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  • World
    Reuters

    Malaysia rulers to meet to consider PM Muhyiddin's emergency proposal

    Malaysia's rulers are set to meet on Sunday to discuss what sources have said is a proposal by Prime Minister Muhyiddin Yassin to impose a state of emergency amid a political crisis. Muhyiddin on Friday asked the king to impose emergency rule that would include suspending parliament, the sources with direct knowledge of the matter said, a move that opposition leaders have decried as an attempt by the premier to stay in power amid a leadership challenge. Muhyiddin has been in a precarious position since he took office in March with a two-seat majority.

  • Why Samsung’s Billionaire Scion Faces Two More Trials
    News
    Bloomberg

    Why Samsung’s Billionaire Scion Faces Two More Trials

    (Bloomberg) -- Samsung Group’s billionaire scion, Jay Y. Lee, is embroiled in two simultaneous legal disputes with South Korean prosecutors over allegations of bribery and corruption. The clashes, which date back to 2015, center on whether Lee and Samsung used illegal means to help him take control of the conglomerate founded by his grandfather. One trial related to the succession case began in October on charges including breach of duty and violating capital market and auditing laws. Separately, a retrial of his bribery case was set to start soon. The two proceedings leave the world’s largest electronics maker exposed to legal uncertainties including a potential jailing of its de-facto leader.1\. Who is Jay Y. Lee?Lee, 52, is the vice chairman of Samsung Electronics Co. and heir apparent at South Korea’s most powerful conglomerate. After his grandfather founded the company, his father led the group until he suffered a heart attack in 2014. The elder Lee died Oct. 25 after years in a coma, during which time his son became the de facto leader. But the succession has been complicated because the son can’t simply take over his father’s assets. South Korea has one of the heaviest inheritance taxes in the world, 50% on estates of more than $2.6 million. The elder Lee’s net worth was about $20 billion, according to the Bloomberg Billionaires’ Index.2\. What is the legal dispute all about?South Korea’s special prosecutors first indicted Lee in early 2017 on charges of bribery and corruption, alleging that Samsung provided horses and other payments to a confidante of the former president to win support to help ease his succession. The case inflamed public opinion against the country’s powerful conglomerates, or chaebol, and triggered the impeachment of then-President Park Geun-hye. Lee was initially convicted and sentenced to five years in prison, but the sentence was suspended in 2018 and he was released from jail. Still, the case wasn’t over. The Supreme Court in August 2019 overturned the lower court’s decision to suspend the mogul’s sentence and ordered a retrial of the whole case. That was delayed while prosecutors sought to remove one of the judges for allegedly favoring Lee, a request the Supreme Court denied.3\. Is he in custody?Not now. In June, prosecutors sought an arrest warrant to send Lee back to jail because of a separate but related investigation. But the Seoul Central District Court rejected the request, saying prosecutors didn’t have a valid reason to detain him. Shortly before, Lee had requested a civilian review panel assess the validity of his indictment, essentially trying to bypass the prosecutors. The attempt to jail Lee was seen by some as a reaction to his request. The panel of outside experts later recommended against an indictment, handing Lee a symbolic victory. But prosecutors ignored the recommendation -- a rare move that could cost them public support. After opening Oct. 22, the case was adjourned until Jan. 14.4\. What is the other case against Lee?Separate from the original bribery investigation but also related to succession, prosecutors indicted 11 people including Lee and former Samsung executives after digging into the details of a controversial merger between two Samsung Group’s units in 2015. The investigation kicked off after South Korea’s financial regulator concluded that Samsung Biologics Co. intentionally violated accounting rules and inflated its value ahead of an initial public offering. Prosecutors suspect the violation was to justify the merger ratio between Biologics’ major owner Cheil Industries and Samsung C&T, which helped bolster the value of the heir’s stake in Cheil and his influence at Samsung Group. The Biologics unit has said it didn’t violate accounting standards.5\. What’s at stake for Samsung?Samsung has largely continued business as normal during the years-long probe, and investors have been mostly unfazed. Samsung Electronics’ shares soared during 2019 and into the first months of 2020 before the coronavirus pandemic, despite prosecutorial scrutiny and investigations into more than 100 group officials. Lee is now facing two trials. The new one may take as long as 18 months and could stretch another two years with appeals. Separately, Lee needs to attend the original trial related to bribery allegations once it resumes. A potential jailing of Lee is a greater concern for Samsung because his absence would render it more difficult to make major decisions, such as mergers and acquisitions or extraordinary investments. Meanwhile, his frequent court appearances will complicate schedules and make it difficult to meet with business partners.6\. How does public opinion affect the situation?Samsung is fighting not just for Lee’s liberty, but for its corporate reputation. The allegations that it used gifts to buy government favor so one of the country’s richest men could take over his family’s company are so explosive they inflamed public opinion and shook the political balance of the nation. Samsung and Lee are determined to clear their names. The scion made a rare, personal apology in May, admitting past missteps and pledging not to hand leadership of the group to his children. Samsung has also been very active in helping South Korea’s battle against the coronavirus, dispatching its own doctors to help in the fight and helping to ramp up production of testing kits.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Brexit, Covid and Climate Colluding to Raise U.K. Food Prices
    Business
    Bloomberg

