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| | September 21, 2016 | |
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| | Denis O'Brien, the Irish billionaire who runs Digicel, says he has made "loads of money in Haiti" since starting his cell phone business there in 2005. He has also built 175 schools that educate 60,000 children. "Even before we started, I said 'we need to get involved, and make sure we are seen as people who are interested in social development.'"
I had breakfast with O'Brien yesterday, to talk about his unique approach to globalization. Digicel operates in 33 markets in the Caribbean and Oceania, and provides cell service, mostly to poor people who weren't being served before he arrived. The company now has worldwide revenues of about $2.7 billion. "No one thought poor people would buy a phone." With innovative low cost plans, he has proved otherwise.
In each market, the company devotes substantial resources to social development. When I ask him how he decides how much to invest in those projects, he smiles, licks his finger, and holds it up to the wind. Employees drive the projects, he says. He gives them a budget at the beginning of the year, but then if they have good ideas he will frequently come in and "top it off."
"To me, this is modern business," O'Brien says. "If you make a profit in a community, you reinvest in social projects." He believes the rising influence of millennials in the workforce will lead more companies to behave in the same way. "Things have to change."
O'Brien was in New York for the annual meetings of the Clinton Global Initiative, which these days is caught up in a firestorm of controversy for mixing its good works with the personal and political ambitions of the Clintons. While O'Brien's business philosophy predates CGI, he praises the former president for encouraging business to act differently. "When I see people attack the Clinton Foundation, I'm aghast."
News below.
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| | Top News | |
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| | • Stumpf Gets Both Barrels From Warren & Co. Wells Fargo CEO John Stumpf got both barrels from the Senate Banking Committee over its suspect sales practices and, more to the point, its determination to make its rank-and-file carry the can for them. Stumpf admitted that the fraud perpetrated on the bank's customers by its staff may have started as early as 2009, rather than in 2011 as initially indicated by the bank's internal investigation. Stumpf told the committee that he had learned about the misconduct only in 2013, even though about 1,000 employees had already been fired back in 2011. Sen. Elizabeth Warren fully lived up to her billing as the scourge of Wall Street, calling on Stumpf to be stripped of his bonuses and be criminally investigated while pouring scorn on his claims that he took full responsibility for the episode. "Your definition of accountable is to push the blame to your low-level employees who don't have the money for a fancy PR firm to defend themselves. It's gutless leadership," being a typical example. Fortune • Fed Day: Watch for the Signals The Federal Reserve's Federal Open Market Committee will announce the results of its latest deliberations as its two-day meeting ends. The Fed is almost universally expected to keep official interest rates unchanged, while many analysts expect its concluding statement to signal a rate hike in December as the likeliest course of action. Both the U.S. and global economy have slowed in the last month or two, meaning that any attempt to raise rates is as much an expression of a loss of confidence in monetary policy to sustain growth as a response to any budding inflation pressures. No such signs of equivocation at the Bank of Japan though, which doubled down yet again on monetary stimulus earlier Wednesday. It set a target of zero for 10-year government bond yields and said it would deliberately try to overshoot its 2% inflation target, in the belief that this would work where umpteen unorthodox easings have failed in dragging the country out of two decades of deflation. Fortune • Brazil's Lula to Face Corruption Charges Brazil's former president Luiz Inacio Lula da Silva will stand trial on corruption charges, a crusading federal judge ruled, adding more turbulence to the country's political landscape. Judge Sergio Moro said that Lula, who served as president from 2003-11 and has for two decades been an iconic and powerful political force in Brazil, will face charges of accepting the equivalent of $1.14 million in bribes connected to a sweeping kickback probe at state-run oil company Petrobras. The ruling, which comes hard on the heels on the impeachment of Lula's successor, Dilma Rousseff, is further proof of the power of Brazil's institutions over even the most influential personalities. At the same time, it is arousing suspicions among Lula's many still-loyal supporters that those institutions are being abused by the new government for the purpose of taking political revenge. It will make for a turbulent background to the wide-ranging privatizations that new president Michel Temer announced earlier this month with the hope of plugging a gaping budget deficit. Fortune • SEC Probes Exxon The Securities and Exchanges Commission is investigating ExxonMobil's accounting practices to see how it values its oil reserves in an environment of low prices and potential curbs on carbon emissions. Exxon said it is complying with the investigation, but the company's refusal to follow its biggest rivals, who have written off a collective $50 billion since 2014, in taking a more conservative view of its balance sheet in the face of clearly visible regulatory and economic threats to it still exudes a conviction that the world will never progress beyond the hydrocarbon age, despite all the evidence from the power and transportation sectors to the contrary. Exxon has every right to think that decades of best-in-class capital discipline and operational excellence allow it to value its assets more highly than its competition. But the oil futures curve is where it is because of observable facts about technology and regulation in the energy business the world over—facts it has no right to ignore. Fortune
