FirstFT: Today’s top stories | Financial Times

FirstFT: Today’s top stories | Financial Times

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International investors bought bonds backed by the crime proceeds of Italy’s most powerful mafia, according to financial and legal documents seen by the Financial Times.

In one case, the bonds — backed in part by front companies charged with working for the Calabrian ’Ndrangheta mafia group — were purchased by one of Europe’s largest private banks, Banca Generali, in a transaction where consulting services were provided by accountancy group EY.

An estimated €1bn of these private bonds were sold to international investors between 2015 and 2019, according to market participants. Some of the bonds were linked to assets later revealed to be created by front companies for the ’Ndrangheta.

The ’Ndrangheta is less well-known outside Italy than the Sicilian mafia but has risen over the past two decades to become one of the wealthiest and most feared criminal groups in the western world, engaging in crimes ranging from industrial-scale cocaine trafficking to money laundering, extortion and arms smuggling. (FT)

Coronavirus digest

  • The US has begun the process of leaving the World Health Organization. The move, effective July 2021, would strip the global UN body of its largest donor.

  • Brazilian President Jair Bolsonaro has tested positive for coronavirus after spending the weekend with the US ambassador and top ministers in Brasília.

  • China probably regained 1.1 per cent of GDP growth in the second quarter, according to a survey of economists.

  • Australian authorities will reimpose a lockdown on Melbourne to contain a rise in coronavirus cases.

  • Boohoo, a fast-fashion website, has been dropped from several retailers’ websites after claims that staff in its Leicester factories were told to come into work during lockdown despite being sick. UK ministers have vowed to crack down on the clothing factories.

  • As some beneficiaries of the US government’s small business bailout programme say they have not taken any money, questions surround the administration’s process in allocating funds. (FT, Nikkei)

In the news

China warns of Huawei ‘consequences’ Beijing’s envoy to London warned that Britain would “bear the consequences” of excluding Huawei from 5G networks. Britain’s foreign secretary Dominic Raab is under pressure to apply the UK’s new sanctions regime to Chinese and Hong Kong officials. Angela Merkel is also facing accusations of taking a soft line against Beijing. (FT)

US says foreign students must leave if classes go fully online Students holding visas for either academic or vocational courses that have moved fully online should either depart the country or transfer to a school with in-person teaching to “remain in lawful status”, US Immigration and Customs Enforcement said. (FT)

Techlash over Hong Kong national security law TikTok, Zoom and Microsoft have become the latest companies to rethink operations in Hong Kong after Beijing’s imposition of a sweeping national security law that has raised concerns over the handling of data in the city. In the US, secretary of state Mike Pompeo has said he is considering a ban on TikTok. (FT, Politico)

US voters more pessimistic on chances of economic rebound Almost half of probable voters said they believed the outbreak would get worse in their community over the next month, a sharp increase from the 35 per cent who said the pandemic would worsen when asked a month ago, according to an FT poll. (FT)

Foreign journalists warned on HK independence reporting Foreign journalists working in Hong Kong could be expelled if they “cross the line” while reporting on demands for independence for the territory, a member of the Chinese government’s top advisory body has said. Carrie Lam, the city’s chief executive, denies that Beijing kept her in the dark over the new law. (FT, SCMP)

Deutsche Bank penalised over Epstein ‘compliance failures’ The German bank has agreed to pay a $150m fine for compliance failures in its dealings with Jeffrey Epstein, the late disgraced financier, as well as Danske Bank Estonia and FBME Bank. (FT)

Big Four accounting firms told plan for audit split PwC, Deloitte, KPMG and EY have until 2024 to separate their audit practices following an edict from the UK accounting regulator that marks the largest shake-up of the industry in decades. The firms must outline how they will implement it by the end of October. (FT)

Tensions rise on the Nile over Africa’s largest dam Egypt, Ethiopia and Sudan are engaged in last-ditch talks to resolve a dispute over Addis Ababa’s construction of a giant dam on the river Nile that Cairo fears could lead to damaging water shortages. (FT)


