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Chinese tycoon waldorf astoria hotel 18 years prison $10 billion fraud

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HONG KONG — Wu Xiaohui, the Chinese tycoon who rose to international prominence to buy the Waldorf Astoria Hotel, was sentenced to 18 years in prison on Thursday after having pleaded guilty to defrauding investors.

Mr. Wu was convicted by a court in Shanghai of using the company he founded, Anbang Insurance Group, to cheat investors out of more than $10 billion, in one of China’s biggest cases of financial crime.

Facing a potential life sentence, Mr. Wu had pleaded guilty to the charges and asked the court to consider a lighter sentence.

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The Shanghai No. 1 Intermediate People’s Court handed down its sentence as 50 people, including members of Mr. Wu’s family, sat in the courtroom, according to a statement from the court.

Mr. Wu was thrust into the spotlight in February when the government seized Anbang, in part of a crackdown on companies that have acquired too much debt by bingeing on overseas assets.

He initially contested the charges in March during his first and only appearance in the court, which included allegations that he had instructed his employees to flee overseas and change their contact information when the government began investigating the company last year.

“I repent deeply, I know and regret my crimes,” Mr. Wu said then in a televised statement from the court.

Anbang went on an international buying spree in recent years, most notably acquiring the Waldorf Astoria Hotel in Manhattan for $2 billion.

When the government seized Anbang earlier this year, it shook investors as far as Vancouver, where the company owns a retirement home, and Amsterdam, where it owns an insurance company.

Chinese prosecutors accused Mr. Wu of a convoluted scheme in which he hid his control in Anbang through of a web of companies. According to the prosecutors, Mr. Wu instructed employees to falsify financial statements and marketing information. In this way, the government said, Mr. Wu was able to skirt regulations and raise money from the public.

The court said in a statement that it had seized Mr. Wu’s bank accounts, real estate and equity.

In a response on Thursday, Anbang said that Mr. Wu had been removed from his duties as chairman of the company, adding that its operations are under government supervision.

“Anbang has sufficient cash flow to fulfill its commitments to all customers and ensure that the legitimate rights of policyholders are effectively protected,” the company said in a statement.

Mr. Wu’s lawyer, Zhai Jian, declined to comment.

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Systemic change and climate action are key to achieving green goals

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From geopolitical tensions to the coronavirus pandemic and disputes over trade, modern life can often feel bewildering, insecure and disjointed.

One area where there does seem to be some renewed sense of unity is the environment. Just last week, U.S. President Joe Biden signed an executive order to re-join the Paris Agreement on climate change, reversing the Trump administration’s decision to pull out of the accord. 

A landmark deal reached at the COP21 summit in December 2015, the Paris Agreement aims to keep global warming “well below” 2 degrees Celsius (35.6 degrees Fahrenheit) above pre-industrial levels, and “pursue efforts” to limit the temperature rise to 1.5 degrees Celsius.

In a statement reacting to Biden’s decision, the European Commission stressed the need for collaboration and consensus going forward. “The climate crisis is the defining challenge of our time,” the EU’s executive arm said, “and it can only be tackled by combining all our forces.”

The role of finance

Politicians are not the only ones focusing on the environment. In a panel discussion moderated by CNBC’s Steve Sedgwick, the financial sector’s role in efforts to mitigate the effects of climate change was touched upon in some detail. 

“In the finance industry, compared to where we were in 2015, there is just this undeniable and accelerating momentum,” Rhian-Mari Thomas, chief executive of the Green Finance Institute, said.

“We’re seeing huge inflows into … environmental, social and governance aligned funds,” she went on to state, going on to explain that the scope of change taking place was widespread.

“As well as the interesting innovation that we’re seeing and the pledges and commitments of individual finance firms and providers, what we’re really seeing is change at the systemic level,” she said.

According to the trade body for U.K. investment managers, the Investment Association (IA), the period between January and October 2020 saw £7.8 billion ($10.72 billion) placed into what it described as “responsible investment funds.”

This, the IA said, accounted for 47.5% of all net money placed into funds and was four times higher compared to the same period in 2019.

