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Ex-employee says company lost millions

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SAN JOSE, Calif. — In public, Elizabeth Holmes was dubbed the next Steve Jobs on the cover of Inc. magazine in 2015, but in private the blood-testing company she founded, Theranos, was hemorrhaging hundreds of millions of dollars.

On Tuesday, the government’s first witness at Holmes’ fraud trial, longtime Theranos financial controller San Ho Spivey, who also goes by Danise Yam, testified in detail about the actual state of the company’s financial condition.

According to Yam, Theranos had net losses of $16.2 million in 2010, $27.2 million in 2011, $57 million in 2012 and $92 million in 2013. Yam testified the company made no revenue in 2012 and 2013, adding that the company was burning through $2 million per week in 2013 and “cash started to get a bit tight.”

Yam testified that by 2015 Theranos had accumulated losses of $585 million, according to tax documents. Despite that, prosecutors pointed to a document given to investors that forecasted revenue for 2014 as $140 million and revenue for 2015 as $990 million. Yam said she did not prepare this document.

“Did you ever provide financial projections to investors?” asked Robert Leach, an assistant U.S. attorney. “No,” replied Yam.

During cross-examination, defense attorneys pointed to a document in which Theranos was valued at either $9.5 billion or $1.69 billion depending on the methodology. Lance Wade, an attorney for Holmes, quizzed Spivey on other companies that suffered big losses during the 2009 financial crisis.

Yam testified that Holmes never sold a share she owned nor did she process any stock sale.

Holmes is facing a dozen counts of wire fraud and conspiracy to commit wire fraud in connection with misleading investors and patients about Theranos’ technology. She has pled not guilty. Her long-awaited criminal fraud trial kicked off last week in San Jose. In opening statements, Holmes’ defense team portrayed her as an ambitious young woman who truly wanted to revolutionize health care.

Holmes had told several investors that Theranos’ technology was deployed by the U.S. Department of Defense in the battlefield, in Afghanistan, and on medevac helicopters. During her four hours on the stand, Yam testified that Theranos actually did not have any revenue-generating contracts with the Defense Department or the military.

The government’s next witness, Erika Cheung, quit her job as a lab associate after seven months and became a whistleblower, giving a TED talk and being interviewed for numerous news stories.

Cheung testified that she was “star struck” by Holmes during her job interview.

“She had a charisma to her, she was very articulate,” Cheung said. “She had a strong sense of conviction to her mission.”

Cheung told the court that she was excited to work at Theranos based on “very little information” she was given. “I asked a bunch of questions about the company, and [Holmes] said you’ll find out when you start working here,” Cheung said.

Theranos was once valued at $9 billion.

“At the time she was one of the few female entrepreneurs to get the unicorn status,” Cheung recalled, adding that Holmes “could potentially set an example for other women to get excited about science and engineering.”

Cheung testified that her orientation was conducted by Holmes’ brother, Christian Holmes, who instructed her not to add Theranos to her Linkedin profile. Cheung said that while she was at Theranos the Edison, which was used for processing blood samples, only ran 12 tests and that all other tests were done on third-party machines.

“The Edison analyzer could only run one type of test for one patient at a given time,” Cheung said.

Holmes arrived at the federal courthouse holding hands with her mother, Noel Holmes. A spectator outside clapped in support and grew emotional as Holmes entered the courthouse, yelling, “Putting everything on one person is ridiculous.”

Earlier in the day the judge excused one juror for financial hardship, moving an alternate juror on to the main bench. It changed the jury makeup to eight men and four women.

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Many German voters undecided who to vote for in election

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Teenage girls draped in German flags attend an election campaign rally of the right-wing Alternative for Germany (AfD) in May 28, 2021 in Haldensleben, Germany.

Sean Gallup | Getty Images News | Getty Images

The outcome of Germany’s federal election on Sunday looks impossible to predict, with one recent survey indicating a that significant number of Germans have not yet decided who to vote for.

A survey by the Allensbach Institute last week found that 40% of 1,259 people were undecided on how they will vote. The survey, conducted for the Frankfurter Allgemeine Zeitung newspaper, also found that the majority were not drawn to any of the candidates standing for chancellor, nor their political parties.

It comes as the latest opinion polls indicate a very close race.

Politico’s poll of polls indicates that the SPD will get 25% of the vote, the CDU/CSU will receive 21% of the vote and the Green Party is expected to get 15%. Then comes the pro-business, Free Democratic Party (FDP) and the right-wing Alternative for Germany (AfD) party, both with 11%. Far-left Die Linke is seen with 7% of the vote.

The dilemma facing many voters comes as Chancellor Angela Merkel, who has been in office for 16 years, prepares to leave office.

In previous elections her conservative bloc of the Christian Democratic Union and Christian Social Union (CDU/CSU) has won with relative ease, but this is looking increasingly unlikely with Merkel’s elected “successor,” Armin Laschet, failing to appeal voters in the same way.

