Category: Economy and Policy

(Corrects headline to read $480 mln, not $450 mln.)

By Paresh Dave

SAN FRANCISCO, Feb 22 (Reuters) – Several Microsoft Corp employees on Friday demanded that the company cancel a $480 million hardware contract with the U.S. Army and stop developing “any and all weapons technologies.”

The organizing effort, described to Reuters by three Microsoft workers, offers the latest example in the last year of tech employees protesting cooperation with governments on emerging technologies.

Microsoft won a contract in November to supply the Army with at least 2,500 prototypes of augmented reality headsets, which digitally displays contextual information in front of a user’s eyes. The government has said the devices would be used on the battlefield and in training to improve soldiers “lethality, mobility and situational awareness.”

In a petition to Microsoft executives, posted on Twitter, workers said they “did not sign up to develop weapons, and we demand a say in how our work is used.” They called on the company to develop “a public-facing acceptable use policy” for its technology and an external review board to publicly enforce it.

Microsoft and the U.S. Army did not immediately respond to requests to comment. Company President Brad Smith said in an October blog post it remained committed to assisting the military.

“We’ll engage not only actively but proactively across the U.S. government to advocate for policies and laws that will ensure that AI and other new technologies are used responsibly and ethically,” Smith wrote.

Though many governments want to better draw upon the expertise of the biggest U.S. tech companies, fresh employee resistance has added a new challenge to already complicated relationships.

Worker pushback led Alphabet Inc last year to announce it would not renew a Pentagon contract in which its artificial intelligence technology is used to analyze drone imagery.

In other cases, employee criticism has invited greater public scrutiny to deals, such as $10 billion cloud computing contract yet to be awarded and various contracts with U.S. Immigration and Customs Enforcement.

One Microsoft worker, speaking on condition of anonymity, said it was unclear whether any of the lead petitioners’ work touches the Army contract because the company’s services are intertwined. Another said several organizers work in the company’s cloud computing division, which is competing with rivals Google Cloud and Amazon Web Services to gain more government work. (Reporting by Paresh Dave; Editing by Richard Chang)

RIO DE JANEIRO (Reuters) – A Brazilian judge on Friday suspended negotiations for the tie-up of Brazilian aircraft maker Embraer SA and Boeing Co, according to a court document.

The court issued an injunction suspending an Embraer shareholders meeting scheduled for Feb. 26 that would vote on whether to approve the terms already agreed upon by the two companies.

The decision will likely be appealed to a higher court. Several previous injunctions blocking the progress of the negotiation have been overruled.

Embraer said in a statement that it will take all available measures to maintain the shareholders meeting’ date for Feb. 26. Boeing did not immediately respond to requests for comment.

Federal judge Victorio Giuzio Neto wrote in his decision on a union lawsuit against Embraer that until all alleged illegalities in the negotiating process were evaluated, the shareholders meeting must be suspended.

In the deal, Embraer will sell 80 percent of its commercial plane division for $4.2 billion to Boeing, which will have total control of the new venture.

In the lawsuit, unions representing Embraer workers said the company’s management did not respect local legislation for listed companies, particularly in respect to what decisions should have been taken to shareholders instead of being made by the company’s management alone.

The Brazilian government, which holds a golden share in Embraer, has already approved the deal.

MEXICO CITY, Feb 22 (Reuters) – Crude production from Mexico’s state-owned oil company Pemex fell to a new multi-decade low of 1.62 million barrels per day in January, the company said on Friday. (Reporting by Ana Isabel Martinez; Editing by David Alire Garcia)

NASA gave its final go-ahead on Friday to billionaire entrepreneur Elon Musk’s SpaceX company to conduct its first unmanned test flight of a newly designed crew capsule to the International Space Station on March 2.

NASA has awarded SpaceX $2.6 billion and Boeing Co $4.2 billion to build rocket and capsule launch systems to return astronauts to the orbiting research laboratory from U.S. soil for the first time since America’s space shuttle program ended in 2011. (Reporting by Joey Roulette in Cape Canaveral; Editing by Steve Gorman and Chris Reese)

 

HOUSTON, Feb 22 (Reuters) – U.S. refiner Citgo Petroleum Corp on Friday said it accepted a new board of independent directors named by Venezuela’s congress and launched a search for a chief executive in a split with its Venezuelan state-run parent PDVSA.

