Benchmark’s Uber Suit Signals End of Era for Imperious Founders

When Uber Technologies Inc. backer Benchmark Capital filed a lawsuit against the startup’s founder Travis Kalanick for using allegedly fraudulent means to pack the board with his loyalists, it sent a strong signal that Silicon Valley’s so-called founder-friendly era is coming to an end.

Going back years, venture firms have given Kalanick and his peers outsize control and influence over their companies. Critics say this has led founders to take a freewheeling approach to running their companies, loading up on shares for themselves and their friends and presiding over toxic workplaces.

At the heart of the Benchmark lawsuit is a provision that venture capitalists say stands out for its deference to Kalanick, and is highly unusual. It allowed the Uber founder to personally appoint three new members to Uber’s eight-seat board, effectively letting him slant the board his way after he resigned. 

According to Benchmark, Kalanick got investors to sign off on the measure “fraudulently,”  by, among other things, hiding “gross mismanagement” at the company. Jimmy Asci, a spokesman for Kalanick, said the lawsuit is “completely without merit and riddled with lies and false allegations.”

On Friday three other investors sent a letter to Uber’s board, shareholders and Benchmark, saying the suit was designed to “hold the company hostage” and asked Benchmark to step down from the board. The investors are Sherpa Capital’s Shervin Pishevar, Yucaipa Companies’ Ron Burkle and Maverick’s Adam Leber. They didn’t immediately respond or couldn’t be reached for comment. Members of Uber’s board, not including Kalanick or Benchmark’s Matt Cohler, said they were “disappointed that a disagreement between shareholders has resulted in litigation,” according to an emailed statement.

Kalanick is far from the only founder deemed to have abused investors’ trust in him. Other examples include Jawbone Inc. founder Hosain Rahman and Tanium Inc. Chief Executive Officer Orion Hindawi, who were both given considerable autonomy or control by boards and then disappointed in their leadership. Rahman led Jawbone into bankruptcy and has now launched a long-shot bid to become a player in medical devices. Hindawi was forced to apologize after past and current employees described abusive behavior that prompted a talent exodus. 

In the 1990s, it wasn’t unusual for venture firms to replace founders as CEOs, usually because the investors believed the company needed a leader with more experience. That practice fell out of favor but has resurfaced in recent years.

Take GitHub Inc., the developer platform. In early 2014, a former Github employee, Julie Ann Horvath, complained that co-workers—going right up to company’s co-founder and CEO, Tom Preston-Werner—had harassed and discriminated against her. Preston-Werner ended up resigning after an internal investigation; in a more forgiving time, he might have taken a leave of absence and returned.

The following year, Parker Conrad, founder and chief executive of Zenefits resigned after news broke that he was using unlicensed brokers to sell health insurance in several states.

In those cases, the founders agreed to step down. In other instances, VCs have discovered that the relatively recent practice of ceding voting control has made forced resignations impossible.

At venture-backed company Theranos, once valued at $9 billion and now worth next to nothing, disgraced founder Elizabeth Holmes controls 98 percent of voting shares. That has allowed her to continue as chief executive even after it turned out her vaunted blood-testing technology didn’t work, putting the company’s future in peril.

One reason VCs tolerated over-privileged CEOS—at Theranos, Uber, Snap, and other companies—was because so much money flooded into tech, making it easy for founders of the most promising startups to shop around. Last year, $41.6 billion was raised by venture firms, the most since the dotcom era, according to the National Venture Capital Association.

In an extreme case, at vegan food maker Hampton Creek Inc., most of the board, not founder Josh Tetrick,  was forced to resign after directors lost all rights due to the voting control they had allowed Tetrick to amass.

But once again, venture firms are wising up.

Today, while more late-stage private companies are creating classes of shares with extra voting power, only 27 percent of recipients of those shares are founders and management, according to a study by law firm Fenwick & West. Three years ago, 43 percent of recipients were founders and management, rather than investors.

For a long time venture firms were loath to crack down on founders for fear they’d go elsewhere for capital. But that theory doesn’t really hold up, says angel investor Keval Desai, a backer of Optimizely, The RealReal and others. “Benchmark’s reputation has been built over many decades, and other entrepreneurs who have taken money from them will be proof that Benchmark isn’t in the business of suing their entrepreneurs,” he says. “Benchmark will be fine.”

    Read more: https://www.bloomberg.com/news/articles/2017-08-11/benchmark-signals-era-of-imperious-startup-founder-is-coming-to-an-end

    Monsanto Was Its Own Ghostwriter for Some Safety Reviews

    Monsanto Co. started an agricultural revolution with its “Roundup Ready” seeds, genetically modified to resist the effects of its blockbuster herbicide called Roundup. That ability to kill weeds while leaving desirable crops intact helped the company turn Roundup’s active ingredient, the chemical glyphosate, into one of the world’s most-used crop chemicals. When that heavy use raised health concerns, Monsanto noted that the herbicide’s safety had repeatedly been vetted by outsiders. But now there’s new evidence that Monsanto’s claims of rigorous scientific review are suspect.

    Dozens of internal Monsanto emails, released on Aug. 1 by plaintiffs’ lawyers who are suing the company, reveal how Monsanto worked with an outside consulting firm to induce the scientific journal to publish a purported “independent” review of Roundup’s health effects that appears to be anything but. The review, published along with four subpapers in a September 2016 special supplement, was aimed at rebutting the 2015 assessment by the International Agency for Research on Cancer (IARC) that glyphosate is a probable human carcinogen. That finding by the cancer-research arm of the World Health Organization led California last month to list glyphosate as a known human carcinogen. It has also spurred more than 1,000 lawsuits in state and federal courts by plaintiffs who claim they contracted non-Hodgkin lymphoma from Roundup exposure.

