US Business

Lobbyists for pesticide and fertiliser producers are pushing “behind the scenes” against stronger protection for species and ecosystems at the COP15 biodiversity conference, research showed Thursday.

Delegates in Montreal for the meeting, which started this week and runs until December 19, aim to finalise a new framework for “living in harmony with nature”, with key goals to preserve Earth’s forests, oceans and species.

InfluenceMap, a think tank that monitors communications by companies and industry associations, said it “tracked lobbying between 2020 and 2022 that has sought to weaken both the targets themselves and steps toward their implementation in the EU and the US.

“As COP15 gets underway to finalise new biodiversity goals, major industry lobbyists are working behind the scenes to try to water down policy ambition,” said the author of the research, InfluenceMap program manager Rebecca Vaughan.

“We’ve tracked efforts from industry associations representing some of the world’s biggest pesticide and fertiliser producers… strongly resisting global and EU targets for reducing the use of biodiversity-harming agrichemicals.”

It tracked submissions they made to the secretariat of the Convention on Biological Diversity (CBD) and communications obtained through Freedom of Information requests.

Examples included the International Fertilizer Industry Association (IFA), which the report said opposed targets for reducing losses of nutrients linked to crop production.

– ‘Constructive dialogues’ –

The director general of the IFA, Alzbeta Klein, said: “This report misrepresents the activities of the fertiliser industry in the area of biodiversity and in particular, the adoption of global targets.

“The industry recognizes the critical importance of biodiversity protection for the well-being of people and the future of the planet, and is mindful of its role and responsibility in helping to avoid and reverse global biodiversity losses,” she told AFP.

The IFA said in a separate statement that it was “actively involved” in the CBD negotiations by providing expertise and information on agricultural practices to set a “realistic, achievable” target on sustainable resource management.

One of the companies named in the report, German chemicals giant BASF, said it took part in “constructive dialogues” at the request of policymakers, advising on ways to limit environmental impact and aid biodiversity.

“BASF supports the preservation of ecosystems and promotes the sustainable use of natural resources,” a BASF communications executive, Christian Zeintl, told AFP.

“We believe that crop protection can go hand in hand with biodiversity in agriculture.”

– ‘Corporate capture’ –

The InfluenceMap report also pointed to fishery lobby groups that oppose one of COP15’s headline initiatives: to protect 30 percent of the world’s land and oceans by 2030.

A previous InfluenceMap study in October documented cases of oil associations lobbying against protection for threatened species such as some bees, seals and polar bears.

The head of the CBD Elizabeth Mrema said at a briefing in November that the majority of people registering for COP15 were non-government “stakeholders, including the business and financial institutions.

“This clearly indicates the awareness of the private sector of their role of also contributing to actions to reduce the loss of biodiversity,” she said.

Friends of the Earth issued a report on “corporate capture” at COP15, arguing that “the participation of big business in the CBD reveals a fundamental conflict of interest.

“The impact of corporate influence on the CBD COP15 can already be seen in the draft Global Biodiversity Framework,” it said.

“Far from being transformative, it fails to address unsustainable production methods and allows for ‘business as usual'”.

Kazakhstan, one of the world’s leading locations for cryptocurrency mining, has moved to reel in the power-hungry industry that has often burdened the ageing energy grid of the Central Asian country.

The ex-Soviet country’s lower house of parliament on Wednesday passed legislation which introduced a tax and a mandatory license for companies mining cryptocurrencies among other measures, state news agency Kazinform reported. 

In recent months, Kazakhstan, the region’s largest economy, has looked to promote the expansion of cryptocurrency mining while cracking down on illegal mining farms.

“The goal of the bill is to eliminate illegal mining and create an adequate legal environment for legal entrepreneurs,” lawmaker Yekaterina Smyshlyayeva, who introduced the bill, told AFP on Thursday. 

She added that this activity is a “capital intensive business and the risks are very high”.

“Miners will only be able to buy electricity from the general electricity network in the event of a surplus,” she said Wednesday as quoted by Kazinform. 

According to data from the University of Cambridge, Kazakhstan was the world’s third-largest miner of cryptocurrency as of January 2022, behind the United States and China. 

Mining for cryptocurrency, such as bitcoin, requires powerful computers to solve complex mathematical puzzles, resulting in the consumption of huge amounts of electricity.

