch from simple quantitative growth based on commodity exports to qualitative growth that is evenly distributed across the economy,” said Khalid al-Falih, chairman of national oil company Saudi Aramco.

Commerce and Industry Minister Tawfiq al-Rabiah said Saudi Arabia had been a victim of the so-called “Dutch disease” – total dependence on oil in the economy – but is now trying to change that.

Saudi Arabia had $628 billion in reserves in November, but analyst doubt Riyadh’s ability to implement the changes, as almost two-thirds of local workers are in the public sector.

“The transition away from being a renter state is not a comfortable one,” David Chaudron, managing partner of the California-based Organized Change Consultancy told Reuters.

“They’re trying. But the fundamental question is: will their trying bear enough fruit before the downside of the current system hits? Or is it a day late and a dollar short? Will the forces of change ultimately be enough to overcome the inertia of the current system? I don’t know,” he added.

READ MORE: Saudi debt risk on par with junk-rated Portugal

Saudi Arabia, the leading country in OPEC, is considered by some to be the main culprit behind the crude price collapse. The Kingdom refuses to cut crude production despite the supply glut on the global market.

Prices have fallen from $115 in July 2014 to about $30 per barrel on Tuesday.

Article source: https://www.rt.com/business/330162-saudi-arabia-oil-economy/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The Shanghai Composite Index plummeted 6.42 percent, and the Shenzhen Stock Exchange went down 7.12 percent after data showed capital outflow from China reached an estimated $1 trillion last year.

China’s stock market tsar offers resignation – media

“The pressure for capital outflow and yuan devaluation is still quite big. We haven’t seen signs of a pick-up in the economy and the first and second quarters could be challenging,” Dai Ming a fund manager at Hengsheng Asset Management in Shanghai told Bloomberg, adding that he’s cutting equity holdings.

The Shanghai index has tumbled 43 percent since June. Michael Every, head of financial markets research at Rabobank Group in Hong Kong, sees the bottom at 2,500, which is 15 percent lower than the current level.

Thomas Schroeder, the managing director of Chart Partners Group, predicts the Index to collapse to 2,400.

Overall, Chinese stock markets have now slumped about 22 percent so far in 2016 as concerns increase over a slowdown in the economy and confusion over the central bank’s foreign exchange policy.

READ MORE: ‘No plans to devalue yuan’ – Chinese Veep

The selloff in China spread to other Asian markets. Japan’s Nikkei fell 2.35 percent while Hong Kong’s Hang Seng Index declined 2.48 percent.

The US Federal Reserve meeting this week is likely to show investors whether it acknowledges concerns over the cooling of the Chinese economy and global market turmoil and whether that will mean a postponement in further rate rises this year.

Article source: https://www.rt.com/business/330144-china-market-shanghai-asia/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The lab is part of a project financed by Russian aluminum producer Rusal. The Russian company invested $10 million to build and equip a research center for microbiological study and medical treatment in Kindia, Western Guinea.

Earlier this month, Russia registered a new Ebola drug. According to the Russian Health Ministry the vaccine has proved to be more effective than the other medicines currently being used to treat the disease.

Russia registers most effective drug for Ebola – Putin

The Guinean government has already asked Russia to help dispensing medicines in the coming months. The Russian health and foreign ministries started working with the African country.

The new center is aimed at diagnosing, treating and preventing infectious and highly contagious diseases. Initially the hospital was for the treatment of those infected with Ebola. The center is currently equipped with an infection hospital, a provisional hospital, a mobile laboratory and a blood and plasma transfusion department.

Russia’s Ambassador to Guinea and Sierra Leone Alexander Bregadze said there will be more cooperation between the countries. “We managed to suppress the epidemics. Now we have to continue working to prevent an outbreak of Ebola and other diseases in Guinea and the neighboring states,” he added.

Rusal representative Pavel Vasiliev said the laboratory was handed over at the request of Prime Minister Dmitry Medvedev.

Rusal is one of the world’s largest aluminum producers, and is one of Guinea’s biggest investors. The company actively assisted the government in fighting the Ebola outbreak. The miner employs nearly 1,500 local people.

READ MORE: Russian scientists to set up lab in Guinea to fight Ebola

An Ebola fever outbreak began in December of 2013, spreading from Guinea to neighboring Liberia and Sierra Leone. The epidemic claimed the lives of 11,000 people in these three countries, with 28,000 infected with the virus.

Article source: https://www.rt.com/business/330054-russia-ebola-laboratory-guinea/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Last year, China became the world’s top buyer of crude oil and nearly every other commodity. According to calculations by Kenneth Courtis, former Asia vice chairman at Goldman Sachs Group, the world’s second biggest economy saves $320 billion on cheaper oil, and another $140 billion in metals, coal and agricultural produce.

Don’t worry about China says Alibaba’s Jack Ma

This has allowed China to cut or keep steady prices of everything from utility bills and petrol prices to the cost of raw materials at plants, Bloomberg reports.

Keeping the money within the economy has also given Beijing a chance to continue the transformation from an industrial to a consumer-driven economy.

“It’s shown up in low consumer-price inflation and more stuff that households have been able to buy,” Louis Kuijs, the head of Asia economics at Oxford Economics in Hong Kong and a former World Bank economist told Bloomberg. “Manufacturing companies would have had even worse profit developments if it had not been for those low commodity prices,” he added.

Besides importing a record volume of oil in 2015, China also had record imports of iron ore, soybeans and copper concentrate. Paying less for the imports, Beijing saw a $594.5 billion trade surplus surge last year, which has softened the consequences of capital outflows.

READ MORE: China’s economic growth slowest in quarter century

“China is the great winner from the crash of commodity prices,” said Courtis, the author of the calculations. “A significant portion of that windfall gain is being transferred to the domestic population,” he added.

Article source: https://www.rt.com/business/330044-china-economy-oil-commodity/?utm_source=rss&utm_medium=rss&utm_campaign=RSS