    Monsanto disclosed that it paid Intertek Group Plc’s consulting unit to develop the review supplement, entitled “An Independent Review of the Carcinogenic Potential of Glyphosate.” But that was the extent of Monsanto’s involvement, the main article said. “The Expert Panelists were engaged by, and acted as consultants to, Intertek, and were not directly contacted by the Monsanto Company,” according to the review’s Declaration of Interest statement. “Neither any Monsanto company employees nor any attorneys reviewed any of the Expert Panel’s manuscripts prior to submission to the journal.”

    Monsanto’s internal emails tell a different story. The correspondence shows the company’s chief of regulatory science, William Heydens, and other Monsanto scientists were heavily involved in organizing, reviewing, and editing drafts submitted by the outside experts. At one point, Heydens even vetoed explicit requests by some of the panelists to tone down what one of them wrote was the review’s “inflammatory” criticisms of IARC.

    “An extensive revision of the summary article is necessary,” wrote that panelist, John Acquavella, an epidemiologist at Aarhus University in Denmark, in a February 2016 email attached to his suggested edits of the draft. Alarmed, Ashley Roberts, the coordinator of the glyphosate papers for Intertek, forwarded Acquavella’s note and edits to Heydens at Monsanto, with the warning: “Please take a look at the latest from the epi(demiology) group!!!!”

    Heydens reedited Acquavella’s edits, arguing in six different notes in the draft’s margin that statements Acquavella had found inflammatory were not and should not be changed, despite the author’s requests. In the published article, Heydens’s edits prevailed. In an interview, Acquavella says that he was satisfied with the review’s final tone. According to an invoice he sent Monsanto, he billed the company $20,700 for a single month’s work on the review, which took nearly a year to complete.

    Monsanto defends the review’s independence. Monsanto did only “cosmetic editing” of the Intertek papers and nothing “substantive” to alter panelists’ conclusions, says Scott Partridge, Monsanto’s vice president for global strategy. While the “choice of words” in the Declaration of Interest “was not ideal,” he says, “it didn’t change the science.”

    In July 2016, the journal’s editor, Roger McClellan, emailed his final instructions to Roberts at Intertek on what the paper’s Acknowledgment and Declaration of Interest statements should include. “I want them to be as clear and transparent as possible,” he wrote. “At the end of the day I want the most aggressive critics of Monsanto, your organization and each of the authors to read them and say—Damn, they covered all the points we intended to raise.”

    Specifically, McClellan told Roberts to make clear how the panelists were hired—“ie by Intertek,” McClellan wrote. “If you can say without consultation with Monsanto, that would be great. If there was any review of the reports by Monsanto or their legal representatives, that needs to be disclosed.”

    Roberts forwarded McClellan’s emails, along with a more technical question, to Heydens, who responded, “Good grief.” The Declaration of Interest statement was rewritten per McClellan’s instructions, despite being untrue. There was no mention of the company’s participation in the editing.

    Monsanto’s editorial involvement appears “in direct opposition to their disclosure,” says Genna Reed, a science and policy analyst at the Union of Concerned Scientists’ Center for Science and Democracy. “It does seem pretty suspicious.”

    In response to questions, McClellan wrote in an email on Aug. 7 that he’d been unaware of the Monsanto documents and has forwarded the matter to the journal’s publisher, Taylor & Francis, in Abingdon, England. “These are serious accusations relative to scientific publishing canons and deserve very careful investigation,” he wrote. “I can assure you that Taylor and Francis, as the publisher, and I, as the Scientific Editor of , will carefully investigate the matter and take appropriate action.” A Taylor & Francis spokeswoman says it has begun an investigation.

    The Monsanto documents, more than 70 in all, were obtained through pretrial discovery and posted online by some of the plaintiffs’ lawyers, who claim Monsanto missed a 30-day window to object to their release. Monsanto says it was blindsided by the disclosures and has asked U.S. District Judge Vince Chhabria in San Francisco to order the documents pulled from the web and to punish the attorneys for violating confidentiality orders. Says Monsanto’s Partridge: “It’s unfortunate these lawyers are grandstanding at the expense of their clients’ interests.”

    Other emails show that Monsanto’s lead toxicologist, Donna Farmer, was removed as a co-author of a 2011 study on glyphosate’s reproductive effects, but not before she made substantial changes and additions to the paper behind the scenes. The study, published in Taylor & Francis’s , served to counter findings that glyphosate hampers human reproduction and development. Partridge says Farmer’s contributions didn’t warrant authorship credit. While almost all of her revisions made it into the published paper, her name doesn’t even show up in the acknowledgments.

      BOTTOM LINE – Monsanto has long noted that independent scientists have vouched for the safety of its Roundup herbicide. Court data show its employees edited some of those reviews.

      Read more: http://www.bloomberg.com/news/articles/2017-08-09/monsanto-was-its-own-ghostwriter-for-some-safety-reviews

      Lucifer Heat Wave Keeps Parts of Europe in Red Alert

      Belgrade, Serbia (AP) — No wonder it's been dubbed "Lucifer."

      A relentless heat wave that gripped parts of Europe this week has sent temperatures soaring to record highs for several days, causing at least two deaths and prompting authorities to issue severe weather warnings.

      "It is just too much," real estate agent Sasa Jovanovic, 52, said during an early morning walk in Serbia's capital, Belgrade, where the temperature was forecast to hit 39 degrees Celsius (102.2 degrees Fahrenheit) Saturday. "Sometimes it feels as if I cannot breathe."

