Month: February 2019

Economy

IRS Watchdog: Shutdown Caused ‘Shocking’ Drop in Phone Help

By on Tuesday, February 12, 2019

Disruptions from last month’s partial government shutdown caused a “shocking” deterioration in the IRS’ telephone help for taxpayers in the first week of the filing season, the agency’s watchdog said in a report released Tuesday.

In the week of Jan. 28, the official start of the tax season, Internal Revenue Service staffers answered only 48 percent of calls seeking help in filing returns, with an average wait time of 17 minutes, the report from the office of the National Taxpayer Advocate said. That compares with 86 percent of calls answered, and an average wait of 4 minutes, at the same time last year.

 

In addition, 93 percent of taxpayers who phoned during the last week in January to arrange installment tax payments were unable to speak with an assistant.

 

The difference between the two years “for levels of service and wait times for phone lines … is shocking,” the advocate, Nina Olson, wrote in her annual report to Congress. “These numbers translate into real harm to real taxpayers. The IRS will be facing tough decisions in light of the shutdown’s impact.”

 

The report flagged other problems at an agency that was already straining, even before the shutdown, from the burden of a complex new tax law, inadequate funding and antiquated computer systems. The IRS’ workforce faced a huge backlog — including 5 million pieces of mail to process — when it returned to full strength Jan. 28 after the 35-day partial shutdown, which had furloughed most of its employees.

 

During the shutdown, the Trump administration made money available to pay hundreds of billions in refunds and ordered nearly 60 percent of the IRS workforce back to work without pay to handle tax returns and questions. Yet fewer than half the recalled employees had returned to their jobs by the time the shutdown had ended, according to congressional and government aides.

 

The disruption raised the possibility of delayed processing of returns and refunds — an annual check that about three-quarters of U.S. taxpayers typically count on. Lower-income households, especially, depend on refunds as their biggest cash infusion of the year.

 

The IRS has said that when taxpayers file electronically and use direct deposit to their bank accounts, roughly nine out of 10 refunds will continue to be issued this year in fewer than 21 days.

 

Still, anger is being vented on social media from people who have already filed their taxes and received smaller-than-expected refunds. President Donald Trump had pledged that under his tax-cut law, families would receive an average $4,000 tax cut. Most taxpayers did receive a tax cut. But because of how some workers had adjusted the amount of money withheld from their paychecks, to account for the complex tax changes, their refund has ended up smaller than they had anticipated.

 

The average refund paid in the first week of the filing season, which ended Feb. 1, was $1,865 — down 8.4 percent from $2,035 in the same week last year — according to the IRS. In her report, Olson did not address how the tax law or the shutdown might have affected refunds. But during the early part of the shutdown, no IRS employees were authorized to answer the phone lines, issue refunds, establish installment agreements with taxpayers or review pending agency actions.

 

Olson’s report found that the IRS’ systems for detecting fraud in tax returns are hobbled by high rates of false positives and long processing times. That “continues to plague the IRS and harm legitimate taxpayers,” it says.

 

The report also found that:

 

  • Taxpayers have difficulty navigating the IRS, reaching the right personnel to resolve their issues and holding IRS employees accountable.

 

  • The use of the IRS’ Free File, an electronic tax filing program in partnership with 12 private software providers, has steadily declined in recent years. The agency isn’t adequately overseeing and testing the program to understand why taxpayers aren’t using it and how it could be improved.

 

  • The IRS lacks a coordinated approach to overseeing professional tax preparers.

 

  • The agency’s expanding use of private debt collectors continues to burden taxpayers who are likely suffering economic hardship.

 

 
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Technology

Reddit Value at $3B After $300M in Finance Led by Tencent

By on Tuesday, February 12, 2019

Social media service Reddit Inc. says it has raised $300 million in a financing round led by Chinese internet giant Tencent.

Reddit’s CEO, Steve Huffman, told CNBC on Monday that values the privately held company at $3 billion.

Half the new money came from Tencent, Asia’s most valuable tech company. Other investors included Sequoia, Fidelity, Andreessen Horowitz, Quiet Capital, VY and Snoop Dogg.

The announcement prompted criticism of Reddit for linking itself with a company from China, where the ruling Communist Party enforces extensive online censorship. Access to Reddit is blocked in China.

Tencent operates online games and popular WeChat social media service. It owns 40 percent of “Fortnite” creator Epic Games and 15 percent of photo service Snap.
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Economy

Toys R US Plans Second Act Under New Name

By on Tuesday, February 12, 2019

Toys R Us fans in the U.S. should see the iconic brand re-emerge in some form by this holiday season.

 

Richard Barry, a former Toys R Us executive and now CEO of the new company called Tru Kids Brands, told The Associated Press he and his team are still working on the details, but they’re exploring various options including freestanding stores and shops within existing stores. He says that e-commerce will play a key role.

 

Toys R Us, buckling under competition from Amazon and several billions of dollars of debt, filed for Chapter 11 reorganization in September 2017 and then liquidated its businesses last year in the U.S. as well as several other regions including the United Kingdom.

 

In October, a group of investors won an auction for Toys R Us assets, believing they would do better by potentially reviving the toy chain, rather than selling it off for parts. Starting Jan. 20, Barry and several other former Toys R Us executives founded Tru Kids and are now managing the Toys R Us, Babies R Us and Geoffrey brands. Toys R Us generated $3 billion in global retail sales in 2018. Tru Kids estimates that 40 percent to 50 percent of Toys R Us market share is still up for grabs despite many retailers like Walmart and Target expanding their toy aisles.

 

“These brands are beloved by customers,” said Barry. He noted that the company will focus on experiences in the physical stores, which could be about 10,000 square feet. The original Toys R Us stores were roughly about 40,000 square feet.

 

Barry said he and his team have been reaching out to toy makers and have received strong support. But he acknowledged that many had been burned by the Toys R Us liquidation.

