US Business

Elon Musk has formally subpoenaed a Twitter whistleblower to share information about spam accounts at the social network, as the billionaire fights in court to back out of a massive buyout deal.

Musk has tried to pull out of the $44 billion agreement by saying Twitter misled him on the number of false accounts, or bots, prompting strong denials and a lawsuit from the social media firm.

The Tesla boss hopes that allegations made by the former Twitter security chief Peiter Zatko, about major security gaps and problematic practices at the firm, will bolster his case.

According to court documents made public on Monday, Musk’s attorneys served Zatko with a subpoena Saturday demanding he share any documents or messages regarding the impact of spam and false accounts on Twitter’s activity, dating back to January 2019.

Zatko was also ordered to answer questions on the record for Musk lawyers on September 9.

Zatko’s attorney did not immediately respond to a request for comment.

Musk’s attempt to back out of buying Twitter has struggled for momentum in court.

Twitter won some early battles in the case, including a fast-track trial date, and its stock had risen as analysts predicted the platform would prevail over the mercurial Musk.

But a US judge last week told Twitter to surrender more data to Musk on the key issue of fake accounts, and the billionaire hopes Zatko’s whistleblower complaint could further turn the tide in its favor.

While Twitter has pointed out that Musk opted not to perform due diligence typically seen in merger deals, the billionaire’s attorney Alex Spiro told the Delaware judge he had trusted the firm’s filings with the Securities and Exchange Commission (SEC).

The market watchdog was one of the recipients of Zatko’s complaint, which accuses Twitter of issuing untrue statements on account numbers because “if accurate measurements ever became public, it would harm the image and valuation of the company.”

The IMF has approved an agreement to revive a massive loan programme for Pakistan, the finance minister said Monday, as the country grapples with devastating monsoon flooding that has worsened an economic crisis.

“We should now be getting the 7th & 8th tranche of $1.17 billion,” Miftah Ismail said on Twitter.

The original $6-billion bailout package with the International Monetary Fund was signed by former prime minister Imran Khan in 2019, but repeatedly stalled when his government reneged on agreed reforms on subsidies and failed to significantly improve tax collection.

The new agreement follows months of deeply unpopular belt-tightening by the government of Shehbaz Sharif, who took power in April and has effectively eliminated fuel subsidies and introduced new measures to broaden the tax base.

The government reached an agreement with IMF staff last month to restart the suspended aid package.

The board of the Washington-based crisis lender also was considering a request to extend the package through June 2023 and add about $1 billion to the total.

The IMF had not yet issued a statement on its decision.

The latest disbursement would bring the total received under the Extended Fund Facility from the IMF to just over $4 billion.

– Desperate for aid –

Pakistan is desperate for international support for its economy, which suffers from poor revenue collection and dwindling foreign reserves to pay its crippling debt.

The new government has slashed a raft of subsidies to meet the demands of global financial institutions but risks the wrath of an electorate already struggling under the weight of double-digit inflation.

A new coalition government — which came to power after Khan was ousted by a parliamentary no-confidence vote — has said it will make the tough decisions needed to turn the economy around.

Successive administrations blame their predecessors for the country’s economic woes, but analysts say the malaise stems from decades of poor management and a failure to tackle endemic corruption and widespread tax avoidance.

In a bid to secure the IMF loan, Sharif has imposed three fuel price hikes — cumulatively totalling 50 percent — and raised the cost of electricity to effectively end the subsidies introduced by Khan.

Ismail told the national assembly last month that the steps were “essential” to preserve the country from default.

“We knew it would damage our political reputation, but still we did it,” he said. 

The latest budget has earmarked 3.95 trillion rupees ($18.8 billion) just to service the country’s whopping debt of $128 billion.

Under the deal agreed with the IMF last month, policy priorities included steadfast implementation of the budget to reduce the need to borrow.

Pakistan also agreed to continue power sector reforms, introduce a proactive monetary policy to tackle inflation, strengthen governance, combat corruption and improve the social security net.

But the IMF warned that authorities should stand ready to take any additional measures necessary.

Stocks slid further Monday and the dollar rallied as traders continued to digest Federal Reserve chief Jerome Powell’s warning of more interest rate hikes to fight inflation.

Wall Street’s main indices opened lower, extending losses of between three and four percent on Friday immediately following Powell’s speech where he clearly stated his priority of bringing inflation down from four-decade highs, even at the expense of economic growth.

“Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance,” he told the Jackson Hole gathering of global monetary policymakers.

The comments dealt a blow to markets, which had in recent weeks enjoyed a bounce from June lows as weak economic data and a slowdown in price rises fanned hopes the Fed would temper its interest rate hike drive and bring down rates next year.

Powell “didn’t splash some cold water on the stock market’s face,” said market analyst Patrick O’Hare at Briefing.com. 