      The extreme heat stifling Serbia, Romania, Croatia and parts of Spain, France and Italy has fueled wildfires, damaged crops and strained energy and water supplies. Authorities in some areas issued traffic restrictions and banned outdoor work during the hottest part of the day.

      Spain's national weather service on Saturday issued an emergency warning for high temperatures in 31 of the country's 50 provinces as forecasts predicted temperatures of up to 44 C (111.2 F).

      Western and northern Europe, in contrast, was experiencing colder and wetter weather.

      Although southern Europe is used to scorching summers, meteorologists have warned that hot spells lasting several days aren't that common.

      The public health institute in Belgrade issued heat instructions, telling people to keep wet towels on windows if there is no air conditioning, and avoid physical strain and alcohol.

      Thousands of residents sought refuge from the heat at the city's recreation area, swimming in the local lake and the Danube or the Sava rivers. Some of those who ventured to the city center dipped their feet or wet their hair in the fountains.

      The high temperatures came as a shock to Australian Mira Balic, who was visiting Serbia at a time when it's winter in the Southern Hemisphere. Belgrade was among the hottest cities in Europe on Saturday and hotter than Egypt's capital, Cairo — which is normally far hotter than central Europe.

      "I came here from Australia, where the temperature is 4 degrees (Celsius; 39.2F," Balic gasped. "This heat is killing me!"

      Animal rights groups urged citizens to place plastic bowls with water outside their buildings and in parks for the city's many stray dogs.

      In Croatia, health authorities have reported a surge in emergency calls over the past week. They appealed to the thousands of tourists vacationing along the country's Adriatic coast to be careful on the beaches and while traveling.

      In Romania, police banned heavy traffic on major roads in daylight hours during the weekend because of the heat wave, while trains slowed down. A train service in southern Serbia also was delayed earlier this week after tracks buckled in the heat.

      Romania reported two heat-related deaths — a 45-year-old man collapsed and died Friday while working in a field in the northeast, while a 60-year-old man died of a heart attack in the street in an eastern port Thursday.

      The state railway company in neighboring Hungary said it would distribute water at busy terminals. At the Budapest Zoo, Beliy and Seriy, a pair of 2-year-old polar bear cubs, were given huge chunks of ice and freezing-cold watermelons to help them withstand the weather conditions.

      Some 15 wildfires have been reported in Albania, and dozens of others throughout the region. Hot and dry weather has scorched crops amid fears of water shortages in Italy and Serbia as authorities appealed for care in consumption.

      In the Alpine nation of Slovenia, authorities reported earlier this week the first-ever "tropical night" at 1,500 meters (4,920 feet) in the mountains, meaning temperatures were higher than 20 C (68 F) during the night.

      ___

      Alison Mutler in Bucharest, Romania; Predrag Milic in Podgorica, Montenegro; Joseph Wilson in Madrid, and Pablo Gorondi in Budapest, Hungary, Ivana Bzganovic from Belgrade, Serbia, contributed to this report.

        Read more: https://www.bloomberg.com/news/articles/2017-08-05/-lucifer-heat-wave-keeps-parts-of-europe-in-red-alert

        Doctor delivers a baby right before she gives birth to her own

        A big day.
        Image: Shutterstock / Angyalosi Beata

        A doctor in Kentucky and her patient will always remember their babies’ birthdays.

        Amanda Hess, an OB/GYN in Frankfort, Kentucky, was in the hospital as she prepared to give birth to her daughter. While she waited, Hess heard another expectant mother who was closer to giving birth.

        The doctor went to the room, where a woman who happened to be one of her patients was fully dilated. The doctor on call was on his way to the hospital, but the baby was coming. So Hess stepped in and handled the delivery right before she went back to her own room to give birth.

        I just put on another gown to cover up my backside and put on some boots over my shoes, to keep from getting any fluid and all that stuff on me, and went down to her room and I knew her,” Hess told WKYT.

        “She was just glad to be able to get to push and have the baby out and not have to wait any longer,” she added.

        Then, Hess gave birth to her own daughter, Ellen Joyce.

        Congratulations to the two mothers! Now time for maternity leave.

        Read more: http://mashable.com/2017/07/29/doctor-delivers-baby-gives-birth/

        Skinny Obamacare Repeal Could Still Disrupt Insurance Markets

        After failing to repeal or replace Obamacare, Senate Republicans are slimming down their ambitions to target the one piece of the health law they loathe most, in what’s being called a “skinny repeal.”

        For insurance companies, that may be the most problematic health-overhaul option yet.

        The Affordable Care Act’s individual mandate requires everyone to have health coverage and penalizes those who choose to go without it. Making the purchase of coverage compulsory is meant to distribute risk evenly among healthy and sick people and keep overall costs down. 

        But Obamacare’s requirement has been a far from perfect solution to prod people to buy insurance. The penalties are far less than the cost of insurance, and people who skip out on coverage can still buy it later. President Donald Trump has even suggested that he won’t enforce the mandate.

        Insurers have taken notice. Many have raised premiums or pulled out of certain markets as healthier people decide to forgo coverage. They warn that overturning the mandate will only create more instability.

        “Eliminating the individual coverage requirement by itself will likely result in fewer people covered and a deterioration of the risk pool, which will increase premiums,” the trade group America’s Health Insurance Plans said in a letter to lawmakers on Thursday.

        Penalty Puzzle

        In 2015, more than 19 million people either claimed an exemption from the mandate or paid a penalty for not having insurance — more than the 11.7 million who signed up for private coverage under the law that year.

        Of those who didn’t have coverage, 12.7 million were people who claimed an exception, according to the Internal Revenue Service, including some who weren’t eligible for subsidies under Obamacare despite having lower incomes, because they lived in states that didn’t fully implement the law. About 6.5 million people paid an average $470 penalty for not having insurance, the IRS said in a statement. The agency hasn’t yet released 2016 numbers.

