Posts Tagged "CEO"

German prosecutors charged former Volkswagen CEO Martin Winterkorn and four others with fraud in the emissions cheating scandal that has helped turn many Europeans against diesel engines and accelerated the push toward electric cars.

Prosecutors said Monday that Winterkorn knew about the scheme since at least May 2014 and failed to put a stop to it.

That contradicted his claim that he didn’t learn about it until shortly before U.S. investigators announced it in September 2015. Winterkorn resigned as CEO five days later.

VW has admitted installing software in its diesel cars that turned on pollution controls when vehicles were being tested and switched them off during everyday driving. That made it look as if the cars met tough U.S. limits on harmful pollutants known as nitrogen oxides.

In all, some 11 million cars worldwide were equipped with the illegal software.

Deception started in 2006, prosecutors say

Prosecutors said the defendants — all top Volkswagen managers — were part of a deception that started in 2006.

The 71-year-old Winterkorn and the others, whose names were not released, face six months to 10 years in prison if convicted of aggravated fraud involving serious losses. Other charges include unfair competition and breach of trust.

Prosecutors said the defendants could also be forced to forfeit sales bonuses ranging from around 300,000 euros to 11 million euros ($453,000 to $16.6 million Cdn).

Winterkorn is already under indictment in the U.S. on charges of fraud and conspiracy to violate the Clean Air Act and could get up to 20 years in prison. But he cannot be extradited from Germany to the U.S.

Winterkorn’s attorney, Felix Doerr, said that the defence could not comment on the German case because prosecutors had not provided adequate opportunity to review the case files. Doerr said prosecutors turned over seven DVDs with hundreds of file folders of material on April 5.

The case, consisting of a 692-page indictment backed by 300 file volumes holding 75,000 pages, was filed in a local court in Braunschweig on Friday. The court will decide if the case will proceed to trial.

Software update covered up elevated pollution while driving

Prosecutors said among other things that the defendants carried out a software update costing 23 million euros ($35 million) in 2014 to try to cover up the true reason for the elevated pollution during driving.

The prosecutors said they are still investigating 36 more suspects.

Volkswagen’s corporate involvement in the Braunschweig investigation ended last year with a 1 billion euro fine ($1.5 billion). Volkswagen noted that the indictment was against individuals and had no further comment.

The prosecutors’ move is only one of the legal proceedings unleashed by the scandal.

Volkswagen has paid more than 27 billion euros ($41 billion) in fines and civil settlements with authorities and car owners since getting caught.

The automaker apologized and pleaded guilty to criminal charges in the United States, where two executives were sentenced to prison and six others charged, although they could not be extradited.

And the U.S. Securities and Exchange Commission charged the company and Winterkorn on March 15 with defrauding investors through misleading statements about vehicle quality and environmental compliance.

Investors in Germany are also seeking damages.

Diesel sales have sagged

The scandal unleashed widespread scrutiny of diesel emissions across the industry. It soon turned out that many models from other companies also emitted far more pollution on the road than on the test stand, because of regulatory loopholes exploited by carmakers such as turning exhaust controls off at certain temperatures to reduce engine wear.

Diesel sales, once half the European car market, have sagged.

That in turn has undermined carmakers’ plans to use diesels — which get better mileage — to help meet tougher European Union limits in 2021 on emissions of carbon dioxide, the main greenhouse gas blamed for global warming.

One result has been greater pressure to develop battery-powered cars to avoid heavy fines for breaching the new emissions limits. Volkswagen plans to spend 30 billion euros ($45 million) to develop electric vehicles by 2023.

The company was able to weather the scandal well enough to take the top spot as the world’s largest carmaker from Toyota. Last year, under CEO Herbert Diess, Volkswagen had record sales of 10.83 million vehicles, making an operating profit of 13.9 billion euros.


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The former CEO of SNC-Lavalin has lashed out at allegations made by an unnamed company insider, denying taxpayer-backed loans from Canada were ever used to pay bribes under his watch.