Ethiopia wants to start filling the reservoir this month © Eduardo Soteras/AFP/Getty

The day ahead

Sunak economic statement Rishi Sunak, chancellor, will announce £3bn of energy efficiency measures on Wednesday as part of a wider coronavirus stimulus aimed at boosting the economy, as well as a £2bn job creation scheme to stop the UK’s young people becoming part of a blighted “Covid generation”. (FT)

EU economic growth forecast Ursula von der Leyen, president of the EU Commission will meet European officials on Wednesday to take stock of progress on EU budget negotiations and to prepare for the EU summit next week. The commission will release its economic growth forecasts the same day. (FT)

Mexican president visits White House Donald Trump and Andrés Manuel López Obrador will buddy up to toast the new trade pact between the US, Mexico and Canada when the Mexican president visits the White House on Wednesday. López Obrador tested negative for Covid-19 on Tuesday. (FT, Reuters)


Mexican President Andrés Manuel López Obrador speaks at the National Palace in Mexico City. © AP

Our Tech Scroll Asia newsletter, which focuses on technology trends in Asia, is now #techAsia. In #techAsia you’ll find a new section featuring the best FT and Nikkei Asian Review comment analysing Asia’s fast-moving tech scene. Check out #techAsia’s LinkedIn Live event, US-China rivalry: A new Cold War? on July 8, 9am EST (9pm HKT) with James Kynge, FT Global China Editor, and Dan Wang, Gavekal Dragonomics.

What else we’re reading

The world falls apart as the US withdraws The US has succumbed to fierce internal divisions that have ended up in a destructive zero-sum nationalism, writes Martin Wolf. Mr Trump is the embodiment of these divisions, as former secretary of defence Jim Mattis has asserted. (FT)


© James Ferguson

Lockdown heroes In the US, they are called “essential” staff, in the UK “key workers” and in France travailleurs clés. But the essential are not always treated as essential. The latest in our series on the new social contract looks at how the pandemic has affected the low paid. (FT)

National security law spells trouble for PE in Hong Kong When Hong Kong officials earlier this year announced plans for a new carried interest scheme, the territory looked like it could be a hospitable host for Asia-focused private equity funds. But Beijing’s new law throws cold water on the potential for a Cayman Islands of the east. (Axios)

India’s faith in Modi India’s lockdown battered an already struggling economy, triggered a humanitarian crisis and failed to stop the deadly pathogen’s spread. But Narendra Modi’s popularity remains undiminished: a recent poll put his approval rating at 74 per cent. (FT)

Time for tech companies to Zoom out of Hong Kong American technology companies will find it hard to please both their stakeholders at home and the increasingly authoritarian rulers in Beijing and Hong Kong, writes Yuan Yang, deputy Beijing bureau chief. (FT)


© Pâté

The future of the beauty business The pandemic has turned grooming routines and beauty behaviours upside down. How To Spend It reports on the new consumer priorities that are emerging out of the antiviral age. (HTSI)

What does an M&A boutique do when the deals dry up? The top rainmakers are trying to turn relationships they have developed with chief executives over deals into all-round consiglieri roles, advising on anything from M&A to picking the best debt provider or how to face a geopolitical crisis. (FT)

Coming out at work For many LGBT+ employees, the workplace can be a minefield and trying to guess who is supportive, indifferent or prejudiced preoccupies many LGBT+ people. FT employees have marked Pride month by sharing stories about coming out at work. (FT)

FT Conversations

A look at what readers are talking about in the comments of “Martin Wolf: ‘Democracy will fail if we don’t think as citizens”:

“This article was long overdue. Let me just add that Western universities have collectively and spectacularly failed to train good citizens. They have even failed to realise that this should actually be one of their main missions alongside scholarship and research. Education, after all, is not just about ‘knowing’ what Aristotle said. It’s about understanding what he said.” — E2

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