        “I don’t buy the argument that this paltry penalty with a feckless mandate, I don’t buy that it is the major deterrent that people think it is,” Robert Moffit, a senior fellow in health policy studies at the conservative Heritage Foundation, said in an interview. The Heritage Foundation backs repeal of the Affordable Care Act.

        Nonetheless, many insurers have already begun to prepare for a world without an individual mandate, whether it comes through a change in law or in enforcement. ConnectiCare Inc., a Connecticut-based insurer, said that it increased its rates by 2.3 percent to account for such a scenario.

        “Even a perception that the mandate will not be enforced will affect consumer behavior in a manner that will erode the risk pools in the individual market,” the company said in a filing to the state’s insurance department.

        Another smaller insurer, BridgeSpan Health, said that it would pull out of counties in Oregon. It attributed its smaller footprint to “a weakened federal mandate to have health insurance coverage.”

        “The only thing insurers know today — and have throughout this entire year — is that nothing is certain,” said Ceci Connolly, chief executive officer of the Alliance of Community Health Plans. “And the uncertainty has been increasingly problematic from a business perspective, especially for nonprofit community plans that often run on margins of 2 percent or less.”

        Less Coverage, Higher Costs

        The Congressional Budget Office estimated Wednesday that a skinny repeal could result in 16 million more people uninsured in a decade than under Obamacare. The nonpartisan agency projected previously that premiums could climb about 20 percent compared to Obamacare if the individual mandate was repealed, according to an estimate it issued in December.

        Younger, healthier people dropping insurance because they no longer get penalized for not having it could “make coverage more unaffordable and inaccessible,” the Blue Cross Blue Shield Association said in a statement Wednesday.

        “Republicans are in a box,” James Capretta, a resident fellow at the conservative-leaning think tank American Enterprise Institute, wrote in RealClear Health. “They have argued repeatedly that they need to pass legislation to steady the insurance marketplace, but they are proceeding with legislation that will almost certainly have the opposite effect.”

        It’s unclear whether Senate GOP leaders will muster enough votes to pass a skinny repeal. The proposal’s prospects already face challenges in the House after Representative Mark Meadows said the conservative Freedom Caucus he leads won’t support it, possibly setting up a scenario where both chambers would have to work out a compromise.

        Tight Timeline

        Insurers are asking for more certainty than a skinny repeal bill would provide, and the timeline is tight. In many states, they’re supposed to set final premiums by the middle of August.

        Companies have also warned of serious disruption to the markets if the Trump administration stops making payments the companies use to reduce low-income customers’ costs. On Wednesday, Anthem Inc. threatened to hasten its retreat from Obamacare’s marketplaces unless the government makes a firm commitment to fund the program.

        Without the subsidies, called cost-sharing reduction payments, Anthem said it would need to boost rates for its ACA-compliant plans as much as 18 percent to 20 percent. In some markets, Anthem would probably quit instead, the company told investors on a conference call.

        “If we aren’t able to gain certainty on some of these items quickly, we do expect that we will need to revise our rate filings to further narrow our level of participation,” Anthem Chief Executive Officer Joseph Swedish said.

          Read more: http://www.bloomberg.com/news/articles/2017-07-27/-skinny-repeal-kills-mandate-insurers-already-see-as-letdown

          Elderly Drivers Are Wreaking Havoc on Japan’s Roads

          In the past several weeks alone, elderly Japanese drivers have been wreaking havoc across the country: breaking through median barriers into oncoming traffic, plowing over pedestrians crossing the road, and smashing into other cars. In all these cases, somebody was killed.

          And as Japan’s population continues to age — meaning more and more older drivers are behind the wheel — the problem is only getting worse: Drivers aged 75 and over were connected to 459 fatal accidents last year, 13 percent of Japan’s total, up from 7.4 percent a decade earlier, National Policy Agency data show. Stopping the carnage on the roads is an "urgent problem," the agency said in a statement.

          "Preventing road accidents caused by changes in the physical condition of drivers is an urgent issue that needs to be dealt with," Mineko Baba, of Keio University’s Center for Integrated Medical Research, wrote in a research report last year. “Laws and society haven’t caught up to the situation of the rapidly increasing number of dementia patients."

          Currently, one quarter of Japanese are 65 or older, and the proportion is forecast to reach 38 percent within five decades.

          A vehicle driven by an 87-year-old man plowed into a group of school children in Yokohama in Oct. 2016.
          Photo: Kyodo News via Getty Images

          In one of the worst recent incidents, last October an 87-year-old man crashed his light truck into a group of children walking to school in Yokohama, killing a 6-year-old boy and injuring two others. This year in June, a 74-year-old woman killed a man driving the other way in Fukuoka after jumping the median. One of the most recent reports, on July 15, was of a 69-year-old man arrested on suspicion of negligent driving after his light truck collided with another vehicle in Fukushima, killing a 65-year-old man.

          To read more about aging Japan, click here.

          The issue is a “major challenge” for authorities, said Hiroki Sasaki, an accident investigator and former policeman based in the northern city of Sendai. 

          The government is stepping up efforts to get the most dangerous seniors off the road. Changes to the law took effect in March requiring drivers over 75 to take a cognitive test when renewing their licenses or if they commit offenses such as running a red light or turning into the wrong lane. Those who fail are ordered to undergo a medical exam. If they flunk that, they’re stripped of their licenses. As many as 15,000 licenses a year may be forcibly revoked, the National Policy Agency projects.