“People who talk behind the scenes — they are just chicken,” said Jacques Lamarre in an interview with CBC News. 

CBC News is not naming the SNC-Lavalin insider, who worked on numerous EDC-backed projects, as he fears for his job.

On Wednesday, CBC News reported claims from the insider that it was an “open secret” in the company that money intended for bribes overseas was buried in budgets, disguised as “technical fees” in applications for financing from Export Development Canada

EDC is a Crown agency that provides financial backing and insurance to Canadian companies operating in other countries. Over the past 25 years, EDC has provided up to $4.7 billion in loans to SNC-Lavalin.

The agency says the claim from the insider has prompted it to hire outside legal counsel to review at least one former deal with SNC-Lavalin.

Lamarre was CEO of SNC-Lavalin from the mid-1990’s until 2009. The Quebec business mogul was in charge of thousands of projects — some of which became mired in corruption and bribery allegations, resulting in numerous police investigations and, in 2014, the conviction of the head of the company’s construction division.

He says “technical fees” were often used to hire local staff in foreign countries where it was “very difficult” for SNC-Lavalin to establish operations. According to Lamarre, all contractors were required to sign agreements stating they were not to use money for illegal payments such as bribes or kickbacks.

“It is written in the contract, that they cannot pay bribes. It says it in black and white.”

Lamarre insists paying bribes was not necessary, despite operating in some of the world’s most notoriously corrupt countries.

“No. No. No. For me, I’m not in that business. If we have to pay bribes, I prefer not to bid on that job.”

EDC wants to meet with insider

Export Development Canada has hired outside lawyers to probe allegations from the insider that EDC turned a blind eye to SNC-Lavalin’s abuse of “technical fees.”

Out of the 26 SNC-Lavalin projects EDC has backed since 1995, the agency is reviewing one project in Angola flagged by the insider as involving illicit payments. EDC provided political risk insurance to SNC-Lavalin on a $250-million deal to repair the Matala hydroelectric dam.

“Based on any outcomes of the review, we will carefully examine whether we need to expand the scope,” wrote EDC spokesperson Jessica Draker.

Quebec-based SNC-Lavalin is a construction and engineering giant, with thousands of employees and projects around the world. (Paul Chiasson/Canadian Press)

“We would welcome the opportunity to meet with your source regarding his or her concerns,” Draker added.

It’s unlikely EDC will make its findings public, as the agency says it doesn’t discuss details of its agreements with clients, including how much money SNC-Lavalin currently owes EDC. 

The insider also alleges EDC signed off on SNC-Lavalin’s technical fees, counting them as Canadian expenses, while knowing the payments were destined for foreign contractors.

(EDC requires projects to meet certain “Canadian content” quotas to be eligible for financing, as the agency exists to support Canadian exports).

EDC has not directly answered questions put to it by CBC News about this claim.

SNC-Lavalin, this week, declined to comment.

Former CEO Jacques Lamarre acknowledges the foreign payments were counted as Canadian expenses.

“I have no good answer for that,” Lamarre said, insisting EDC was fully aware of SNC-Lavalin’s budget details.

Criminal case

In recent years, SNC-Lavalin has faced a string of bribery scandals both in Canada and abroad, including corruption allegations tied to EDC-backed projects in India, Angola and Algeria. 

The company is also facing criminal prosecution in Canada for alleged offences in Libya between 2001 and 2011. One company executive has already pleaded guilty to bribery and fraud in connection with contracts in that country. A judge in Montreal will rule next month on whether the Quebec-based engineering giant itself should stand trial.  If convicted, SNC-Lavalin could face a 10-year ban from bidding on federal contracts.

Lamarre says he never knew of — or sanctioned — bribery and says any instances where it occurred were isolated, and the result of lone, corrupt employees.

“We never took any chances. We were always black and white,” Lamarre said. “But on the other hand, I cannot say that with 10,000 projects, [that] once and a while we didn’t have problems.”

