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Brazil’s top court rules that ex-president Lula can be jailed

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Brazil’s Supreme Court early on Thursday rejected former president Luiz Inacio Lula da Silva’s plea to avoid prison while he appeals a corruption conviction, in a vote that likely ends his political career and deepens divisions in the country.

The pivotal vote was cast by Justice Rosa Weber against Lula’s request to avoid jail and begin serving his 12-year sentence for accepting bribes. Weber was seen as the only swing vote and her decision sealed Lula’s fate. He may be jailed within a week.

Lula is still Brazil’s most popular politician, despite his conviction and six separate pending corruption trials. He is the front-runner in all opinion polls for the presidential election in October, but his conviction will likely bar him from running.

The decision against Lula is a serious blow to the political survival of Brazil’s first working-class president whose career from a factory shop floor to high office is sinking in the corruption scandals that have rocked the political establishment and especially his Workers Party, which held power from 2003 until mid-2016.

Brazilian society remains deeply divided after Lula’s successor, President Dilma Rousseff, was impeached and removed from office amid a corruption scandal and economic crisis.

Lula’s conviction was upheld on a first appeal. Under Brazilian electoral law, a candidate is forbidden from running for elected office for eight years after being found guilty of a crime. Some exemptions have been made in the past, and the ultimate decision in Lula’s case would be made by the top electoral court if and when Lula officially files to be a candidate.

Lower court judges, the country’s top prosecutor and business groups urged the court to abide by its own 2016 ruling that defendants can be jailed if a conviction is upheld on a first appeal, as Lula’s was earlier this year.

Before that ruling, appeals in Brazil’s complex and badly backlogged legal system could stretched out for several years, guaranteeing impunity for those rich enough to afford lawyers who could launch countless technical appeals.

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SoftBank-backed Grab agrees to deal to go public in world’s largest SPAC merger

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Southeast Asia’s ride-hailing giant Grab announced Tuesday that it’s set to go public through a SPAC merger with Altimeter Growth Corp., in a deal that values the company at $39.6 billion — the largest blank-check merger to date.

Grab says it intends to list on the Nasdaq under ticker symbol “GRAB” following the deal’s completion.

SPACs, or special purpose acquisition companies, are shell companies or blank-check companies set up for the purpose of raising capital to acquire private companies. A SPAC listing bypasses Wall Street’s traditional IPO process.

As part of the mega-deal, SoftBank-backed Grab will receive about $4.5 billion in cash, which includes $4 billion in a private investment in public equity (PIPE), managed by BlackRock, Fidelity, T. Rowe Price, Morgan Stanley’s Counterpoint Global fund and Singapore’s sovereign wealth fund Temasek. PIPEs are mechanisms for companies to raise capital from a select group of investors that make the final market debut possible through their financing.

Grab — most recently ranked No. 16 on last year’s CNBC Disruptor 50 list — delivers an array of digital services such as transportation, food delivery, hotel bookings, online banking, mobile payments and insurance services from its app. The Singapore-based company has operations throughout most of Southeast Asia, and serves more than 187 million users in over 350 cities across eight countries.

While SPACs have become a hot investment vehicle on Wall Street, they’re also gaining traction in Asia with six regional-focused SPAC companies that have collectively raised $2.7 billion thus far in 2021.

But in the first quarter this year, capital raised by blank-check firms like Altimeter has already outpaced 2020’s total issuance. It’s not only drawn the attention of the U.S. Securities and Exchange Commission, but also investors who are fearful of a market bubble.

Still, new deals continue to flood the market — more than 100 in March alone, according to SPAC Research.

While Grab’s merger remains record-setting, Boston-based biotech company Ginkgo Bioworks, ranked No. 44 on last year’s CNBC Disruptor 50 list, is said to be considering an equally-massive $20 billion blank-check merger of its own, according to Bloomberg.

Throughout the pandemic, Southeast Asia saw a surge in the use of digital services like e-commerce, food delivery and online payment. As many as 40 million people in six countries across the region — Singapore, Malaysia, Indonesia, the Philippines, Vietnam and Thailand — came online for the first time in 2020, according to a report from Google, Temasek Holdings and Bain & Company.

Still, Covid-19 has forced regional private market decacorns (start-ups valued at more than $10 billion) to cut staff and rethink what will define a dominant “super app” suite of on-demand services. It’s also intensified the competitive landscape in an already saturated market that’s proven difficult to turn a profit.