 

Tru Kids, based in Parsippany, New Jersey, about a 20 minute drive from Wayne, New Jersey, where Toys R Us was based, will work with licensing partners to open 70 stores this year in Asia, India and Europe. Outside the U.S., Toys R Us continues to operate about 800 stores.

 
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Technology

Iowa Democrats Propose ‘Virtual’ Caucuses in 2020

By on Tuesday, February 12, 2019

The Iowa Democratic Party on Monday proposed the biggest changes to the state’s famed caucuses in nearly 50 years by recommending Iowans be able to participate virtually.

 

If approved, the measure would allow people to caucus using telephones or smart devices during the days leading up to the Feb. 3 caucus night.

 

It’s a dramatic shift from the current system in which caucus-goers have to physically show up at a site — often a school, church or community center — and show their support for presidential candidates by standing in groups. If the group doesn’t meet an established threshold, the participants have to select another candidate.

 

It’s an often chaotic process that plays out before banks of television cameras on an evening that formally ushers in the presidential primary season. But proponents say it will help address criticism that the caucuses are difficult to attend for single parents, people who work at night and the elderly.

“Through this additional process we’re going to be able to give more Iowans a chance to participate in this process,” Iowa Democratic Party Chairman Troy Price said. “Whether someone is a shift worker, a single parent, in the military, living overseas or experiencing mobility issues, this process will now give these individuals a voice in selecting the next president of the United States.”

 

And while Price says the proposed changes are the state party’s effort to open the process often described by critics as antiquated, it was also required by the Democratic National Committee. The results are Iowa Democrats’ attempt at threading the needle of complying while maintaining the essence of the caucuses, which are real-time meetings of fellow partisans.

 

Presidential candidates are already beginning to swarm the state — three were here this weekend. They’ll likely try to determine whether a virtual caucus would help them turn out more of their supporters.

 

“I suspect presidential campaigns who we’ve shared this information with are going to be trying to figure out how to get their members to participate in this,” Price added.

Party officials said they didn’t know how many people would take advantage of the new format or how campaigns might seek to capitalize on it.

 

A key element of the proposal, which now goes before Iowa Democrats to comment on for 30 days, is that, no matter how many Iowans participate virtually, their contribution will be factored as a flat 10 percent of the total turnout, apportioned by congressional district. Price said officials reached 10 percent as a starting point, uncertain of how many people might join virtually.

“This is a new system so we don’t have any data to tell if this number is too high or too low,” Price said. “And so we are starting the conversation at the 10 percent threshold, and if it goes gangbusters this year, then we will have conversations in subsequent years about if we need to make adjustments.”

 

Hillary Clinton, the 2016 Democratic presidential nominee who narrowly beat Vermont Sen. Bernie Sanders in Iowa that year, criticized the caucus process for deterring late-shift workers and others less able to steal away for an evening of political wrangling.

 

“Campaigns must decide how to organize for that 10 percent,” said veteran Iowa Democratic caucus operative Jeff Link, who did not work for Clinton in 2016 and is not affiliated with a candidate heading into 2020.

In another noteworthy development, the state party said it would release the raw data of preferences by caucus-goers, information that is typically kept confidential. The caucuses are a series of preference tests in which candidates without a certain level of support are rendered unviable. This data would give a first glimpse of the candidates’ support before caucus-goers abandon their first choices to side with more viable contenders.

 

The Iowa caucuses are scheduled for February 3, 2020. The proposal won’t be finalized until the spring.
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Science

Earth’s Earliest Mobile Organisms Lived 2.1 Billion Years Ago

By on Tuesday, February 12, 2019

Scientists have discovered in 2.1-billion-year-old black shale from a quarry in Gabon the earliest evidence of a revolutionary development in the history of life on Earth, the ability of organisms to move from one place to another on their own.

The researchers on Monday described exquisitely preserved fossils of small tubular structures created when unknown organisms moved through soft mud in search of food in a calm and shallow marine ecosystem. The fossils dated back to a time when Earth was oxygen-rich and boasted conditions conducive to simple cellular life evolving more complexity, they said.

Life emerged in Earth’s seas as single-celled bacterial organisms perhaps 4 billion years ago, but the earliest life forms lacked the ability to move independently, called motility.

The Gabon fossils are roughly 1.5 billion years older than the previous earliest evidence of motility and appearance of animal life.

The Gabonese shale deposits have been a treasure trove, also containing fossils of the oldest-known multicellular organisms.

“What matters here is their astonishing complexity and diversity in shape and size, and likely in terms of metabolic, developmental and behavioral patterns, including the just-discovered earliest evidence of motility, at least for certain among them,” said paleobiogeochemist and sedimentologist Abderrazak El Albani of the University of Poitiers in France.

The identity of these pioneering mobile organisms remains mysterious. The fossils did not include the organisms themselves.

The tubular structures, up to 6.7 inches (170 mm long), originally were made of organic matter, perhaps mucus strands left by organisms moving through mud. The researchers said the structures may have been created by a multicellular organism or an aggregation of single-celled organisms akin to the slug-like organism formed when certain amoebas cluster together in lean times to move collectively to find a more hospitable environment.

“Life during the so-called Paleoproterozoic Era, 2.5 to 1.6 billion years ago, was not only bacterial, but more complex organisms had emerged at some point, likely only during some phases and under certain environmental circumstances,” El Albani said.

In comparison, the first vertebrates appeared about 525 million years ago, dinosaurs about 230 million years ago and Homo sapiens about 300,000 years ago.

The evolutionary experimentation with motility may have encountered a setback relatively soon after the Gabon organisms lived because of a dramatic drop in atmospheric oxygen 2.08 billion years ago.

The research was published in the Proceedings of the National Academy of Sciences.
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Science

US Sees Growing Threats to ‘Freedom of Action’ in Space

By on Tuesday, February 12, 2019

Russia and China are racing to advance their space-based military capabilities and could soon prevent the United States and its allies from using outer space freely.