The company has been lobbying for a deferred prosecution agreement, which former attorney general Jody Wilson-Raybould opposed.

Prime Minister Justin Trudeau replaced her in January with a new attorney general who could still intervene and impose a settlement that would not bar the company from federal work.

(CBC )


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Elon Musk’s job as Tesla Inc’s chief executive appeared safe on Thursday as a federal judge in Manhattan urged the billionaire to settle contempt allegations by the U.S. Securities and Exchange Commission.

At a hearing in Manhattan federal court, U.S. District Judge Alison Nathan gave both sides two weeks to work out their differences, and said she could rule on whether Musk violated his recent fraud settlement with the regulator if they failed.

Musk declined to comment about the hearing as he left the courthouse, surrounding by reporters, photographers and television cameras.

Nathan had been asked by the SEC to hold Musk in contempt over a Feb. 19 tweet where the regulator said he improperly posted material information about Tesla’s vehicle production outlook without first seeking approval from company lawyers.

The SEC said pre-approval had been a core element of the October 2018 settlement, which resolved a lawsuit over Musk’s tweet last Aug. 7 that he had “funding secured” to take Tesla private at $420 US per share.

That settlement called for Musk to step down as Tesla’s chairman, and levied $20 million civil fines each on Musk and the Palo Alto, California-based company.

Possible drag lifted

Legal experts had said Musk could have faced penalties as severe as removal from Tesla’s board or as chief executive if held in contempt.

But at Thursday’s hearing, the SEC stopped short of recommending such sanctions.

That lifted a potential drag on Tesla’s share price, which recouped some early losses stemming from its Wednesday night report of lower-than-expected vehicle deliveries.

The shares closed down 8.2 per cent, after earlier falling as much as 10.7 per cent.

SEC lawyer Cheryl Crumpton said if Musk were held in contempt, the regulator might ask Nathan to require regular reports about his oversight by Tesla lawyers, including whether they were vetting his statements and if not why.

Noting that Musk had called his $20 million fine “worth it,” she also said higher fines for future violations might be needed to ensure that further backsliding would be “not worth it.”

Crumpton also faulted what she called Tesla’s “troubling” conduct. “Tesla still appears to be unwilling to exercise any meaningful control over the conduct of its CEO,” she said.

The SEC did not accuse Tesla of contempt.

Musk’s lawyer, John Hueston, countered that the “ambiguity” of the settlement made further punishment for his client unfair.

“There simply is not a clear enough standard to use the hard penalty of contempt,” he said.

Musk sat quietly with his lawyers, sometimes staring down at paperwork, during oral arguments.

SEC  calls tweet ‘obviously different’

The battle concerns a tweet that Musk sent to his more than 24 million Twitter followers: “Tesla made 0 cars in 2011, but will make around 500k in 2019,” meaning 500,000 vehicles.

Four hours later, Musk corrected himself, saying annualized production would be “probably around” 500,000 by year end, with full-year deliveries totaling about 400,000.

The SEC called the earlier tweet “obviously different” from Tesla’s Jan. 30 outlook, when it targeted annualized Model 3 production exceeding 500,000 as soon as the fourth quarter, and projected 360,000 to 400,000 vehicle deliveries this year.

Musk’s lawyers countered that the earlier tweet merely restated a forecast he had given on Jan. 30, and that the SEC conceded during settlement talks that Musk did not need pre-approval for all tweets about his company.

Tesla, which built its reputation on luxury cars, has faced several production challenges with its Model 3 sedan, which it is counting on to reach the mass market, recently offering a version starting at $35,000.

On Wednesday night, Tesla repeated its Jan. 30 vehicle delivery forecast, but said first-quarter deliveries had fallen 31 per cent from the prior three months to about 63,000.

Respect for justice system 

The “funding secured” tweet had sent Tesla’s share price up as much as 13.3 per cent. Musk’s privatization plan was at best in an early stage, however, and financing was not in place.