After a period of intense and expensive competition by Uber to dominate rideshare in many markets, Indonesian rival Gojek sold its Southeast Asia business to Grab three years ago in return for Uber receiving a stake in the company.

In January, Reuters reported that Grab’s net revenue had grown 70% year over year, recovering to pre-pandemic levels with its ride-hailing business breaking even in all operating markets, including its largest, Indonesia.

Grab and Gojek were reportedly close to finalizing a merger of their own late last year.

Reuters reported that Gojek — which is ranked No. 10 on last year’s CNBC Disruptor 50 list — is now in advanced talks with Indonesian e-commerce leader Tokopedia for an $18 billion merger, ahead of a potential dual listing in Jakarta and the U.S.

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Exports can’t help China grow as much this year

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Containers and trucks at the port of Qingdao, China on February 14, 2019.

Reuters

BEIJING — China’s economy was buoyed by strong exports last year, but that boost is waning.

The country’s customs agency said Tuesday that in dollar terms, exports rose 30.6% in March from a year ago, missing expectations for growth of 35.5%.

Looking ahead to the next three months, customs spokesperson Li Kuiwen told reporters that last year’s high base poses challenges for trade in the second quarter. In addition, Li said the resurgence of Covid-19 cases and overseas uncertainties — such as the Suez Canal blockage — mean China still has a long way to go in achieving stable growth in trade.

Chinese authorities would like to shift the economy’s reliance to private consumption for growth, and away from manufacturing of goods for export. But the category still plays a significant role in the overall economy. Last year, Chinese factories were able to resume production far earlier that those in other countries still struggling with the pandemic.

National exports rose 3.6% last year, while the country’s GDP grew 2.3% as the only major economy to expand amid the pandemic. Much of the exports growth last year came from a surge in demand for face masks and other protective gear.

China’s early emergence from the pandemic and stimulus overseas have driven purchases of products made by Chinese factories, noted Larry Hu, chief China economist at Macquarie.

“These two factors (will) both fade away in the rest of this year as other countries reopen and consumers are able to spend more on services,” he said in an email Tuesday. “Therefore, I don’t think the current pace could sustain.”

March’s 30.6% increase in exports comes off a low base. China’s exports fell by 13.6% in the first quarter of last year amid a GDP contraction of 6.8%, according to data accessed through Wind Information.

Nomura analysts expect export growth to decline to 10% to 15% in April, with a more significant slowdown in the second half of the year.

International e-commerce

In another sign of limits to trade’s ability to contribute to national growth, cross-border e-commerce between China and other countries showed muted performance in the first quarter.

The new, internet-driven trend contributed 419.5 billion yuan ($64.5 billion) to trade in the first three months of the year. That marked just under 5% of China’s trade during that time — little changed from the ratio of nearly 5.3% for all of last year.

While the first quarter figures marked 46.5% growth from a subdued base a year ago, the value of cross-border e-commerce trade in the first three months of the year was below last year’s quarterly average of 422.5 billion yuan.

“The proportion of cross-border e-commerce remains low, (showing) the limits it has on contributing to imports and exports and the economy as a whole,” said Bruce Pang, head of macro and strategy research at China Renaissance. That’s according to a CNBC translation of his Chinese-language statement.

He expects Chinese authorities will focus on expanding domestic demand and the local market, as a way to hedge against potential fluctuations in foreign trade.

Imports rose a greater-than-expected 38.1% in March.

China is set to release first-quarter GDP figures on Friday. Data for January and February are typically distorted by the Spring Festival, the country’s biggest holiday of the year.

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Why violent riots have broken out in Northern Ireland

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A man walks past a hijacked bus burning on The Shankill Road as protests continue in Belfast, Northern Ireland, April 7, 2021.

Jason Cairnduff | Reuters

LONDON — Tensions have erupted in Northern Ireland once again, as U.K. and Irish leaders attempt to preserve a long-standing peace deal in the region.

Violence has plagued the streets of Belfast for the past week and dozens of police officers have been injured amid attacks with petrol bombs, vehicles and rocks.

The renewed unrest comes as Ireland and the U.K. marked the 23rd anniversary of the Good Friday Agreement — a historic truce which brought an end to three decades of sectarian violence.

Now, hostilities have come to a head as leaders scramble to agree on new trade rules between the U.K. and European Union without undermining this agreement. The U.K. – which includes Northern Ireland – left the EU in 2020, whereas the Republic of Ireland remains a member of the union.

The British and Irish prime ministers, as well as Northern Irish lawmakers from across the political divide, have condemned the violence and called for calm.