In October 2020 alone, more than £1 billion was placed into these funds, a figure the IA described as the “highest monthly total on record.” Still, work needs to be done: the IA said responsible investment funds’ “overall share of industry funds under management” amounted to just 3.0% at the end of October.

Reinforcing her point of systemic change, Thomas referred to the Network of Central Banks and Supervisors for Greening the Financial System, or NGFS. Launched in 2017, the NGFS is made up of central banks and supervisors.

Breaking things down, it consists of 83 members and 13 observers. The latter includes institutions such as the International Monetary Fund and OECD, while members range from the Bank of England and European Central Bank to the U.S. Federal Reserve.

The presence of such big hitters is not lost on Thomas. “All the world’s systemically important banks and many other financial institutions are now supervised by members of the NGFS that are committed to ensuring that the financial services system is aligned with the goals of the Paris Agreement,” she said.

The challenge facing business

While the big picture may be changing thanks to global initiatives and collaborations, the issue of how individual companies tackle issues surrounding sustainability and the environment is also important.

Another member of CNBC’s panel, Covestro CEO Markus Steilemann, sought to highlight the challenge facing his firm, a major player in polymers.

“We have two transitions to master,” he said. “Number one is our massive energy intake needs to become climate neutral, carbon dioxide emission neutral,” he added.

“And secondly, we have to master the raw material transition, so, going completely away from raw materials that come from coal, oil and gas towards renewable sources.”

Steilemann also highlighted the importance of pursuing a circular economy rather than a linear one, an idea that’s started to gain more and more traction in recent years. 

“The materials we put out there do not need to end up — and must not end up — in landfill, and must not end up in the oceans … they must be recycled,” Steilemann said.

“Secondly, we need to make sure that also our feedstock we are using is not coming from a linear business model and is not extracted from the ground.”

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EU suggests AstraZeneca diverts Covid-19 vaccines from UK

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An AstraZeneca vaccine production line.

Bloomberg | Bloomberg | Getty Images

The European Union has suggested that drugmaker AstraZeneca divert supplies of its coronavirus vaccine from the U.K. to mainland Europe, as a battle over production delays and supply continues.

It comes after AstraZeneca told the EU last week that it would initially deliver far fewer doses of its Covid vaccine to the 27-member bloc than originally thought.

The EU demanded on Wednesday that the pharmaceutical giant fulfil its agreement to supply it with coronavirus vaccines, by whatever means necessary.

Health Commissioner Stella Kyriakides said talks with the company, which continued Wednesday, had been “constructive.” But she also tweeted that “contractual obligations must be met, vaccines must be delivered to EU citizens.”

She said in a statement that the EU had rejected the “logic of first come first served,” after AstraZeneca’s CEO blamed supply delays on teething issues at its European manufacturing sites, and said similar issues in the U.K. had been ironed out because it had ordered its vaccine dose three months earlier than the EU.

In a press briefing, Kyriakides said there was “no hierarchy” in the production plants named in its advance purchase agreement with AstraZeneca, and no stipulation on which ones would or wouldn’t supply the EU.

“In the contract there are four factories listed but it does not differentiate between the U.K. and Europe. The U.K. factories are part of our advance purchase agreement and this is why they have to deliver,” she said. There was no clause in the contract stating that the drugmaker would prioritize the U.K., she added.

Battle brewing

It marks the latest development in the very public argument between the EU and AstraZeneca, as the latter confronts problems at two of its European plants.

The British-Swedish company’s CEO Pascal Soriot stoked tensions further on Tuesday when he said in an interview with Italy’s La Repubblica newspaper that its agreement with the EU was a “best effort” one and not a “contractual commitment.”

The EU hit back, demanding that the drugmaker present detailed plans over its delivery schedule. One official explicitly asked AstraZeneca to divert doses made in the U.K. to the EU, although the company did not respond to this issue, according to a Reuters report.

