Business
Post Office prosecutions ‘corrupt’, ex-minister Greg Clark says
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The Post Office brought prosecutions against sub-postmasters in a way that was “corrupt”, “unreliable” and “totally unconscionable”, a former business secretary has said.
Greg Clark – who held the position from 2016 to 2019 – told the Post Office IT scandal inquiry the management culture of the Post Office was “insensitive and dismissive to the point of abject rudeness”.
However, like former business secretary Vince Cable, who appeared before the inquiry on Thursday morning, Mr Clark said the Post Office had not made him aware of any issues.
Mr Cable, who held the position between 2010 and 2015 said he was unaware of the prosecutions, despite being in charge of the organisation while in government.
The former Lib Dem leader also referred to Post Office managers as “thugs in suits”.
In what has been called the UK’s most widespread miscarriage of justice, more than 900 sub-postmasters were prosecuted for stealing because of incorrect information from a computer system called Horizon between 1999 and 2015.
The Post Office was able to both investigate and prosecute these sub-postmasters itself because of the way it is set up, a structure heavily criticised by campaigners.
Some of the sub-postmasters went to prison for false accounting and theft, and many were financially ruined.
In 2017, 555 of them took legal action against the Post Office. In 2019, it agreed to pay them £58m in compensation, but much of the money went on legal fees.
The High Court judgement found that the Horizon IT software contained a large number of software defects and was not “remotely robust”, which caused shortfalls with sub-postmasters’ accounts, and that there was a “material risk” that shortfalls in Post Office branch accounts were caused by the system.
When questioned about the High Court judgement, Mr Clark said he was “angry” and accused the Post Office of playing a “legal game” for “tactical” reasons when the Post Office said it would appeal the judgement.
He said he kept “nuclear options” on the table to resolve Horizon litigation, including firing the entire board.
During the morning session of the inquiry, Sir Vince admitted, under questioning from Jason Beer KC, a share of responsibility for the scandal.
Despite being in charge of the Post Office during his tenure, Sir Vince said he did not know this until “right at the end” of his time in office, which was around 2015.
“This was an area of the department where clearly there was a policy failure,” he said.
Sir Vince said he was aware of more general issues with the Post Office at the time.
In his first meeting with then-Post Office chief executive Paula Vennells, he said he had “a spirited discussion when I raised the treatment of postmasters”.
He added in his witness statement that the Post Office was “authoritarian” and “dealt with us in an arrogant way”.
He also said in the statement that he agreed with former sub-postmaster Sir Alan Bates’ description of Post Office middle-management as “thugs in suits”.
![Getty Images Sir Vince Cable in a blue suit with a colourful patterned tie photographed in the street walking towards his evidence session for the Post Office Horizon IT Inquiry](https://ichef.bbci.co.uk/news/480/cpsprodpb/bc73/live/82d00a10-4a61-11ef-935f-59cf6f181f38.jpg.webp)
Sir Vince described the Post Office at the time as a “monopoly”, which he wanted to change.
He said he had wanted to “address the imbalance” between the Post Office and sub-postmasters by creating a “mutual structure”, which would have in effect given sub-postmasters control of the organisation.
He said he raised some of these issues with Ms Vennells but the mutualisation “unfortunately never came to fruition”.
Instead, the Post Office was split from the Royal Mail group under Sir Vince’s watch and remains a government-owned company.
Mr Beer questioned why Sir Vince, despite raising these general concerns, was not aware of serious problems with Horizon until 2015.
A letter from 2012 signed by Sir Vince to then-Labour leader Ed Miliband said he “remains fully confident about the robustness and integrity” of the Horizon software.
It was written in response to Mr Miliband’s concerns about a sub-postmaster. Sir Vince said he never saw the letter, despite it being written on his behalf.
“The problem was there were about several hundred letters, and emails, [that] would come in every day,” he said, adding that he was on international visits at the time.
Business
Russia economy: Relying more China’s yuan is backfiring
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After the U.S. and its allies sanctioned Russia in 2022 for its invasion of Ukraine, Moscow turned away from the dollar and euro in international transactions and relied more on China’s yuan.
That coincided with more trade between the two countries as Russia was largely shut out of Western markets as well as the global financial system.
By June, the yuan accounted for 99.6% of the Russian foreign exchange market, according to Bloomberg, which cited data from Russia’s central bank. And Russian commercial banks ramped up corporate loans denominated in yuan.
But this dependence on the yuan is now backfiring as top Russian banks are running out of the Chinese currency, Reuters reported on Thursday.
“We cannot lend in yuan because we have nothing to cover our foreign currency positions with,” German Gref, CEO of top Russian lender Sberbank, said at an economic forum.
That’s because the U.S. expanded its definition of Russia’s military industry earlier this year, thereby widening the potential scope of Chinese firms that could get hit with secondary sanctions for doing business with Moscow.
As a result, Chinese banks have been reluctant to transfer yuan to Russian counterparts while servicing foreign trade payments, leaving transactions in limbo for months. With yuan liquidity drying up from China, Russian companies have tapped the central bank for yuan via currency swaps.
At the start of this month, banks raised a record 35 billion yuan from Russian’s central bank through these swaps, according to Reuters. And banks were expecting more help.
