The week’s news included; Russian invasion of Ukraine, UPS loses $2bn EU lawsuit, LVMH mulls bid for Ralph Lauren, Trump launches new social media platform.
Below are our top 10 stories that you need to know about. Be sure to check our twitter page, Facebook page and Instagram Page, for regular posts of important headlines. Get all the important stories and insights straight into your inbox by subscribing to our mailing list here.
Opinion articles of the week:
- City A.M. – Clifford Chance tech lawyer says London law firm should adopt Silicon Valley work culture
- The Economist– How football jumped on the crypto hype.
- Legal Cheek – Will City law firms join the Metaverse?
- BBC News – Why Ukraine crisis could cause global price rises.
- FT – Metaverse vs employment law: the reality of the virtual workplace.
1. RUSSIAN INVASION OF UKRAINE
Russia formally declared war on Ukraine last week and invaded the Eastern European country. Key parts of the Ukrainian infrastructure have been damaged or destroyed. Hundreds of Ukrainian’s have been killed and thousands have been injured so far.
Western powers such as the US, EU and UK have all expressed solidarity with Ukraine and have taken action against Russia’s key economic players. A wave of sanctions, namely asset freezes, have been issued against Vladimir Putin himself along with Russian oligarchs with ties to the Kremlin. Furthermore, sanctions were also slapped on Russian businesses. The most significant of these was the US and EU ban from Russian banks using the Swift messaging system. The Swift messaging system underpins global financial markets and allows banks to make quick and secure cross border payments. This Swift ban alongside other sanctions on Russian business could have a significant impact. Major sanctions have also been issued against Russia’s largest banks, including Sberbank and VTB Bank.
Western companies are rapidly cutting ties with Russian sponsors. European footballing bodies UEFA terminated its £66 million sponsorship deal with Russian state energy company Gazprom. It also moved the Champions League final set to take place in May from St Petersburg to Paris. German football club Schalke also removed Gazprom, its main sponsor, from its jerseys. Organisers of the Eurovision song contest have expelled Russia from the competition. Manchester United have also terminated their sponsorship deal with Russian airline Aeroflot.
All this action has impacted Russia’s financial markets significantly. Russia’s 116 billionaires have lost over $126 billion in the past 2 weeks alone due to the crisis. Russia’s Moex stock index collapsed 33% in one day and even closed down to taper the financial bloodbath. The Russian central bank had to purchase millions of roubles to prop up the currency after it plunged to a record low of 89.60 against the dollar. This is part of what the Kremlin considers a financial safety net to help its markets manage the volatility sparked by its invasion.
Western markets were also affected. In the UK, Friday was the worst day for markets since June 2020. Nearly £77 billion was wiped off the value of the FTSE 100 as investors sold off assets.
2. UPS LOSES $2BN EU LAWSUIT
Last week, UPS lost its $2 billion lawsuit against the EU Commission over its proposed takeover of TNT. UPS sought to buy its Dutch rival TNT in 2013 for $5.9 billion but the EU blocked the deal due to competition issues. There were concerns that the merger would significantly limit consumer choices. UPS then sued the EU for $2 billion, claiming its decision to block the deal harmed the company. To be successful however, UPS needed to show that the EU had failed to follow proper procedures in taking its decision to block the deal. The EU General Court dismissed the claim for damages as UPS failed to show a deviation from the proper procedure. UPS can appeal to the European Court of Justice but has not yet confirmed whether it will do so.
3. LVMH EXPLORES BID FOR RALPH LAUREN
Luxury fashion group LVMH is reportedly plotting a bid for Ralph Lauren. Insiders claim that the companies have recently been discussing a potential sale. Founder and executive chairman Ralph Lauren is considering plans for succession. Ralph Lauren itself is worth $9.54 billion. Whether these talks with LVMH will bear fruit remains to be seen.
This purchase could be a welcome addition to its growing portfolio. Last year, LVMH bought Tiffany & Co. for £11.6 billion. The LVMH group includes brands such as Louis Vuitton, Sephora, Givenchy, Fendi, Hennessey and Hublot. The company has enjoyed a bumper period over the past year, enjoying year-on-year revenue growth of 46% in Q3 2021.
4. 1MBD TRIAL BLUNDER
The trial of a former Goldman Sachs banker, Roger Ng, involved in the Malaysian 1MDB scandal has been paused in the US due to a serious oversight by prosecutors. Over 15,500 documents were not shared by prosecutors with defence lawyers. The error has been described as “inexcusable” and could lead to a mistrial depending on the nature of the information that was not shared. The trial will be paused until the defence has reviewed the outstanding evidence with the judge confirming they will have “as much time as they need”.