          National Policy Agency

          Despite the carnage wrought by Japan’s seniors, Japan’s overall death toll on the roads has been declining for years, reaching a 67-year low of 3,904 deaths in 2016, police figures show. As a result, the percentage involving elderly drivers has nearly doubled.

          Older drivers are also increasingly volunteering to hand over their licenses. Under a program that’s been in place for almost two decades, 345,000 people relinquished their driving credentials in 2016, up 21 percent from a year earlier. In the first three months after the new law took effect, 1,271 old people a day on average returned their licenses, up from 946 a day in 2016, according to the National Police Agency.

          One of them is Katsutoshi Kamei, a 79-year-old retiree from Tokorozawa, west of Tokyo, who gave up his license in November after hearing about the increase in accidents. He said he wanted to stop driving “before something like that happened.”

          Seniors take a simulated driving test at a driving school in Kofu, Yamanashi in 2015.
          Photographer: Kyodo News via Getty Images

          Some companies are offering incentives for senior citizens to hand over their driving papers. Elderly people who give up driving in Tokorozawa are offered a year of free transportation on a community bus service that runs throughout the city, plus 20 percent off purchases at Mister Donut, a unit of Duskin Co. Other perks include a 10 percent discount on a local home-help service, 10 percent off taxi fares and even discounts on funeral services.

          Banks and insurance companies are also getting in on the act. Bank of Kyoto Ltd. gives a 1 percentage point discount on car loans for anyone living with a senior citizen who has given up the keys. Awa Bank Ltd., on the western island of Shikoku, offers an additional 0.3 percentage point on time deposits for elderly folks who stop driving. MS&AD Insurance Group Holdings Inc. said last month it’s developing an in-car box that sounds a warning if the vehicle goes outside a predetermined area or drives the wrong way and alerts family members via a smartphone app.

          Ministry of Land, Infrastructure, Transport and Tourism

          Giving up the car keys can be tough for people who live away from public transport or are the only driver in the household. Older people sometimes overestimate their own cognitive abilities, according to researchers. It’s also an issue of independence, of giving up personal freedom and reconciling with old age.

          Losing the right to drive and the independence that accompanies it may also hasten physical decline and contribute to dementia, said Hiroshi Takahashi, a former professor of welfare policy at the International University of Health and Welfare Graduate School who advises governments on elderly care. Policies should encourage innovation to give seniors more options for mobility, such as self-driving cars, he said.

          "The government is restricting their movements without giving alternative mobility options, which makes it really difficult for them to stop driving,’’ he said.

          Takao Inui, a elderly resident of Tokyo’s Shibuya district who drives a Suzuki Cruze, said he uses his car about once a week for shopping or when his wife needs to go somewhere, and has no plan to give up for perhaps three years. While public transportation is readily available, he prefers to drive.

          "I’m aware that at 77, things are starting to get dangerous, so I’m very careful when I drive,’’ he said. "If I got sick or something scary happened, then I’d have to think about it — although I guess that might already be too late.’’

          Kamei, the 79-year-old retiree from Tokorozawa, now relies on his 69-year-old wife to drive him around. 

          “The way she’s going, I think she’ll be okay for another 10 years or so,” he said. “And I guess it’ll be taxis after that.”

            Read more: http://www.bloomberg.com/news/articles/2017-07-23/elderly-drivers-are-wreaking-havoc-on-japan-s-roads

            Trumps Modest Proposal for a Nafta Revamp

            Donald Trump has gone squishy by stages on the North American Free Trade Agreement, which he once called “the worst trade deal maybe ever signed anywhere.” In April, aides persuaded him not to abrogate the 23-year-old trade pact with Canada and Mexico. On July 17, moderates scored another victory: The Office of the U.S. Trade Representative released objectives for renegotiating Nafta that aim to tune it up, not gut it. “Overall this looks like a Nafta modernization. It’s not like the whole of Nafta is up for grabs,” says Antonio Ortiz-Mena, a senior adviser at Albright Stonebridge Group, a Washington ­diplomacy advisory firm, who ­previously headed the economic affairs section of the Mexican Embassy.

            Even after Trump relented last spring on killing the three-way pact, some analysts expected he would direct U.S. Trade Representative Robert Lighthizer to take a hard, nationalistic line in talks on updating it. After all, in January the president had threatened a 20 percent tariff on Mexican goods to pay for the border wall. There are no such threats in the trade rep’s letter to Congress spelling out the administration’s objectives. The administration is OK with maintaining tariff-free, quota-free trade among the three countries.

            True, there’s some harsh language about Nafta in the 18-page document. “Since the deal came into force in 1994, trade deficits have exploded,” it says. “For years, politicians promising to ­renegotiate the deal gave American workers hope that they would stop the bleeding. But none followed up.” Trump, it says, is finally doing what others only promised.

            But that campaign-style language is confined to the introduction. What follows are mostly mainstream ideas for furthering trade liberalization, such as speeding goods through customs and ensuring that health and safety regulations aren’t ­manipulated to block imports.

            In fact, many provisions the administration is seeking in a new Nafta were negotiated into the Trans-Pacific Partnership—ironic, since one of Trump’s first acts was to pull the U.S. out of it. Among those provisions: unfettered cross-border data flows; regulatory harmonization; stronger labor and environmental standards; and a ban on currency manipulation (which Canada and Mexico don’t do anyway). “He’s taking Nafta and making it look more like the TPP but with fewer countries,” says Todd Tucker, a fellow at the Roosevelt Institute, a think tank in New York.

            Canada and Mexico responded positively, with Canadian Foreign Minister Chrystia Freeland saying her country welcomed the opportunity to ­modernize the treaty to “reflect new realities” and Mexico’s economy ministry saying in a statement it “will contribute to defining with greater clarity the subjects to negotiate and the timing for the modernization process.” Congress now has a chance to shape the administration’s negotiating strategy before the talks, which will begin on Aug. 16.

