Business

BEIRUT —  A Lebanon judge on Thursday referred central bank chief Riad Salameh to judicial investigation over his mishandling of a foreign currency scheme meant to stem skyrocketing food prices, a judicial source said. 

"Mount Lebanon general prosecutor Ghada Aoun has referred to judicial investigation central bank chief Riad Salameh and head of the central bank's Banking Control Commission, Mayya Dabbagh, on charges of professional negligence and breach of public trust" the source said.

The decision came after Aoun found cracks in a central bank scheme meant to sell dollars to food producers and importers at a subsidised rate to curb inflation, the source noted.

"The dollars did not all end up in the right place," with some reaching money exchangers who then profited by selling them on the black market, the source added. 

The Lebanese pound had been pegged to the dollar at 1,500 since 1997 but the country's worst economic crisis in decades has seen its value plunge by more than two thirds on the black market.

The dizzying devaluation has led to soaring food prices in a country where more than half of the population lives below the poverty line. 

In May, authorities said the central bank would provide dollars to support the import of basic foods and related raw materials.

Last month, Aoun questioned Salameh, his aides and several money exchangers to determine whether the subsidised dollars reached their target.

"The sum of money that went into the pockets of money exchangers and financial institutions exceeds five million dollars," the judicial source said. 

Michel Mekattaf, a top foreign currency exporter and Abed al Rahman Al-Fayyed, a money exchanger, have also been referred to investigation over the same case. 

Salameh is the subject of a separate probe by Swiss authorities into large money transfers he allegedly made out of Lebanon despite tight banking controls.

The veteran central bank chief, who has come under fire over the country's financial downturn, has denied all allegations brought against him. 

RIYADH — Saudi Arabia opened a two-day Davos-style investment forum on Wednesday, with dozens of global policy makers and business tycoons lined up to speak at the largely virtual event amid the coronavirus pandemic.

Only 200 of around 8,000 registered delegates are attending the fourth edition of the Future Investment Initiative (FII) in-person at Riyadh's Ritz-Carlton hotel, organisers said. Previous summits drew thousands of Wall Street titans and global policymakers.

Around 100 speakers are set to participate virtually from FII hubs in New York, Paris, Beijing and Mumbai and 50 are physically attending the conference, which seeks to showcase the insular kingdom as a dynamic investment destination.

The participants include Goldman Sachs Chief Executive David Solomon, Stephen Schwarzman, head of private equity firm Blackstone, American asset management company Blackrock's chief executive Larry Fink and former Olympic sprinter Usain Bolt, organisers said.

"The COVID-19 pandemic has forced a fundamental rethink about the ways in which economies and societies function," said Richard Attias, chief executive of Riyadh's FII Institute, which organised the summit. 

"We have brought together the best and the brightest minds in person and virtually, to set the course for 2021 tackling the biggest challenges we are all facing."

The summit, originally slated to be held last October, coincides with the Davos World Economic Forum and comes as the global economy reels from the devastating impact of the pandemic.

"There has never been a more important time for leaders, investors and policymakers to come together to work towards reenergising the global economy," Yasir Al Rumayyan, chairman of Saudi Arabia's Public Investment Fund, said in a statement.

The annual summit, dubbed "Davos in the desert", was launched by Saudi Crown Prince Mohammed Bin Salman in 2017 to woo foreign investors and promote his Vision 2030 diversification plan to wean the economy off its dependence on oil. 

The forum is considered an economic gathering for the kingdom, which is eager to project its economic ambitions.

SAN FRANCISCO — Microsoft said on Tuesday its profit rose sharply in the recently ended quarter as the coronavirus pandemic reinforced the shift to relying on services hosted in the cloud for work, play and socialising.

The US technology stalwart reported net income of $15.5 billion in the final three months of last year, a 33 per cent jump from the same period in pre-pandemic 2019.

Overall revenue rose 17 per cent from a year ago to $43.1 billion, Microsoft said in its update for its fiscal second quarter.

"What we have witnessed over the past year is the dawn of a second wave of digital transformation sweeping every company and every industry," Microsoft Chief Executive Satya Nadella said in an earnings call.

Microsoft's commercial cloud offerings took in revenue of $16.7 billion in the quarter, up 34 per cent from the same period in the prior year, according to chief financial officer Amy Hood.

"We continue to benefit from our investments in strategic, high-growth areas," Hood said.

Microsoft shares were up more than 5 per cent after-market trades that followed release of the earnings figures.

"These were blow-out numbers that will be another feather in the cap for the tech sector as the cloud growth party is just getting started, in our opinion led by Microsoft," Wedbush analyst Dan Ives said in a note to investors.

Revenue in Microsoft's consumer-focused More Personal Computing unit was up 14 per cent to $15.1 billion, helped by a 40 per cent surge in money taken by its Xbox video game unit, according to the company.

