In Brief: CLO Edition
2018 Jul 15
Today's Top Story
High Court to Rule on Whether Canadian Province Has to Give Health Data to Cigarette Maker
The Supreme Court of Canada will decide whether British Columbia (B.C.) must hand millions of patients' health information over to tobacco giant Philip Morris International. The decision is the newest chapter in the province's legal fight to force cigarette makers to compensate the province for the cost of treating tobacco-related illnesses. In the late 1990s, the provincial government filed a lawsuit against 13 tobacco companies, arguing that the companies knew their advertisements of "light" cigarettes for children were no safer than regular cigarettes, and that they colluded to conceal the research on the health risks of smoking. As a result, B.C. argued, those companies should have to help pay the cost of treating tobacco-related diseases, reports CBC News (12 July, Tunney). However, Philip Morris International argues it needs access to individuals' health data to defend itself in court. The province's lawyers say releasing individuals' health information—even anonymously—could violate privacy laws.
Activist Investors Turn Up the Heat
Activist investors are launching campaigns at a record pace, according to a Lazard study published Thursday, as the rise in passive investing pressures fund managers to find new ways to beat the market and as it becomes more accepted to allow activists into boardrooms. Activists spent US$40 billion targeting 136 companies with market values of more than US$500 million in this year's first and second quarters, the most since the investment bank began collecting such data in 2013, reports the Wall Street Journal (12 July, Lombardo). Just 94 companies were the subject of new activist campaigns by this time a year ago. The efforts are having a definite impact: activists won a record 119 directorships in the first half, a 75 percent jump from a year earlier, and they are increasingly pursuing control of boards, the research shows.
Chevron Names Head of Brazil Operations
Chevron Corp said it has named Mariano Vela, a geologist with 20 years of experience at the U.S. oil major, to oversee its Brazil operations. A letter signed by former Brazil country manager Javier La Rosa on 19 June said Vela would take over in Brazil at the beginning of July, reports Reuters (12 July, Alper). In June, La Rosa was transferred to Venezuela as country manager after a two-year stint in Brazil, following the months-long detention in Venezuela of two Chevron executives.
Northrop Grumman Taps Kathy Warden as Next CEO
CNNMoney (12 July, Wattles) reports that Northrop Grumman CEO Wes Bush is stepping down from the position he has held since 2010, effective 1 January. Bush will remain as chairman through July 2019. Succeeding him as chief executive will be Northrop President and COO Kathy Warden. Her promotion to Northrop's top post brings the number of females serving as Fortune 500 CEOs to two dozen.
Labor and Employment
What Walmart's Patent for Audio Surveillance Could Mean for Employees
A new Walmart patent would give the retailer a system of sound sensors to listen in on workers' activities and interactions, gathering audio data such as checkout line sounds and conversations between shoppers and the cashier. "A need exists for ways to capture the sounds resulting from people in the shopping facility and determine performance of employees based on those sounds," Walmart wrote in its patent application, called "Listening to the Frontend." Although the technology may never be built, it provides another way employers are using technology to more closely monitor employees. For example, earlier this year Amazon won patents for a wristband that would verify whether warehouse workers are correctly processing items, setting off vibrations to guide workers' hands to the right bin, GeekWire reported. According to Walmart, the concept was designed to help decrease store costs and boost guest satisfaction, reports the Washington Post (12 July, McGregor).
Huawei Linked to Major Data Breach
Chinese phone company Huawei has been linked to a major data breach in Africa. An investigation by French newspaper Le Monde and later confirmed by the Financial Times contends that confidential data from the African Union headquarters in Ethiopia was sent to Shanghai every night for five years and that bugs were found in the walls and desks at the building. After discovering the breach, the African Union replaced some of its technology infrastructure. However, a new report by Danielle Cave from the Australian Strategic Policy Institute (ASPI) adds that Huawei provided some of the building's technology under a contract signed in January 2012. The hack revelation comes at a bad time for Huawei, as it tries to convince Australia that there is no evidence to back up national security concerns which could see it banned from the rollout of 5G networks in the country, reports the Australian Financial Review (12 July, Grigg). Jeremy Mitchell, Huawei's corporate affairs director, said the ASPI report was another attempt to smear Huawei without facts or evidence.
Facebook Probed for Late Warning on Privacy Lapse
Indonesia Moves Closer to Taking Controlling Stake in Freeport Mine
After years of negotiations, global mining giants Freeport-McMoRan Inc. and Rio Tinto agreed to hand over control of the world's second-biggest copper mine to Indonesia. Under the terms of the deal, PT Indonesia Asahan Aluminum, or Inalum, will pay US$3.5 billion for an interest held by Rio Tinto in the mine's share of production. Inalum will then acquire an approximately 9 percent stake in the mine, called Grasberg, from Freeport for US$350 million, which will increase Inalum's stake from around 10 percent to 51 percent, reports the Wall Street Journal (12 July, Hoyle, Ramkumar). Freeport will end up with 49 percent and operate the mine. The agreement, which was made 12 July, is nonbinding, and Freeport and Rio Tinto said they expect to finalize it in the second half of 2018.
J&J Told to Pay US$4.7 Billion in Baby Powder Case
NBC News (13 July) reports that a Missouri jury ordered Johnson & Johnson (J&J) to pay a record US$4.69 billion to 22 women who alleged the company's talc-based products contain asbestos and caused them to develop ovarian cancer. J&J is battling approximately 9,000 talc cases. The company has denied that its products cause cancer and that they ever contained asbestos. Thursday's massive verdict was handed down in the Circuit Court of the City of St. Louis. The charge was comprised of US$550 million in compensatory damages and US$4.14 billion in punitive damages. J&J has vowed to appeal.
Food and Beverage
Fast-Food Chains Agree to End 'No-Poaching' Policies
The Seattle Times (12 July, Johnson) reports that seven major fast-food chains have agreed to end policies that prohibit employees from changing branches, which limits their wages and job opportunities, under the threat of legal action from the state of Washington. Washington Attorney General Bob Ferguson announced binding accords with Auntie Anne's, Arby's, Buffalo Wild Wings, Carl's Jr., Cinnabon, Jimmy John's, and McDonald's at a Thursday news conference.
Corporate Social Responsibility
Deloitte Employees Call on Company to Stop Working With ICE
A petition and internal emails show that Deloitte employees want the firm to ends its contracts with Immigration and Customs Enforcement (ICE) and United States Customers Border Protection, and to take a stance against the Trump administration policy that resulted in migrant children being separated from their parents. The move comes after its competitor McKinsey & Company decided to sever ties with ICE, reports the New York Times (12 July, Forsythe, Bogdanich). Daniel Helfrich, who leads Deloitte's government practice, told his employees in an email that the company had been working with the immigration and border agencies for years and that the firm's work "does not directly or indirectly support the separation of families." Neither Helfrich nor Cathy Engelbert, the company's chief executive, have indicated that the company would end its work with ICE.
World's Largest Food Companies Have a New Plan for Fixing Food and Farm Policy
The Washington Post (12 July, Dewey) reports that the Sustainable Food Policy Alliance was unveiled Thursday by the U.S. divisions of Danone, Mars, Nestle, and Unilever. The organization's goal will be to fight for progressive food policies, from conservation programs to more prominent nutrition labels, that have long been avoided by leading food makers. In doing so, the new alliance is likely to clash with the influential and well-funded Grocery Manufacturers Association, which Mars, Nestle, Unilever and seven other major companies abandoned amid high-profile philosophical disagreements last year. The Alliance will lobby in five key policy areas: product transparency, nutrition, the environment, food safety, and a positive workplace for food and agriculture workers.