            Trump has frequently expressed annoyance that the U.S. runs deficits in merchandise trade with Canada and Mexico, viewing it as evidence that the countries aren’t playing fair. That ­perspective surfaces in the trade rep’s letter. The first ­objective listed in the document is: “Improve the U.S. trade balance and reduce the trade deficit with the NAFTA countries.”

            That anti-deficit language worries ­free-traders, who say it’s not reasonable to expect balanced trade with each trade partner. To put it in individual terms, the average person runs a trade deficit with her auto mechanic but a trade surplus with her employer. Countries are the same: Mexico logs a trade surplus with the U.S. and a deficit with the rest of the world. Shrinking trade gaps with Canada and Mexico is “not something achievable through trade policy,” says Chad Bown, a senior fellow at the Peterson Institute for International Economics in Washington and a staff member of the Council of Economic Advisers under President Obama. “You’re inevitably setting yourself up for failure if that’s your goal.” The document, however, gives no indication that Trump is prepared to punish Canada or Mexico if bilateral deficits fail to narrow. “There is nothing that could be ­considered radical,” says Eric Miller, president of Rideau Potomac Strategy Group, a Washington advisory and lobbying firm.

            In a nod to a key priority of Commerce Secretary Wilbur Ross, the document seeks to ensure that goods don’t qualify for zero tariffs unless they really do come from one of the three signatory countries. Ross has expressed concern that some products said to be made in Mexico are actually largely Chinese in content. Nafta’s rules of origin refer generally to North American content, while the letter seeks more sourcing from “the United States and North America.” The insertion of the United States into the phrase could be a way to placate nationalists in the administration.

            Negotiators from all three countries are aiming to button up the treaty revisions before 2018 ­elections in Mexico and the U.S. That “may be achievable” because the countries already agreed to big chunks of the new agenda during the TPP talks, says Robert Holleyman, who was a deputy U.S. trade representative under Obama. On the other hand, he says, “this is something you could imagine being a ­multiyear exercise.”

              BOTTOM LINE – Trump nixed the Trans-Pacific Partnership, but many of the Nafta modifications his administration is seeking are straight out of the 12-nation trade pact.

              Read more: http://www.bloomberg.com/news/articles/2017-07-20/trump-s-modest-proposal-for-a-nafta-revamp

              Trump America-First Pipeline Plan Draws Ire of American Oil

              Donald Trump’s allies in the oil industry are warning the president that his bid to boost U.S. steelmakers could backfire against their efforts to achieve his goal of "American energy dominance." 

              The intense lobbying effort comes as the Commerce Department faces a Sunday deadline to give the president a plan to require oil and gas pipelines use American-made steel, an idea Trump embraced in the initial days of his presidency. While the U.S. has imposed "Buy American" rules on government purchases for decades, it would be unprecedented to force those obligations on privately funded, commercial projects.

              The blueprint from Commerce Secretary Wilbur Ross will set the stage for further protests from the oil industry, the U.S. Chamber of Commerce and developers, including The Williams Companies Inc. and Energy Transfer Partners

              "A core feature of the U.S. free enterprise system" is that "private businesses should be free to make purchasing decisions on their own," the Chamber of Commerce, the biggest-spending business lobby in Washington, said in its comments to Ross.

              The effort illustrates how Trump’s "America-first" agenda pits his allies against one another and underscores the challenges of fulfilling the president’s protectionist stance. As with Trump’s promises to restrict immigration from Muslim-majority nations, rework former President Barack Obama’s health care law and overhaul the tax code, the reality of implementing this idea has been more difficult than the president initially posited. 

              Read More: Trump Pins Keystone, Dakota Pipeline Fate on Renegotiation

              Trump kicked off the pipeline-focused effort during his fourth day in office, issuing a presidential memorandum compelling the Commerce Department to determine how to require American material in all, retrofitted, repaired or expanded U.S. pipelines "to the extent permitted by law." Under Trump’s directive, iron and steel only qualifies as American-made if it is fully produced in the U.S., from its initial melting to the later application of coatings.
               
              The idea originated when union leaders suggested it during a meeting with the president; Trump ordered an aide to make it happen, sending advisers scrambling to draw up the directive before it was signed the next day.

              Separately, the Trump administration is investigating whether foreign steel threatens U.S. national security — a probe that could lead to tariffs or quotas on those imports.

              While pipeline developers have praised Trump’s approval of projects that stalled under Obama, including TransCanada Corp.’s Keystone XL and Energy Transfer’s Dakota Access, they warn America-made requirements could undercut that progress. More than three quarters of pipe used in oil and gas projects begins as imported steel, according to one industry study.

              Read more: Under Trump, It’s Make a Deal With the President — or Else

              "Fewer new pipeline projects would run counter to the Trump administration’s goal of expanding U.S. energy production and infrastructure to support the economy, job growth and national security," said a coalition of oil industry trade groups, including the American Petroleum Institute and the American Gas Association. Relying solely on U.S.-produced pipeline-quality steel and components "could lead to long construction delays and higher costs, potentially canceling planned pipeline projects or blocking new pipeline projects."

              Energy Transfer said that when it purchased pipe for three U.S. projects simultaneously, it effectively consumed the entire domestic capacity.

              It’s not clear how the U.S. government could enforce the mandate, though multiple federal agencies can play a role permitting pipeline projects and scrutinizing their operations.

              Steel Dynamics Inc., one of the largest domestic steel producers, recommended the Trump administration impose an American-made requirement through the Federal Energy Regulatory Commission, which reviews proposals to build interstate pipelines to ensure they comply with safety, security and environmental standards.