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| | Around the Water Cooler | |
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| | • Exit Nobel Laureate, to the Sound of SU-24s The U.S. blamed the Syrian and Russian governments for an airstrike Monday on a UN convoy that was delivering humanitarian aid to the besieged town of Aleppo. The strike, which killed 12 aid workers and led to the immediate suspension of humanitarian relief by the UN, effectively ended the fragile ceasefire agreed only last week. It virtually ensures that the Syrian war will still be raging when Barack Obama leaves office as President. Russia, having first suggested that the convoy "caught fire", now says it was shelled by rebels (i.e., the people who were due to receive the aid). U.S. officials told the BBC that two Russian SU-24 attack aircraft were in the sky above the convoy at the precise moment it was hit in Urum al-Kubra. They said the strike was too sophisticated to have been carried out by the Syrian army. The attack came after U.S.-led airstrikes killed 80 Syrian soldiers at the weekend, which caused outrage in Damascus and Moscow. There is no proof that the attack on the UN convoy was direct retaliation, but nothing in President Assad's conduct of the war—or that of his ally Vladimir Putin—suggests the hypothesis should be ruled out, and the end of the ceasefire is of more benefit to the government side than to the rebels. BBC • The Melancholy Pleasures of Owning Microsoft Microsoft raised its quarterly dividend by 8% and said it would buy back up to $40 billion more stock as part of a new share repurchase program. An existing $40 billion repurchase program is on course to expire at the end of the year, it said. The new buyback program has no expiration date and may be terminated at any time. The company's shares are indicated to open some 2% higher this morning, as you might expect. It's not that the company has gone ex-growth—it's just opening its first data centers in Germany, for example, which will help it compete better in public cloud services in Europe—and the return of truly surplus capital to investors is always to be welcomed. But the move does reinforce the perception (one not exactly contradicted by its throwing of $26 billion at LinkedIn and by its failure to defend Skype's early lead in messaging) that the average investor now has more and better ideas about how to create value than the people at Redmond. Fortune • 21 States Sue to Stop Federal Rule on Overtime One of the Obama administration's signature labor reforms—a new rule to allow millions more American qualify for overtime pay—has been challenged by a total of 21 states. Attorneys-general in Texas and Nevada have filed suit on behalf of themselves and 19 other states, arguing the Labor Department rule violates the U.S. Constitution and exceeds congressional authority. A broad coalition of over 50 business groups led by the U.S. Chamber of Commerce has also taken legal action to block the rule. The rule doubles the pay level up to which employees are allowed overtime and also bakes in regular indexation of that level. Small businesses in particular fear that it will hurt them, driving up their costs and causing them to cut workers' hours. They also claim it will slow the hiring of full-time staff and turn salaried workers into hourly employees. WSJ, subscription required • Investors Sue VW for Over $9 Billion Volkswagen faces 8.2 billion euros ($9.14 billion) in damage claims from investors over its emissions scandal in the legal district where the carmaker is based, a German court said. A total of about 1,400 lawsuits have been lodged at the regional court in Brunswick near Volkswagen's (VW) Wolfsburg headquarters, the court said on Wednesday. Blackrock, VW's biggest private shareholder outside the Piech and Porsche families, is among the plaintiffs. The news comes just after the anniversary of the diesel emissions scandal breaking, and a month after VW settled most federal claims against it for a little over $14 billion. The company is also under pressure from EU regulators to offer more compensation to the (far larger number of) European drivers affected by the scandal. Investigations into key individuals are also advancing, with Audi's head of research and development Stefan Knirsch being suspended last week. That has focused attention on veteran Audi head Rupert Stadler, who had appointed Knirsch in the wake of Ulrich Hackenberg's suspension a year ago. The use of defeat devices by Audi, which develops its engines far away from VW's headquarters, has undermined VW's claim that the scandal was the work of a small and tight conspiracy below senior management level. Reuters | |
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