Aurelia Butler

NEW DELHI (Reuters) – Sequoia Capital India has asked a local court to dismiss a defamation lawsuit filed by one of its former general counsels, saying it was an attempt to curb its free speech rights and harm its interests, the venture capital firm’s court filing shows. Sequoia has been locked in a legal battle with Sandeep Kapoor, after he included the company in a defamation lawsuit against media companies that reported on a leaked Sequoia email of June 2. Kapoor was Sequoia’s in-house general counsel for nearly nine years until 2019. The lawsuit is the latest in a series of troubles for Sequoia that have the company grappling with complaints from startups about damaged trust following high-profile governance scandals at some of its portfolio companies in India and Southeast Asia. Kapoor’s firm, Algo Legal, has said in a press statement and its lawsuit that Sequoia sent an email to its portfolio companies this month making baseless references to “concerning details” about the law firm that hurt its business and reputation. Sequoia denied the allegations in a 19-page court filing in India’s tech hub of Bengaluru on June 18, calling the lawsuit “frivolous and vexatious” and saying it was duty bound to inform its portfolio companies when it detected certain irregularities. An independent probe at Sequoia Capital-backed fashion startup in Singapore, Zilingo, found certain payments made to Algo and its related entities “were not in consonance with the engagement terms/contracts”, forcing Sequoia to caution its portfolio companies from dealing with the law firm, the court filing states.Sequoia’s filing, which has been seen by Reuters, has not been made public. A spokesperson for Algo and Kapoor said on Sunday they told the court on Saturday the investigation into Zilingo’s affairs is ongoing and there was no final finding, and that Sequoia’s allegations in the filing were without merit. Detailing the Zilingo probe’s findings for the first time, Sequoia said it found the fashion startup paid Algo and its related entities more than $6 million between 2020 and 2022. In such circumstances, Sequoia said, its “right to freedom of speech prevails over the plaintiff’s right of reputation since the statement was issued without any malice and without any intention to defame.” Sequoia was Algo’s top client in billings, but the U.S. venture capital firm ended its engagement with Algo in January. Sequoia on Sunday declined to comment on its court filing. The Bengaluru court will next hear the matter on June 29. Zilingo in April suspended its 30-year-old CEO and cofounder Ankiti Bose, a former Sequoia analyst, over suspected financial irregularities. Bose was later dismissed in what she has said was a wrongful termination.Zilingo and Bose did not immediately respond to a request for comment on Sunday. Bose’s removal, Zilingo has previously said, followed an independent investigation into complaints about what the startup described as “serious financial irregularities”. More

