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#Amex reputation at stake due to a controversial Russian partner

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By any standards, Russian billionaire Roustam Tariko needs a stiff drink – no doubt a double vodka – if he is to ward off accusations of being a “fraudster”.
For the second time, the man who gave the world “Russian Standard Vodka” is accused of serving up a short measure. Once again, he’s defaulted on Eurobond payments.

And that could lead to his empire losing one of its best customers – American Express.

It was Tariko, 58, who brought the ubiquitous card to all Russians.
At the height of his pomp he told Forbes Magazine:
"I have one of the best vodka brands in the world and one of the biggest retail banks in Russia.
"If I just maintain what I have and grow it, that will already be enough to be proud of myself."
But pride goes before a fall…

Roustam Tariko

Roustam Tariko

Tariko’s problems started when his Russian Standard Bank (RSB) did not cough up $400 million in 2017.
RSB was the collateral on the loan.
Now, international bondholders are planning to claim a 49% stake in the bank.
They called in the Center for Financial Investigations and Forensic Expertise (CFIFE) to go through the RSB books.
Although confidential, the analysis was later shown in documents lodged with the Moscow Arbitration Court.
And it makes for uncomfortable reading for Tariko.
Investigators say the full sum of Tariko’s debts are more than $800 million.
And, they are convinced that cash and assets are being stripped from the bank.
According to the CFIFE these fears are “not unfounded”.
Last month (July) the creditors started an action to collect its collateral.
The Center reports more than $300 million has been withdrawn from the bank.
It added: “Since 2017, the value of the bank's assets has been constantly and sharply decreasing, while the share of illiquid assets, on the contrary, is growing just as rapidly.”
David Nitlispakh, head of the Swiss fund Pala Assets, represents the creditors of Russian Standard Ltd.
Pala Assets is a Switzerland-based investment company focusing on emerging market bonds.
Mr Nitlispakh said: “We have stated for a long time that the shareholder of Russian Standard organized a massive withdrawal of money from the bank.
“We are convinced he should bear full responsibility for unlawful actions to inflict such large damage on the bank.
“We are confident that it will not be possible to break the law with impunity.”

Russian Standard Bank

Russian Standard Bank

Pala Assets is considering filing an application to start a criminal prosecution.
A spokesman said: "What is happening is a clear malicious violation of the law, and we believe that the criminal activity of depriving the bank of its liquid assets must be stopped."
One creditor said: “The shareholder of Russian Standard Bank has been playing with his bondholders for three years, every time promising repayment of debt and then breaking the promise.
“This is done to squeeze all valuable assets from the bank before it is taken by bondholders as a collateral.
“This scandal can seriously tarnish the reputation of Amex whose exclusive partner in Russia is Tariko.”
Commenting on RSB’s future, Alexey Sanaev, of the Russian brokerage company Finam, told Cards International:
“The bad thing is that if the transactions are what they appear to be, then it would put the reputation of Tariko at significant risk.
“He may be labelled as a fraudster, which is bad.
“What will most likely happen is that the international bondholders will become the primary shareholders of the bank.
“Ultimately, that would help to make sure the bank’s reputation continues to grow in a positive direction. “
And, in a world where reputation is everything, global banking giant American Express finds itself caught up in the financial farrago.
Amex ran a famous advertising campaign in the 70s and 80s with the catchphrase “that’ll do nicely, sir”.
It was aimed at promoting how its credit card was welcomed worldwide and loved by all.
An Amex card carried cache. It was for the aspirational. It appealed to the new entrepreneurial Russian.
Amex and RSB have been close trading partners since the turn of the 2000s.
It was an alliance that saw Amex cards issued in Russia.
But as the worldwide reputation of RSB diminishes, there is a fear Amex may well be looking to distance itself from its partner.
Mr Sanaev said: “Russian Standard Bank was the first – and is still the only – bank to issue American Express cards in Russia.
“When the two companies first collaborated, the market was booming, and consumer spending was growing.
“The bank was a pioneer and one of the greatest beneficiaries of this market.
“I don’t think it is a surprise that American Express chose RSB as its exclusive partner.
“Back then it was the right thing to do, and a good name in the prospective market for Amex to be associated with.
“But the question remains as to whether that is the right thing to do now.
“Amex’s exclusive partner is suffering in terms of its reputation.

“I am not sure if Amex will continue to operate with RSB.
“It isn’t a question of the reputation of Amex in Russia, but the reputation of Amex in America, and globally that may be affected by the activities of its Russian partner.”

Mr Sanaev believes Amex will soon drop the damaged RBS.

He said: “Amex will choose a different partner in Russia, one with a cleaner reputation.
“I think that is an obvious thing to do.
“Amex is no longer gaining from the partnership with Russian Standard Bank – financially and in terms of reputation.”
In the early days Tariko embodied what Amex is all about.

He made his fortune from scratch – unlike many other oligarchs who helped themselves to a considerable slice of the nation’s industrial assets during the 1990s.