The legal battle has not stopped Musk from being an outspoken critic of the SEC.

Since it began last September, he has labeled the SEC the “Shortseller Enrichment Commission,” recalling his attacks on investors who sell Tesla stock short, and told CBS’s 60 Minutes he did not have respect for the SEC.

And in the early morning of Feb. 26, after the SEC filed its contempt motion, Musk tweeted: “Something is broken with SEC oversight.”

As he prepared to enter the courthouse. Musk told reporters: “I have a great respect for the justice system.”

Asked whether he also respected the SEC, Musk laughed, before turning to go inside.


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The head of SNC-Lavalin says its role as a Canadian global champion will be undermined if the embattled engineering firm is barred from bidding on federal contracts and its local employees are forced to work for foreign competitors.

In an interview with The Canadian Press, Neil Bruce said the Montreal-based company, unlike the Trudeau government, has never cited the protection of 9,000 Canadian jobs as a reason it should be granted a remediation agreement to avoid a criminal trial.

However, he said there’s a public interest for such an agreement, because its well-qualified employees will be forced to work for U.S. or European competitors if it is barred from bidding on federal contracts for a decade.

SNC-Lavalin faces accusations it paid bribes to get government business in Libya — a criminal case that has triggered a political storm and cost Prime Minister Justin Trudeau two cabinet ministers and his most trusted adviser.

Bruce said about 75 per cent of the company’s rivals have concluded deferred prosecution agreements in their host countries and are free to work in Canada.

Meanwhile, Bruce says he still doesn’t know why a federal official and former attorney general Jody Wilson-Raybould were not open to granting a remediation agreement.


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U.S. regulators charged Volkswagen and former CEO Martin Winterkorn with defrauding investors during its massive diesel emissions scandal.

The charges from the U.S. Securities and Exchange Commission come two years after the German automaker settled with the U.S. over criminal and civil charges, as the company tries to distance itself from one if its darkest eras.

The SEC said that between April 2014 and May 2015, Volkswagen issued more than $13 billion US in bonds and asset-backed securities in U.S. markets when senior executives knew that more than 500,000 vehicles in the country grossly exceeded legal vehicle emissions limits.

Volkswagen made false and misleading statements to investors and underwriters about vehicle quality, environmental compliance, and the company’s financial standing, which gave Volkswagen a financial benefit when it issued securities at more attractive rates for the company, according to the SEC.

“Volkswagen hid its decade-long emissions scheme while it was selling billions of dollars of its bonds to investors at inflated prices,” said Stephanie Avakian, co-director of the SEC’s enforcement division.

In September 2015 Volkswagen installed software on more than 475,000 cars that enabled them to cheat on emissions tests, according to the Environmental Protection Agency. The software reduced nitrogen oxide emissions when the cars were placed on a test machine but allowed higher emissions and improved engine performance during normal driving.

In 2016 the Justice Department sued Volkswagen over the emissions-cheating software and the Federal Trade Commission sued the company, saying it made false claims in commercials promoting its “Clean Diesel” vehicles as environmentally friendly.

Charges come as a surprise

Winterkorn resigned saying he took responsibility for the fraud, but insisted he personally did nothing wrong.

Volkswagen said Friday that the SEC is simply repeating unproven claims about Winterkorn.

“Regrettably, more than two years after Volkswagen entered into landmark, multibillion-dollar settlements in the United States with the Department of Justice, almost every state and nearly 600,000 consumers, the SEC is now piling on to try to extract more from the company,” the company said in a prepared release.

The company has paid some $20 billion in fines and civil settlements. It has also pleaded guilty to criminal charges in the United States and several managers, including Winterkorn, were charged there.

The surprise charges from the SEC arrive as the German company attempts to distance itself from the scandal. On Tuesday the automaker said that it planned to ramp up production of electric vehicles over the next ten years, to 22 million, and reduce its carbon footprint over vehicle life cycles by 30 per cent.