The warning, in a new report Monday from the Defense Intelligence Agency, builds on a series of warnings issued by the defense and intelligence communities over the past several years.

But unlike many previous assessments, which focused on Russian and Chinese efforts to match or counter U.S. capabilities, the new DIA report suggests both countries are pursuing a far more aggressive agenda.

“They are developing systems that pose a threat to freedom of action in space,” the report warned, citing current Russian and Chinese military doctrine that sees the ability to control outer space as “integral to winning modern wars.”

U.S. defense intelligence officials believe Russia and China have spent the past four years increasingly aligning their militaries around the importance of space operations.

Already, those efforts have resulted in what officials describe as “robust and capable” space services for both countries, with improvements constantly in the works.

Additionally, Russia and China now have “enhanced situational awareness, enabling them to monitor, track and target U.S. and allied forces,” the report said.

Both countries have also made gains in tracking U.S. space assets.

“Chinese and Russian space surveillance networks are capable of searching, tracking, and characterizing satellites in all Earth orbits,” the report added.

Such capabilities are critical in order for Russia and China to successfully use a variety of systems that could eliminate or incapacitate U.S. satellites, from directed energy weapons to anti-satellite missiles.

While the DIA report warns Russia and China pose the greatest threats to the U.S. in space, other countries are also taking aim at U.S. dominance in space, including Iran and North Korea.

Both Tehran and Pyongyang have shown the ability to jam space-based communications and “maintain independent space launch capabilities.”

In January, the U.S. issued a new National Intelligence Strategy, which warned of growing competition in space.

The strategy, by the Office of the Director of National Intelligence, said both Russia and China are pursuing “a full range of anti-satellite weapons, which could degrade U.S. intelligence gathering abilities.”

The U.S. Worldwide Threat Assessment issued late last month also said China already has an anti-satellite missile capable of hitting satellites in low-Earth orbits, while Russia has been field testing ground-based laser weapons.
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Technology

Trump Administration Unveils Order to Prioritize, Promote AI

By on Monday, February 11, 2019

U.S. President Donald Trump on Monday signed an executive order asking federal government agencies to dedicate more resources and investment into research, promotion and training on artificial intelligence, known as AI.

Under the American AI Initiative, the administration is directing agencies to prioritize AI investments in research and development, increase access to federal data and models for that research and prepare workers to adapt to the era of AI.

There was no specific funding announced for the initiative, but the White House wants better reporting and tracking of spending on AI-related research and development.

The White House said investment in AI is “critical to creating the industries of the future, like autonomous cars, industrial robots, algorithms for disease diagnosis, and more.”

The initiative aims to make sure the United States maintains its advantage in AI development and related areas, such as advanced manufacturing and quantum computing.

Trump, in his State of the Union speech last week, said he was willing to work with lawmakers to deliver new and important infrastructure investment, including investments in the cutting-edge industries of the future, calling it a “necessity.”

Michael Kratsios, a White House science adviser, said in an essay in Wired magazine on Monday that “with proper leadership, AI can empower American workers by liberating them from mundane tasks.”

“AI is something that touches every aspect of people’s lives,” a senior administration official told reporters on Sunday. “What this initiative attempts to do is to bring all those together under one umbrella and show the promise of this technology for the American people,” the official said.

AI and deep machine learning raise ethical concerns about control, privacy, cybersecurity, and is set to trigger job displacements across industries, companies and experts say.

A 2018 study from PwC said 30 percent of jobs are at potential risk of automation by the mid-2030s, including 44 percent of workers with low education. At the same time, the study found automation could boost global gross domestic product by $15 trillion by 2030.

The White House held a meeting on AI in May with more than 30 major companies from a variety of industries, including Ford, Boeing, Amazon.com and Microsoft, vowing not to stand in the way of its development.
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Technology

AP Explains: The Promise and Hype of 5G Wireless

By on Monday, February 11, 2019

A much-hyped network upgrade called “5G” means different things to different people.

To industry proponents, it’s the next huge innovation in wireless internet. To the U.S. government, it’s the backbone technology of a future that America will wrestle with China to control. To many average people, it’s simply a mystery.

The technology is one of the issues expected to take center stage at the MWC mobile conference in Barcelona, Spain, this month. The interest goes well beyond engineers: In Washington, there are fears that China could take the lead in developing the technology and sell equipment that could be used to spy on Americans.

What, exactly, is 5G wireless — and will you even notice when it comes online?

What is 5G?

5G is a new technical standard for wireless networks — the fifth, naturally — that promises faster speeds; less lag, or “latency,” when connecting to the network; and the ability to connect many devices to the internet without bogging it down. 5G networks will ideally be better able to handle more users, lots of sensors and heavy traffic.

Before we can all use it, wireless companies and phone makers have to upgrade. Phones need new chips and radio antennas. The phone you have today won’t work with a 5G network.

Wireless companies have been getting ready. They’ve been revamping their network equipment, buying up chunks of radio spectrum for carrying 5G signals, and installing new 5G antennas on cellphone towers, utility poles and streetlights. Wireless providers will invest $275 billion in 5G-related networks in the U.S., according to CTIA, an industry trade group.

When will it be available?

A true U.S. mobile rollout will start in 2019. It will take a few years to go national, and even then more rural areas of the country will not be covered in the “millimeter wave” frequencies that promise the highest data speeds and capacities, said Michael Thelander, CEO of wireless consultancy Signals Research Group.

Thelander predicts that China may lag the U.S. by a year in its initial rollout, but will ultimately have the biggest deployment, while European countries will build out more slowly.

Beware of confusion, though. Wireless carriers have a history of rushing to slap the latest-and-greatest label on their networks, and this time is no different. AT&T has already applied the name 5G on a service that’s not really 5G. (Sprint, upset, then sued its larger rival.)