After graduating in 1989 with an economics degree from the Moscow Institute of Railway Engineering, he turned his hand to importing luxury items into Russia.

His money was made in chocolates and Italian sparkling wines.

It was a stepping stone to bringing more big-name drink brands to Russians – and then offering vodka to the world.

In the early days Tariko embodied what Amex is all about.
He made his fortune from scratch – unlike many other oligarchs who helped themselves to a considerable slice of the nation’s industrial assets during the 1990s.

"I made a fortune selling vodka to the Russians and now I am making a fortune selling it to the British.”, said Tariko to Forbes magazine.

However, some believe Roustam Tariko is now drinking in the last chance saloon as he fights to keep his business empire and – more importantly – his good name.

EU

Horizon Europe given the go-ahead.

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"The Horizon Europe research, innovation and science programme will deliver economic recovery in Europe. But partnerships between public and private bodies must play a key part in rolling out the policy objectives of Horizon Europe". That is according to Abraham Liukang, the Huawei chief representative to the EU institutions.

Abraham Liukang, the Huawei chief representative to the EU institutions.

Abraham Liukang, the Huawei chief representative to the EU institutions.

Horizon Europe given the go-ahead.

EU Governments this week approved the legal texts that will give the formal go ahead to the new Horizon Europe programme. Negotiations will now shortly commence with the European Parliament to iron out any differences that exist between MEPS and EU governments. The bottom line is this:- legislators and key stakeholder groups alike are working towards ensuring that the Horizon Europe programme can and will commence in January 2021.

 

Partnerships – central element of Horizon Europe.

Partnerships between public and private bodies will be a key element of Horizon Europe. This is particularly the case when it comes to involving the ICT sector in Horizon Europe. There are going to be a number of hardcore ICT public private partnerships that will build the next generation of smart services and networks (SNS) in Europe. In reality, SNS will be the key vehicle that will be used to prepare Europe to introduce 6G later in this decade. There will also be a joint undertaking that will be devoted to improving the capability of Europe in the area of key digital technologies.

 

ICT – a driver for positive change.

It is impossible to de-compartmentalise or divorce the ICT sector from other parts of Horizon Europe. This is because, as a society we are now witnessing a digital transformation. Technology is now modernising the industrial, agriculture, health, education, smart city, energy and transport sectors. There is a whole ambit of research activity that is enshrined in Horizon Europe that contains a technological component. In other words, research and innovation actions weave through the whole of Horizon Europe from the sections of this programme that deal with basic science right through to the delivery of new ICT products into the marketplace.

 

International Co-operation.

Horizon Europe is an open programme. This means that research consortia are open to participation for private, public, research, educational and public bodies from all countries around the world. In fact, organisations from circa 185 countries took part in Horizon 2020 during the past seven years alone.

If one wants to develop the best products for the marketplace then one needs to co-operate with the best talent and expertise that exists within these specific fields. I welcome too the publication that was made by the European Commission today that will support the development of a common European research area (ERA). We certainly do need a higher level of mobility of researchers in an out of Europe, including from third countries. Reciprocity, transparency and openness must underpin the relationships that third countries from around the world have with the European Union on the research front.

 

ICT will deliver Economic Recovery.

International organisations such as the OECD, the European Commission, the International Monetary Fund and the World Bank all point to the economic benefits that accrue to countries from investing in basic and applied research. The EU leaders have set a target of investment into research and science at 3% GDP. This target can be achieved by fully rolling out the Horizon Europe initiative. Research, innovation and science are economic instruments.

25% of all global research @ development is carried out in Europe. This is a very strong foundation for Europe to build upon – as the EU seeks to strengthen it’s industrial sector via the use of technology.

There are many global challenges that we all must face together. Co-operation and collaboration between public and private bodies from different countries around the world is an imperative if we are to successfully and effectively tackle these grand societal challenges.

Abraham Liukang, is the chief Huawei representative to the EU institutions.

 

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EU

Commission adopts ambitious Capital Markets Union Action Plan and Digital Finance Package

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The European Commission has adopted a new, ambitious Action Plan to boost the EU’s Capital Markets Union over the coming years. The EU’s top priority today is to ensure that Europe recovers from the unprecedented economic crisis caused by coronavirus. Developing the EU’s capital markets, and ensuring access to market financing, will be essential in this task. The Action Plan aims to develop and integrate EU capital markets in order to ensure they can support a green, inclusive and resilient economic recovery by making financing more accessible to European companies.

press release, available in all languages, a Q&A and a factsheet are available online with more information.

The European Commission has also adopted an ambitious Digital Finance Package to ensure a competitive and digital friendly EU financial sector that gives consumers access to innovative financial products, modern payments, while ensuring consumer protection and financial stability.