Overall sales of video games, consoles and accessories hit a record high in the US last year as people hunkered down at home due to the pandemic turned to play.

Sony's PlayStation 5 and Microsoft's newest Xbox were released in November, vying for holiday season dominance as the pandemic boosts gaming demand. 

It was the first time in the year-end holiday quarter that gaming revenue at Microsoft topped $5 billion, and the launch of the latest Xbox models was the most successful in the history of the consoles, according to Nadella.

He did not disclose sales figures for new Xbox X and Xbox S consoles, but said they scored the best launch month sales ever for the hardware line.

"We are gaining console share," Nadella said.

The Xbox Live online service for game-play and content now has more than 100 million subscribers, according to Nadella.

Nadella expected the shift to cloud services and remote work to linger even after the pandemic is a thing of the past.

"We obviously are not going to have the same constraints going forward; I am not at all assuming we will remain as is," he said.

"At the same time, there is no return to January of 2020. What I think is key for us is to maintain flexibility."

He envisioned "hybrid" work styles that combine remote work with visits to offices or other job sites.

"In hybrid work you need that sophisticated set of tools that really tracks work flow irrespective of who is where," Nadella said.

"That is what we are focused on; that is how we expect work to evolve."

NEW YORK — Boeing concluded a bruising 2020 on Wednesday with another unpleasant surprise: A $6.5 billion blow from delays to its new 777X plane that exacerbated its annual loss.

The aerospace giant, which saw its revenues ravaged by the commercial airline downturn due to COVID-19 and the 20-month grounding of its 737 MAX model, now expects first deliveries of the widebody 777X in late 2023, compared with the earlier time-table of 2022.

The accounting for the 777X prolongation pushed Boeing's fourth-quarter loss to $8.4 billion, plunging its tally for all of 2020 to $11.9 billion in the red.

The past year "was a year of profound societal and global disruption which significantly constrained our industry", said Chief Executive Dave Calhoun. "The deep impact of the pandemic on commercial air travel, coupled with the 737 MAX grounding, challenged our results.”

"I am proud of the resilience and dedication our global team demonstrated in this environment as we strengthened our safety processes, adapted to our market and supported our customers, suppliers, communities and each other."

In light of radically worsened market conditions, Boeing has taken a sledgehammer to costs, announcing job cuts of some 30,000 employees over two years. The company also completed a $25 billion bond offering to provide liquidity to ride out the downturn.

For the fourth quarter, Boeing reported a loss of $8.4 billion after accounting for a $6.5 billion hit from the 777X. Revenues fell 14.6 per cent to $15.3 billion.

Repeated delays 

The fourth quarter also included a number of other one-time hits: payments to the US Justice Department to settle criminal charges over the 737 MAX crashes, the altered production schedule for the same aircraft, production issues on the KC-46 US military tanker and the drag from anemic demand for Boeing's global services business.

Each of these items amounted to a hit of between $275 million and $744 million. 

As far as the 777X, Boeing has now pushed back the timeframe at least three times.

When it delayed the program in 2020, Boeing said the prolongation reflected the need to incorporate lessons from the 737 MAX certification, as well as uncertainty about airline demand due to the pandemic's travel downturn. Boeing described similar dynamics on Wednesday.

The MAX grounding weighed on the company's results over the last two years, but the outlook for that programme has improved after commercial flights on the plane resumed in late 2020 following a lengthy grounding caused by two fatal crashes.

Since the plane was cleared to resume service, Boeing has delivered more than 40 MAX aircraft and the plane has safely flown more than 2,700 commercial flights on five carriers. 

However, commercial air travel overall is not expected to make a full recovery until after 2021.

Shares of Boeing tumbled 3.9 per cent to $194.00 in pre-market trading.

By John Biers

WASHINGTON — Amazon announced plans on Tuesday to expand its technology hub in the Boston area, creating some 3,000 jobs in the next few years.

The Boston hub will add teams working on the Alexa digital assistant, robotics, Amazon Pharmacy and the giant's web services unit.

The company, which already employs some 3,700 people in the Boston area, has leased a new 17-story office tower which is part of the Boston Seaport project. 

Set for completion in 2024, the complex will include a community dog park, retail space and a new performing arts centre.

Rohit Prasad, vice president and head scientist for Alexa at Amazon, said the new hub will expand research and development for the artificial intelligence system.

"Much of the technology that makes Alexa smarter every day is invented in Boston," Prasad said.

"Our teams here play a key role in driving Amazon's innovations."

Amazon's workforce has been surging in recent years and includes some 800,000 in the United States, as the company expands its e-commerce, web services, streaming and other projects while at the same time drawing heightened scrutiny from antitrust enforcers.

AMMAN — Arab Bank Group concluded 2020 reporting net income after tax of $195.3 million compared to $846.5 million in 2019, recording a drop of 77 per cent, according to a statement of the Arab Bank Group. 