    Brexit, Covid and Climate Colluding to Raise U.K. Food Prices

    (Bloomberg) -- Supermarket prices in Britain could start increasing in coming months as food supplies get pummeled by a triple whammy of Brexit, Covid-19 and weather-struck harvests.The U.K. is just 10 weeks from leaving the European Union, yet there’s still no trade deal between the two sides. If the status quo persists, import taxes averaging 18% will be slapped on meat, produce and beverages coming from the bloc starting Jan. 1. Both sides are aiming for zero tariffs, but there’s a chance they won’t succeed. Either way, logistical burdens will stack up as new checkpoint bureaucracies are created.Portions of those extra costs likely will make their way to consumers, putting some foods out of reach and exacerbating existing inequalities. The looming sticker shock dovetails with grocers trying to ward off stockpiling in the face of more Covid-19 lockdowns and domestic wheat output dropping near a four-decade low after a year of weather extremes.“We’re all very nervous,” said Simon Lane, owner of Fruco Plc, which imports about 100 truckloads of fruit and vegetables from the EU every month. “It’s a watch-this-space situation. One thing is for sure: no-deal will equal a bad deal for consumers.”The U.K. relies on foreign fare for about half the meals consumed domestically, and the deadline for a Brexit trade deal approaches during winter, when little is harvested from local fields. Talks between the two sides resumed Thursday, and Irish Prime Minister Micheal Martin said “momentum” is building toward a deal.The uncertainty leaves importers scouring tariff codes to calculate the potential hits to their business. Spanish-foods retailer Brindisa needs to decide whether to stockpile as much as 500,000 pounds ($645,000) of shelf-stable items, such as olives and tinned fish, to avoid disruptions for its customers. It also may start transporting goods by sea for the first time.“The U.K. can’t feed itself,” said Heath Blackford, managing director for Brindisa’s wholesale division. “If we don’t get a deal, we should all be expecting to pay more for our food.”Supply chains snarled by the down-to-the wire negotiations risk sparking food inflation at a time when job cuts are climbing by a record amount. With shops already operating on low margins, higher tariffs likely would ripple into higher consumer prices, said the Food and Drink Federation, with members ranging from cereal makers to soft-drink companies.A season of floods and drought also hurt growers. The paltry wheat crop means imports may double from the prior season as domestic values climb. Porridge maker Pimhill Farm raised prices about 6%, the first increase in seven years, after a May dry spell hampered oats output, and the Shropshire-based company is unsure how Brexit will affect costs for the imported nuts and raisins used in its longstanding muesli recipe, manager Ian Anderson said.“It’s the unknown that’s the worry,” he said.Shoppers in Britain spend a relatively low proportion of their income on food, and prices have been subdued in recent months. Still, the number of people in need has climbed as the coronavirus upends the economy. The Trussell Trust, which supports 1,200 food banks nationally, expects food-parcel demand to increase 61% in the fourth quarter from a year earlier.Nearly a third of children –- about 2.2 million – between the ages of 8 and 17 are enrolled in free school-meal programs this autumn, with 42% of them newly registered, as household income wanes, according to data from The Food Foundation charity.“We are terrified about the predictions there are around the number of people who are going to be struggling,” said Lindsay Boswell, chief executive officer of FareShare, a charity that reroutes surpluses from restaurants and retailers to U.K. charities and community groups. “Demand for food is going to soar at a time when the supply chain is going to be massively disrupted because of Brexit.”Even with a trade agreement, knock-on effects from logistical hangups or a declining currency could make it pricier to stock pantries. Extra paperwork, and animal and plant health certificates, required at the borders could lengthen transport times, and the chairman of Tesco Plc, Britain’s top supermarket chain, warned of fresh-food shortages if no deal is reached.Lane, owner of Crowborough-based Fruco, said trucks of nectarines and peaches can’t afford to get held up at the border because their shelf life fades quickly. The U.K. previously said it would grant a six-month grace period for customs checks, but since the EU hasn’t agreed to the same, trucks still could get snarled on that side of the border. Leaving the single market means food-price inflation “under any eventuality,” said Dylan Bradley, an agribusiness director for London-based IHS Markit.The uncertainty arrives at the same time Prime Minister Boris Johnson’s government struggles to curb the escalating number of coronavirus infections. Wales is in a two-week lockdown, and the Greater Manchester area is under strict restrictions. Quarantine rules also limited the number of foreign workers that often staff meat plants, risking Christmas turkey supplies.While some have praised the food system’s resilience during the pandemic -- with stores quickly restocking after shortages when lockdowns began -- that was all during the U.K.’s time in the one market, said Tony Heron, professor of international political economy at the University of York. Removing that buffer just as Europe goes through another surge of infections will prove a tougher test.“It’s a very visible, tangible effect if prices start to shift or if certain produce becomes unavailable,” he said.Yet Harry Smit, a senior analyst at Rabobank in the Netherlands, said it’s unlikely the U.K. will levy tariffs on food imports because it’s so reliant on foreign fare, and tandem taxes imposed by the EU –- making British exports uncompetitive there – would create domestic surpluses of lamb, barley and other farm products.Plus, increasing commodity prices for food manufacturers don’t always lead to higher costs for consumers, said Sarah Baker, senior strategic insight manager at the Agriculture & Horticulture Development Board. For example, wheat only accounts for about a 10th of the cost of a loaf of bread.“If consumers are increasingly price conscious, you can see that everyone in the supply chain needs to take a bit of a knock,” she said.The current upheaval from politics, coronavirus and the climate is prompting some growers to make long-term preparations. Julian Gold invested in new grains storage at the farm he manages in South Oxfordshire so he could diversify his plantings and keep them ready for market over longer periods.The 750-hectare (1,853-acre) estate stopped raising sheep for the first time in his 28-year tenure in case a no-deal cuts off vital sales to the EU, and he plans to rent a small field to a fruit or vegetable grower as the pandemic fuels a buy-local boom.“We’re in a more volatile world,” he said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.