“He dumped a whole bucket of ice water on it and the stock market wasn’t ready for the ice bucket challenge.”

Yanxi Tan of Malayan Banking said: “The game of assessing the Fed outlook has shifted from guessing how high the peak rate might be to also understanding how long it might stay there for.” 

Analysts said the chances of a third successive 75 basis-point increase next month had risen, with US Treasury yields — a gauge of future interest rates — surging. That in turn helped propel the dollar higher.

The dollar closed in on the 140 yen mark not seen since 1998, but an easing in European gas prices helped the euro limit its losses.

“Powell sent the dollar rallying… on the back of a solid divergence between the decidedly hawkish Fed, and more hawkish, but increasingly worried other central banks,” said Swissquote Bank analyst Ipek Ozkardeskaya.  

“Other major central banks are also hawkish, but they are less aggressive than the Fed,” she added.

Asian stocks ended sharply lower save for Shanghai, which eked out a small gain.

In European trading, both Paris and Frankfurt ended the day in the red.

London was closed for a public holiday.

European gas prices retreated from record highs set last week after Germany said Sunday it is replenishing its gas stocks more quickly than expected, and should meet an October target early despite drastic Russian supply cuts.

An emergency meeting of EU energy ministers was called for next week, with European Commission chief Ursula von der Leyen saying the bloc is working on an “emergency intervention” to rein in electricity prices sent soaring by Russia’s war in Ukraine as well as a structural reform of the market.

Oil prices jumped despite talk that surging interest rates could choke off the economic recovery as traders focused on supply concerns.

“Oil rallied on rising risks of a potential civil war that could put Libyan output at risk and over growing expectations that OPEC+ is positioning themselves to cut production,” said OANDA analyst Edward Moya. 

The commodity has fallen in recent weeks on bets that demand will be hit by an expected drop in economic output, particularly from China as it continues to battle a Covid-19 outbreak with lockdowns.

 

– Key figures at around 1530 GMT –

New York – Dow: DOWN 0.7 percent at 32,064.39 points 

EURO STOXX 50: DOWN 1.0 percent at 3,569.51

Frankfurt – DAX: DOWN 0.6 percent at 12,892.99 (close)

Paris – CAC 40: DOWN 0.8 percent at 6,222.28 (close)

London – FTSE 100: Closed for public holiday

Tokyo – Nikkei 225: DOWN 2.7 percent at 27,878.96 (close)

Hong Kong – Hang Seng Index: DOWN 0.7 percent at 20,023.22 (close)

Shanghai – Composite: UP 0.1 percent at 3,240.73 (close)

Euro/dollar: UP at $0.9989 from $0.9964 Friday

Pound/dollar: DOWN at $1.1704 from $1.1743

Euro/pound: UP at 85.34 pence from 84.85 

Dollar/yen: UP at 138.67 yen from 137.38

West Texas Intermediate: UP 3.2 percent at $95.99 per barrel

Brent North Sea crude: UP 3.0 percent at $103.98

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The European Union is preparing to take emergency action to reform the electricity market and get a grip on energy prices that have soared since Russia invaded Ukraine, senior officials said Monday.

Energy ministers from EU member states will hold urgent talks in Brussels on September 9.

High gas prices have been followed by disruptions in the nuclear and hydroelectric sectors amid a heatwave blamed on climate change — threatening businesses and households with massive bills.

“The skyrocketing electricity prices are now exposing the limitations of our current electricity market design,” EU Commission president Ursula von der Leyen told a forum in Bled, Slovenia.

“It was developed for different circumstances. That’s why we are now working on an emergency intervention and a structural reform of the electricity market.”

Separately, Germany’s Chancellor Olaf Scholz also called for action.

Speaking at a press conference after talks with Czech Prime Minister Petr Fiala, Scholz said that “we are in complete agreement that rapid action has to be taken” to reform the market.

“My impression is, I think our common impression is, that this will now succeed more quickly across Europe than under other framework conditions,” he said.

The Czech Republic holds the rotating presidency of the European Union, and it was Czech Industry and Trade Minister Jozef Sikela who announced next week’s emergency talks.

“We must fix the energy market. Solution on the EU level is by far the best we have,” he said.

The European Commission has yet to publish a detailed plan for market reform, but some member states have been pushing for a temporary cap on wholesale gas prices.

EU officials are also considering measures to split electricity price setting from the gas price and take into account other energy sources.

Some member states have launched price reduction measures of their own, but Brussels believes EU capitals working together will be more effective.

“The main thing we have to do is to separate electricity prices from power prices and hence prevent Putin from dictating electricity prices to Europe by tampering with gas supplies,” Sikela said.

“Therefore one of the proposals we are coming up with is putting a ceiling on prices of gas used in the production of electricity. This will be a functional and less costly solution that should reduce prices.”

The move comes as the 27-nation bloc is trying to shed dependence on supplies of Russian oil and gas following Moscow’s assault on Ukraine.

