BusinessDay 12 Dec 2017
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
Tuesday <strong>12</strong> <strong>Dec</strong>ember <strong>2017</strong><br />
FT FINANCIAL TIMES<br />
C002D5556<br />
BUSINESS DAY<br />
A1<br />
World Business Newspaper<br />
Maduro bans opposition<br />
parties from 2018<br />
presidential election<br />
The president is tightening his grip on politics but losing control of the economy<br />
Gideon Long<br />
Trump trade tsar<br />
wields power over<br />
WTO destiny<br />
President Nicolás Maduro<br />
has pushed Venezuela a<br />
step closer to full-blown<br />
dictatorship by banning<br />
the main opposition parties<br />
from next year’s presidential<br />
election.<br />
He said that by boycotting Sunday’s<br />
municipal polls, the opposition<br />
parties had forfeited the right<br />
to take part in next year’s far more<br />
important presidential vote.<br />
“They cannot take part. They will<br />
disappear from the political map,” a<br />
triumphant Mr Maduro crowed after<br />
his socialist party won more than<br />
90 per cent of the mayoral contests<br />
in Sunday’s local election, which<br />
much of the opposition ignored and<br />
dismissed as a farce.<br />
Banned parties include Primero<br />
Justicia (Justice First), Voluntad Popular<br />
(Popular Will) and Un Nuevo<br />
Tiempo (A New Era), which between<br />
them won almost 40 per cent of the<br />
seats in 2015’s legislative elections —<br />
the last in Venezuela which could be<br />
described as anything like fair.<br />
Despite presiding over one of the<br />
worst economic crises in history, Mr<br />
Maduro now looks more secure than<br />
at any time since he came to power<br />
in 2013. His opponents are in disarray<br />
and the street protests of earlier<br />
this year have largely fizzled out.<br />
“Maduro has significantly<br />
strengthened his control over his<br />
coalition and the government has<br />
strengthened its hold over the<br />
country,” said David Smilde, senior<br />
fellow at the Washington Office on<br />
Latin America, a think-tank. “Everything<br />
indicates they will seek to<br />
hold presidential elections as soon<br />
as possible. They have nothing to<br />
gain by waiting.”<br />
Meanwhile, the president’s<br />
policies to deal with the tanking<br />
economy are becoming increasingly<br />
bizarre.<br />
His latest, announced just over a<br />
Africa’s oldest liberation movement<br />
is poised to take one of<br />
the most important decisions<br />
in its 105-year history, at a time that<br />
it is more divided than ever. Without<br />
the common enemy of old — the<br />
apartheid state — the component<br />
parts of the ruling African National<br />
Congress have steadily lost their<br />
shared purpose.<br />
Under the leadership of Jacob<br />
Zuma, the movement and state have<br />
been corroded by corruption and<br />
cronyism. The elective conference<br />
that starts on Saturday threatens to<br />
split the ANC irreparably — between<br />
week ago, is a state-backed cryptocurrency<br />
called the petro which he<br />
said would help Venezuela circumvent<br />
US sanctions.<br />
Backed by Venezuela’s mineral<br />
wealth, the currency would help<br />
the country “advance in issues of<br />
monetary sovereignty, make financial<br />
transactions and overcome the<br />
financial blockade”, Mr Maduro<br />
said. He did not explain how it<br />
would work or who might accept it<br />
as legal tender.<br />
“It lacks all economic sense,”<br />
said José Guerra, an opposition<br />
lawmaker and economist. “It’s a<br />
smokescreen to distract attention<br />
away from the most important issue<br />
of the moment which in my view is<br />
hyperinflation.”<br />
Francisco Rodríguez, chief economist<br />
at Torino Capital in New York,<br />
said Mr Maduro’s economic policies<br />
were starting to “veer further into<br />
the unconventional”, while Henkel<br />
García, an analyst at Econométrica<br />
in Caracas, said the idea of a cryptocurrency<br />
issued by the state was<br />
contradictory.<br />
Last month, just hours after the<br />
state and its oil company PDVSA<br />
