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BusinessDay 11 Apr 2018

Wednesday

Wednesday 11 April 2018 FT Rusal’s Oleg Deripaska, left, and Glencore’s Ivan Glasenberg in talks in 2006. Mr Glasenberg joined the Rusal board in 2007 © Alamy Ivan Glasenberg steps down from Rusal board as sanctions bite Latest US action against Russia hits rouble and forces Glencore chief’s hand NEIL HUME, DAVID SHEPPARD AND HENRY FOY Glencore chief executive Ivan Glasenberg has stepped down from the board of Rusal, the Russian aluminium producer plunged into crisis by sweeping US sanctions, as the impact of the economic broadside continued to bite, dragging down the rouble on fears of a wider economic fallout. The Switzerland-based miner and commodity trader has also put on hold plans to swap its 8.75 per cent stake in the company, controlled by tycoon Oleg Deripaska, for shares in another one of his companies. The moves by Glencore on Tuesday morning highlight the potency of the latest US measures, which have sent shockwaves through Russian financial markets and left Hong Kong-listed Rusal, the biggest aluminium producer outside of China, scrambling to shore up its finances. The Russian currency fell 4.6 per cent in early trading to Rbs63.61 against the dollar, taking its slump this week to 8.5 per cent, before recovering slightly to trade at Rbs62.26 at midday. That helped boost demand for Russian stocks and send the Mos- Trump cancels Peru trip to oversee Syria response President is trying to build coalition for joint action over alleged chemical strike KATRINA MANSON Donald Trump on Tuesday cancelled a visit to South America to oversee the US response to a suspected chemical weapons attack on Syria, as he attempts to build a coalition for action that could include a military strike. On Tuesday morning, the White House announced that the president “will remain in the United States to oversee the American response to Syria and to monitor developments around the world”. Mr Trump met with his senior military and defence leadership on Monday night to discuss plans for Syria, where a reported chemical weapons attack he has described as “a barbaric act” killed at least 48 people on Saturday. “We have a lot of options, militarily. And we’ll be letting you know pretty soon. Probably after the fact,” he said before the meeting began. He had earlier said he would make “major decisions” about whether to strike Syria within 24 to 48 hours. The moves raised expectations that cow market’s benchmark index up almost 2 per cent in early afternoon trading, after falling more than 8 per cent on Monday on fears of further fallout from an alleged chemical weapons attack in Syria and worries that more companies could be affected by further sanctions. A senior executive at a large listed Russian industrial company told the Financial Times that many corporates feared further sanctions being imposed upon them. “We are afraid, of course. All of us are. Nobody knows who will be next,” he said, speaking on condition of anonymity. “This is why the whole market has tanked.” Rusal has seen its shares fall more than 56 per cent since the sanctions were announced on Friday. The company has told its customers to halt all financial transactions as it tries to maintain operations, which are now in effect barred from accessing the US financial system. In a statement, Glencore said it was “committed to complying with all applicable sanctions” and was “taking all necessary measures in order to mitigate any risks” as a result of the US measures taken against Rusal and EN+, Mr Deripaska’s London-listed holding company. Mr Trump was preparing to take military action despite his long-running opposition to fighting wars overseas. Earlier this year, he said that US troops would leave Syria “very soon” as the number of Isis fighters dwindle, and has been reluctant to take action in the wider Syrian conflict. But Mr Trump has made clear his opposition to the use of chemical weapons and a year ago authorised unilateral missile strikes against a Syrian air base after reports of a sarin gas attack. His administration has repeatedly warned Damascus against undertaking chemical weapons strikes. Mr Trump’s administration is trying to co-ordinate a joint diplomatic response with France, the UK and Saudi Arabia. Mr Trump spoke to French president Emmanuel Macron on Sunday and is due to speak to UK prime minister Theresa May on Tuesday. The White House said Mr Trump and Mr Macron had agreed to “exchange information on the nature of the attacks and co-ordinate a strong, joint response”. One reason the US is seeking a ANALYSIS Glencore also said it was “evaluating the position” of its contracts but added they were not “financially material” to the company. As Mr Glasenberg announced his resignation from the Rusal board that he joined in 2007, Russia’s central bank governor called for calm, saying that the country’s economy and financial markets would adapt to the new conditions forced upon it by the sanctions. “Some time is needed for adaptation of both the financial sector and the economy to these changed external conditions,” said Elvira Nabiullina. “The events that took place on Friday naturally cause correction of the markets,” she told an investor conference in Moscow. “As in such cases, there is increased volatility in the first days after the events, because there is still a lot of uncertainty for investors, and market participants are not entirely clear of the consequences.” Glencore purchased $2.4bn of aluminium from Rusal last year under a long-term supply deal that is due to expire later this year. Analysts reckon this contributed around $80m to Glencore’s earnings before interest, tax, depreciation and amortisation, a tiny percentage of its overall profits. joint diplomatic response is because officials said it had been hard to gain access to the area in Douma in order to confirm the use of sarin gas. Syria’s foreign ministry said it has invited OPCW, the international chemical weapons watchdog, to send a team into the country to investigate the attack with “full transparency and [to] rely on credible and tangible evidence”. Russia has denied any such attack took place and has also called for an independent inquiry into the attack. The US and allies are calling for access to the site to conduct an