Hungary accepts big penalty for mismanaging EU funds By Reuters



BUDAPEST (Reuters) – Hungary has accepted a penalty for poorly managing funds it receives from the European Union that could cost Budapest more than 500 billion forints ($1.65 billion) in funding.

Details of the penalty were set out in a document prepared by the European commissioner for neighborhood policy’s team for a meeting of the European Parliament’s Budget Control Committee on Monday.

The document was posted on the committee’s website after the meeting. It showed Hungary had agreed to a 10% reduction in the EU funds deemed by the committee to have been mismanaged in the current 2014-2020 EU budget period.

The penalty would amount to more than 500 billion forints, about 2% of Hungary’s economic output if it were paid in a single year.

Right-wing Prime Minister Viktor Orban has clashed repeatedly with EU institutions and other member states over what they see as the erosion of the rule of law and Hungary’s use of EU funds.

Orban rejects allegations that his government has eroded democratic checks and balances, and scoffed at a proposal to tie funding to upholding democratic principles and the rule of law.

But in 2018, eight of the 30 EU funding programs that had to be “corrected” by the European Commission because of problems in how they were managed were Hungarian, according to the Commission, the EU’s executive.

Citing a public procurement audit, the Commission identified Hungary as the EU member state with the weakest national management and control systems in 2018.

Hungary could have challenged the Commission’s findings project-by-project but instead opted for a “10% flat-rate financial correction.”

The Hungarian government did not respond to requests for comment.

Benedek Javor, a former Green member of the European Parliament who opposes Orban, wrote in a blog post that the penalty showed that “even in regional terms, Hungary’s situation is tragic.”

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Illinois’ municipal market penalty eases in $750 million bond sale By Reuters


Illinois’ municipal market penalty eases in $750 million bond sale

CHICAGO (Reuters) – Illinois paid a smaller penalty for its financial woes on Wednesday, selling $750 million of general obligation (GO) bonds at tighter, but still hefty spreads.

The deal benefited from aggressive bidding by investment banks and yield-hungry investors, according to Daniel Berger, senior market strategist at Municipal Market Data (MMD).

The spread for Illinois bonds due in 10 years over MMD’s benchmark triple-A yield scale fell 11 basis points to 150 basis points.

“The penalty eased, but it’s still a big penalty,” Berger said, noting that Illinois spreads remain the widest among the states.

Illinois also has the lowest credit ratings compared to other states due to its $133.5 billion unfunded pension liability and chronic structural budget deficit.

Bank of America Merrill Lynch (NYSE:) won $450 million of the bonds in competitive bidding, while Barclays (LON:) Capital won the remaining $300 million.

“We were pleased to have entered the market near historic low interest rates and with solid investor demand, and the results reflect a low all-in interest cost that benefits Illinois taxpayers.” said Paul Chatalas, Illinois’ capital markets director, in a statement.

Proceeds are earmarked in part for a six-year, $45 billion Rebuild Illinois infrastructure program passed earlier this year by the legislature, which also approved new funding from higher fees and taxes and a gambling expansion that includes additional casinos and sports betting.

The bond sale is Illinois’ first since a constitutional challenge to some of its outstanding GO bonds was filed in a state court in July. The case is on appeal after it was dismissed in August.

Last month, the governor’s budget office released a five-year forecast that showed the state’s general fund deficit reaching $3.2 billion by fiscal 2025 along with an unpaid bill backlog that balloons to $19.2 billion. The forecast pointed to the state’s “unsustainable” tax structure as a culprit. Governor J.B. Pritzker hopes voters will make a major change to the structure next year by adopting a constitutional amendment for graduated income tax rates.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Nigeria fights back, but threat of $9 billion penalty looms By Reuters


Explainer: Nigeria fights back, but threat of $9 billion penalty looms

By Libby George

LAGOS (Reuters) – A British judge has given the Nigerian government permission to seek to overturn a ruling that would enable Process and Industrial Developments Ltd (P&ID) to try to seize some $9 billion in assets over a failed deal.

The British Virgin Islands-based firm, which was set up solely for a project to build a gas processing plant, initiated arbitration against Nigeria in 2012 after the deal collapsed.

P&ID spent $40 million on design and feasibility but didn’t construct the plant as the government failed to supply the gas it was meant to process. In 2017, the arbitration tribunal awarded P&ID $6.6 billion, plus interest, based on what it could have earned over two decades.

The award is accruing $1.2 million in interest per day, backdated to 2013, and is now worth more than $9 billion – some 20% of Nigeria’s foreign reserves.

The issue has enraged Nigeria, with President Muhammadu Buhari calling it a “scam” in a speech at the United Nations. Cabinet members are demanding patriotic Nigerians band against the award, while a dozen high-level officials were in London for a court hearing on Thursday.

WHAT DOES THE RULING MEAN?

In August, a ruling in London converted the arbitration award to a court judgment – allowing P&ID to try to seize assets in order to collect it.

A British judge on Thursday gave Nigeria permission to seek to set aside that decision, with a date for an appeal hearing yet to be decided.

Legal experts told Reuters that in order to succeed, Nigeria’s lawyers will have to prove there was an error in the ruling.

The lawyers on Thursday focused on whether the arbitration tribunal was allowed to determine that England was the appropriate seat of the arbitration; the Nigerians argue that only a court could make such a determination.

They also argue that the award itself was “patently and hugely excessive.”

The judge said he did not support one of Nigeria’s arguments, which said the award itself should not be enforced because a federal court in Lagos set it aside.