Once the network is ready, you’ll need a 5G-enabled phone to connect to it. The first ones should be available in the first half of 2019, but a 5G iPhone isn’t expected until 2020. 5G phones will most likely be more expensive than current 4G phones. Don’t worry, even when 5G turns on, you can keep using 4G phones, just not at 5G speeds.

Wat can 5G do?

There’s a considerable amount of hype over the promise of 5G. Industry groups say it will promote smart cities by connecting sensor networks that could manage traffic and quickly identify streetlight outages. 5G could connect self-driving cars and fuel new applications in virtual and augmented reality. Its high-speed connections could enable better remote surgery and other telemedicine, help companies automate their factories and offer businesses dedicated high-speed internet lanes.

“5G speeds, and ever-faster home broadband, will mean that existing applications will get richer, and also that new applications will emerge — new Flickrs, YouTubes or Snapchats. We don’t know what yet,” Benedict Evans, a partner at Silicon Valley venture capital firm Andreessen Horowitz, wrote in a January blog post .

The most immediate impact on consumers will be faster download speeds for movies and other video. Thelander says your phone’s internet will work better in crowded locations such as stadiums.

What are the security concerns?

The 5G network is one front in rising tensions between the U.S. and China. The U.S. government has warned U.S. companies not to use Chinese telecom technology in communications networks due to security concerns, and is pressing other countries to ban Huawei, a Chinese telecom company, from 5G network buildouts.

U.S. officials have suspected for years that the Chinese government could use Huawei network equipment to help it spy. Huawei has rejected such accusations.
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Economy

Turkey Opens Government Vegetable Stalls in Battle with Inflation

By on Monday, February 11, 2019

Battling a sharp rise in food costs, Turkish authorities opened their own markets on Monday to sell cheap vegetables directly to shoppers, cutting out retailers who the government has accused of jacking up prices.

Crowds queued outside municipality tents to buy tomatoes, onions and peppers in Istanbul’s Bayrampasa district, waiting for an hour for items selling at half the regular shop prices.

The move to set up state markets follows a 31 percent year-on-year surge in food prices in January and precedes local elections next month in which President Tayyip Erdogan’s AK Party faces a tough challenge to maintain support.

Traders blamed storms in southern Turkey’s farming region for food price inflation, as well as rising costs of labor and transport. Authorities called it “food terror” and said they would punish anyone trying to keep prices artificially high.

“This was a game. They started manipulating prices, they tried to make prices skyrocket,” President Tayyip Erdogan said in a campaign speech on Monday.

“This was an attempt to terrorize (society),” Erdogan said.

Under the government initiative, municipalities are selling vegetables at around 50 percent of prices recorded by the Turkish Statistical Institute in January. A maximum of three kilos of goods per person is allowed.

The move will be extended to rice and pulses such as lentils, as well as cleaning products, Erdogan said.

The project is currently taking place only in Istanbul, where around 50 sites are selling the cut-price goods, and in the capital Ankara. That means it is unlikely to have a direct impact on national inflation figures, but could mitigate the price rises for residents of Turkey’s two largest cities.

Barely managing

Mustafa Dilli, 55, said he was struggling to make ends meet and hoped shops would follow suit by lowering their prices. “I think I can only shop here from now on,” he said. “We barely make it through to the end of the month.”

Several shoppers in Bayrampasa said they hoped the sales would carry on after next month’s vote. “I am curious whether this will continue after the elections,” 43-year-old housewife Nebahat Deniz said as she bought spinach and eggplants.

Agriculture Minister Bekir Pakdemirli, visiting a tent set up by the Ankara municipality, said the project would continue as long as it is needed, and could become permanent.

Last week, authorities inspected fresh produce wholesalers and imposed fines totaling 2 million lira ($380,000) on 88 firms for setting unreasonably high prices, according to the Trade Ministry.

At an Istanbul food market in a covered parking lot, traders complained that they could not compete with municipality stalls they said were subsidized by taxpayers and had been set up to win votes.

Standing behind an array of peppers, tomatoes and fresh greens, one trader said he was being hit by rising costs across the board.

“Prices in the food market are affected by the price of plastic bags, employee wages, stall fees, taxes, fuel prices.

All of them are increasing the cost of the goods,” said the trader, who only gave his first name, Yusuf.

“The government does not have these costs,” Yusuf said. “All of their costs are paid from the money out of our pockets.”

Another vendor, Erkan, said municipality sales were aimed purely at maximizing votes. “After the election, municipality sales will halt,” he said.

Erkan said the profit margin at his own stall, which supports three or four families, was very tight. “If we buy for 8 liras per kilo from the wholesaler we sell with little profit. We sell the goods for 9 liras for example,” Erkan said.
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Economy

Mexico President Calls for Steps to Keep Power Prices Low

By on Monday, February 11, 2019

Mexican President Andres Manuel Lopez Obrador said on Monday contracts private companies have with state-run power utility CFE should be revised to keep electricity prices low, sending shares in one Mexican contractor tumbling

“We are urging companies that have agreements with the Federal Electricity Commission (CFE) to come together to review contracts and above all to reach an agreement that electricity prices will not increase,” Lopez Obrador said during his morning press conference.

Lopez Obrador noted that the state-run utility is already contractually obliged to pay billions of dollars to the private firms that developed seven gas pipelines to supply power stations, even though the projects are incomplete and unable to deliver gas.

Those companies are Mexican energy infrastructure firm IEnova, a unit of U.S.-based Sempra Energy; TransCanada Corp; and Mexican tycoon Carlos Slim’s Carso, said CFE chief Manuel Bartlett.

“If the pipelines can’t be built, as is happening in seven large gas pipelines, the companies still have to be paid even if there is no gas,” said Lopez Obrador.

IEnova’s shares dropped 6.7 percent, TransCanada’s were down 0.5 percent and Carso slipped 0.21 percent after the comments. In a statement to the Mexican stock exchange, IEnova said it has one pipeline that entered into operation in 2017, but that the supplies to CFE were interrupted due to “sabotage.”