Kazakhstan has many benefits for the industry, including some of the cheapest electricity in the world and a cold climate favourable for cooling computers. 

It has also seen an influx of miners from neighbouring China, where the mining of cryptocurrency is officially banned. 

Kazakhstan’s energy system dates back to the Soviet era and, despite investments, remains dilapidated and regularly experiences energy deficits.

In March, the Kazakh government announced the closure of some 100 illegal mining farms, including those belonging to the brother of the former president Nursultan Nazarbayev. 

Chinese President Xi Jinping and Saudi Arabia’s powerful crown prince met Thursday on an Arab outreach visit that has earned a rebuke from Washington, reaching deals in areas including energy and infrastructure. 

Agreements worth about $30 billion were to be signed, Saudi state media said, as China seeks to shore up its Covid-hit economy and as the Saudis, long-term US allies, push to diversify their economic and political alliances.

Xi and Crown Prince Mohammed bin Salman, the 37-year-old de facto ruler of the world’s biggest oil exporter, met at Yamamah Palace in Riyadh, flanked by high-ranking officials wearing face masks, footage aired on state television showed.

They oversaw the signing of energy agreements on hydrogen as well as a plan to “harmonise” Saudi Arabia’s ambitious economic reform agenda, Vision 2030, with China’s trillion-dollar Belt and Road Initiative, the official Saudi Press Agency said. 

The signed deals also covered a petrochemicals project, housing development and the teaching of the Chinese language, SPA said, though it did not detail their substance or monetary value.

Earlier, state television showed Xi being greeted by Prince Mohammed before the two men stood side-by-side as a brass band played their countries’ national anthems. 

They then chatted while walking into the palace, which is the king’s official residence and seat of the royal court. 

Xi also met with Prince Mohammed’s father, 86-year-old King Salman, signing a comprehensive strategic partnership agreement first reached during Xi’s last visit in 2016, state media reported. 

They “agreed to hold a heads of state meeting between the two countries in turn every two years”, Chinese state media said.

“I am very pleased to visit Saudi Arabia again after six years. I still remember the scenes from my last visit,” Xi said in remarks carried by Chinese state broadcaster CCTV.

“The Chinese side views the Saudi side as an important force in a multipolar world and attaches high importance to developing a comprehensive strategic partnership with Saudi Arabia.”

He said Beijing was ready to expand its crude oil trade with Riyadh and would “list Saudi Arabia as a destination country for outbound tourism organised by Chinese citizens”.

– ‘Raising pace’ of cooperation –

Upon his arrival on Wednesday, Xi said bilateral ties with Saudi Arabia had grown “by leaps and bounds” in recent years. 

This “has not only enriched both countries’ peoples but promoted regional peace, security, prosperity and development,” Xi said, according to CCTV.

The crown prince sees China as a critical partner in his sweeping Vision 2030 agenda, seeking the involvement of Chinese firms in ambitious mega-projects meant to diversify the economy away from fossil fuels.

Saudi investment minister Khalid al-Falih said this week’s visit “will contribute to raising the pace of economic and investment cooperation between the two countries”, offering Chinese companies and investors “rewarding returns”, according to SPA.

Earlier on Thursday, Saudi state media announced 34 investment agreements in sectors including green hydrogen, information technology, transport and construction.

State broadcaster Al-Ekhbariya said another 20 agreements worth 110 billion riyals ($29.3 billion) were due to be signed.

– Arab outreach –

Arab leaders began Thursday to converge on the Saudi capital ahead of summit meetings with Xi, who will hold separate talks with the six-member Gulf Cooperation Council before leaving on Friday.

China, the top consumer of Saudi oil, has been strengthening ties with a region that has long relied on the United States for military protection but which has voiced concerns the American presence could be downgraded.

Egyptian President Abdel Fattah al-Sisi, Palestinian president Mahmud Abbas and Sudan’s de facto leader Abdel Fattah al-Burhan had all arrived by Thursday afternoon, according to the Saudi foreign ministry.

Qatari Emir Sheikh Tamim bin Hamad Al-Thani, Tunisian President Kais Saied, Iraqi Prime Minister Mohammed Shia al-Sudani, Moroccan Prime Minister Aziz Akhannouch and Lebanese caretaker Prime Minister Najib Mikati have also confirmed their attendance.