Volkswagen’s pivot to electric vehicles comes as it seeks to comply with new limits on carbon dioxide emissions in Europe, and a push by China for more low-emission vehicles.

The SEC’s complaint, filed in the U.S. District Court for the Northern District of California, charges Volkswagen AG, its subsidiaries Volkswagen Group of America Finance, LLC and VW Credit, Inc., and Winterkorn with violating the anti-fraud provisions of the federal securities laws.

The SEC seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest and civil penalties. It also wants to bar Winterkorn from holding any corporate officer or director positions.


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Mark Zuckerberg said Facebook will start to emphasize new privacy-shielding messaging services, a shift apparently intended to blunt privacy criticisms of the company.

In effect, the Facebook co-founder and CEO promised to transform the service from a company known for devouring the personal information shared by its users to one that gives people more ways to communicate in truly private fashion, with their intimate thoughts and pictures shielded by encryption in ways that Facebook itself can’t read.

But Zuckerberg didn’t suggest any changes to Facebook’s core newsfeed-and-groups-based service, nor to Instagram’s social network, currently one of the fastest-growing parts of the company. That didn’t sit well with critics.

“He’s kind of pulled together this idea that the thing that matters most to people is privacy between peers and one-to-one communication, ignoring completely the idea that people also value their privacy from Facebook,” said Forrester analyst Fatemeh Khatibloo.

Zuckerberg laid out his vision in a Wednesday blog post , following a rocky two-year period in which the company has weathered a series of revelations about its leaky privacy controls. That included the sharing of personal information from as many as 87 million users with a political data-mining firm that worked for the 2016 Trump campaign.

Since the 2016 election, Facebook has also taken flak for the way Russian agents used its service to target U.S. voters with divisive messages and for being a conduit for political misinformation. Zuckerberg faced two days of congressional interrogation over these and other subjects last April.

Messenger, WhatsApp, Instagram connect

As part of his effort to make amends, Zuckerberg plans to stitch together its Messenger, WhatsApp and Instagram messaging services so users will be able to contact each other across all of the apps.

Zuckerberg plans to stitch together its Messenger, WhatsApp and Instagram messaging services so users will be able to contact each other across all of the apps. (Arun Sankar/AFP/Getty Images)

The multiyear plan calls for all of these apps to be encrypted, so no one could see the contents of the messages except for senders and recipients. WhatsApp already has that security feature, but Facebook’s other messaging apps don’t.

Zuckerberg likened it to being able to be in a living room behind a closed front door, and not having to worry about anyone eavesdropping. Meanwhile, Facebook and the Instagram photo app would still operate more like a town square where people can openly share whatever they want.

Creating more ways for Facebook’s more than two billion users to keep things private could undermine the company’s business model, which depends on the ability to learn about the things people like and then sell ads tied to those interests.

In an interview with The Associated Press, Zuckerberg said he isn’t currently worried about denting Facebook’s profits with the increased emphasis on privacy.


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The head of SNC-Lavalin told the Canadian government it had to change its anti-corruption rules “as expeditiously as possible” in a 2017 letter to the minister in charge of procurement, just as her department was helping oversee public consultations on lighter punishments for corporate misconduct.

SNC-Lavalin CEO Neil Bruce wrote to Public Services Minister Carla Qualtrough on Oct. 13, 2017 and sent copies to seven other senior cabinet ministers.

Bruce attached his company’s official submission for the consultations, which were examining possible changes to the “integrity regime” and the potential creation of a plea-bargain-type tool known as a deferred-prosecution agreement or remediation agreement.

Bruce’s Montreal-based firm was charged in 2015 with corruption and fraud over allegations it resorted to bribery while pursuing business in Libya. If convicted, it could be barred from public contracts for 10 years under the federal integrity regime.

Bruce’s letter went to then public services minister Carla Qualtrough and seven other senior ministers. (Adrian Wyld/Canadian Press)

The letter, obtained by The Canadian Press under access-to-information law, shows a high-level push for policy changes to help the engineering and construction giant avoid prosecution.