 The group’s equity grew to reach $9.4 billion, said the statement, adding that the board of directors recommended the distribution of 12 per cent in cash dividends for the financial year 2020.

The year 2020 was challenging for global and regional banking sectors due to economic contraction, higher cost of risk, and lower interest rates, in addition to the plunge in oil prices since the outbreak of the pandemic, the group said in its statement.

Customer deposits grew by 7 per cent to reach $38.7billion compared to $36.2billion, while loans grew by 1 per cent to reach $26.5 billion as compared to $26.1 billion. 

The group maintained its robust capital base with an equity of $9.4 billion and a capital adequacy ratio of 16.8 per cent, calculated in accordance with Basel III regulations.

The group enjoys high liquidity with a loan-to-deposit ratio of 68.4 per cent, while credit provisions held against non-performing loans continue to exceed 100 per cent.

Sabih Masri, chairman of the board of directors said the COVID-19 pandemic impacted businesses around the world and the economic environments in which they operate. 

“In an effort on safeguard their economies, governments and regulatory authorities launched various programmes to mitigate the impact of the crisis,” he said in the statement.  “The bank dealt with these challenges while maintaining its strong liquidity and capital positions,” he noted.

Nemeh Sabbagh, chief executive officer, said the group took several initiatives to help mitigate these unprecedented economic and market conditions, safeguarding its healthy liquidity and capital ratios, maintainingresilient asset quality metrics, and scaling up digital banking initiatives and channels across the Group.

The increased provisions taken across the group are in accordance with the guidelines of International Financial Reporting Standard # 9, and as per the bank’s internal expected credit loss model, and include general provisions built due to the current economic situation in Lebanon, he added.

The 2020 financial statements require the approval of the Central Bank of Jordan.

LONDON — UK department store chain Debenhams is to shut all its outlets, administrators for the collapsed group said Monday, with the loss of around 12,000 jobs.

Debenhams, which has long struggled with fierce online competition, will see its brand live on, however, after British online fashion group Boohoo bought the group's intellectual property assets.

Meanwhile, Boohoo-rival ASOS announced it was in exclusive discussions with the administrators of Arcadia about purchasing some of its brands, including Topshop. 

Arcadia and Debenhams collapsed last month — together risking the loss of 25,000 jobs — having struggled to transition from a bricks-and-mortar business long before the coronavirus pandemic forced shoppers online. 

Arcadia owner Philip Green — once dubbed "the king of the high street" — saw his reputation severely hit by the high-profile collapse of UK retailer BHS in 2016.

"The importance of the bricks-and-mortar traditionally associated with retail brands has now fully waned," noted Gordon Fletcher at the University of Salford Business School. 

"This is not a new realisation that has only been discovered during the pandemic. 

"However, the current lockdown situation has forced us to cut the final ties between our favourite brands and the physical high street," Fletcher added.

Debenhams' stores will reopen following the lifting of the UK lockdown solely to liquidate stock, administrators FRP Advisory, brought in to salvage parts of the business, said in a statement on Monday.

"Regrettably, all the UK stores will then be permanently closed," it added.

A source close to the company said this meant that around 12,000 jobs would disappear.

Debenhams, whose history dates back to the late eighteenth century, had hoped to sell some of its 124 stores, whose staff have been paid by the British government's furlough scheme during the pandemic.

It is unclear whether British retail group Frasers, which has been in talks with the administrators, will still snap up some Debenhams stores.

Frasers is headed by Mike Ashley, owner of English Premier League football club Newcastle United and renowned for purchasing major retailers that have fallen from great heights.

'Strong brands' 

Boohoo said its acquisition of Debenhams' assets, including customer data, will cost it £55 million ($75 million, 62 million euros).

It plans to relaunch Debenhams' online platform, as Boohoo looks to lead the fashion e-commerce market by entering new areas including beauty, sports and homeware.

"Debenhams is a long-standing and leading UK fashion and beauty retailer with high brand awareness, and an established online platform with approximately 300 million UK website visits per annum," Boohoo said in a statement. 

"This makes it a top 10 retail website in the UK by traffic."

With an increasing shift to online, main shopping streets in England's towns and cities could lose another 400,000-plus jobs after coronavirus passes, according to a recent survey by accountants KPMG.

While COVID-19 has ravaged the UK retail sector, with tens of thousands of jobs being lost owing to other big-name bankruptcies, supermarkets have boomed.

Arcadia, one of Britain's biggest clothing retailers, fell into administration ahead of Christmas, putting at risk a further 13,000 roles.

Arcadia, whose brands sold also in Debenhams' stores, blamed its own demise largely on coronavirus fallout.

However like Debenhams, Arcadia also struggled to make the transition into a leading online company.

ASOS on Monday said it was looking at buying the Topshop, Topman, Miss Selfridge and HIIT brands from Arcadia. 

"The board believes this would represent a compelling opportunity to acquire strong brands that resonate well with its customer base."