had diligently made two big repayments<br />
to bondholders, the president<br />
said he would see to restructure<br />
Venezuela’s debts. Even now,<br />
investors remain confused, unsure<br />
of whether the country is in default<br />
or not. It is in arrears on more than<br />
$1.5bn of coupon payments, but<br />
some bondholders have received<br />
payment and others have not. Standard<br />
& Poor’s says Venezuela is in<br />
“selective default”.<br />
Meanwhile, Sinopec, one of<br />
China’s biggest state-owned oil<br />
companies, is suing PDVSA in a US<br />
court as Beijing begins to run out of<br />
patience over unpaid debts.<br />
In another insight into the unconventional<br />
mindset of Mr Maduro’s<br />
economic team, the director<br />
at the Venezuelan Central Bank<br />
recently said the country should be<br />
looking to Pyongyang for inspiration.<br />
South Africa’s ANC faces its day of reckoning<br />
The movement has a chance to reverse damage done by Jacob Zuma<br />
Martin Sandbu<br />
Page A3<br />
those members motivated by the<br />
pursuit of social justice and those for<br />
whom patronage has become their<br />
raison d’être. But the conference also<br />
offers members a chance to begin<br />
repairing damage done.<br />
There is much of that. South<br />
Africa’s economy, though no longer<br />
technically in recession, is<br />
still shrinking in per-capita terms.<br />
Unemployment is at a record<br />
high, and business confidence is<br />
as low as it has been at any time<br />
since the 1980s when the country<br />
was languishing under sanctions. As<br />
a result of political uncertainty and<br />
Continues on page A2<br />
The decline<br />
of the Swiss<br />
private bank<br />
Venezuela’s president Nicolás Maduro speaks during his weekly radio and TV broadcast ‘Los Domingos con Maduro’ © Reuters<br />
Leading London NHS trust chairman quits amid funding crunch<br />
Head of King’s College Hospital and former civil service chief raises temperature on health cash<br />
Robert Wright<br />
The chairman of one of the UK’s<br />
biggest and busiest NHS trusts,<br />
Bob Kerslake, has resigned from<br />
his post at King’s College Hospital<br />
over the government’s approach to<br />
the “enormous challenges” around<br />
funding, in the latest sign of financial<br />
concern over health.<br />
The resignation was announced<br />
in an article in the Guardian in which<br />
Lord Kerslake, a former head of the<br />
civil service, writes the hospital is<br />
caught between the “inexorable pressures”<br />
of rising costs and the “tightest<br />
spending figures in recent times”.<br />
Lord Kerslake’s departure marks<br />
the culmination of a prolonged standoff<br />
between King’s, based at Denmark<br />
Hill, south-east London, and the government<br />
over the hospital’s funding<br />
arrangements. Lord Kerslake writes<br />
that King’s, which manages more than<br />
1,300 beds, has “struggled financially”<br />
since it took over the Princess Royal<br />
Hospital in Bromley in 2013.<br />
Since becoming chairman in April<br />
2015, Lord Kerslake has helped to cut<br />
the hospital trust’s annual deficit from<br />
US lifts threat of prosecution against HSBC<br />
DoJ dismisses deferred criminal charges hanging over bank since breaches 5 years ago<br />
Martin Arnold<br />
The US Department of Justice<br />
has given HSBC a significant<br />
boost by dismissing the deferred<br />
criminal charges that have been hanging<br />
over the bank since it was fined<br />
for money laundering and sanctions<br />
breaches five years ago.<br />
The decision by the DoJ lifts the<br />
threat of criminal prosecution that had<br />
been a “sword of Damocles” hanging<br />
over HSBC, as its new management<br />
team looks to put its misconductplagued<br />
past behind it.<br />
HSBC said the DoJ would file a motion<br />
with the US District Court for the<br />
Eastern District of New York seeking<br />
the dismissal of the charges deferred as<br />
part of a settlement with the lender in<br />
<strong>Dec</strong>ember 20<strong>12</strong>, which prompted criti-<br />