Lopez Obrador has been a staunch critic of landmark 2013-14 energy reforms that ended the wholesale electricity monopoly held by CFE and opened up the Mexican oil industry to private investment.

“We are looking to achieve a voluntary restructuring of agreements and commitments within the framework of the law … The Mexican government is committed to not increasing electricity prices for consumers, but we want private companies to help in this initiative,” he said.

The reforms ended state oil company Pemex’s decades-long monopoly by allowing private producers to operate projects on their own as well as enter into partnerships with Pemex known as farm-outs.
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Economy

US Steel Cites Trump in Resuming Construction Project

By on Monday, February 11, 2019

U.S. Steel Corp. will restart construction on an idled manufacturing facility in Alabama, and it gave some of the credit to President Donald Trump’s trade policies in an announcement Monday.

Trump’s “strong trade actions” are partly responsible for the resumption of work on an advanced plant near Birmingham, the Pittsburgh-based company said in a statement. The administration’s tariffs have raised prices on imported steel and aluminum.

The manufacturer also cited improving market conditions, union support and government incentives for the decision.

Work will resume immediately, the company said, and the facility will have an annual capacity of 1.6 million tons (1.5 million metric tons).

U.S. Steel said it also will update other equipment and plans to spend about $215 million, adding about 150 full-time workers. The furnace is expected to begin producing steel in late 2020.

The 16,000-member United Steelworkers praised the decision to resume work, which followed an agreement with the union reached last fall.

“This decision paves the way for a solid future in continuing to make steel in Alabama and the Birmingham region,” Leo W. Gerard, the president of the international union, said in a statement.

U.S. Steel shut down its decades-old blast furnace at Fairfield Works in 2015, idling about 1,100 employees, and said it would replace the operation with an electric furnace.

The company then blamed conditions in the steel, oil and gas industries as it suspended work in December 2015 on an electric arc furnace at its mill in Fairfield, located just west of Birmingham. The project stalled until the announcement Monday.

Trump imposed tariffs of 25 percent on steel imports and 10 percent on imported aluminum on June 1, 2018. The move was to protect U.S. national security interests, he said, but other countries said the taxes break global trade rules, and some have imposed tariffs of their own.

 
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Technology

Huawei Global Business Model Relied on Bribes and Corruption

By on Monday, February 11, 2019

In Algeria, it was banned from bidding for public contracts after one of its executives was convicted of bribery. 

In Zambia, it was probed over allegations of bribery involving a multi-million-dollar contract to build cell towers in rural areas.

In the Solomon Islands, it was accused of offering millions of dollars to the ruling party in exchange for an undersea fiber optic cable contract.

In all three cases – and half a dozen others in recent years – the alleged perpetrator was Huawei Technologies, the Chinese telecom behemoth facing scrutiny from Western nations over allegations of intellectual property theft and espionage.

Saying it poses a national security threat, the U.S., Australia and New Zealand have banned the company from building new, state of the art 5G telecom networks. Other Western countries are debating over a similar ban. 

Security concerns about Huawei and other Chinese telecom equipment providers are mounting after U.S. prosecutors last month charged the company founded by a former People’s Liberation Army officer with violating U.S. sanctions on Iran, purloining trade secrets from T-Mobile and encouraging its employees to steal intellectual property.

The focus on national security concerns about Huawei has eclipsed a little reported aspect of the company’s operations: Huawei’s involvement in corrupt business dealings.

The company has denied the allegations of corruption and said it has strong safeguards against corporate graft. 

In a statement on its website, Huawei says it has a “zero-tolerance” policy on graft.

“Huawei believes that corruption severely damages fair market competition and is a threat to the development of our society, economy and enterprises,” the statement said. 

But experts who have studied Huawei’s business practices say the company’s statements are contradicted by its conduct.

“The unfortunate reality of Huawei’s activities on the (African) continent is that they have a proven track record of engaging in corruption and other dodgy business dealings,” said Joshua Meservey, an Africa expert at the Heritage Foundation and author of a recent report on Chinese corporate corruption. 

With business operations in more than 170 countries and annual revenues of $108 billion, Huawei is the world’s largest supplier of telecom equipment. Last year, the multinational company beat Apple to become the No. 2 manufacturer of smartphones and tablets in the world.

In December, Huawei’s chief financial officer, Meng Wanzhou, was arrested by Canadian authorities and she is being held for possible extradition to the U.S. for violation of U.S. sanctions on Iran.

​Huawei has rejected the charges. In a recent letter to the U.K. Parliament made public last week, Huawei refuted allegations of espionage, saying if the company engaged “in malicious behavior, it would not go unnoticed – and it would certainly destroy our business.”

International corruption

In developing countries in Asia and Africa, the company’s corrupt business practices are a matter of great concern among industry officials and civil society activists.

In the last 12 years, Huawei and its smaller Chinese rival ZTE have been “investigated or found guilty of corruption” in as many as 21 countries, according to Andy Keiser, a former House Intelligence Committee professional staffer.

These include a dozen African countries such as Algeria and Ghana as well as the Philippines, Malaysia, Norway, Papua New Guinea, Mongolia, the Solomon Islands and China itself, according to Keiser. 

“ZTE and Huawei have developed dubious reputations around the world,” Keiser testified before Congress last June. 

The transaction cost of Huawei’s corrupt business deals runs in the billions. RWR Advisory Group, a consulting firm that tracks Chinese investments around the world, estimates that Huawei has entered into more than $5 billion worth of business deals involving allegations of bribery and corruption.

The charges against Huawei range from outright bribery to making illegal donations to political parties in exchange for contracts and other business advantages.

The Algerian case involved an elaborate scheme in which Huawei and ZTE executives allegedly paid $10 million in bribes to a former state telecom operator executive and a businessman in exchange for winning contracts.

In 2012, an Algerian court convicted the former executive and another businessman of receiving bribes. The two Algerians were sentenced to 18 years in prison.