Mr Ng is currently facing a total of 25 years for money laundering and bribery charges, although he denies all allegations. He worked for Goldman Sachs between 2005 and 2014, obtaining $35 million in kickbacks related to the scandal. Goldman Sachs helped raise $6.5 billion for Malaysia’s 1MDB sovereign wealth fund. Over $4.5 billion was embezzled from the fund between 2009 and 2014. The money was syphoned away from intended development projects and spent on luxuries by Jho Low and his associates. Some of the spending included private jets, Picasso artwork and even funding for the Wolf of Wall Street film. Goldman Sachs agreed a $3.9 billion settlement with the Malaysian government in 2020 over its involvement.
5. FRASER GROUP BUYS STUDIO RETAIL
Mike Ashley’s Frasers Group has bought Studio Retail out of administration for £26.8 million. Studio had fallen into administration earlier this month putting 1400 jobs at risk. The retailer had already warned earlier in the month that it was at risk of falling into administration and was struggling due to supply chain problems. It then failed to obtain a crucial £25 million working capital loan from HSBC and was unable to meet its liabilities. The company then had to call in the administrators. Frasers is known for swooping up struggling retailers, most notably House of Fraser. The group also includes Sports Direct, Jack Wills, GAME and Evans Cycles. The £26.8 million sum consists of cash and payment of liabilities to lenders.
6. TRUMP LAUNCHES NEW SOCIAL MEDIA PLATFORM
Former US President Donald Trump has launched his own social media platform, Truth Social. The app is available only on the US Apple App Store and bears some similarity to Twitter. It is expected to be fully operational by the end of next month although it is available for download. It is pitched as a “big tent’ social-media platform that encourages an open, free and honest global conversation without discriminating against political ideology”.
Donald Trump has been banned from all major social media sites including Twitter, Facebook and Youtube since the US Capitol riots in January 2021. Trump has staunchly criticised big tech firms and claimed they prevented him from exercising freedom of speech. His social media platform appears to be the answer to this. Whether it will take off as Trump envisions remains to be seen. Check out our article exploring whether social media bans impinge on freedom of speech.
7. UK LAW FIRM ACCEPTS CRYPTO PAYMENTS
Gunnercooke has become the first major UK law firm to accept payment for services in cryptocurrencies. Payments will be processed through the Coinpass crypto exchange. Customers will be able to pay in a variety of crypto currencies such as Ether or XRP, not just Bitcoin. Gunnercooke has already accepted their first payment in cryptocurrency from one of their clients. Gunnercooke is a commercial law firm with 10 offices across UK and Germany and turned over £30 million in 2020. This news comes amid a decline in cryptocurrency prices sparked by jitters over the Russian invasion of Ukraine.
8. LONDON UNDERGROUND STRIKES TO GO AHEAD
Strikes by London Underground workers are to go ahead next week after talks failed to resolve a dispute over jobs, pensions and conditions. The strike will see all Underground lines closed on Tuesday and Thursday. Members of the RMT union, which represents the majority of London Underground workers will stage the walkout. The dispute is largely over cuts and night rotas alongside conditions and pensions. The RMT claims that London Underground “blocked a route to progress” and “dragged their heels”. TFL has advised commuters to work from home this week if possible due to the strikes.
9. PRINCE HARRY SUES DAILY MAIL
Prince Harry has sued the Associated Newspapers Limited, publisher of the Daily Mail, for libel. The Mail on Sunday published an article about his family’s security titled “Revealed: How Harry tried to keep his legal fight over bodyguards secret”. Prince Harry has also lodged a High Court claim against a Home Office decision not to allow him to personally pay for police protection for himself and his family while in the UK. Meghan, Duchess of Sussex, recently won a privacy claim against Associated Newspaper Limited over their publication of private letters. Last year, the Daily Mail usurped Rupert Murdoch’s The Sun as the UK’s best selling newspaper.
10. CUSTOM DUTIES REACH RECORD HIGHS
Customs duties have spiked for UK businesses, up 64% since January 2021. A record £4.5 billion was paid in customs duties, largely driven by red tape due to Brexit. The new “Rules of Origin” regulations require all products sold by EU firms in the UK to originate wholly or largely from the EU or they shall face customs duties. Furthermore, from January 1st 2022 all firms have been required to provide a declaration of the origin of goods at the point of entry. Failure to provide this declaration results in full rates of custom duties and even fines. This red tape and additional costs has had a significant impact on supply costs for UK businesses who import from the EU.