Page A4<br />
£140m to £80m in each of the last two<br />
years, he writes. The trust has moved<br />
“significantly away” from the planned<br />
financial performance for the current<br />
year, Lord Kerslake adds, but the trust<br />
is “far from alone” in that.<br />
“Every hospital in London is struggling,”<br />
he writes.<br />
“The right thing for me to do ...<br />
is to step down and do so publicly,”<br />
he adds.<br />
The resignation comes against a<br />
backdrop of growing concern about<br />
funding for the National Health Service.<br />
Simon Stevens, head of NHS England,<br />
said before last month’s budget<br />
that the service needed an extra £4bn<br />
a year spending to avoid lengthening<br />
waiting lists. Philip Hammond, chancellor,<br />
awarded the service an extra<br />
£2.8bn over the next three years, far<br />
less than Mr Stevens had demanded.<br />
There are widespread concerns<br />
that the pressures will lead to severe<br />
problems this winter as seasonal illnesses<br />
put a strain on already thinlystretched<br />
services.<br />
The service faces particular problems<br />
because nurses are next year<br />
likely to be awarded a pay rise of<br />
cism that the bank was “too big to jail”.<br />
The five-year deferred prosecution<br />
agreement meant the DoJ could have<br />
reopened the criminal case if the bank<br />
had repeated similar breaches during<br />
that period.<br />
The DoJ could have extended the<br />
DPA, as it did twice on a similar agreement<br />
with Standard Chartered. But<br />
HSBC said on Monday that it had “lived<br />
up to all its commitments”.<br />
The move is expected to allow<br />
HSBC to return more of the $8bn of<br />
trapped capital that regulators have<br />
forced it to keep in the US, which is<br />
likely to fund an extension of its share<br />
buy-back programme. Shares in HSBC<br />
rose 1.1 per cent on Monday morning.<br />
The ending of the DPA is a vindication<br />
for the outgoing management<br />
team of Douglas Flint, who retired as<br />
more than 1 per cent — the first such<br />
increase in seven years. It is unclear if<br />
hospitals will be awarded more generous<br />
funding to cope with the effects<br />
of the unexpected end to the public<br />
sector pay freeze.<br />
In an effort to head off potential<br />
attacks over his record at the trust,<br />
Lord Kerslake quotes in the article a<br />
so-far unpublished draft report by the<br />
Care Quality Commission praising his<br />
leadership and saying he was “held in<br />
very high regard by staff at all levels”.<br />
Lord Kerslake concludes by saying<br />
that, while there are things the trust<br />
could have done better, its problems<br />
fundamentally lie in the way that the<br />
NHS is funded and organised.<br />
“We desperately need a fundamental<br />
rethink,” he writes.<br />
In an interview with The Sunday<br />
Telegraph, the peer also disclosed that<br />
he and a group of former civil servants<br />
were advising the Labour party on<br />
preparing for government.<br />
“It is not unusual for some of the<br />
things they want to have run by the<br />
state being run by the state in other<br />
parts of Europe. The comparison is<br />
quite illuminating,” he said.<br />
chairman this year, and Stuart Gulliver,<br />
who is due to hand over as chief executive<br />
to John Flint, his retail banking<br />
head, in February.<br />
Mr Flint and Mr Gulliver made it<br />
one of their priorities to clean up the<br />
bank’s anti-money laundering and<br />
sanction controls, investing more than<br />
$1bn in compliance technology and<br />
creating a financial crime risk unit that<br />
has more than 7,000 staff.<br />
“We took the decision to apply US<br />
level standards across the entire bank,<br />
which we didn’t have to do, but it is<br />
clearly one of the reasons why the DoJ<br />
agreed to do a DPA rather than prosecute<br />
us,” said Stuart Levey, a former<br />
DoJ and US Treasury official who HSBC<br />
hired as its chief legal officer in 20<strong>12</strong>.<br />
“Of course we still have improvements<br />
to make and we always will.”