Three executives of the Chinese firms also were tried in absentia and sentenced to 10 years in prison for their role in the scheme.

The government fined Huawei and ZTE and banned them from bidding on public contracts for two years.

In Ghana, Huawei has confronted accusations of illegally funding the ruling party, a charge Huawei and other Chinese companies have faced in other countries.

In 2012, an opposition group disclosed what it claimed was evidence that Huawei had made illegal campaign contributions to the ruling National Democratic Congress in exchange for a $43 million tax exemption.

Alliance for Accountable Governance (AFAG) produced invoices and other documents showing the Chinese telecom company had paid for millions of dollars worth of campaign paraphernalia for the ruling party’s 2012 election campaign.

In return, the group alleged, the government awarded “one of the juiciest contracts to be doled out by the government” – a $150 million contract to build an e-government platform.

Huawei and the government denied the charges.

In the Solomon Islands, Huawei has faced similar accusations. In 2017, a Parliamentary committee accused the government of awarding Huawei a contract to build a submarine fiber optic link to Australia after Huawei offered a $5.25 million campaign donation to the ruling party.

“The committee is of the view that this is the main reason for the government to bypass procurement requirements in favor of the company Huawei,” a parliamentary report said.

Huawei dismissed the allegations.

“As a global business entity, Huawei does not involve itself in politics. Huawei forbids all of its global subsidiaries from making any form of political donation, including in places where this practice is legal,” the company said in a statement. 

Bribery allegations have also plagued Huawei projects in South Africa, Nigeria, and Pakistan. But the company appears to have weathered the allegations, positioning itself as a major player in building 5G networks around the world. 

WATCH: 5G networks explained

​As of last February, Huawei had signed 25 memorandums of understanding with telecom operators around the world to trial 5G equipment, according to a Reuters survey of public announcements.

In recent years, Huawei has also found itself at the receiving end of a Chinese government crackdown on domestic corruption. In 2017, the head of Huawei’s consumer business group for China was detained on suspicion of taking bribes.

To root out corruption among its employees, Huawei says it has implemented policies including requiring executives to take a loyalty oath. But the safeguards are “of limited value if the material incentives for employees don’t reflect those priorities,” said Alexandra Wrage, president of anti-bribery business organization TRACE International.

“This danger can be compounded when an enterprise maintains financial and political backing from the government, which is often seen as fostering a greater tolerance for risk in pursuit of growth,” Wrage said.
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Economy

IMF Chief says Ready to Support Pakistan after Meeting PM

By on Sunday, February 10, 2019

International Monetary Fund chief Christine Lagarde on Sunday met Pakistani Prime Minister Imran Khan and assured him that IMF stands ready to support his country.

The meeting took place on the sidelines of the World Government Summit in Dubai, hosted by the United Arab Emirates, both IMF and prime minister Imran Khan’s office said.

“I reiterated that the IMF stands ready to support Pakistan,” Lagarde said in a statement following meeting Khan.

A team from the International Monetary Fund visited Pakistan in November to discuss a possible bailout with officials, though the talks ended without agreement, but since then the government official said talks were still ongoing on a possible bailout.

Pakistan — which has gone to the IMF repeatedly since the late 1980s — is facing a balance of payments crisis.

“I also highlighted that decisive policies and a strong package of economic reforms would enable Pakistan to restore the resilience of its economy and lay the foundations for stronger and more inclusive growth,” said Lagarde, calling the meeting “good and constructive”.

Pakistan — a regular borrower from the IMF since the 1980s — last received an IMF bailout in 2013 to the tune of $6.6 billion.

Forecasts by the IMF and World Bank suggest the Pakistani economy is likely to grow between 4.0 and 4.5 percent for the fiscal year ending June 2019, compared to 5.8 percent growth in the last fiscal year.

Addressing the World Government Summit, prime minister Khan said his government has started a reform program and was trying to improve its economic policies.

“Reforms are painful but it is essential if we have to get out of our current problems,” Khan told the summit and said his government was making efforts to cut down the fiscal and current account deficit.

Khan hoped that the time has come that “Pakistan will take off”.

Khan has launched a highly publicized austerity drive since being sworn in, including auctioning off government-owned luxury vehicles and buffaloes, in addition to seeking loans from “friendly countries” and making overtures to the IMF.

The United Arab Emirates, Pakistan’s largest trading partner in the Middle East and a major investment sources, recently offered $3 billion to support Pakistan’s battered economy.

Islamabad also secured $6 billion in funding from Saudi Arabia and struck a 12-month deal for a cash lifeline during Khan’s visit to the kingdom in October.

It has also received billions of dollars in Chinese loans to finance ambitious infrastructure projects.

Despite the pledges, the ministry of finance said Pakistan would still seek broader IMF support for the government’s long-term economic planning.

In January, Pakistan launched a new investment certificate for overseas citizens, aimed at easing the country’s balance of payments crisis.

 

 

 
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Science

Most Children Globally Lack Social Protection Coverage

By on Sunday, February 10, 2019

A joint study by the International Labor Organization and U.N. Children’s Fund finds the vast majority of the world’s children lack effective social protection coverage. It says this dooms them to a life of extreme poverty, with negative implications for society.

The study finds only one third of children between zero and 14 years of age have any social protection. That means two-thirds, or 1.3 billion children live without a social safety net.

International Labor Organization Social Protection Department Director Isabel Ortiz says just slightly more than one percent of GDP is allocated to social protection for children. She says this huge under-investment gap needs to be covered.

“And, of course, the numbers worsen as we go by region. In Africa, for instance, children represent 40 percent of the African population overall. However, only 0.6 percent is actually invested in social protection for children,” she said.

The report finds children fare best in Europe and Central Asia where 87 percent have social protection coverage, followed by children in the Americas with 66 percent. Asia and Africa have the worst records. The report says no data is available on the Arab States.