Beijing’s foreign ministry this week described Xi’s trip as the “largest-scale diplomatic activity between China and the Arab world” since the People’s Republic of China was founded.

It has not escaped the attention of the White House, which warned of “the influence that China is trying to grow around the world”, calling its objectives “not conducive to preserving the international rules based order”. 

Washington has long been a close partner of Riyadh, but the relationship is currently roiled by disagreements on energy policy, US security guarantees and human rights. 

Xi is making his third journey overseas since the Covid pandemic prompted China to shut its borders and embark on a series of lockdowns, putting the brakes on its giant economy.

His visit follows US President Joe Biden’s trip in July, when he greeted Prince Mohammed with a fist-bump at the start of a vain attempt to convince the Saudis to raise oil production.

Wall Street stocks staged a relief rally and Hong Kong soared on Thursday, but elsewhere equity trading was held back by recession fears.

Oil prices, meanwhile, added to recent sharp losses.

Equity markets had been rising ahead of US jobs figures last week, boosted by a surprise drop in inflation and comments from Federal Reserve boss Jerome Powell that the bank was likely to raise rates at a slower pace.

But robust jobs figures and a jump in wages, plus data on Monday showing a forecast-busting jump in activity in the US services sector last month, raised the prospect that the Fed will not back down from sharp rate increases when it meets next week.

That sent stocks slumping, with even China’s relaxing of Covid testing and quarantine restrictions, setting up the prospect of a rebound in activity in the world’s second-largest economy, unable to turn sentiment.

Following several days of losses, Wall Street moved higher on Thursday, with the Dow up 0.6 percent in late morning trading.

“What we have today, then, is a little rebound spirit — an assumption that the stock market is due for a bounce after behaving so poorly in more recent action…” said market analyst Patrick O’Hare at Briefing.com.

European stocks spent the afternoon wobbling between gains and losses. Frankfurt ended the day flat, while London and Paris shed 0.2 percent.

“The risk-off sentiment… remains hard to kick into touch as concerns about recession stay front and centre,” noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“The evil twins of recession and persistently higher inflation are lurking, keeping investors on edge.”

Analysts pointed out that two-year US Treasury yields were much higher than those of 10-year bonds, which is usually considered a clear indication of a looming recession.

This week also saw the heads of some of Wall Street’s biggest banks warn of a downturn.

– China Covid shift –

The fear of a US recession is playing off against China’s shift away from its zero-Covid strategy of lockdowns and mass testing.

After widespread protests last month against the strict measures and calls for more political freedoms, authorities have scaled back many of them and on Wednesday announced a nationwide loosening of restrictions.

While there are worries that the more liberal approach will spark a surge in infections, it has helped fan a rally in Hong Kong where Chinese tech firms and property developers are listed.

The Hang Seng Index closed up more than three percent Thursday.

“Developments in China have a big role to play, although as we’re seeing once again, Covid-related moves are almost exclusively impacting stocks in domestic markets,” said Craig Erlam, senior analyst at OANDA trading group. 

“We can see that again overnight, with reports of looser mask and isolation requirements in Hong Kong lifting the Hang Seng and making it the clear outperformer in the region, while most other indices tread water.”

Joshua Mahony, senior market analyst at online trading platform IG, said “to a large extent this week highlights how traders have to somehow weigh up the benefits of a gradual Chinese reopening with the fears of an impending economic contraction in the year ahead.”

– Key figures around 1630 GMT –

New York – Dow: UP 0.6 percent at 33,799.15 points

EURO STOXX 50: FLAT at 3,921.27

London – FTSE 100: DOWN 0.2 percent at 7,472.17 (close)

Frankfurt – DAX: FLAT at 14,264.56 (close)

Paris – CAC 40: DOWN 0.2 percent at 6,647.31 (close)

Tokyo – Nikkei 225: DOWN 0.4 percent at 27,574.43 (close)

Hong Kong – Hang Seng Index: UP 3.4 percent at 19,450.23 (close)

Shanghai – Composite: DOWN 0.1 percent at 3,197.35 (close)

Euro/dollar: UP at $1.0548 from $1.0510 on Wednesday

Dollar/yen: UP at 136.58 yen from 136.57 yen

Pound/dollar: UP at $1.2221 from $1.2209

Euro/pound: UP at 86.29 pence from 86.05 pence

Brent North Sea crude: DOWN 1.0 percent at $76.38 per barrel

West Texas Intermediate: DOWN 0.4 percent at $71.74 per barrel

Wirecard’s ex-CEO Markus Braun and two former executives went on trial in Munich on Thursday charged with fraud over their involvement in Germany’s biggest-ever accounting scandal.