“We have no incumbent really,” Thomas Gschwend, a professor at the Department of Political Science at the University of Mannheim, told CNBC Thursday.

“The CDU tried to stage their campaign that Laschet was a natural successor of Merkel, but people just didn’t buy this story because he’s not Merkel, he’s not like her. Many people who preferred Merkel were not necessarily supporters of her party ,so if you replace the leader of the party, many people might think: ‘I might not vote for this party anymore’.”

These voters, Gschwend said, are now “up for grabs.”

International challenges

Merkel’s departure could be accelerating a decline in support for the CDU/CSU seen in recent elections, showing that Germans, and particularly younger voters, are eager for change.

This has been borne out in voter polls this year, with the Green Party leading the polls at one point in April. It was then overtaken by the left-leaning Social Democratic Party (SPD), which has maintained its lead in recent weeks, ahead of the CDU/CSU.

SPD politician and leader of the opposition in Schleswig-Holstein region, Ralf Stegner, told CNBC on Thursday that German voters wanted a new chancellor that could fill Merkel’s shoes.

“Most people want to see somebody at the top of the government who’s able to do the job and also to hold the country together. These are difficult times and there are a lot of things that need to be done in terms of international crises and the coronavirus issue and in terms of a lot of challenges we have in Europe and in our country.”

“Voters in Germany measure their chancellor candidates on how they could deal with the international challenges and how they would be on the stage with the American or Russian presidents or Chinese leaders,” he added.

This factor, Stegner noted, could give the SPD’s candidate Olaf Scholz, who is used to top-tier politics given his role as German finance minister and vice chancellor, the biggest advantage over his rivals — the main contenders being the CDU/CSU’s Armin Laschet and Annalena Baerbock from the Green Party.

Coalition confusion

A coalition government is extremely likely given the expected close vote, with pundits now guessing what formation this might take.

Eurasia Group’s Europe Director Naz Masraff said Wednesday that the chance of a chancellery led by the SPD’s candidate Olaf Scholz now had a 60% likelihood, compared to a 40% chance for the center-right CDU/CSU’s Armin Laschet.

The political risk consultancy put the chances of an SPD-led so-called “traffic light” coalition (with the Greens and the Free Democrats (FDP)) — as the most likely post-election scenario, giving this a 45% likelihood. It noted that the chances of a CDU/CSU-led “Jamaica” government (with the Greens and FDP) had fallen to 30%.

Despite Merkel trying to revive Laschet’s election chances, the CDU/CSU alliance could find itself out in the cold when coalition negotiations take place. That would be a shock for the alliance, which has dominated German politics since 1949.

‘Watershed moment’

The 2021 vote is unpredictable for a variety of reasons, including the high number of mail-in votes expected this year.  

Factors to watch on election day will be whether the recent slight improvement in the polls for CDU/CSU turns into some last-minute momentum on election day, Teneo Intelligence’s Deputy Director of Research Carsten Nickel said, as well as how the Greens fare.

Still, he told CNBC on Thursday that it’s very difficult to guess which party will gain from undecided voters. 

“We’ve had polls suggesting that up to 40% of voters still haven’t made up their minds so that ultimately serves as a reminder of this watershed moment in German politics,” he told CNBC’s Street Signs. “After 16 years of stability, continuity, and utterly predictable election campaigns, all of that certainty has gone and we’re looking at a tight race.”

The formation of a coalition is expected to be a long and drawn-out affair given the divergences between the parties on matters such as fiscal policy and climate targets.

It has already proved contentious during the election campaign.

Laschet, for example, has said that Scholz and the SPD could represent a security risk if they allow the far-left Die Linke party, which wants to scrap NATO, into a coalition government. For his part, Scholz has said he is open to negotiations with any party, except for the right-wing AfD, as long as there is a strong commitment to NATO.

Speaking to CNBC on Wednesday, Scholz reiterated his commitment to the military alliance, commenting that “as the minister of finance for Germany we increased the budget for our military spending much more than all the times before. It was an increase of 37% and this was something that I did deeply from my heart because we need a very strong defence infrastructure in Germany together with our partners in the EU and NATO.”

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Narendra Modi meets Kamala Harris, ahead of talks with Joe Biden

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US Vice President Kamala Harris speaks alongside Indian Prime Minister Narendra Modi prior to talks at the Vice Presidents Ceremonial Office in the Eisenhower Executive Office Building next to the White House, in Washington, DC, on September 23, 2021.

Nicholas Kamm | AFP | Getty Images

Indian Prime Minister Narendra Modi met with U.S. Vice President Kamala Harris on Thursday as part of a three-day official visit stateside.

The two leaders exchanged views on a number of issues including the situation in Afghanistan, the coronavirus pandemic, tackling climate change as well as the U.S. and India’s commitment toward the Indo-Pacific region, according to the Indian foreign ministry.