Did UK inflation stabilise in May?After surging in April, UK inflation is expected to stabilise over the next few months — albeit remaining at historic levels — before reaching new heights later this year.Economists polled by Reuters expect UK consumer price growth to have hit 9.1 per cent on an annual basis in May. That figure would represent little change from the 40-year high of 9 per cent reached in April, when a jump in the country’s energy price-cap bill led to a sharp rise from 7 per cent in the previous month.“We are expecting fewer fireworks in the May CPI release,” said Ellie Henderson, economist at Investec. She forecast the headline consumer price index rate to remain at 9 per cent in May, but expects a combination of firmer food costs, higher petrol prices and another steep uptick in the energy price cap in October to push inflation into double figures in the second half of the year.This is in line with forecasts by the Bank of England which last week said it expects inflation to average above 11 per cent in the last quarter but pointed out that “risks to the inflation projection were judged to be skewed to the upside.”In order to bring inflation down closer to the bank’s target of 2 per cent, markets expect the bank to increase interest rates to 3 per cent by the end of the year, from the current level of 1.25 per cent. They are also pricing a more-than 50 per cent probability of a 0.5 percentage point interest rate rise at the BoE’s next policy meeting in August, which would be the sixth consecutive rise in rates. Valentina RomeiHow far has eurozone inflation hit business activity in June?As the European Central Bank prepares to end its era of easy money and start raising interest rates, economists will be tracking whether business activity has grown at a slower pace than expected in the face of surging inflation.A monthly survey released on Thursday is forecast to show that eurozone business activity expanded in June, but at a slower pace than in May. Economists polled by Reuters predict that the ‘flash’ or early reading of the S&P Global composite purchasing managers’ index for the eurozone will come in at 54 compared with 54.8 a month earlier. Any number above 50 indicates growth rather than contraction.That consensus estimate comes as businesses and consumers in Europe grapple with record inflation levels stemming from supply chain disruption and the soaring price of goods and energy, exacerbated by Russia’s invasion of Ukraine.Bert Colijn, a senior economist at ING, said a central factor in determining the health of business activity would be how well the services industry — particularly in southern eurozone economies — has fared after the lifting of pandemic restrictions.“Also important is whether the manufacturing sector continues to hold up despite supply chain problems and falling new orders,” he said, adding: “Energy price growth remains problematic, but we also hear anecdotal evidence of businesses becoming more careful to price through higher input costs to the consumer.” Nikou AsgariWill Norway announce an extra-large rate rise?Norway may have been ahead of other big central banks in tightening monetary policy before the current inflation scare. But even after three rate rises since last September, Norges Bank still faces questions about the pace of future increases when it meets on Thursday.Most economists expect it to raise interest rates by 0.25 percentage points to 1 per cent, and to indicate that it will speed up future rises. Nordea, the Nordic region’s biggest bank, expects four more increases this year after next week, with the subsequent one due in August, a more rapid increase than Norges Bank indicated in March. By the end of 2023, its main policy rate should be 3 per cent, Nordea believes.Norway, western Europe’s leading petroleum producer and one of the world’s richest countries, is suffering from many of the same issues as other developed nations — from rising inflation and wage pressure to worries about future growth. But it also has the world’s largest sovereign wealth fund, which provides about a quarter of the government’s budget, and sky-high revenues from oil and particularly gas.Could Norges Bank be tempted to follow the US Federal Reserve with a large rate rise? The Nordea economists do not believe so, arguing that as 94 per cent of households have floating mortgage rates (versus about 10 per cent in the US) Norway’s policy rate is effectively transmitted to individuals, lessening the need for shock rises of 0.5 percentage points or more. Richard Milne More

PARIS (Reuters) – French President Emmanuel Macron may find himself without a ruling majority during his second term and unable to push through his economic reform agenda with a free hand after a new left-wing alliance did well in the first round of voting.The second round will be held on Sunday. Here are three possible outcomes.ABSOLUTE MAJORITYScared off by increasingly strident warnings against Jean-Luc Melenchon’s radical left platform, voters elect more than 289 Macron-supported candidates to parliament.He will have free rein to drive through his manifesto, which includes a contested pension reform. Even so, the president is unlikely to find it as easy to push legislation through parliament as during his first mandate.His former prime minister, Edouard Philippe, who is widely believed to harbour presidential ambitions, has created his own party, officially part of Macron’s majority, and is likely to want a say on legislation, pushing for more conservative policies on pensions and public deficits, for instance. With a tight majority, even a small contingent of lawmakers could help make Philippe a kingmaker during Macron’s second term. HUNG PARLIAMENTMacron’s coalition fails to reach the 289 mark and does not command a majority of seats despite being the largest party in parliament.This is an unusual event under the Fifth Republic, and there is no institutional rule to follow to build a coalition, as is the case in countries like Belgium or the Netherlands.Macron may have to reach out to other parties, probably the centre-right Les Republicains, to form a coalition, which would probably involve offering prominent cabinet roles to rivals and manifesto adjustments in return for parliamentary support.He could also try to poach lawmakers individually and offer sweeteners to encourage them to break ranks with their parties.Failing that, Macron could be forced to negotiate bill by bill, securing centre-right support for his economic reforms, for example, while attempting to win over the centre-left support on some social reforms.That would slow down the pace of reforms and might lead to political deadlock in a country where consensus-building and coalition work is not engrained in the political culture.But the president would still have a few tricks up his sleeve. He could, at any time, call for a new snap election, for instance, or use article 49.3 of the constitution that threatens a new election if a bill is not approved.COHABITATIONMelenchon defies opinion polls and his Nupes alliance wins a majority in the National Assembly. Under the French constitution, Macron must name a prime minister who has the support of the lower house, and “cohabitation” follows. Macron is not compelled to pick the person put forward by the majority for premier. However, should he refuse to name Melenchon, a power struggle would almost certainly ensue with parliament, with the new majority likely to reject any other candidate put forward by Macron.Cohabitation would leave Macron with few levers of power in his hands and upend his reform agenda. The president would retain the lead on foreign policy, negotiate international treaties, but cede most day-to-day policymaking to the government.There have been few previous periods of cohabitation in post-war France. They typically led to institutional tension between the president and prime minister, but were surprisingly popular with the electorate.Polls show this to be the least likely of the three outcomes. More

