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US dollar weaponisation to continue after Donald Trump is gone


It isn’t surprising that both those directly targeted by the US sanctions – countries like China and Russia – and other third parties are all pursuing mechanisms for circumventing them.

China is promoting its own currency in its trade deals, particularly within Asia, along with an ambitious schedule for an imminent launch of a digital renminbi. China and Russia have been trying to use their own currencies in their direct trades – last year was the first time dollar-denominated trade between them fell below 50 per cent.

The Europeans were side-swiped by one of the earliest decisions of the Trump administration.

With the Obama administration, they had signed up to the Iran nuclear deal in 2012, in which US sanctions on Iran were lifted in exchange for constraints on Iran’s nuclear ambitions. Trump, unilaterally, took the US out of that deal and reimposed the sanctions.

The power of US sanctions lies in the dollar and the financial system infrastructure that facilitates its global usage – the SWIFT (the Society for Worldwide Interbank Telecommunication) secure messaging platform that enables financial institutions to send, receive, track and confirm transactions.

SWIFT is a co-operative controlled by about 3500 international banks (the Australian banks are represented on its board) and is arguably the key piece of global financial system architecture.

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In response to the abrupt US change in stance towards Iran and its impact on Europe and European companies – they would be in breach of the sanctions and risk being sanctioned themselves and cut out of SWIFT and the global financial system if they continued to trade with Iran – the Europeans tried to develop a workaround.

The major European Union members created a special purpose vehicle, INSTEX (Instrument in Support of Trade Exchanges) to try to facilitate non-US dollar, non-SWIFT humanitarian transactions with Iran.

It was a clunky solution, more of a bartering platform than a SWIFT alternative. It allows buyers and sellers in Iranian transactions to be matched – Iranian companies or individuals in Iran and Europeans in Europe – and their deals netted off and settled in their own countries without any cross-border flows. It hasn’t been particularly popular.

The Iranian experience and US threats of sanctions – including threats against businesses working on or financing the Russian-sponsored Nord Stream 2 gas pipeline between Russia and Germany that included the prospect of “crushing” sanctions of a German port that was the logistical hub for the project – caused the Europeans to think more deeply about their vulnerability to the power of the dollar.

Earlier this week the Financial Times reported (and other mastheads subsequently confirmed) that there is a draft of a European Commission policy paper that refers to the difficulty of the EU asserting its independence and using the Iranian experience to argue for measures to shield the EU from the effects of “unlawful extraterritorial application” of US sanctions.

The efforts of China, Russia and the EU to reduce the extent of the US dollar’s dominance have gained momentum, thanks to the Trump administration.

The US sanctions not only impacted SWIFT but also European clearance and settlements platforms for domestic and international bonds, equities and derivatives so it isn’t at all surprising that the EU is searching for structural insulation from the threat of being caught up in future US sanctions.

Promotion of a greater use of the euro to settle transactions between European companies in traditionally US-dollar denominated trades, like commodities, and a shift from using US dollars in financial benchmarks to euros are among the paths being explored.

Network effects – the more the dollar is used in international transactions the more companies, individuals and countries have to use it – make any attempt to undermine the dollar’s reserve currency status problematic but the efforts of China, Russia and the EU to reduce the extent of its dominance have gained momentum, thanks to the Trump administration.

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Longer term, the incentive for countries other than the US to develop something along the lines of the multi-polar digital currency advocated by former Bank of England governor, Mark Carney, will only increase.

It’s not just the sanctions. Dollar dominance reduces the economic and financial independence of economies and the sovereignty of nations. It reduces their flexibility to respond to their own circumstances and, for those with free-floating currencies, can generate external shocks and destabilisation that are difficult to respond to.

If there were a global, or at least international, digital currency with credibility sponsored by the key non-US central banks the dollar’s dominance would be reduced, along with the extraterritorial power and coercive influence of the US.

The resentment, particularly in Europe, of the dollar’s status – it is disproportionate to America’s actual scale in global trade and economic activity – and the consequent under-representation of the euro in global activity relative to the size of the eurozone, existed before Trump’s presidency.

The past four years, with Trump’s trade wars, threats and sanctions on even America’s traditional allies have, however, stressed and perhaps even broken the trans-Atlantic relationship and provided new and more powerful motivation for China, the EU and other economies to reduce their exposure to the dollar and undermine its dominance.