They also discussed potential cooperation in areas such as space, technology and health care.

The visit come a day before Modi’s first face-to-face meeting with President Joe Biden in Washington.

Speaking in Hindi, Modi said at a joint briefing that the U.S. and India are natural partners that share similar values and geopolitical interests — and that cooperation between the two countries have continued to increase.

“India, of course, is a very important partner to the United States,” Harris added. “Throughout our history, our nations have worked together, have stood together, to make our world a safer and stronger world.”

“The United States, like India, feels very strongly about the pride of being a member of the Indo-Pacific, but also the fragility and the importance and strength as well, of those relationships, including maintaining a free and open Indo-Pacific,” she said.

While the exact geographical definition of the Indo-Pacific vary by countries and administrations, broadly it refers to the interconnected area between the Indian and Pacific oceans, joined together by the straits of Malacca in the heart of Southeast Asia.

U.S. pivot to Asia

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Afghanistan’s health care system is ‘on the brink of collapse’: WHO

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In this photo taken on March 20, 2019, an Afghan health worker administers a polio vaccine to a child in the Kandahar province.

Javed Tanveer | AFP | Getty Images

Afghanistan’s health-care system is “on the brink of collapse” as a lack of funding left thousands of health facilities struggling to buy medical supplies and pay their staff, the World Health Organization said Wednesday.

“Unless urgent action is taken, the country faces an imminent humanitarian catastrophe,” WHO Director-General Tedros Adhanom Ghebreyesus and WHO Regional Director for the Eastern Mediterranean Ahmed Al-Mandhari said in a statement following a visit to Kabul, Afghanistan’s capital city.

The Taliban, an ultraconservative militant group, seized power in Afghanistan last month as the U.S. withdrew its military presence in the country. Afghanistan is heavily dependent on international funding, but many donors have suspended aid to the country while the U.S. froze its Afghan financial assets.

WHO said reduced donations to Afghanistan’s largest health project, Sehatmandi, left health facilities without medicines, medical supplies, fuel, and salaries for medical workers.

Sehatmandi is the main source of health care in the country — it operates 2,309 medical facilities across Afghanistan that benefitted over 30 million people in 2020.

“Many of these facilities have now reduced operations or shut down, forcing health providers to make hard decisions on who to save and who to let die,” the statement said, noting that only 17% of the facilities were fully functional.

Covid-19 response

Problems in Afghanistan’s health-care system have affected the country’s response to the ongoing Covid-19 pandemic.

“Nine of 37 COVID-19 hospitals have already closed, and all aspects of the COVID-19 response have dropped, including surveillance, testing, and vaccination,” WHO said.

Covid vaccination rates have “decreased rapidly” in recent weeks, while 1.8 million vaccine doses remained unused, according to the statement.

United Nations Childrens Emergency Fund (UNICEF) members label the shipment containing Astrazeneca Covid-19 coronavirus vaccines donated by the French government after it arrived at the Kabul airport in Kabul on August 8, 2021.

Wakil Kohsar | AFP | Getty Images

“Swift action is needed to use these doses in the coming weeks and work towards reaching the goal of vaccinating at least 20% of the population by the end of the year based on national targets,” said WHO.

Only around 1.1% of the Afghan population has been fully vaccinated, according to latest data compiled by online repository Our World in Data.

Other emergencies

In addition to Covid, Afghanistan faces other health emergencies, said WHO.

The country is one of only two in the world where polio is still prevalent, said the agency. Cases of wild poliovirus cases have fallen to just one this year from 56 in 2020, but efforts to eradicate the disease will suffer due to problems facing the Afghan health system, explained WHO.

Meanwhile, measles outbreaks are spreading in Afghanistan, the agency added.

The United Nations said Wednesday it’s releasing $45 million from the Central Emergency Response Fund to “help prevent Afghanistan’s health-care system from collapse.”

“Allowing Afghanistan’s health-care delivery system to fall apart would be disastrous. People across the country would be denied access to primary health care such as emergency caesarian sections and trauma care,” said Martin Griffiths, UN under-secretary-general for humanitarian affairs and emergency relief coordinator.

Impact on women

Problems in Afghanistan’s health-care system pose a particular risk to women in the country.

With fewer health-care facilities operating and fewer female medical workers reporting to work, female patients are hesitant to seek medical attention, said WHO.

While women in the public health sector have been asked to return to their jobs, many are understandably scared of dealing with Taliban militants, especially now that that there is no governing system in place to offer them any protection.

Samira Hamidi

Humanitarian Campaigner, Amnesty International

Samira Hamidi, Amnesty International’s South Asia campaigner, said that women in the country feel insecure as they don’t trust the Taliban.

“While women in the public health sector have been asked to return to their jobs, many are understandably scared of dealing with Taliban militants, especially now that that there is no governing system in place to offer them any protection,” she told CNBC.

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