In the Tuesday interview Soriot said: “The U.K. government said the supply coming out of the U.K. supply chain would go to the U.K. first. Basically, that’s how it is. In the EU agreement it is mentioned that the manufacturing sites in the U.K. were an option for Europe, but only later.”

British Prime Minister Boris Johnson did not comment directly on the matter Wednesday, but said: “We’re very confident in our supplies, we’re very confident in our contracts, and we’re going ahead on that basis.”

Vaccination drives

The EU is struggling to get its vaccination drive into gear as it lacks supplies. It was first dealt a blow by vaccine maker Pfizer-BioNTech, which announced that it had to temporarily lower production in order to upgrade its manufacturing capacity in Belgium. This was then followed by AstraZeneca last Friday reducing its delivery estimates for the region.

One unnamed senior EU official told Reuters that the bloc expected about 80 million doses by March, but had been told it would receive only 31 million doses instead. The company has not confirmed the quantities involved.

The European Medicines Agency is expected to approve the AstraZeneca vaccine for use on Friday.

The U.K. ordered 100 million doses of the AstraZeneca vaccine last May, making it the first country to do so. It is heavily reliant on the vaccine for its immunization drive, which has sprinted ahead of those in continental Europe, having begun in early December. The EU began its rollout on Dec. 27; it originally ordered 300 million doses of the AstraZeneca vaccine in August.

So far, the U.K. has vaccinated over 7.1 million people with a first vaccine dose, and almost half a million have received their second dose, meaning it has carried out more immunizations than German, France, Italy and Spain combined, according to Our World In Data figures.

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10,000 stores set to close in 2021, Covid keeps pummeling retailers

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A man passes by a Banana Republic store, which is going out of business, in New York, January 10, 2021.

Scott Mlyn | CNBC

One retail research and advisory group is forecasting there could be as many as 10,000 store closures announced by retailers in the United States this year, which would set a new record, as the Covid pandemic continues to take a toll on the industry and companies rethink how many locations they’re able to keep open.

10,000 closures would represent a 14% uptick from 2020 levels, Coresight Research said in a report released Thursday. Coresight is also forecasting retailers will announce 4,000 store openings in 2021, driven by growth from grocery discounters and dollar store chains.

Last year, in the thick of the pandemic, Coresight predicted in the June that there were going to be as many as 25,000 closures announced by retailers in 2020. But it ended up tracking just 8,741, along with 3,304 openings. That was a deceleration from the 9,832 closures it tracked in 2019 — the highest number Coresight has seen as long as it has been following retail closings and openings.

The reason for the large gap between the final tally and its initial prediction, Coresight said, was because some companies have been “holding out for an upturn in store-based sales.” Many retailers have also been able to buy more time by reducing their rents and striking deals with their landlords to be able to stay open a little longer, it said.

“In 2021, the rollout of [Covid] vaccination programs should result in a partial recovery in store-based sales,” Coresight CEO and Founder Deborah Weinswig said. “However, these programs may take many months to reach a wide base of consumers.”

Some companies won’t be able to wait much longer, Weinswig said, especially those that didn’t have the holiday season they were hoping for. Consumers are going to continue to spend more of their money online, which is another reason for the heightened store closure forecast this year, she said.

As of Jan. 22, Coresight said retailers in the U.S. have already announced 1,678 closures, which include ones by Bed Bath & Beyond, Macy’s and J.C. Penney.

Weinswig also pointed to a pattern that took shape in the retail industry after the Great Recession, which could repeat itself this year.

“Although retail was significantly impacted in 2008 and 2009, the repercussions in terms of retail bankruptcies peaked in 2010,” she said. “We could see history repeat itself in 2021, resulting in greater numbers of store closures this year than we saw in 2020.”

Coresight said apparel retailers, including Ascena Retail Group and The Children’s Place, accounted for 36% of all store closures in 2020, tallying more than 3,000. The apparel category will likely make up a substantial portion of closures this year, too, it said.

A study released earlier this week by First Insight found 40% of consumers plan to shop for apparel in brick-and-mortar stores either the same amount or less after being vaccinated, implying there won’t be an immediate rush back to the mall.

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