What is happening now?

Recent rioting on the streets of Belfast has seen primarily Protestant pro-British unionist groups clash with mainly Catholic Irish republicans.

The origins of the protests have been attributed in part to resentment among the British loyalist community at the Northern Ireland Protocol – part of the treaty that saw the U.K. leave the EU.

However, the police’s recent decision not to prosecute senior lawmakers from Irish republican party Sinn Fein for breaking Covid rules, in order to attend the funeral of high-profile former Irish Republican Army member Bobby Storey, has also been cited as lighting the tinderbox.

Paramilitary groups and criminal factions have seized upon the discontent to stoke sectarian violence. Many of those arrested have been minors, some as young as 13, and Northern Irish Children’s Commissioner Koulla Yiasouma has said adults persuading young people to commit violence and vandalism is tantamount to “child abuse.”

Former Irish Prime Minister Bertie Ahern told CNBC Monday that the tensions had been simmering since last year, but said peace commitments from politicians on both sides meant it was unlikely to become a long-term issue.

However, he voiced some concern that the “marching season,” a period of regular marches by Protestant groups between April to August, will be more febrile in the wake of the recent clashes.

How has Brexit affected Northern Ireland?

The Good Friday Agreement, a pair of accords signed on April 10, 1998, brought an end to nearly three decades of sectarian conflict in Northern Ireland, known as The Troubles.

The fact that both the U.K. and the Republic of Ireland were members of the EU was also important and enabled a blurring of borders between the two.

However, the U.K.’s departure from the EU has been accused of undermining the Good Friday Agreement. It mandates either an “Irish Sea border,” between Northern Ireland and the rest of the U.K., or a “hard border” separating Northern Ireland from the Republic of Ireland, which would enrage Irish nationalists.

The Northern Ireland Protocol creates the former – a distinction between Northern Ireland and the rest of the U.K. – and it’s angered the unionist community, which identify as British.

Prior to winning election, U.K. Prime Minister Boris Johnson swore that no government of his would agree to any deal with the EU that saw a customs border for trade crossing the Irish Sea. However, he reneged on that promise within weeks of taking office, leaving unionists feeling disenfranchised and betrayed by London.

BELFAST, NORTHERN IRELAND – APRIL 07: Nationalists and Loyalists riot against one another at the Peace Wall interface gates which divide the two communities on April 7, 2021 in Belfast, Northern Ireland.

Charles McQuillan/Getty Images

U.K. and EU leaders are continuing to finalize the application of trade rules under the Northern Ireland Protocol, although the Financial Times reported Sunday that both sides were optimistic on progress.

Despite the fact that it is not yet fully implemented, goods arriving into Northern Ireland were subjected to EU customs checks in January for the first time.

Ahern suggested that British and European lawmakers will reach an agreement on the border issue, which has caused trade and supply chain disruption, but that might not be enough to put the genie back in the bottle in the short term.

“The million dollar question is: ‘Will that by itself remove the perception that is now ingrained into loyalists that there still is a border down the Irish Sea, that there is this mystical line down the Irish Sea?’ That’s the bit that worries me,” Ahern said.

How will peace be restored?

Among the common institutions enshrined within the Good Friday Agreement was the British-Irish Intergovernmental Conference. However, Ahern highlighted that the group has not met since the governments of Johnson and Irish Prime Minister Micheal Martin took office.

“I see both the government (in Ireland) and the government of the U.K. saying we must implement the Good Friday Agreement … But the one mechanism that’s in the Agreement that both of them have responsibility for is the British-Irish Intergovernmental Conference, and they haven’t met since either government has been elected,” he said.

British and European leaders are now scrambling to establish a way of implementing the Protocol that placates both sides of Northern Ireland’s sectarian divide.

BELFAST – Members of the clergy at the peace wall on Lanark Way in Belfast following a Ecumencial service in response to the recent riots and violence in the city

Brian Lawless/PA Images via Getty Images

DBRS Morningstar, a global credit ratings agency, said cooler heads will likely prevail, but the Irish Protocol is unlikely to be fundamentally reworked since it is the only available alternative to a hard border across the island of Ireland.

“A temporary extension of waivers on post-Brexit checks is likely and could buy time. However, permanent solutions will need to be found that reduce or eliminate trade friction along the Irish Sea while not compromising the EU’s single market,” Jason Graffan and Nichola James said in a recent note.

“If these challenges are left unaddressed or if relations are poorly managed, long-standing security risks to the island of Ireland will persist.”

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