              "Pipeline applications not using domestic pipe from domestic steel should be rejected unless an applicant proves that there is no available domestic pipe made from domestic steel that meets the pipeline’s specifications," Steel Dynamics told the Commerce Department in written comments.

              Many steel producers, including ArcelorMittal USA LLC, Nucor Corp., and U.S. Steel Corp., say Trump’s plans could help revive the industry, which is struggling to compete amid a worldwide glut of the product.  

              "At a time when the domestic steel industry faces unprecedented challenges resulting from massive global overcapacity and surges of unfairly traded imports, domestic preference provisions are even more critical to stimulating domestic production and employment throughout the steelmaking supply chain," Nucor said in comments to Commerce.

              But pipeline builders argue many steel mills have elected not to invest in producing a specialized pipe that meets industry standards for integrity and strength that make it usable in oil and gas pipelines. Fewer still produce large pipe with very thick walls — the kind typically used for long-distance projects. About 77 percent of steel used in U.S. pipelines today begins abroad — with roughly half of the pipe foreign sourced and the remaining half made in the U.S., using imported steel, according to a study from ICF International Inc. cited by the American Petroleum Institute.

              Steve Crookshank, a senior economist at API, said it could take two to 10 years for the U.S. to ramp up its capacity to satisfy the oil and gas industry’s needs and even then, "there’s no guarantee that domestic manufacturers are going to commit the capital" to serving a cyclical, niche market.

              Buy America

              The Alliance for American Manufacturing told the Trump administration it shouldn’t be swayed by arguments there isn’t enough capacity to churn out the steel pipe the oil and gas industry requires. Supporters point to Philadelphia-based Sunoco Logistics’ plans to fully source its 350-mile Mariner East 2 pipeline with 75,000 tons of domestically produced steel. That project is evidence that U.S. companies can meet the oil industry’s needs, the manufacturing alliance said.

              "Buy America" preferences are now set for government-funded projects, such as highways and passenger-rail systems. But trade lawyers say putting similar requirements on commercial endeavors would be difficult — and might be illegal.

              "Current law does not authorize the U.S. government to impose domestic-origin requirements on privately owned, operated and funded pipelines," said Scott Lincicome, a trade attorney with White & Case LLP. It also is inconsistent with the rules of the World Trade Organization — the same forum the U.S. has used to object to other countries’ local-content requirements.

              "The United States is one of the top complainants when it comes to local-content requirements around the world, so it would be quite a reversal of policy for the United States itself to institute such measures for pipelines," Lincicome said.

                Read more: http://www.bloomberg.com/news/articles/2017-07-21/trump-s-america-first-pipeline-plan-draws-ire-of-american-oil

                Overdose Victim’s Dad Rallies Teamsters in Fight With McKesson

                Travis Bornstein took to the stage last summer at the International Brotherhood of Teamsters’ annual convention in Las Vegas to talk about his son Tyler, who died of an overdose at 23.

                The father, a former Marine and president of a union chapter in Akron, Ohio, told the audience at the Paris Hotel how Tyler got hooked on painkillers after multiple elbow surgeries. It eventually led to a heroin addiction.

                Travis Bornstein

                Source: Teamsters

                Bornstein’s speech rallied the union’s 1.4 million members and its more than $100 billion of pension and benefit assets around one goal: Demand accountability from firms that it deems to be responsible for helping fuel America’s opioid crisis and the executives who profited from it. First on the list: McKesson Corp., the nation’s largest drug distributor, whose $198.5 billion in annual revenue last fiscal year was fourth-highest among U.S. companies and more than Exxon Mobil Corp.’s, according to data compiled by Bloomberg.

                “We’re trying to hold these big companies responsible and accountable for what’s going on in America,” Bornstein said Friday in a telephone interview. McKesson’s board “needs to take a long, hard look in the mirror, a deep breath and a step back on what they’re doing to our country. Everything isn’t about money.”

                John Hammergren

                Photographer: David Maxwell/Bloomberg

                When McKesson’s board and executives gather near Dallas for their annual shareholders meeting on July 26, they’ll be greeted by a throng of picketing Teamsters. Representatives of the union, which owns more than $30 million of McKesson shares, will call on investors to reject the company’s executive-pay plan and for the board to claw back some of Chief Executive Officer John Hammergren’s compensation.

                “We take our responsibility to help manage the safety and integrity of the pharmaceutical supply chain extremely seriously and are committed to maintaining — and continuously improving — strong programs designed to detect and prevent opioid diversion,” McKesson spokeswoman Kristin Chasen said in an emailed statement. “We are doing everything we can to help address this crisis in close partnership with doctors, pharmacists, government and other organizations.”

                Millions Affected

                The opioid epidemic has emerged as one of the nation’s most pressing health crises, claiming a life every 19 minutes, according to the U.S. Surgeon General. An estimated 2.7 million people over age 26 abused painkillers in 2015, resulting in 33,000 deaths that year. More than 20 states, counties and cities have sued drugmakers, such as Purdue Pharma Inc. and Johnson & Johnson, and distributors including McKesson and AmerisourceBergen Corp., claiming they aggravated the crisis with misleading marketing and aggressive distribution.

                Read more: Opioid costs push struggling states to dust off tobacco strategy

                As the Teamsters see it, McKesson played a central role. The company, a middleman between drugmakers and pharmacies, ships millions of doses of opioids each year. It’s required to monitor those distributions and report suspicious orders to federal authorities. Still, the company delivered so many painkillers to West Virginia’s Barbour County over a five-year period that it equaled 15,445 doses per anticipated patient, or 210 doses per citizen, the union said in a Nov. 15 letter to McKesson’s board.