“I think the central bank can do something,” Andrei Kostin, CEO of second-largest bank VTB, said Thursday. “They hopefully understand the need to increase the liquidity offer through swaps.”
But on Friday, Russia’s central bank dashed those hopes, calling on banks to curb corporate loans denominated in yuan.
The Bank of Russia also said in a report that swaps are only meant for short-term stabilization of the domestic currency market and are not a long-term source of funding, according to Bloomberg. But rather than simply filling the roles that dollars and euros did, yuan loans have expanded.
“The increase in yuan lending was partly caused by the replacement of loans in ‘toxic’ currencies, but 41% of the increase was down to new currency loans,” the bank said.
The central bank also released a survey that showed a quarter of Russian exporters had trouble with foreign counterparts, including blocked or returned payments even when dealing in supposedly friendly countries. And about half of exporters said the problems got worse in the second quarter from the prior quarter.
The overall Russian economy has been propped up by the government’s wartime spending as well as oil exports to China and India. But the combination of busy factories and labor shortages due to military mobilizations have stoked more inflation.
Researchers led by Yale’s Jeffrey Sonnenfeld warned the seemingly robust GDP data mask deeper problems in the economy.
“Simply put, Putin’s administration has prioritized military production over all else in the economy, at substantial cost,” they wrote. “While the defense industry expands, Russian consumers are increasingly burdened with debt, potentially setting the stage for a looming crisis. The excessive focus on military spending is crowding out productive investments in other sectors of the economy, stifling long-term growth prospects and innovation.”
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Business
ETFs are set to hit record inflows, but this wild card could change it
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Exchange-traded fund inflows have already topped monthly records in 2024, and managers think inflows could see an impact from the money market fund boom before year-end.
“With that $6 trillion plus parked in money market funds, I do think that is really the biggest wild card for the remainder of the year,” Nate Geraci, president of The ETF Store, told CNBC’s “ETF Edge” this week. “Whether it be flows into REIT ETFs or just the broader ETF market, that’s going to be a real potential catalyst here to watch.”
Total assets in money market funds set a new high of $6.24 trillion this past week, according to the Investment Company Institute. Assets have hit peak levels this year as investors wait for a Federal Reserve rate cut.
“If that yield comes down, the return on money market funds should come down as well,” said State Street Global Advisors’ Matt Bartolini in the same interview. “So as rates fall, we should expect to see some of that capital that has been on the sidelines in cash when cash was sort of cool again, start to go back into the marketplace.”
Bartolini, the firm’s head of SPDR Americas Research, sees that money moving into stocks, other higher-yielding areas of the fixed income marketplace and parts of the ETF market.
“I think one of the areas that I think is probably going to pick up a little bit more is around gold ETFs,” Bartolini added. “They’ve had about 2.2 billion of inflows the last three months, really strong close last year. So I think the future is still bright for the overall industry.”
Meanwhile, Geraci expects large, megacap ETFs to benefit. He also thinks the transition could be promising for ETF inflow levels as they approach 2021 records of $909 billion.
“Assuming stocks don’t experience a massive pullback, I think investors will continue to allocate here, and ETF inflows can break that record,” he said.
Business
Tens of thousands in South Korea protest lack of climate progress By Reuters
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By Sebin Choi and Daewoung Kim
SEOUL (Reuters) – More than 30,000 protesters gathered in South Korea’s capital in broiling heat on Saturday, demanding more aggressive action by the government to combat global warming.
With temperatures exceeding 30 degrees Celsius (86 degrees Fahrenheit), protesters young and old marched in the country’s biggest demonstration so far this year, snarling traffic in central Seoul.
They waved large banners reading “Climate justice,” “Protect our lives!” and “NO to climate villain (President) Yoon Suk Yeol’s administration”.
“Truth is, without the air conditioner this summer was not liveable and people could not live like people,” said Yu Si-yun, an environmental activist leading the protest.
“We are facing a problem not unique to a country or an individual. We need systemic change and we are running out of time to act.”
Organised by the 907 Climate Justice March Group Committee, the protest followed a ruling last month by South Korea’s top court that the nation’s climate change law fails to protect basic human rights and lacks targets to shield future generations.
The 200 plaintiffs, including young climate activists and even some infants, told the constitutional court that the government was violating citizens’ human rights by not doing enough on climate change.
South Korea, which aims to be carbon-neutral by 2050, is the biggest coal polluter after Australia among the Group of 20 big economies, with a slow adoption of renewable energy. The government last year lowered its 2030 targets for curbing industrial greenhouse-gas emissions but kept its national goal of cutting emissions by 40% from 2018 levels.
Even South Korea’s kimchi has fallen victim to climate change. Farmers and manufacturers say the quality and quantity of the napa cabbage used in the ubiquitous pickled dish is suffering due to intensifying heat.
“Feel how long this summer is,” said Kim Ki-chang, a 46-year-old novelist who was participating in the protest for a third straight year.
“This would be a much bigger threat and survival issue to younger generations than the older ones, so I think the older generation should do something more actively for the next generation.”
Seoul has had a record 20 consecutive nights defined as “tropical”, with low temperatures remaining above 25 C (77 F).
Protest organising committee member Kim Eun-jung said the demonstrators chose the popular Gangnam financial and shopping area this year, not the Gwanghwamun area they used last year, to have their voices heard by the many big corporations there that the group blames for carbon emissions.
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