A Chinese state-owned company that trumpeted its green credentials when listing on the London Stock Exchange has quietly acquired a development in Indonesia that scientists warn threatens the world’s rarest great ape.SDIC Power signed off plans to invest in the $277mn Batang Toru hydropower plant in Indonesia less than two months after completing a listing in 2020 that was backed by big western banks and strongly supported by the LSE.But environmentalists have argued the dam is not needed and questioned whether the project was pushed through for political reasons to support China’s Belt and Road Initiative. They also said that the development risked the extinction of the critically endangered Tapanuli orang-utan.SDIC Power’s acquisition of a 70 per cent stake in the project, unreported until now except in company disclosures, has fanned concerns, too, about companies overstating their environmental credentials in the growing market for responsible investments. Activists have called on Beijing to withdraw from the development in Sumatra, in western Indonesia, as it prepares to host the UN Biodiversity Conference this year. Up to 800 Tapanuli orang-utans were discovered in the region in 2017 © Tim Laman/Creative Commons Attribution 4.0 International“We had these high hopes China was becoming a responsible financier on the global stage,” said Amanda Hurowitz, a director at campaign group Mighty Earth. Now “a Chinese state entity is involved in this project that could lead to the extinction of a species. I’m just heartsick.”SDIC Power, part of the State Development and Investment Corporation, listed in the UK in October 2020 via the London-Shanghai Stock Connect, a programme launched the previous year to boost links between the financial centres. HSBC, Goldman Sachs and UBS were bookrunners for its London debut. The LSE’s then interim chief executive Denzil Jenkins hailed the listing as a “milestone for [SDIC Power’s] business”.The group said approximately 70 per cent of the proceeds would be used for investing in overseas renewable energy projects.The Batang Toru dam is considered part of China’s Belt and Road Initiative, one of Xi Jinping’s flagship foreign policy projects, designed to build infrastructure and win political influence around the world. Opponents, however, are sceptical about the merits of the development. A 2020 report commissioned by Mighty Earth and co-authored by a Stanford University lecturer found there was no energy deficit in north Sumatra, the region the hydropower dam would supply, where 80 new plants were planned to be built or developed in the next decade.The acquisition could be “geopolitical”, said one environmentalist. “We question whether SDIC is involved because the Chinese state wants this.”

Critics said the project had been shrouded in secrecy since it was launched in 2015 by North Sumatera Hydro Energy, a Chinese-backed company that SDIC Power bought a majority stake in last October. Campaigners began targeting the development when up to 800 rare Tapanuli orang-utans were discovered in the region in 2017.Tensions escalated in 2019 following the “extremely suspicious” death of an environmental lawyer in Sumatra. Golfrid Siregar, who had opposed the dam, died three days after being found beaten on the side of a road, environmentalists said.The lack of awareness of SDIC Power’s stake in the project has highlighted “how complicated [responsible investing] is”, said Serge Wich, a professor in primate biology at Liverpool John Moores University who has opposed the dam. Although investors often “hope they are doing the right thing”, they may still be “investing in questionable projects”.SDIC Power and HSBC did not respond to a request for comment. The LSE, Goldman Sachs and UBS declined to comment. More