                The drug distributor has said it doesn’t manufacture or prescribe opioids. The company has spent millions of dollars building a monitoring program for controlled substances to oversee ordering, report dubious cases to the Drug Enforcement Administration and educate customers on how to identify abuse, Edward Mueller, McKesson’s lead independent director, wrote in a July 14 letter to shareholders.

                Still, in the past decade, McKesson has twice settled DEA allegations that it failed to report suspicious orders of controlled substances. As a result, the company can’t sell such products from distribution centers in four states for several years, and it has paid a combined $163 million in civil penalties.

                This shows “a dearth of accountability and visible action” by directors and executives, the Teamsters said, urging the board to appoint an independent committee to investigate allegations raised in lawsuits and tweak pay for senior managers to include metrics tied to compliance.

                Bonus Payouts

                The union also called on McKesson investors to vote against the executive pay program and support its shareholder proposal to appoint an independent chairman, stripping the CEO of that role. The union noted that Hammergren, 58, has received above-target bonus payouts for years, partly because of the board’s favorable assessment of his performance in meeting the company’s ethical standards.

                Hammergren has taken home $781 million since becoming sole CEO in 2001, according to a Bloomberg Pay Index tally of his salary, bonuses, perks, vested stock and exercised options.

                Institutional Shareholder Services Inc. and Glass Lewis & Co., the nation’s largest proxy advisers, joined the Teamsters this month in recommending that investors reject McKesson’s compensation plan. ISS criticized the board for repeatedly boosting executive bonuses on the premise of strong individual performance while failing to mention how the company’s role in the opioid controversy has impacted pay decisions. Both proxy advisers urged shareholders to support the Teamsters’ proposal to split the CEO and chairman roles.

                See also: Here’s why Yellen’s Fed cares about America’s opioid epidemic

                In his letter, Mueller defended the board’s work, arguing that Hammergren’s total direct compensation had decreased by 27 percent in the past five years even as McKesson shares returned more than 75 percent.

                The recent campaign by the Teamsters doesn’t help to “address the root causes of this tragic epidemic,” and the union’s beef is tied to a long-running contract dispute with McKesson involving workers at a Florida distribution center, Mueller wrote. He asked shareholders to approve the pay program and reject the union’s proposal to split the CEO and chairman roles. “I can assure you that McKesson’s board of directors takes its independent oversight responsibilities seriously.”

                The Teamsters, meanwhile, are playing the long game.

                “I don’t claim to be the smartest person in the room,” Bornstein said in his speech last summer. But, reminding the audience of his service as a Marine, “I do know how to stand up and fight like hell until the mission’s accomplished.”

                  Read more: http://www.bloomberg.com/news/articles/2017-07-21/overdose-victim-s-dad-rallies-teamsters-in-fight-with-mckesson

                  Chipotle Falls Again, Thanks to Norovirus and Mice

                  Chipotle Mexican Grill Inc.’s rough week isn’t over yet.

                  Shares of the burrito chain fell for a fifth day after it was hit by a fresh wave of damaging reports, dragging the stock down to its lowest level since 2013. The number of people who claim to have been sickened by Chipotle location in Virginia has now climbed above 130. And in Texas, customers complained to local news about rodents dropping from the ceiling of a restaurant.

                  The negative headlines have tarred what was supposed to be a marketing coup for the Denver-based company. It rolled out a new campaign on Wednesday featuring RZA of the Wu-Tang Clan, aiming to tout the quality of the chain’s ingredients.

                  Instead, investors have focused on the mounting number of suspected norovirus cases. The outbreak first came to light after Chipotle closed a location in Sterling, Virginia, on Monday, citing a “small number” of illnesses. But the tally has climbed higher. Patrick Quade, who runs the website Iwaspoisoned.com, said that 137 people have reported getting sick after visiting that Chipotle.

                  The company reopened the restaurant on Wednesday after it was sanitized. In response to the incident, Chief Executive Officer Steve Ells pointed to the steps Chipotle has taken to safeguard customers’ health, including hiring a food-safety director and updating its protocols.

                  Chris Arnold, a spokesman for Chipotle, also noted that the Iwaspoisoned site may not be the most accurate way to measure the scope of an outbreak.

                  “The site relies on user-generated data, and there is no medical or clinical verification for that,” he said.

                  The Loudoun County Health Department, which is investigating the matter, said on Thursday that it had identified about 60 people who fell ill after eating at the Chipotle in Sterling. One of the customers has tested positive for norovirus, said David Goodfriend, director of the agency.

                  Heavy Scrutiny

                  Norovirus outbreaks aren’t uncommon, with about 20 million Americans getting stricken by the virus each year. But Chipotle is under heavy scrutiny after a series out of E. coli and norovirus outbreaks tarnished the chain’s reputation in 2015. That history has put a harsh glare on each subsequent health incident.

                  The stock fell 4.5 percent to $356.05 on Thursday, extending a streak of declines that began last Friday. The rout has erased Chipotle’s gains for the year.

                  In Dallas, customers told the local NBC affiliate that rodents fell from the ceiling of a Chipotle restaurant on Tuesday. Video of the mice skittering across the floor was posted, kicking off another wave of negative publicity.

                  Arnold blamed the incident on mice getting inside through a structural gap in the building. He called the situation an “extremely isolated incident.”

                  “Management immediately removed them and the gap has been repaired,” Arnold said. “We’ve been in touch with our guests to offer our sincere apologies.”

                    Read more: http://www.bloomberg.com/news/articles/2017-07-20/chipotle-takes-hit-as-norovirus-mice-keep-company-in-spotlight