Reduced supplies and anxiety over the future have sparked rocket growth in energy prices across Europe.

– Private pools –

On Friday, Germany and France reported record electricity prices, with the German year-ahead contract jumping to 995 euros ($995) per megawatt hours while the French equivalent soared past 1,100 euros — compared to 85 euros in both countries last year.

The European Commission is planning to cut EU dependency on Russian gas by two-thirds this year and end its reliance on Russian supplies of the fuel before 2030.

The EU has targeted the Russian energy sector in its sanctions, banning coal imports from Russia.

Its plan to cut gas consumption across the bloc by 15 percent to cope with the energy price crisis came into effect earlier this month.

The aim is for the EU to be able to bolster its reserves of gas in time for what is likely to be a very tough winter.

Some EU nations are launching power saving drives, including measures to cut back on air conditioning, switch off illuminated advertising screens at night and banning the heating of private swimming pools.

Germany said on Sunday is was replenishing its gas stocks more quickly than expected and should meet an October target early.

Some member countries, however, have had carve-outs from strictly following the rules as they are too dependent on Russian supplies.

French-Israeli diamond magnate Beny Steinmetz was back in court in Switzerland on Monday seeking to clear his name by appealing against his conviction in one of the mining sector’s biggest-ever corruption cases.

The 66-year-old businessman was found guilty in January 2021 of setting up a complex financial web to pay bribes to ensure his company could obtain permits in Guinea’s southeastern Simandou region, which is estimated to contain the world’s biggest untapped deposits of iron ore.

He was sentenced by a Geneva court in 2021 to five years in prison and also ordered to pay 50 million Swiss francs ($52 million) in compensation.

Wearing a dark blue suit and flanked by a new defence team, Steinmetz arrived at the courthouse as a free man.

He has not begun serving his sentence, since he was issued a legal free-passage guarantee to attend the first trial. 

He has been issued another for his appeal, which is set to last until September 7 with the verdict due at a later date.

Steinmetz, who maintained his innocence throughout the original trial, changed his lawyers and beefed up his communications team for the appeal.

– ‘Bought’? –

His new lead lawyer Daniel Kinzer presented an impassioned opening statement, detailing a long line of alleged missteps, errors and misunderstandings in the trial, including accusing the prosecution of relying on coerced and even “bought” testimonies to build its case.

“I am confident the appeals court can be convinced,” he told AFP before the hearings. “We expect that the tribunal recognises that Beny Steinmetz did not bribe anyone.”

During the original trial, Swiss prosecutors convinced the court that Steinmetz and two partners had bribed a wife of the then Guinean president Lansana Conte and others in order to win lucrative mining rights in Simandou.

The prosecutors said Steinmetz obtained the rights shortly before Conte died in 2008 after about $10 million was paid in bribes over a number of years.

Conte’s military dictatorship ordered global mining giant Rio Tinto to relinquish two concessions that were subsequently obtained by Beny Steinmetz Group Resources (BSGR) against an investment of  $160 million.

Just 18 months later, BSGR sold 51 percent of its stake in the concession to Brazilian mining giant Vale for $2.5 billion.

But in 2013, Guinea’s first democratically-elected president Alpha Conde launched a review of permits allotted under Conte and stripped the VBG consortium formed by BSGR and Vale of its permit.

The defence insists there was nothing inappropriate about how BSGR obtained the permits, maintaining that Rio Tinto lost half the concessions for failing to develop them.

They were then “awarded to BSGR on the basis of a solid and convincing business case, with no need to bribe a public official,” Kinzer told AFP.

– ‘Pact of corruption’ –

To secure the initial deal, prosecutors claimed Steinmetz and representatives in Guinea entered a “pact of corruption” with Conte and his fourth wife Mamadie Toure.

Toure, who has admitted to having received payments, has protected status in the United States as a state witness.

Kinzer told the court that much of the prosecutor’s case had relied on her testimony, despite no insight into the “opaque” US deal, and asked that her testimony be deemed inadmissible.

His co-counsel Christian Luscher meanwhile highlighted concerns around the handling of the case by Claudio Mascotto, the prosecutor initially in charge of the investigation, suggesting he had struck a deal with another witness in the case, and asking that he be questioned in court.

He also pointed out that Mascotto had once shared a law practice with the court president, Catherine Gavin, warning of “a problem of appearances”.

Lead prosecutor Yves Bertossa responded angrily to such arguments, accusing the defence of attacking anyone involved in the case.

“They will stop at nothing to try to find a procedural flaw,” he told the court, insisting the case rested on a massive amount of evidence beyond Toure’s testimony, slamming allegations of purchased testimony as laughable.

“The only ones who tried to buy Mamadie Toure,” he insisted, “were Beny Steinmetz and Frederic Cilins,” one of two alleged co-conspirators who are also appealing against previous convictions.