The Daily Visionary: Monday, November 19, 2018

Photo Credit: Getty Images

Photo Credit: Getty Images

Facebook pays USD $69 million to dismiss investor lawsuit over Zuckerberg control

 

Facebook settled a lawsuit last month for USD $69 million to investors who sued the company for legal fees incurred fighting CEO Mark Zuckerberg's controversial proposal to increase his control of the company. Mr. Zuckerberg has planned to create a new class of non-voting share, which would have allowed him to sell down his stake to fund his charitable endeavours while retaining his 60 percent share of voting rights. After the investors launched their original lawsuit last September, Mr. Zuckerberg abandoned his plan and then filed a new lawsuit against Facebook for their legal costs. The investors sought USD $129 million from the court, whereas Facebook argued they only deserved USD $20 million.

 

Mr. Zuckerberg already controlled a majority of Facebook's voting rights through its special class B shares but proposed to further dilute the company's voting stock so that he could sell off his stake while retaining control. In 2015, Mr. Zuckerberg pledged to sell or give away 99 percent of his Facebook stock during his lifetime in order to found the Chan Zuckerberg Initiative, a charitable foundation he created with his wife Priscilla Chan. Investors objected, and Mr. Zuckerberg abandoned the plan just four days before he was due to testify in that lawsuit, claiming that it was no longer necessary because Facebook's stock had grown so valuable that he could sell enough to "fully fund" his philanthropy without losing control.

 

The settlement means Zuckerberg will avoid having to testify in a court in Delaware, where he had been scheduled to appear on Monday to explain to a judge precisely why Facebook changed its mind on the share reclassification. "Following extensive, arms-length negotiations, the company has agreed, in the exercise of business judgement, to resolve the fees and expenses motion," Judge J. Travis Laster wrote. "Defendants continue to deny any and all allegations that they engaged in wrongdoing in any way, and the company has agreed to resolve the motion due to the costs of defense of that application and litigation risk." Facebook declined to comment on the outcome of the case.

 

Last week, revelations surfaced that Facebook had used a "dark arts" PR firm, Definers, with its own "in-house fake news shop" to spread negative information about its critics. On Friday, investors called for Mr. Zuckerberg to step down as chairman of Facebook's board, warning that his dual role had created a "concentration of power" that led it to hide from its problems. Facebook claimed it had never asked Definers to publish any "misinformation" and Mr. Zuckerberg said he had terminated Facebook's relationship with the firm as soon as he found out about it.

 

No end in sight for Canada Post strikes after the postal workers' union rejected the corporation’s latest offer

 

Canada Post workers have now been on strike since October 22, and the growing backlog of deliveries are now anticipated to not guarantee delivery before Christmas. Late last week, Canada Post asked 190 partner countries to suspend mail shipments to Canada because of a backlog of deliveries resulting from the labour dispute. Both sides say they are committed to reaching a resolution and continuing negotiations to reach a settlement for about 42,000 urban employees and 8,000 rural and suburban carriers. The strikes are now into their fourth week and have touched virtually every Canada Post facility and every Canadian address so far.

 

On Friday, the Canadian Union of Postal Workers (CUPW) said the latest proposals from Canada Post were positive steps but not enough to end the rotating strikes that have shut down postal operations in more than 200 communities. It said it would not bring the offers to a vote of its members, although both sides remained at the bargaining table.

 

Canada Post presented its latest offer on November 14, and set to expire Sunday, November 18, with the following terms:

  • A two-per-cent annual wage increase;

  • Overtime pay for working more than 40 hours; and

  • The creation of 500 full-time positions over three years.

 

Saturday saw several developments. The CUPW issued a request for the federal government to appoint a mediator in its contract talks with Canada Post, rejecting the Crown corporation’s latest offers.  The CUPW then released a list of demands in response to the company's offer, including:

  • 2.9 percent annual wage increase;

  • Double time pay for working a sixth or seventh day; and

  • New wage advancements for temporary workers, based on working 1,000 hours in a fiscal year.

 

The Retail Council of Canada urged Ottawa to “bring an immediate end” to the rotating strikes through back-to-work legislation. Council president Diane Brisebois wrote a letter to Prime Minister Justin Trudeau, stating, “Just as retail merchants, our workforce of two million and our customers enter the busiest time of year, the postal system is grinding to a near-halt.

 

Last week, eBay called on the government to legislate an end to the dispute in time for Black Friday and Cyber Monday sales events tied to the American Thanksgiving. PM Trudeau responded saying “all options” would be on the table to end postal disruptions if there was no progress in bargaining. A government source, speaking on condition of anonymity, said decisions on how to end the job action by postal workers could come as early as Sunday, adding that “‘all the options’ does include legislating.” After the deadline passed on Sunday for the CUPW to accept its proposals, Canada Post said it was “determining next steps.”