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Bank dividends to bounce back after ‘very grim’ year


Peter Gardner, a senior portfolio manager at $1.8 billion fund Plato Investment Management, said banks’ dividend payout ratios would recover significantly, though distributions would remain below pre-COVID levels. “We certainly expect that bank payout ratios will go from 50 per cent where they have been, to around 70 per cent to 75 per cent,” Dr Gardner said.

Banks set aside billions for bad loans last year, and analysts say over the longer term boards could also announce “write backs” of these provisions, which would further boost profits. However, Dr Gardner said that was unlikely until vaccines had been rolled out widely and the risk of further outbreaks was contained.

Chief investment officer at Atlas Funds Management, Hugh Dive, said the fund had recently increased its weighting to banks, after the “doom and gloom disaster” that was expected in 2020 did not come to pass.

“Last year was a very grim year for bank shareholders,” Mr Dive said. “Looking into 2021, there’s a fair bit of optimism.”

“It’s a bit too soon to see buy-backs, but I think what we will see is some surprising upside in the dividends, particularly if the bad debts are looking a lot more benign than expected.”

The market’s optimism has sparked a sharp rally in bank shares over summer, with industry giant CBA up 23 per cent since that start of November, compared with a 13.7 per cent rise in the ASX 200 over the same period.

CBA’s half-year results, on February 10, are shaping up as a critical gauge of how lenders’ loan books are performing against the uncertain backdrop, and boards’ willingness to return excess capital to shareholders.

Even so, fund managers and analysts cautioned that payouts would not quickly return pre-COVID levels, given the possibility of further lock-downs, diminishing government stimulus payments, and uncertainty about the rollout of vaccines.

Evans and Partners analyst Matthew Wilson forecast the major banks’ dividends would increase by an average of 75 per cent compared with 2020, due to lower bad debt charges and the removal of APRA’s cap on payouts.

Mr Wilson said it was likely that as stimulus was wound back this year, banks would need to remain prudent in their bad debt charges given the backlog in both corporate and personal insolvencies. But the likely hit to bank profits would be nowhere near as severe as feared by markets last year.

“We expect a limited bad debt provision build this year… indeed, write backs may even be possible,” Mr Wilson said.

Angus Gluskie, managing director of $900 million fund White Funds Management, also said he thought banks would feel pressure from investors to increase their dividends. But he added it would not be a rapid bounce-back, as lenders would need to remain prudent as the government’s JobKeeper scheme was withdrawn from March, potentially leading to stress among household and business borrowers.

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Deeper causes of America’s troubles are economic and social


It’s a solitary life, but slowly she makes casual friendships with a whole tribe of other older nomads moving around in search of unskilled casual work. The climax comes when her van breaks down and she must return to suburbia to beg her sister for a loan so she can keep on the move.

Nomadland is a fictionalised version of a non-fiction book, Nomadland: Surviving America in the Twenty-First Century.

Nomadland is a fictionalised version of a non-fiction book, Nomadland: Surviving America in the Twenty-First Century.Credit:Searchlight

It’s a fictionalised version of a non-fiction book, Nomadland: Surviving America in the Twenty-First Century. In the hands of the film’s director, it becomes a story of human resilience, how McDormand’s character and the other nomads learn to adapt and survive. According to the reviews, the movie glosses over the book’s criticism of the poor treatment and payment of people working at a huge Amazon warehouse.

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For a harder-nosed expose of life on the margins of America’s mighty economy, I recommend the recent work of the Nobel prize-winning Scottish American economist, Sir Angus Deaton. With his wife Anne Case, another distinguished economics professor from Princeton University, Deaton has obliged Americans to acknowledge an epidemic that’s been blighting their society for two decades, the ever-rising “deaths of despair” among working-class white men.

These are deaths by suicide, alcohol-related liver disease and accidental drug overdose. Much of the problem is the opioid crisis, in which increased prescription of opioid medications – which the pharmaceutical companies had assured doctors were not addictive – led to widespread misuse of both prescription and non-prescription opioids and many fatal overdoses.

Anne Case and Angus Deaton discovered that life expectancy had suddenly begun to reverse for middle-aged white Americans.