SNC-Lavalin lobbied federal officials, including in the Prime Minister’s Office, to put remediation agreements into the law.

A few months after the public consultations in fall 2017, the Trudeau government included the Criminal Code amendment creating the agreements in last spring’s 582-page omnibus budget bill.

In his letter, Bruce asked Qualtrough and her staff to a meeting so he could answer questions about the company’s submission, explain its governance improvements and share its plans to expand from its Canadian base.

SNC-Lavalin was charged in 2015 with corruption and fraud over allegations it resorted to bribery while pursuing business in Libya. (Paul Chiasson/Canadian Press)

He argued that Canada needed a deferred-prosecution agreement option as well as “enhancements” to its integrity regime for government contractors to align with policies in countries like the United States, United Kingdom and France.

Those are related but separate issues. Deferred-prosecution agreements, or DPAs, are plea-bargain-type arrangements for companies that can show they have straightened up after behaving corruptly. The government’s own integrity regime covers which suppliers Ottawa will do business with; it aims to keep public dollars away from bad actors.

“The time is right” to address the DPA and the integrity regime, Bruce wrote to Qualtrough. “But time is also of the essence.”

He warned that Canadian engineering and consulting firms didn’t have a level playing field with their foreign competitors, operating in countries that had deferred-prosecution agreements in their laws.

From there, Bruce’s letter underscored the urgency several times.

“SNC-Lavalin fully supports the need to take the time to conduct a credible, fair, open and transparent consultation process,” he wrote. “However, Canada is clearly behind in terms of using all possible tools to deal as effectively as possible with corporate economic crime … Accordingly, we urge the government of Canada to move forward as expeditiously as possible.”

An internal briefing note to Qualtrough about Bruce’s letter recommended she decline his invitation to meet and discuss SNC-Lavalin’s submission. Since the public consultations were being led by federal officials, the memo suggested that Barbara Glover, Public Services and Procurement’s assistant deputy minister for integrity, meet with Bruce instead.

Qualtrough agreed and signed a response letter to Bruce saying he should meet Glover. In that Oct. 31, 2017 letter, she thanked Bruce for his submissions and his participation in the consultation process.

Last week, Qualtrough was asked during an appearance before a parliamentary committee whether SNC-Lavalin had been among the stakeholders that provided input during the public consultations.

“I don’t know the list of the 300 organizations offhand that participated in the consultation,” she said in response to a Conservative MP’s question. “Sorry, I don’t mean to be difficult, but I can’t recall offhand.”

Later in the hearing, one of her officials confirmed the company was indeed among the participants.

The company and the remediation tool are now at the centre of a political storm that has walloped the Liberals. Even since remediation agreements were created last year, the director of public prosecutions decided not to invite SNC-Lavalin to negotiate one.

Jody Wilson-Raybould delivers her opening statement as she appears at the Justice committee meeting in Ottawa on Feb. 27. (Adrian Wyld/Canadian Press )

Former attorney general Jody Wilson-Raybould resigned from cabinet amid allegations that Prime Minister Justin Trudeau, his staffers and other senior officials improperly pressured her to stop a criminal prosecution of SNC-Lavalin.

Trudeau had denied that he or his officials inappropriately leaned on Wilson-Raybould.

Treasury Board president Jane Philpott handed in her resignation Monday. Philpott said she had lost confidence in the way the government has dealt with criminal charges against the company.

Treasury Board president Jane Philpott resigned from cabinet Monday. (Chris Wattie/Reuters)

Trudeau named Qualtrough as acting president of the Treasury Board, adding oversight of government spending and human resources to her duties.

The federal government is still moving forward with changes to the integrity regime that could help beleaguered SNC-Lavalin.

Last week at committee, Qualtrough said the updated integrity regime, if adopted, will still carry a potential ban from federal contracts of up to a decade, depending on factors such as the severity of the transgression — but a draft of the new scheme released last fall shows there is no minimum ineligibility period.