 

Anti-fuel tax protests in France results in one person killed and hundreds injured

 

French President Emmanuel Macron has been accused by the public of being out of touch with the problems of ordinary people. Although the protests were sparked by higher fuel prices, they are a symptom of a wider crisis of confidence in President Macron’s centrist government.  A nationwide wave of peaceful protests aimed at French president Emmanuel Macron began when demonstrators from the gilets jaunes – yellow vests – movement called for people to turn out and gridlock France’s road network to show their anger at increases in fuel taxes.

 

As early-morning demonstrators gathered around the country, one person was killed at Pont-de-Beauvoisin in the south-east Savoie region. The local prefect, Louis Laugier, said a motorist taking one of her children to the doctor had been stopped by protesters at a roundabout, but ran over a 63-year-old woman after demonstrators began banging on the roof of her car. “It appears the woman panicked, accelerated and ran over a person who died,” Laugier said. The driver was arrested. Across France, 106 people were injured, five seriously. In Arras in the north a 71-year-old demonstrator struck by a car suffered serious injuries. Police said most of the accidents were caused by drivers colliding with crowds of protesters as they tried to force their way through roadblocks.

 

The gilets jaunes movement had called on supporters to force a go-slow outside city centres, airports, motorways and major roads, in protest at government increases in taxes on petrol and diesel. By mid-Saturday, police said around 244,000 people had turned out at two thousand demonstrations across the country, including French overseas territories such as Corsica.

Police used teargas in clashes with protesters, slowing vehicles entering the Mont Blanc tunnel linking France and Italy, and demonstrators completely blocked the Pontde Normandie across the Seine that links Le Havre to Honfleur. As night fell, dozens of police reinforcements were deployed in central Paris to prevent demonstrators reaching the Élysée Palace. The gilets jaunes had said it wanted to have a show of numbers, not of force, but the authorities feared the peaceful protest could degenerate. Fifty-two people were arrested, police said.

 

Ministers and government officials justify the latest tax increases as a necessary measure to wean France from its dependence on fossil fuels. This is rejected by the protestors; “We need reform, but not to the detriment of people’s pockets. We all bought diesel vehicles because we were told they were good, now they are punishing us because they say diesel is bad,” said Roger Ordonez, owner of a building company. “They are killing us off. We open our mouths they tax us, we shut them, they tax us. What is happening is totally unfair and we are totally fed up with this government.” The French government has offered financial aid for motorists who want to exchange older vehicles for newer cleaner models, but critics say it is not enough. A survey by pollster Elabe for Le Figaro newspaper found 73 percent of people supported the gilets jaunes action and 70 percent wanted the government to abandon its fuel tax increases.

 

Irish economy is in danger of overheating, say bailout officials

 

In recent weeks both the Irish central bank Governor, Philip Lane, and the head of the European Central Bank, Mario Draghi, have said that the Irish economy may be overheating, adding to fears about how a Brexit-related shock could shake the country’s fragile banking system. The United Kingdom is the destination for 15 percent of Irish exports and 25 percent of its imports. A team of officials from the European Commission tasked with overseeing the state’s ability to repay loans have reported that “signs of overheating” are building, amid “significant risks” which are “overshadowing the economic outlook”.

 

In the aftermath of the last global financial crisis, which started in 2007, Ireland sought a bailout of €85 billion in a joint programme from the EU and the International Monetary Fund to fund both its state and banking system, along with other bilateral loans from Denmark, Sweden and the UK. Ireland continues to recover from the severe effects of the crisis that caused Irish GDP to fall by 11 percent from its 2007 peak and cost 300,000 jobs.

 

Approximately 10 percent of Irish mortgages are still in negative equity, and banks’ balance sheets still hold a high level of bad loans. Repossession rules in the country make it very difficult to remove these. Overall, bad loans total 9.2 percent of Irish banks’ exposure, more than double the 4 percent eurozone average, according to the ratings agency Moody’s.

 

Inflated figures for Irish growth are also potentially flattering the overall rates of GDP growth reported for the eurozone. Martin Beck of Oxford Economics said, “While Ireland has posted the fastest growth in the eurozone for the past three years, official statistics overstate the underlying pace of growth.

 

Andrew Gillum Concedes Florida Governor Race to Republican Ron DeSantis

 

Democratic candidate Andrew Gillum conceded Florida’s gubernatorial race Saturday to Republican Ron DeSantis, a former Florida representative. Gillum had initially conceded on election night on November 6th but backtracked as more votes were counted and the race appeared closer than originally thought. Ultimately, DeSantis was approximately 30,000 votes ahead after a machine recount. Earlier in the week, President Donald Trump appeared to anticipate Gillum’s loss, posting on Twitter that the candidate is a “strong Democrat warrior” and will be a “force to reckon with.”