Anne Case and Angus Deaton discovered that life expectancy had suddenly begun to reverse for middle-aged white Americans.Credit:The Washington Post

Deaton and Case found that these deaths of despair had risen from about 65,000 a year in 1995 to 158,000 in 2018 and 164,000 in 2019. This increase is almost entirely confined to Americans – particularly white males – without a university degree.

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While overall death rates have fallen for those with full degrees, they’ve risen for less-educated Americans. Amazingly, life expectancy at birth for all Americans fell between 2014 and 2017 – the first three-year drop since the Spanish flu pandemic. It rose a fraction in 2018, as the authorities finally responded to the opioid crisis.

Deaton and Case have found that, after allowing for inflation, the wages of US men without college degrees have fallen for 50 years, while college graduates’ earnings premium over those without a degree has risen by an “astonishing” 80 per cent.

With the decline in employment in manufacturing caused by globalisation and, more particularly, automation, less-educated Americans have become increasingly less likely to have jobs. The share of prime-age men in the labour force has trended downwards for decades.

President Donald Trump promised to overhaul the establishment.

President Donald Trump promised to overhaul the establishment.Credit:AP

Despite losing the popular vote to Hillary Clinton in 2016, Donald Trump won more votes in the Electoral College partly because most Republicans held their nose and voted for him, but mainly because three or four smaller midwest “rust bucket” states – still suffering from the loss of less-skilled jobs in the Great Recession – switched from the Democrats to the man who promised to give the establishment a big kick up the bum. (Instead, he gave it big tax cuts and more deregulation.)

So Trump is more a symptom than a cause of America’s long-running economic and social decay. Which doesn’t change the likelihood that his woeful mismanagement of the coronavirus pandemic will add to the economic and social causes of deaths of despair.

Deaton and Case say the pandemic has exposed and accelerated the long-term trends that will render the US economy even more unequal and dysfunctional than it already was, further undermining the lives and livelihoods of less-educated people in the years ahead.

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In the pandemic, many educated professionals have been able to work from home – protecting themselves and their salaries – while many of those who work in services and retail have lost their jobs or face a higher risk of infection doing them.

“When the final tallies are in, there is little doubt that the overall losses in life and money will divide along the same educational fault line,” they conclude.

Ross Gittins is the economics editor.

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Banks, Wall St prepare for tougher action from Yellen


Yellen, a former Federal Reserve chair, will argue that “the benefits will far outweigh the costs”. And she will portray her job as having two mandates: helping people to stay afloat until the pandemic is over and rebuilding the economy so that Americans can better compete in a globalised world.

If confirmed, Yellen is expected to bring a very different perspective to the job than her predecessor, Treasury Secretary Steven Mnuchin. That includes Yellen’s approach to financial regulation and protecting the economy against systemic risks.

Two years ago, Yellen co-signed a letter to Mnuchin urging him not to move forward with plans to relax oversight of big financial firms, warning that doing so could threaten the stability of America’s financial system.

‘There’s an emphasis on working people, racial justice and inequality, and that’s a good place to start.’

Lisa Donner, executive director of Americans for Financial Reform

The plea by Yellen, who was joined by Ben Bernanke, another former Fed chair, and former Treasury secretaries Jacob J. Lew and Timothy F. Geithner, went unheeded. Under Mnuchin’s direction, the Financial Stability Oversight Council (FSOC) pressed ahead with plans to stop designating large, nonbank financial institutions like insurers and asset managers as a threat to the financial system, chipping away at a key pillar of the post-financial crisis regulatory era.

Now Yellen is poised to restore some of the Trump administration’s regulatory rollbacks if she wins Senate confirmation.

Her confirmation hearing before the Senate Finance Committee on Tuesday, US time, is expected to focus largely on Yellen’s plans to revive a pandemic-stricken economy. But she will also be under pressure to show Democrats and progressive groups that she is ready to end what they view as Mnuchin’s coddling of Wall Street.

In recent weeks, Yellen and Wally Adeyemo, Biden’s nominee for Treasury’s deputy secretary, have been on a virtual listening tour of industry groups across Washington. According to people who participated in those sessions, the two have emphasised the need to create “equitable growth,” using the tools of the Treasury Department to combat climate change and rebuild regulatory institutions like the FSOC.