The Digital Finance package consists of:

  • A Digital Finance Strategy
  • Legislative proposals for an EU framework on crypto-assets
  • Legislative proposals for an EU framework on cyber resilience
  • A Retail Payments Strategy, which seeks to achieve a fully integrated EU retail payments system, including instant payment solutions that work cross-border.

press release in all languages, a Q&A and a factsheet are available online. Follow the press conference by Executive Vice-President Dombrovskis  on EbS.

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EU law

In divorces, the odds are stacked against women

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Among the many side effects the Covid-19 pandemic and subsequent lockdowns have had on Europe is a particularly shameful one: skyrocketing domestic abuse. France – with its deeply embedded chauvinism – has stood out in particular, as calls to the government hotline for abused women rose 400 percent during the lockdown.

At the same time, leaving these relationships is not easy. For legally married women, a divorce would be a logical step, but not all women are willing or even able to make that move. The reasons behind that are manifold, yet one of the most common ones is one of the most frequently overlooked as well: the fact that women are commonly disadvantaged in divorce settlements that are leaving women in economic and social hardship more often than men.

Women get the short stick

This fact is surprisingly uniform across the globe, which is why it’s even more of a shock that women continue to find the odds stacked against them in highly developed regions with a strong women’s rights and equality agenda, such as Europe. A 2018 study assessing the gender differences in the consequences of divorce, using data from the German Socio-Economic Panel Study (1984-2015), found that “women were strongly disadvantaged in terms of losses in household income and associated increases in the risk of poverty”. Worse, these losses were permanent and substantial, without significant changes over time.

Even when a settlement results in a 50/50 division of assets, women often feel disadvantaged due to lower earning power caused by childcare responsibilities and reduced hours available to work, or make strategic career choices. Furthermore, women are frequently left indebted by the legal costs of divorce proceedings because their lower savings levels mean they have to rely on eye-watering loans. Women’s financial positions rarely recover enough to reach pre-divorce levels, while men’s incomes tend to rise by 25 percent on average following the split.

 

Rich or poor, you lose

While these problems are common occurrences across different cultures around the world, they’re also independent of the social class. It may seem obvious that these problems are exclusive to the middle class rather than the wealthiest members of society. However, women divorcing rich husbands face the same hurdles and adverse prospects. Indeed, if there’s one common factor that unites women across all social strata, it’s how they have to fight disproportionally harder than their ex-husbands to obtain their fair share of the divorce pie.

Case in point is the bitter divorce fight between Azerbaijani oligarch Farkhad Akhmedov and his ex-wife Tatiana Akhmedova. Farkhad Akhmedov, who is based in Baku despite having failed to obtain Azeri citizenship, made his fortune in the gas sector but left the industry after being forced to sell his stake in Northgas to Inter RAO in 2012 for $400 million under value. Tatiana, a British citizen, was awarded 40 percent of her ex-husband’s fortune by a UK court in 2016, amounting to roughly £453 million – the biggest divorce settlement in history. Instead of accepting the judgement and paying out, Farkhad Akhmedov has been fighting tooth and nail to avoid making payments, or handing over the assets given to his ex-wife in the settlement, including an art collection, real estate and superyacht, valued at £350 million

 

The divorce of the century

In the process, Akhmedov has frequently not only fought with the gloves off, but outright dirty. From the very beginning, Akhmedov’s defense argued that the couple got divorced before, namely in Moscow in 2000. According to the defense, that alleged divorce supersedes the British decision, painting Akhmedova as a fraud. However, the attempt at slandering his ex-wife backfired: no evidence for an earlier divorce ever materialised, leading Justice Haddon-Cave in 2016 to declare “… that the 2000 Moscow divorce documents … were, at all material times, forged.”

This should’ve been a lethal blow to Farkhad Akhmedov’s defense, but four years on, no significant pay-outs have been made – despite the fact that the original 2016 decision in Akhmedova’s favour has been upheld in other courts. In 2018, Akhmedov was ruled to be in contempt of court and was criticised by Justice Haddon-Cave for taking “numerous elaborate steps” designed to avoid the judgement’s execution, such as “concealing his assets in a web of offshore companies.” These entities, primarily located in Liechtenstein, were recently ordered to transfer Akhmedov’s assets to Tatiana.

 

This is a men’s world

It shouldn’t be surprising that this hasn’t happened yet, all the while the oligarch’s contempt for both British law and his ex-wife are unwavering. In fact, the Akhmedov case – owing to the volume of assets and great publicity involved – serves to highlights the stark contrast in divorce outcomes and that women are generally fighting an uphill battle for equity of the settlement that can last for years, straining their ability to move on and restart their lives.

Yet it could help to raise awareness for this deeply engrained inequality, where women all over the world seeking divorce or justice for domestic abuse are exposed to odds overwhelmingly in their ex-spouse’s favour. Stronger, more relentless enforcement of rulings – including painful punishment in case of non-compliance – is the only way to break the vicious circle. Otherwise, gender equality will forever be imperfect, even unattainable.

 

 

 

 

 

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