WOULD SETTING ASIDE MAKE THE LIABILITY GO AWAY?

Not exactly. While a successful set aside would make the award unenforceable in the UK, P&ID is also asking federal courts in Washington, D.C., to convert the award to a judgment in U.S. courts. That case, an entirely separate process, is pending.

The arbitration award itself also allows P&ID to seek to seize assets in any of the other 160 countries that are part of the New York Convention – a global pact for the recognition and enforcement of arbitration awards.

Legal experts said there is a long history of successful asset seizures using the New York Convention. But other jurisdictions considering seizure requests could take UK court rulings into account, which means that if Nigeria succeeds in its set aside, seizure elsewhere becomes harder.

CAN THE AWARD ITSELF BE OVERTURNED?

Possibly. Global law firm Norton Rose Fulbright noted that arbitration awards can be overturned based on “public policy arguments” that hinge on allegations of fraud or corruption.

Nigeria’s anti-graft unit, the EFCC, is conducting an investigation into P&ID, and has charged a former petroleum ministry lawyer with taking bribes related to the contract. The former official has pleaded not guilty. It also alleged that a now-deceased petroleum minister broke the law by signing the contract without proper approvals and protocol.

Last week two Nigerians, who the EFCC said worked for P&ID, pleaded guilty on its behalf to charges of fraud and tax evasion.

Nigeria’s attorney general Abubakar Malami said that gave Nigeria “a judicial proof of fraud and corruption” and “cogent ground for setting aside the liability.”

P&ID said neither man was a current employee or representative of the company, and that there was “no evidence produced, no defense allowed, no charges laid, no due process followed.”

A successful fraud argument is not an easy path.

Simon Sloane of law firm Fieldfisher said the Nigerian government would need to prove that the contract was not merely tainted by fraud, but that it was “on its face” unlawful or fraudulent. Sloane called this an “extremely high hurdle.”

Thus far, the Nigerians have not presented evidence against P&ID in an international forum.

P&ID denied any wrongdoing.

“The Nigerian government knows there was no fraud and the allegations are merely political theater designed to deflect attention from its own shortcomings,” it said in a statement.

ARE THERE OTHER OPTIONS?

Nigeria could settle with P&ID – a common route and one that would likely cost the country substantially less than $9 billion.

In 2015, at the end of the term of President Goodluck Jonathan, P&ID proposed a settlement of $850 million. The Buhari administration did not take the offer.

Both parties have said they are open to negotiations, but the government said P&ID had not directly approached it to initiate talks.

Experts said that Thursday’s ruling allowing an appeal significantly strengthened Nigeria’s negotiating position.

WHAT IS AT STAKE?

For now, Nigeria’s assets are safe; the judge on Thursday ordered a stay of execution on seizures as long as Nigeria puts $200 million into a court account with 60 days and pays certain of P&ID’s legal fees within 14 days. If they fail to do so, P&ID could try to seize assets.

Harry Mantovu QC, who represented Nigeria, said that “even if P&ID seized assets for a short time, it could be serious.”

P&ID could target real estate, bank accounts or any kind of moveable wealth, but it would have to prove that the property is unrelated to Nigeria’s operations as a sovereign state.

State assets that have any diplomatic function – such as a commercial property that is also used to issue visas – cannot be seized.

Mantovu noted that the award represents 2.5% of Nigeria’s gross domestic product and half of its earnings from last year.

“It is not going to take an Einstein to conclude that this would have a massive impact on the economy of Nigeria and the monetary policy of Nigeria,” he said in court.



National Grid faces possible penalty on non-compliance of NY safety rules By Reuters


© Reuters. National Grid faces possible penalty on non-compliance of NY safety rules

(Reuters) – The New York State Public Service Commission on Thursday said National Grid Plc (L:) is facing possible financial penalty after an investigation found that two of its gas utilities failed to comply with safety rules related to gas infrastructure work in their service territories.

The investigation found that National Grid’s Brooklyn Union Gas Company (KEDNY) and KeySpan Gas East Corp (KEDLI) failed to inspect work completed by its contractors during construction at sufficient intervals and allowed work to be completed by inspectors who were not properly qualified to do the work.

The commission has ordered the two utilities to provide explanation on why it should not commence a penalty action against them.

KEDNY, serving the New York City borough of Brooklyn, has about 1.2 million customers, and KEDLI, serving Long Island, has 590,000 customers.

Source: (https://on.ny.gov/2xKH13Y)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



MyCC issues RM1.94m penalty for bid rigging – Business News


KUALA LUMPUR: The Malaysia Competition Commission (MyCC) has issued a combined penalty of RM1.94mil against eight companies for their involvement in bid-rigging offense related to a information technology (IT) procurement by a public higher learning institution.

According to MyCC chief executive officer Iskandar Ismail, the case involving Akademi Seni Budaya dan Warisan Kebangsaan (ASWARA) was Malaysia’s first bid rigging case in public procurement.





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MyCC warns MyEG for not paying financial penalty – Business News



KUALA LUMPUR: The Malaysia Competition Commission (MyCC) has warned MyEG Services Bhd for not complying with the decision of the Competition Appeal Tribunal to pay a daily penalty of RM7,500, now totaling RM9.46mil.

MyCC  said in a statement on Friday the e-government services provider MyEG had continuously been in non-compliance with the CAT’s decision dated Dec 28, 2018 which affirmed MyCC’s June 24, 2016 decision. 





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