The report highlights the impact extreme poverty has upon the lives of children and the societies in which they live. Chief of the U.N. Children’s Fund Child Poverty and Social Protection Unit, David Stewart, says 385 million children are living on under $1.90 a day.

“I think one of the most striking statistics, which emerges is that children are two times as likely to be living in poverty as adults,” he said. “Now, for children it is particularly concerning because poverty can have a lifetime implication for children. You do not have a second chance at nutrition, at health care, and education.”

Stewart says this has negative implications for children, and for societies and economies as well.

The ILO and UNICEF recommend the rapid expansion of social protection for children including the consideration of universal cash grants to children. Authors of the report say evidence clearly shows cash transfers play a vital role in breaking the vicious cycle of poverty and vulnerability.

 

 
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Technology

Top US University Suspends New Research Projects with Chinese Telecom Giant Huawei

By on Saturday, February 9, 2019

One of the world’s top research universities, the U.S.-based University of California, Berkeley, has stopped new research projects with Huawei Technologies, a Chinese telecommunications giant.

The university’s suspension, which took effect on January 30, came after the U.S. Department of Justice filed criminal charges against the corporation and some of its affiliates two days earlier. The department announced a 13-count indictment against Huawei, accusing it of stealing trade secrets, obstruction of justice, violations of economic sanctions and wire fraud.

Vice Chancellor for Research Randy Katz said in a letter addressed to the Chancellor’s cabinet members the campus would continue to honor existing commitments with Huawei that provide funding for current research projects.

Huawei’s chief financial officer, Meng Wanzhou, has been under house arrest in Canada since December 1 for allegedly deceiving U.S. banks into clearing funds for a subsidiary that interacted with Iran in violation of U.S. sanctions. Her extradition to the U.S. is pending.

Meng’s arrest has prompted some observers to question whether her detention was an attempt to pressure China in its ongoing trade war with the U.S.  She is the daughter of the corporation’s founder, a relationship that places her among the most influential corporate executives in China.

UC Berkeley and other leading U.S. universities, meanwhile, are getting rid of telecom equipment made by Huawei and other Chinese companies to prevent losing federal funds under a new national security law.

The administration of U.S. President Donald Trump alleges Chinese telecom companies are manufacturing equipment that allows the Chinese government to spy on users in other countries, including Western researchers working on innovative technologies.

UC Berkeley has removed a Huawei video-conferencing system, a university official said. The University of California, Irvine is also replacing Chinese-made audio-video equipment. Other schools, such as the University of Wisconsin, are reviewing their telecom suppliers.

The action is in response to a law Trump signed in August. A provision of the National Defense Authorization Act prohibits recipients of federal funding from using telecom and networking equipment made by Hauwei or ZTE.

Universities that fail to comply with the law by August 2020 could lose federal government research grants and other funding.
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Science

Leader of New Climate Panel Talks of Need for ‘Bold Action’

By on Saturday, February 9, 2019

It does not yet have office space, staff or even Republican members, but Florida Rep. Kathy Castor is confident that a special House committee on climate change will play a leading role on one of the most daunting challenges facing the planet.

Castor, who chairs the new panel, says those early obstacles can be overcome as lawmakers move to reduce carbon pollution and create clean-energy jobs.

“The Democratic caucus is unified under the belief we have to take bold action on the climate crisis,” Castor said in an interview.

While that can take many forms, the transition to renewable energy such as wind and solar power is “job one,” she said.

Castor, who’s in her seventh term representing the Tampa Bay area, said Congress has a “moral obligation” to protect future generations from the costly effects of climate change, including more severe hurricanes, a longer wildfire season and a dangerous sea-level rise.

House Speaker Nancy Pelosi named Castor to lead the panel in December, saying she brings experience, energy and urgency to what Pelosi called “the existential threat of the climate crisis” facing the United States and the world.

The climate panel is similar to one Pelosi created when Democrats last controlled the House from 2007 to 2010. The panel was eliminated when Republicans took the majority in 2011.

While the previous panel played a key role in House approval of a landmark 2009 bill to address global warming, Castor said the new panel is likely to focus on a variety of actions rather than a single piece of legislation.

She and the eight other Democrats named to the panel “are ready to stand up to corporate polluters and special interests” as they press for action to reduce greenhouse gas emissions and move toward a clean-energy economy, Castor said.

“Climate deniers, fossil fuel companies and other special interests have had an outsized influence” in Congress in recent years, she said, promising to “stand up” to those forces to protect the environment and create green jobs.

The climate panel is separate from an effort by Democrats to launch a Green New Deal to transform the U.S. economy and create thousands of jobs in renewable energy.

Castor dismissed the idea that the Green New Deal — put forth by freshman Rep. Alexandria Ocasio-Cortez of New York and veteran Sen. Ed Markey of Massachusetts — will conflict with the climate panel.

“My job and the committee’s job is to take the general concepts (of the Green New Deal) and turn them into a real policy framework and legislative language and eventually law,” she said.

Pelosi agreed, saying in a statement that the climate panel will “spearhead Democrats’ work to develop innovative, effective solutions to prevent and reverse the climate crisis.”

Pelosi invited Ocasio-Cortez, a social media star and the best-known member of the large class of freshman Democrats, to join the climate panel, but she declined, saying she wants to focus on the Green New Deal and other committee assignments.

Three freshmen — Sean Casten of Illinois, Mike Levin of California and Joe Neguse of Colorado — serve on the panel, along with veteran lawmakers such as Rep. Ben Ray Lujan of New Mexico, the fourth-ranking House Democrat, and Californians Julia Brownley and Jared Huffman, both close Pelosi allies.

“We need their passion and energy, and we need support from all corners all across the country,” Castor said of the freshmen members. “It’s all hands on deck right now.”

Republicans have not named anyone to the climate committee, but six GOP members are expected to join the panel this month.