(Reuters) -Federal Reserve Governor Christopher Waller on Saturday became the latest U.S. central banker to pledge a whatever-it-takes approach to fighting inflation, three days after the Fed raised interest rates by three-quarters of a percentage point and signaled more hikes to come.”If the data comes in as I expect, I will support a similar-sized move at our July meeting,” Waller told a Society for Computational Economics conference in Dallas. “The Fed is ‘all in’ on re-establishing price stability.” A surge in inflation, which is at its highest level in 40 years, has made hawks of nearly all Fed policymakers, only one of whom dissented earlier this week against what was the central bank’s biggest rate increase in more than a quarter of a century. Policymakers currently expect to raise the Fed’s benchmark overnight interest rate, now in a range of 1.50%-1.75%, to at least 3.4% in the next six months. A year ago, the majority thought the rate would need to stay near zero until 2023. On Friday, the Fed called its fight against inflation “unconditional,” and Atlanta Fed President Raphael Bostic, who had been its most dovish policymaker, declared “we’ll do whatever it takes” to bring inflation back down to the central bank’s 2% target.Inflation, as measured by the Personal Consumption Expenditures Price Index, is running at more than three times that level.”That’s the most important thing I’m worried about,” Waller said on Saturday, adding that moving rates quickly up to the neutral level and into restrictive territory is necessary to slow demand and put a check on inflation.That monetary tightening will likely drive unemployment, now at 3.6%, to between 4% and 4.25%, or possibly higher, Waller said, “but my goal is just to slow the economy.” Rising worries that Fed rate hikes will cause a recession, he said, “are a bit overblown.”Waller also said there are limits to how fast the Fed can move: markets would have a “heart attack” if the central bank raised rates by a full percentage point in a single move.RISK OF OVERSHOOTSpeaking at the same event in Dallas, former Fed Vice Chair Donald Kohn blamed high inflation in part on a decision to delay the tightening of policy that he traced to a framework the U.S. central bank adopted in 2020. That framework ruled out raising rates to preempt inflation triggered by falling unemployment. Waller, however, argued that it was the Fed’s overly specific promises about when it would end its massive asset purchases, implemented in 2020 to shelter the economy from pandemic-related fallout, that were at fault. Structural changes to the economy mean there is a “decent chance” the Fed will in the future need to again slash its policy rate to zero and buy bonds to fight even a typical recession, he said.Waller said, next time, he would support less restrictive promises around the end of bond purchases and more clarity around not just when the Fed would start to tighten policy but also how fast. If the Fed says it will not start raising rates until the labor market is at full employment, as it did in the recent cycle, markets should be primed to understand that borrowing costs will be pushed up very quickly once rates start to rise.Kohn, for his part, urged some caution once rates are high enough to start slowing inflation, warning that the Fed risks overshooting on its goals. “It requires judgment and confidence to know when to back off,” Kohn said. More

In an emergency meeting this week, the ECB decided to direct bond reinvestment to help nations on the bloc’s southern rim, and to devise a new instrument to contain divergence in borrowing costs.But ECB action will only go as far as preventing “unwarranted” market moves and will not help countries in case of profound debt issues, Rehn, Finland’s central bank chief, said at an event organized by the Dallas Federal Reserve. “We are fully committed to preventing fiscal dominance – and/or financial dominance, for that matter,” Rehn said, referring to a situation when fiscal, not monetary, considerations dictate central bank policy.”In the case of more profound structural economic weaknesses and debt sustainability problems, there is always the option to activate Outright Monetary Transactions.” OMT, a never-used emergency debt purchase scheme, can only be activated if a country is taking part in an economic adjustment programme, a politically unpopular option since the bloc’s debt crisis a decade ago. Borrowing costs have risen sharply around the world this year as high inflation is forcing central banks to rise interest rates to prevent rapid price growth from getting entrenched. Italy, with gross debt of around 150% of GDP, is among the most vulnerable in the bloc and the ECB sprang into action this week when its 10-year borrowing cost surged, exceeding Germany’s by 250 basis points. Rehn said that help to individual members will only go as far as ensuring that monetary policy gets transmitted to all corners of the bloc and inflation is brought under control. “While fiscal-monetary interaction is a basic feature of policy coordination in a currency union like the eurozone, it cannot be in contradiction with the independence of central banks,” he said.The ECB promised hikes in July and September, and said further moves are also likely in the fight against high inflation. More