Qualtrough said the new policy will be finalized in four to six weeks and will cover a wider range of offences.


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Shares in Brazil’s Vale SA, the world’s largest iron-ore miner, fell on Monday after its CEO Fabio Schvartsman and three other executives resigned over the weekend following a dam collapse in January that left over 300 dead.

Brazilian prosecutors had requested that the executives be “temporarily removed,” the company said in a statement. It is unclear how long the “temporary” removals will last or if they could become permanent.

Vale shares listed on the New York Stock Exchange fell as much as three per cent on Monday. After trading at $15.88 US in October 2018, they now are hovering around $12.

In Brazil, markets are closed for the Carnaval long weekend and stocks won’t begin trading again until Wednesday afternoon.

Eduardo Bartolomeo, a 10-year company veteran, was named interim chief executive officer.

Public scrutiny since accident

Vale has faced increased public scrutiny after the disaster, including the arrest of several mid-level executives soon after the dam burst who were released days later.

Prosecutors have also sought the arrest of ferrous minerals head Peter Poppinga, although they have been unsuccessful so far. Poppinga was one of the executives temporarily let go on Sunday.

The tailings dam broke at Vale’s Corrego do Feijao mine in the interior Brazilian state of Minas Gerais on Jan. 25, releasing massive amounts of toxic sludge. The disaster happened just three years after a tailings dam co-owned by Vale and BHP Group also broke in Minas Gerais, killing 19 people and contaminating waterways in Brazil’s worst-ever environmental catastrophe.

There’s been a perception in Brazil that Vale was too big to fail. 

Although there are 800 mining operations in Brazil, the government had just 14 inspectors to monitor their operations. Vale was permitted a “self-auditing” system on safety.

Dangerous tailings dams

Tailings dams holding sometimes toxic, often dangerous, waste produced in mining were involved in both accidents. Much of the time, the holding ponds and dams were built by contractors instead of the company.

“It is a system that was designed to fail,” said Alexandre Vidigal de Oliveira, a former federal judge who took over the country’s Mines and Energy Ministry with Brazil’s new government.

“We had two disasters in a row, so the first question is what can be done to avoid a third?” Oliveira said.

The government of Jair Bolsonaro, elected last October, seems keen to hold the company to account.

Oliveira has asked legal authorities to probe Vale’s safety procedures under an anti-corruption law.

The company employs about 60,000 workers and is responsible for millions of dollars in iron ore exports from Brazil. It also owns Canadian operations in Sudbury and Port Colbourne, Ont., Thompson, Man., St. John’s, Long Harbour and Voisey’s Bay, N.L.


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One of the latest wrinkles to follow the Alberta government’s decision to mandate oil production cuts is the creation of “secondary market” for oil, according to Husky Energy.

The company’s chief executive Rob Peabody said he has purchased available oil production space from another company in order to get more oil to market. Speaking to analysts on a conference call Tuesday morning, Peabody described it as one of the more “amusing” unintended consequences of the Alberta government’s policy.

“It’s just funny to note how resilient the markets are in trying to correct actions even after government’s kind of screw it all up,” he said.

Husky Energy president and CEO Rob Peabody addresses the company’s annual meeting in Calgary in April 2018. (Jeff McIntosh/Canadian Press)

Some companies may be producing less than the government’s mandated limit because of facility maintenance or reducing production because of low oil prices.

“One of the things we’re seeing is the emergence of a secondary market in curtailed barrels,” said Peabody. “Companies that seem to have extra barrels available for production despite being curtailed — which is odd itself if you think about it— are now selling them to companies that could use those barrels profitably.”

The curtailment policy forced the largest 25 companies in the province to limit their oil production to help boost prices.  A lack of export pipeline space has created a backlog of oil in Alberta.

Husky has been critical of the policy since it was first proposed because the company can recoup some of the lost revenue from low oil prices by enjoying higher profit margins at its refineries.