“There’s an emphasis on working people, racial justice and inequality, and that’s a good place to start,” said Lisa Donner, executive director of Americans for Financial Reform, an advocacy group that met with Yellen this month. “But reversing things that the current Treasury Department has done is not enough.”

Americans for Financial Reform, a left-leaning organisation that has spent the past four years largely shut out of the Treasury Department, wants Yellen to set a new direction for the FSOC, which has the power to subject big financial firms to stricter oversight. It was created by the 2010 Dodd Frank law to prevent a repeat of what happened in the run-up to the financial crisis, when firms like the insurance giant AIG made risky bets outside of regulators’ reach and then needed to be bailed out by taxpayers.

The Biden administration is likely to get tougher on financial firms after Trump relaxed regulations imposed after the GFC.

The Biden administration is likely to get tougher on financial firms after Trump relaxed regulations imposed after the GFC.Credit:AP

Its power has been winnowed under the Trump administration, which released AIG and three other financial firms from stricter oversight.

Americans for Financial Reform has urged Yellen and transition officials to harness FSOC’s power to designate climate change as a “systemic risk” and create tools to limit leverage at hedge funds, which are only lightly regulated.

Yellen likely has a new regulatory approach in mind. She called last year for a “new Dodd-Frank,” arguing at a Brookings Institution event that existing laws were insufficient for dealing with problems in the “shadow” banking sector that emerged when the pandemic caused severe market turmoil.

The former Fed chair has also demonstrated that she is willing to punish banks for misdeeds when warranted. In 2018, on Yellen’s last day on the job, the Fed required Wells Fargo to replace four members of its 16-person board for failing to properly oversee the bank amid a fraud scandal.

But Yellen’s experience at the Federal Reserve and her understanding of the banking system have eased concerns among some in the financial sector who might otherwise be wary that an incoming Democratic administration will quickly roll out onerous new rules. In meetings with financial services groups, Yellen has indicated that helping to craft and oversee the Biden administration’s economic relief efforts will initially be her top priority.

“She’s extremely knowledgeable about the banking system; she’s familiar with the strength and the role of the large banks, including the positive role that they have played over the last year,” said Kevin Fromer, chief executive of the Financial Services Forum, a lobbying group that also met with Yellen this month.

Yellen will have to recuse herself from Treasury matters involving certain financial institutions as a result of an ethics agreement she signed when disclosing paid speeches that she gave to major corporations and Wall Street banks since leaving the Federal Reserve in 2018. According to her financial disclosure, which was released on New Year’s Eve, Yellen earned more than $US7 million in speaking fees from firms such as Goldman Sachs, Citigroup and Citadel.

Jeff Hauser, the director of the Revolving Door Project, called on Yellen to release the contents of her speeches. But he said that they were less troubling than some of the consulting work that Biden’s other nominees have done in recent years for firms such as Blackstone, a giant asset manager run by Stephen Schwarzman, and the data-mining company Palantir.

The Biden transition team has declined to make videos or transcripts of the speeches public, noting that she was usually participating in unscripted discussions about the economy.

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“This is the worst economic crisis in 100 years, and nobody is better qualified than Secretary-designate Yellen to lead an economic recovery,” said Senator Ron Wyden of Oregon, who will become the Finance Committee chairman when Democrats take control of the Senate. “She deserves much of the credit for the longest economic expansion in our history, which lasted until the pandemic hit.”

The confirmation process is expected to be a relatively smooth one. Senator Charles E. Grassley of Iowa, currently Republican chairman of the Finance Committee, has spoken positively of Yellen since Biden picked her for the job.

Grassley said on Friday that he had spoken to Yellen and said he emphasised to her the importance of cooperation with congressional oversight, and also expressed concern that tax increases and more regulation would slow the economic recovery.

In 2014, the Senate confirmed Yellen to be Fed chair by a vote of 56-26.

While Yellen, an economist by training, has a deep understanding of monetary policy, the portfolio at the Treasury Department is vast. She will likely face questions about America’s economic relationship with China, her position on sanctions policy as it relates to Iran and her thoughts on tax policy.

Before Yellen’s hearing, several groups have suggested that they are enthusiastic for a change in tone and personnel at Treasury. Mnuchin has managed the department with a small staff and was most receptive to executives from large banks and companies.