The mammoth court case comes two and a half years after digital payments firm Wirecard collapsed in spectacular fashion after admitting that 1.9 billion euros ($2 billion) missing from its accounts did not actually exist.

Chancellor Olaf Scholz, who was finance minister at the time of Wirecard’s implosion, described the scandal as “unparalleled” in Germany’s post-war history.

The first day of the keenly anticipated trial, held in a high-security courtroom inside the sprawling Stadelheim prison complex, mainly consisted of the prosecution reading out the 90-page indictment.

Austrian-born Braun, in custody since July 2020, appeared in the dock wearing his trademark dark turtleneck under a suit jacket. 

The 53-year-old spoke only to confirm his personal details and appeared to be following the proceedings intently.

– Fugitive COO –

Braun has been charged with commercial gang fraud, breach of trust, false accounting and market manipulation.

He denies the allegations and claims to be a victim of the fraud, painting Wirecard’s fugitive former chief operating officer Jan Marsalek as the mastermind.

Marsalek, a shadowy figure with ties to foreign intelligence services, was reported earlier this year to be hiding out in Russia.

Braun’s co-defendants are ex-accounting boss Stephan von Erffa and Oliver Bellenhaus, the former head of Wirecard’s Dubai subsidiary.

Bellenhaus has admitted wrongdoing and will act as a key witness for the prosecution.

If found guilty, the trio risk lengthy prison sentences.

But Bellenhaus’s lawyer, Florian Eder, told reporters he expected “a significantly reduced sentence” for his client given his cooperation with authorities.

The complex trial is expected to last well into 2024.

– Fake transactions –

The prosecution’s case centres around the claim that Wirecard executives inflated the company’s earnings, starting at least as far back as 2015, by inventing revenue streams from transactions with a web of partner companies.

These so-called Third Party Acquirer (TPA) companies in Dubai, the Philippines and Singapore accounted for a huge chunk of Wirecard’s sales and profits according to its books.

But “all the accused knew” that the revenues from these TPA businesses “didn’t exist”, the indictment said, adding that the defendants used forged documents to hide the trickery.

The goal was “to increase the company’s financial strength and make it more attractive to investors and customers”, prosecutors alleged.

Braun’s defence lawyer, Alfred Dierlamm, is expected to argue on Monday that the business dealings with partner companies were real.

But the commissions resulting from those transactions were not transferred into the correct Wirecard accounts. Instead, the defence will claim, the funds were secretly diverted to tax havens without Braun’s knowledge.

– FT investigation –

Founded in 1999 as an outfit processing credit card payments for porn and gambling websites, Wirecard rose to become a respectable player in the booming “fintech” (financial technology) sector.

It joined Germany’s blue-chip DAX index in 2018 and at its peak was valued at more than 24 billion euros, outweighing giant Deutsche Bank.

Despite occasional speculation of wrongdoing at the company, Wirecard continued its meteoric rise.

But its troubles began in earnest in 2019 when the Financial Times published a series of explosive articles detailing accounting irregularities.

The scam finally unravelled when long-time auditor EY uncovered a 1.9-billion-euro hole in its accounts in June 2020.

The cash, which made up a quarter of Wirecard’s balance sheet, was meant to be sitting in trustee accounts at two banks in the Philippines.

But the Philippines’ central bank has said the cash never entered its monetary system and both Asian banks, BDO and BPI, denied having a relationship with Wirecard.

Wirecard’s share price tanked and it filed for insolvency soon after, leaving behind three billion euros in debt that creditors are unlikely to recover.

The company’s downfall sent shockwaves through Germany and prompted an overhaul of finance watchdog Bafin, heavily criticised for ignoring early warnings about Wirecard.