While she would have preferred that the committee be given subpoena power and legislative authority to draft their own bills, the panel’s more limited power “is not going to hamper us,” Castor said. Most invited witnesses will be eager to testify, she said, and those who resist — including members of the Trump administration — can be compelled to appear by other committees such as Energy and Commerce or Natural Resources.

While the earlier climate panel focused on establishing the threat posed by climate change, Castor said the time to debate climate science is long past.

“People understand the problems,” she said. “They see the effects of sea rise and more dangerous storms. They understand it. They look at Washington and kind of throw up their hands and say, ‘Why don’t you guys do something?’ ”

The committee’s challenge, she added, will be “to restore the faith of people and show them Washington can do some things.”

 
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Science

Study: Opioid Prescriptions for Pets Surge, Mirroring Human Crisis

By on Saturday, February 9, 2019

Many more Americans may be getting opioids for their pets, and veterinarians appear to be prescribing increasingly potent versions of these drugs to animals, a small study suggests. 

The researchers examined data on opioid tablets and patches dispensed or prescribed by 134 veterinarians at an academic small-animal hospital in Philadelphia from 2007 to 2017. Over the decade, the amount of opioids used for creatures like rabbits, birds and reptiles surged 41 percent even though visits to the hospital increased by only 13 percent. 

“We have no way of knowing if any of these prescriptions were obtained by pet owners for themselves, and most were likely not,” said senior study author Dr. Jeanmarie Perrone, a toxicologist with the emergency medicine department at the Perelman School of Medicine at the University of Pennsylvania in Philadelphia. 

“However, the risk to humans is that leftover opioid prescriptions to animals end up in the same medicine cabinets as leftover opioids for people, leading to opportunities for misuse by teenagers or unintentional exposures in children that can be lethal,” Perrone said by email. 

The study included 366,468 pet visits to the animal hospital. During these visits, veterinarians prescribed a total of 105.2 million tablets of tramadol, more than 97,000 tablets of hydrocodone, almost 39,000 tablets of codeine and 3,153 fentanyl patches. 

Most were for dogs

Dogs got the most drugs, accounting for 73 percent of these prescriptions, followed by cats at 22.5 percent and exotic animals at 4.5 percent. 

A major factor contributing to the growing opioid crisis in the U.S. is the increasing availability of these drugs, which addicts often get from friends or relatives when they aren’t able to obtain a prescription, researchers note in JAMA Network Open. 

Although medical and dental health providers are the biggest source of these opioids, the current study suggests that veterinary prescriptions may also be part of the problem, they write. 

Veterinarians and animal hospitals can be registered with the U.S. Drug Enforcement Administration, and in many states vets can prescribe, stock and dispense opioids without the same reporting requirements that are in place at many retail outlets. 

Only 20 states require veterinarians to report opioid prescribing as medical doctors do to a registry designed to limit misuse, the study authors note. 

Pennsylvania is one of many states without reporting requirements, and results from the study may reflect what happens in other states that lack registries to help curb abuse, Perrone said. 

It’s not clear if the increase in prescriptions in Pennsylvania might be due to an increased push to better manage pain for animals and pets, said Dr. Lee Newman, a researcher at the Colorado School of Public Health in Aurora, or if it is due to the growing number of people with substance abuse problems trying to get medications from veterinarians, or both. 

Switch surmised

“It’s speculation on my part, but it could be that when a human patient stops getting opioid prescriptions from their doctor that they next turn to the veterinarian to try to get drugs,” Newman, who wasn’t involved in the study, said by email. 

While the study suggests that opioid prescribing from veterinarians represents only a small fraction of the overall opioid prescribing in the country, it also suggests that veterinary practices may be an overlooked part of the problem, said Kirk Evoy, an assistant professor in both the College of Pharmacy at the University of Texas at Austin, and at the School of Medicine at the University of Texas Health Science Center at San Antonio.

“This study brings to light that this is yet another potential source of access to opioids that many clinicians and policymakers may not be thinking about in their efforts to curtail the country’s opioid abuse epidemic,” Evoy, who wasn’t 

involved in the study, said by email. 

“Furthermore, while human opioid prescribing has begun to level off in recent years in response to the opioid epidemic, this data seems to indicate that, at least in the specific hospital being studied, prescribing of opioids for animals has continued to climb,” Evoy said. 
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Science

Washington State Considers Vaccine Bill Following Measles Outbreak 

By on Friday, February 8, 2019

Lawmakers in the U.S. Northwestern state of Washington, which is battling a measles outbreak, are considering a bill that would prohibit parents from claiming a personal or philosophical exemption to their children receiving vaccinations.

Hundreds of people opposed to the bill lined up early Friday to attend a hearing in Olympia, the state capital, where lawmakers heard testimony from both supporters and opponents of the proposed bill.

The measure came after health officials reported at least 52 known cases of the measles in the state and four cases in the neighboring state of Oregon.

Current law

Washington state law requires children to be vaccinated for nearly a dozen diseases, including measles, before they can attend schools or child care centers. However, exemptions are allowed for parents based on personal beliefs, including medical, religious and philosophical views.

The proposed bill would eliminate that personal exemption, meaning all children would have to be vaccinated for a range of diseases before enrolling in schools or child care facilities.

The bill has the support of the state medical association as well as Washington Gov. Jay Inslee, who declared a state of emergency last month because of the measles outbreak. 

Opponents testifying against the bill Friday included environmental activist Robert F. Kennedy Jr., who has questioned vaccine safety standards.

The Associated Press cited state Department of Health records that showed 4 percent of Washington secondary school students had nonmedical vaccine exemptions. The records showed that 3.7 percent of those exemptions were personal, while the remainder were religious exemptions.

Arguments for, against

Proponents of eliminating the personal exemption argue that schools must be safe and protect vulnerable children. Opponents of the eliminating the exemption argue that the vaccines come with a medical risk and that therefore people must have a choice about whether to use them. 

Both California and Vermont have removed personal belief vaccine exemptions for schoolchildren.  
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