In her testimony, Yellen will make clear that fostering greater equality is a priority.

“People worry about a K-shaped recovery but well before COVID-19 infected a single American, we were living in a K-shaped economy, one where wealth built on wealth while working families fell further and further behind,” she will say. “This is especially true for people of color.”

New York Times

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Top investor says climate change is the biggest opportunity since the internet


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Mr Griffin said the push by governments in the European Union and China as well as major corporations such as Microsoft and BHP to be carbon neutral by 2050 meant companies engaged with climate change are a “great place to invest over the next 20 years”.

“We think there was a pandemic last year that got a lot of attention. But there was a quasi-epidemic occurring of countries, companies, councils, states, you name it, announcing zero carbon targets.”

Mr Griffin said Denmark was ahead of the curve when it came to green investments.

“Two of the biggest renewable companies in the world happen to be listed in Denmark, a country that’s tiny,” he told this masthead. “Those two companies make up $150 billion in market cap – one is bigger than our biggest company in Australia.

“It disproves the argument that focusing on climate is negative for the economy. It’s actually positive, you just should have done it first.”

Munro’s global fund is not invested in any Australian companies and while Mr Griffin said he was focused on international opportunities, he acknowledged Australia’s federal policy settings had not fostered innovation in this sector.

“If the best business was here, we would look at it, but we haven’t seen anything so far that rivals what we can find outside of Australia,” he said.

Mr Griffin said government policy on climate change had increasingly become irrelevant as the corporate world was moving independently to facilitate the transition to a low carbon future.

“The reality is most companies in the world recognise the problems in the world and working hard internally to solve them,” he said. “If you look at BHP, they’ve committed to a zero carbon target. The reality is, I don’t think the federal policy settings actually make that bigger difference here.”

Speaking at the same forum, Tribeca partners senior portfolio manager Jun Bei Liu said she would allocate a portion of her portfolio to growth stocks but was also seeking opportunities in old world companies that are set to benefit from the post-COVID bounce – including aviation, shopping centres and housing.

“We also look to make money out of the high quality players that are trading at a significant discount now,” she said. “In the next 12 months, we expect to return to pre-COVID levels.”

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Pot stocks riding high on Biden optimism


The company is focused on bringing a cannabis inhaler called Medihale to market, believing the vaping product can attract global demand.

Lifespot shares opened at 10.5¢, 250 per cent higher than where they were 12 months ago.

Ela’s initial stake in the business, which will be worth just under $800,000, will help boost the company’s strategic position as global cannabis stocks eye opportunities after President Joe Biden’s inauguration this week.

The President-elect has traditionally been tough on drugs but the industry hopes a Democrat-led administration could help research-focused cannabis businesses thrive.

The Democrats look likely to allow financial institutions to work more freely with cannabis companies and help boost scientific research behind the drugs.

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“Regardless of whether it was the Democrats or Republicans, the industry was going to move towards a more open market,” Mr Golden said.

“I think with the Democrats, you are probably going to see a more science-based approach, and … whether there is scientific evidence which is supportive [of products].”

Local cannabis stocks spiked at the end of 2020 after the House of Representatives voted in favour of the MORE Act, which was seen as a major first step towards national decriminalisation of marijuana in the United States.

This helped to build momentum that was already growing among some small cap cannabis companies. Alex Waislitz-backed Zelira Therapeutics is up 75 per cent over the past 12 months.

Incannex is backed by high profile investors including former Ellerston Capital chief executive Glenn Poswell.

Incannex is backed by high profile investors including former Ellerston Capital chief executive Glenn Poswell.Credit:Janie Barrett

Shares in Incannex, which counts former Ellerston boss Glenn Poswell among its investors, has gained 112 per cent over the past year as it advances trials for cannabis and magic mushroom-based therapies.

Co-founder of Lifespot investor Cannvalate, Darryl Davies, said he expected 2021 to be a big year for medical cannabis as the push to further deregulate products in the US continues. “It will likely transition towards being regarded as part of mainstream medicine,” he said.

Australian companies now had the opportunity to build up clinical evidence that products that were previously only used on the “black market” would be effective.

“There will no doubt be an influx of new players coming io the market, both in Australia and internationally,” Mr Davies said.