It’s just funny to note how resilient the markets are in trying to correct actions even after government’s kind of screw it all up.– Rob Peabody, Husky CEO

Peabody again called for the government to end the curtailment program.

The policy has had several unintended impacts, such as boosting prices to a level that companies no longer want to ship oil by rail because it’s not economical.

Peabody said this new market for companies to buy space from other companies is yet another outcome the government likely wasn’t anticipating.

“Even when governments try to frustrate markets, markets have a habit of continuing to try to come back,” he said.

Several companies such as Cenovus and Canadian Natural Resources have endorsed the government’s policy after describing the low oil prices in late-2018 as a crisis for the industry.

The Alberta government eased back on its production cuts for February. Officials have said they are monitoring the situation and will make adjustments as necessary.

The Alberta Energy Regulator, which is overseeing the curtailment policy, setup a panel to review the concerns of industry.


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The CEO of Freshii Inc., called it “a humbling experience” to face up to what he could have done better leading the restaurant chain over the past two years as it reported a loss and shrinking same-store sales in its most recent quarter.

“We’ve been trying to do too much at once and, in trying to do everything, we haven’t been able to do anything as well as we want it,” said Matthew Corrin during a conference call with analysts Friday.

The company, which released its fourth-quarter results after markets closed Thursday, has faced repeated challenges in several areas, he said.

Corrin outlined big growth plans a few years ago, anticipating the chain would have 810 to 840 stores by the end of its 2019 financial year. Freshii scaled back that target in September 2017 to between 730 and 760 stores. Corrin then scrapped the company’s long-term outlook through 2019, including the revised store count goal, in November 2018.

During the company’s quarter ended Dec. 30, 2018, same-store sales fell 6.1 per cent compared with growth of 6.4 per cent in the same quarter in the previous year.

The company experienced continued weakness in some U.S. markets as well as a slowing across Canada in its most recent quarter, Corrin said.

For the full year, the metric fell 1.2 per cent compared with growth of 5.5 per cent in 2017, which Corrin called “unacceptable” especially for the back half of the year.

Freshii’s also struggled with a cohort of underperforming stores that need to be addressed, Corrin said.

We need to do fewer things, but to do them better.– Matthew Corrin, CEO of Freshii Inc.

Corrin said he has spent the past 100 days assessing these challenges and travelling to six of the company’s biggest franchise markets to meet with more than 100 franchisees and some of their staff to learn their perspective on how he could better lead the company.

“We need to do fewer things, but to do them better,” Corrin said.

The company will focus on driving franchisee profitability in the coming quarters, he said, which will likely lead to somewhat slower unit growth over the next little while.

The shift from growing store count to boosting franchisee profits meant the company reduced its headquarters staff by about 20 per cent late last year, he said.

Simplifying the menu

The company is working to simplify its menu and remove underperforming items, he said, in an effort to improve guest experience and make restaurants more profitable.

Freshii is also working to develop new items to boost lunchtime traffic, that will start to appear in restaurants this spring, Corrin said. The company is also looking to upgrade its protein and some premium toppings.

It is designing its first global media campaign, dubbed “let there be lunch,” which will roll out in the second quarter.

Freshii announced Thursday it will soon sell its prepared food offerings in 100 Walmart Canada locations by the end of April, as well as online. It already has similar partnerships with Air Canada and Shell, and Corrin said to expect similar announcements in the coming quarters.

The company lost $483,000 US in its fourth quarter compared with a loss of $620,000 for the same quarter a year earlier.

Adjusted net income came in at $232,000, up from $155,000 for the same quarter a year earlier. Analysts had expected earnings of $134,000.

Total revenue, which includes its franchised shops and its company-owned stores, totalled $5.65 million for the quarter, up from $4.85 million a year earlier.

Freshii shares were down 52 cents or about 16 per cent at $2.79 in trading on the Toronto Stock Exchange on Friday afternoon.


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