investigation. The US ambassador to the UN, Nikki Haley, told the UN Security Council on Monday that reports indicated victims had foamed at the mouth and nose and had ashen blue skin, indicators that chemical weapons had been used. “Chemical weapons have been reportedly used dozens of times and this council does nothing,” she said, adding Syria president Bashar al-Assad is “doing all he can to ensure maximum suffering”. “There can be no more rationalisations for our failure to act,” she said. C002D5556 Six questions Mark Zuckerberg will not like from Congress Facebook founder set for grilling in wake of Cambridge Analytica data BARNEY JOPSON AND HANNAH KUCHLER Mark Zuckerberg, Facebook’s founder and chief executive, will be assailed by lawmakers when he testifies on Capitol Hill this week about the Cambridge Analytica data leak, fake news and Russian election meddling. Ron Wyden, a senior Democratic senator and longstanding ally of the tech industry, said last week: “Mr Zuckerberg is going to have a couple of very unpleasant days before Congress.” Here are the six key questions politicians on Capitol Hill need to ask. 1. Can Congress look inside Facebook’s advertising systems? Facebook has a wealth of data on who advertisers want to target and how. So far, it has only publicly revealed to Congress the adverts and targeting used by the Russian Internet Research Agency. If Congress were granted access to Facebook’s systems, it may be able to see more detailed targeting from Russian troll farms, as well as learn more about who Cambridge Analytica targeted, with what messages, and how much they spent. Congress could also examine the developers who had access to vast amounts of data on Facebook’s platform, to see if, for example, other analytics companies or political marketers were behaving in a similar way to Cambridge Analytica. But the social network is likely to push back, arguing that to protect the privacy of users and advertisers, it cannot grant the government access. The group would also like to protect its commercial intellectual property: the targeting system is lucrative and competitors would be keen to understand in more detail how it works. Some data might be able to be anonymised, as in a new elections research initiative launched on Monday, but that might also make it harder for Congress to try to spot bad practices. 2. Why didn’t you report the data leak earlier? Mr Zuckerberg is vulnerable over Facebook’s past decisions to keep the data leak under wraps. The company realised that Cambridge Analytica had, in its words, “improperly obtained” user data back in 2015. But instead of reporting it to data protection authorities or telling affected users, it chose to ask the data analytics firm and the Cambridge professor who originally harvested the data to delete it. Facebook did not even ban Cambridge Analytica from the platform until last month. The social network said that was because it was not an advertiser in 2015 — but it took no measures to ensure it could never become one. When Cambridge Analytica started using Facebook for its political campaigns, Facebook employees even worked alongside the company. Lawmakers will press Mr Zuckerberg over why Facebook did not go public earlier. 3. Why can’t you tell us where the data have gone? Lawmakers will try to make Mr Zuckerberg squirm over Facebook’s blind spots. It does not know BUSINESS DAY A5 whether Cambridge Analytica still has the data of up to 87m users, exactly how many users were affected and whether the data were used in the Trump campaign (something Cambridge Analytica denies). The social network is waiting until the UK information commissioner finishes its investigation to embark on its own. The heart of the problem is that once data have leaked, there is no way to track them. Lawmakers can argue that is why Facebook should have had tighter controls on who could access data and for what purpose — and should have developed better ways to detect when an app had started to download it. 4. Why shouldn’t we regulate you? Beyond the risk of being abandoned by users, the biggest threat that Facebook faces is legislation from Congress. Facebook has long argued that it can police itself. Improvements announced last week were designed to prove it is being proactive. But Facebook also made a significant concession: it executed a U-turn by saying it now supports the only concrete legislative proposal related to its business. That bill, the Honest Ads Act, would require tech companies to keep copies of digital political ads, report how much they cost and who paid, and make them searchable to the public. The act, however, addresses only a sliver of Facebook’s activities and does not touch on consumer privacy. Counting in the company’s favour is congressional gridlock. Mr Zuckerberg could say he is open to regulation knowing that Congress remains divided over how to act and is unlikely to pass any new laws in this election year. 5. How much profit will you sacrifice to fix this? Both Mr Zuckerberg and his second-in-command, Sheryl Sandberg, have vowed not to change Facebook’s business model. Profits from targeted advertising have made Facebook one of the largest companies in the world: last year it generated $16bn in net income on almost $40bn of revenue. So far, Facebook has made many announcements about its plans to restrict the data that developers can access, be it offering surveys, games or dating apps. It has not pledged to reduce the amount of data Facebook itself collects to help advertisers. Facebook could promise major changes — such as not tracking people’s web activity, or not using technologies that analyse what or who is in photos uploaded to the network — but reducing this kind of data collection would be likely to hit its bottom line. 6. Are you the problem? The Cambridge Analytica saga has prompted the most searching questions to date about whether Mr Zuckerberg is the right person to lead Facebook. Lawmakers will be tempted to raise the ultimate form of accountability: the founder stepping down (as Travis Kalanick did at Uber last year). Addressing criticisms of naivety, Mr Zuckerberg has said: “I was maybe too idealistic.” That is unlikely to be enough for Congress.

A6 BUSINESS DAY C002D5556 Wednesday 11 April 2018

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