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From corporate kryptonite to retail rainmaker


Billionaire retailer, Solomon Lew, ignored the public relations consequences in favour of picking up an executive bargain. The year after leaving David Jones, McInnes began his professional rehabilitation at the helm of Premier Retail.

The partnership of Lew and McInnes has been one of the most successful in the history of Australian retailing and richly rewarding for both.

But in a year it will come to an end. The decision to leave was entirely McInnes’, according to the ASX statement from Premier which said he was resigning to give more time to his family.

By the time McInnes will be able to rejoin the workforce he will be 58 and considered unlikely to take on another chief executive role.

And where he left millions of dollars in entitlements on the table when he left David Jones, McInnes will receive what is sure to be a hefty short term incentive payment, plus a full year’s base salary of $2.7 million. He has already pocketed Premier shares from vested long term incentives worth more than $23 million at today’s share price.

Lew has ensured McInnes, who will work out one year’s notice, won’t turn up working for a competitor – the terms of his departure include two years’ retail industry gardening leave during which Premier will pay him his base pay for both years – a total of $5.4 million.

By the time McInnes will be able to rejoin the workforce he will be 58 and considered unlikely to take on another chief executive role.

He will likely be in demand as a consultant, while there is speculation he would be sought after in private equity circles.

Based on the half year profit update Premier Retail delivered to the market last week – expected to be up as much as 85 per cent on the same period last year – McInnes is leaving on a particularly high note.

Since joining Premier in 2011, the company’s share price has increased fourfold. When McInnes joined the company its market capitalisation was about $900 million, today it is roughly $3.75 billion.

Smiggle chief executive John Cheston and Peter Alexander boss Judy Coomber are seen as internal contenders to replace Mark McInnes.

Smiggle chief executive John Cheston and Peter Alexander boss Judy Coomber are seen as internal contenders to replace Mark McInnes.Credit:Louise Kennerley

Under McInnes, Premier has rolled out its Smiggle brand internationally, has successfully overhauled its distribution and logistics to profitably expand online sales and undertaken a massive overhaul of its physical stores – closing many and renegotiating deals with landlords to reduce rental costs.

Clearly Lew feels more than vindicated by his decision to employ McInnes – it is a relationship that has been particularly profitable for Lew who is a 42 per cent shareholder in Premier. His Premier shares are worth more than $1.5 billion.

“Premier has delivered year on year record operational and financial performance under Mark’s leadership. We have thrived in very challenging times while many of our competitors have struggled or failed,” Lew said on Monday.

But now Lew faces the unenviable task of replacing McInnes – the man described as the tough guy of retailing.

The two potential internal candidates are said to be Smiggle’s chief executive, John Cheston, and Peter Alexander boss Judy Coomber.

Lew is particularly well connected in international retail circles, so is in a good position to find offshore candidates. But even Lew would need to concede the history of management imports to Australian retail has been mixed.

There are big shoes to fill and this was reflected in the 3.25 per cent fall in Premier’s share price on Monday.

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Fallen neobank Xinja probed by secret US website offering $1m rewards


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“Work with us!”

The website claims to be seeking “tips and insider information” related to the deal and includes instructions on how to get in touch anonymously using encrypted email servers.

“We protect our sources and offer legal assistance to whistleblowers in the US, Australia and Europe,” the website says.

Xinja said it was not aware of any US investigation and had not been contacted by the owners of the website.

The Byron Bay-based advisory firm was lauded for brokering the deal with Dubai-based World Investments that shareholders and customers were told would be delivered in instalments.

Xinja claimed in March it would receive $160 million “immediately”, with the balance transferred over a two-year period.

However, no money has materialised and Xinja is now in the process of terminating its banking licence, closing all customer accounts and returning deposits.

Internal communications from First Penny, obtained by The Age and The Sydney Morning Herald, show the company was set to clip 2 per cent of the deal, making it about $7 million in fees had it been completed.

One former staff member, who declined to be named, said employees were told the deal would bring money into the firm that would enable outstanding invoices to be paid.

“They’re all about to start deserting him like the sinking ship,” one former employee said, who spoke on the condition of anonymity.

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Xinja said the last formal communication with World Investments was in September when the funds agreement was updated and re-signed by all parties.

Mr Gale said in December the deal had not been terminated but added: “I really can’t comment about their intentions following Xinja’s change of business model.”

Mr Gale has a string of soured business deals behind him, including a venture with Seek co-founder Matt Rockman, with his resume spanning four continents and more than three decades.

Former and current staff members who invested in the MPP fund say they have received no information about the status of these investments from the fund directors or First Penny. “I guess we’ve lost the lot,” said one who spoke on the condition of anonymity.

The owners of the “Xinja tips” website and Mr Gale were contacted for comment but neither responded.

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Locked-down Aussies spend up big on electronics, camping


“All the camping categories performed very strongly. And you don’t just buy a tent, there are a number of other things you have to buy to make that all work,” Mr Heraghty said.

At the company’s sports retailer Rebel, like-for-likes sales jumped 17 per cent in the six months to December, while the number of customers buying their sporting goods online increased by 102 per cent.

Mr Heraghty said the pandemic had shown clearly that “online [retail] is no longer just a side project, it’s the main game”.

Super Retail CEO Anthony Heraghty said online retail was no longer a side project.

Super Retail CEO Anthony Heraghty said online retail was no longer a side project. Credit:

JB Hi-Fi chief executive Richard Murray said shoppers appeared to be more “mission focused” in the age of COVID-19, and the ongoing trend towards work-from-home would help sustain the company’s sales.

“I think more people will say ‘I want to basically duplicate my office environment at home,'” he said.

Solomon Lew’s Premier Investments, which operates the Smiggle and Peter Alexander brands, hit record share price highs last week when it also revealed an uptick in online sales will push its earnings 85 per cent higher over the past six months.

Paul Zahra, chief executive of the Australian Retailers Association, said strong trading updates were encouraging, but warned coronavirus was set to impact retails for some time.

“Australian households have a lot to be positive about especially when they see images of how COVID-19 has devastated other countries around the world and this is having a positive impact on consumer confidence,” Mr Zahra said.

“Even with a vaccine in place, we are likely to live with the virus for some time – albeit at a reduced level, so some of the existing challenges will remain.



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QBE expands COVID-19 provision after losing UK insurance case


The industry has sought to prove the exclusions were valid by launching a test case in the NSW Supreme Court of Appeals however five judges unanimously sided with policyholders in November. The Insurance Council of Australia has since launched an appeal to the High Court.

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“While the insurance industry is sympathetic to businesses, particularly small and medium enterprises, that have experienced hardship as a result of COVID-19 restrictions, it remains of the view that pandemics were not contemplated for coverage under most business interruption policies and that the Quarantine Act exclusion excludes COVID-19 related claims,” an ICA spokeswoman said.

In the UK, a similar test case was launched by the corporate regulator. The initial ruling found mostly in favour of policyholders and on Friday the UK Supreme Court knocked out the insurers’ main grounds for appeal.

Litigation funder ICP and law firm Clayton Utz have now set up a taskforce to analyse Australian business interruption policies and help business owners make claims for losses relating to COVID-19.

If the insurers refuse to pay out claims deemed eligible, ICP managing director John Walker said a class action would be launched to redeem funds.

The industry has argued it never intended to cover businesses from the financial fallout from the pandemic, and it has not been charging the correct premiums to reflect this.

However, Mr Walker said this perspective was “an omission of a stuff up”.

“The actual intent of the industry is not relevant to its obligations,” he said. “Its contractual obligations are to be construed from the words of the policy. If they wrote words in their policy that was not consistent with their intention, that’s their issue it’s not the insured’s issue.”

More than 100 small businesses had contacted his firm, however, Mr Walker said he expects this to reach “in the tens of thousands”, adding failure to pay could have wider implications for the economy.

“The insurers are now provisioning billions of dollars for the potential payout of these policies. That’s money that has been lost by businesses in Australia,” Mr Walker said. “So the ramifications of denial and delay in paying out valid claims is immense to those individuals and to the economy.”

Insurance Australia Group was placed into a trading halt after the unfavourable NSW Court ruling and subsequently launched a $750 million capital raising in November to brace for a spike in claims.

Business interruption policies are typically held by public-facing businesses, including restaurants, bars and gyms, that were forced to close due to nation-wide lockdowns.

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