The eighth largest U.S. refiner said Luisa Palacios, Rick Esser, Edgar Rincon, Angel Olmeta, Luis Urdaneta and Andres Eloy Padilla were confirmed as directors. Esser will take over day- to-day operations, it said, pending the naming of a new CEO to replace Asdrubal Chavez, it said. (Reporting by Marianna Parraga)

(Reuters) – An experimental gene therapy for spinal muscular atrophy (SMA) developed by Novartis AG would be worth up to $900,000, according to an independent U.S. nonprofit organization that reviews the value of drugs and medical treatments.

The Boston-based Institute for Clinical and Economic Review (ICER) made the determination using a commonly cited cost-effectiveness threshold that values each “quality-adjusted life year” (QALY) gained at $100,000 to $150,000.

If each QALY gained were assessed at $500,000, ICER found the gene therapy, Zolgensma, would be cost effective at just over $5 million.

Novartis has said the price will be determined in negotiations with health plans, but it believes the gene therapy would be cost effective at $4 million to $5 million as a one-time treatment.

The company said in an emailed statement on Friday that “both the rare disease community and various governmental bodies” suggest that $500,000 per QALY “is the appropriate standard to protect vulnerable populations and allow access to innovative, transformational therapies.”

SMA can lead to paralysis, breathing difficulty and death. It is the leading genetic cause of death in infants.

Gene therapies use engineered viruses to carry healthy genetic material into a person’s cells to replace faulty or mutated genes that cause a disease or condition.

ICER also found that Spinraza, Biogen Inc’s SMA treatment would require a substantial price decrease to be considered cost effective. Spinraza’s current list price is $750,000 for the initial year and $375,000 per year thereafter.

Biogen noted that Zolgensma is experimental and has reported data for only 15 patients, compared with Spinraza’s track record of use by more than 6,600 patients. Spinraza is considered by Wall Street to be one of Biogen’s most important growth drivers.

“The promise of gene therapy in general is that it would be once and done … but that is uncertain at this point,” Biogen Chief Medical Officer Alfred Sandrock told Reuters.

“Spinraza is still a very viable option for babies with SMA. For children, teenagers and adults it may be the only option open to them,” Sandrock said.

Spinraza was approved in 2016 to treat SMA in children and adults.

The U.S. Food and Drug Administration is expected to decide sometime in May whether to approve Zolgensma, which has been studied in infants with SMA.

ICER’s assessments have become increasingly influential in U.S. drug price negotiations and are taken into consideration by insurers making decisions about patient access to treatments.

Using an alternate measure known as “life years gained” (LYG), ICER found the Novartis gene therapy cost effective at a price as high as $1.5 million.

ICER found that Spinraza, when used for patients who do not yet show symptoms, would have value at up to $130,000 for the first year and $65,000 for each successive year. Based on the LYG measurement, the price could be as high as $82,000 during the initial year and $41,000 per year thereafter, according to the ICER report.

At the QALY value of $500,000, Spinraza was seen by ICER as cost-effective at $264,000 per year.

DETROIT (Reuters) – Fiat Chrysler Automobiles NV (FCA) has set an annual compensation target for Chief Executive Officer Mike Manley consisting of pay, cash and equity bonuses of $14 million, the automaker said in a regulatory filing on Friday.

Manley took over as the head of FCA last July after the abrupt departure of his predecessor Sergio Marchionne. The company paid its new CEO 600,442 euros ($680,240) for 2018 and he will receive a bonus for 2018 of $367,000 to be paid this year.

Manley also was granted FCA 180,364 shares for his work in 2018, which will vest in 2019 if the company meets certain targets. The fair value per share on the date those were granted was $16.61, FCA said.

His target annual compensation consists of a base salary of $1.6 million, and a bonus of $2.4 million and an equity award valued at $10 million, both linked to the company hitting certain performance targets.

Former CEO Marchionne received 6.6 million euros in compensation for 2018, which consisted of nearly 2 million euros in base pay and an annual bonus for 2017 of just over 4.6 million euros.

For the 2014 to 2017 time period, Marchionne also received 2.8 million FCA shares. The fair value per share was $14.84, FCA said.

FCA chairman John Elkann received a base salary of 1.7 million euros and no annual bonus.

OSLO, Feb 22 (Reuters) – A Boeing commercial airliner that belongs to budget carrier Norwegian Air and was stranded in Iran after an emergency landing in December, took off and will arrive in Sweden early on Saturday, a Norwegian Air spokeswoman said on Friday.

The plane, a 737 MAX model, took off from Dubai on Dec. 14 bound for Oslo but had to land in Shiraz in Iran because of problems with one of its engines. It had stayed there since, tied by delays over local regulations and waiting for a new engine.

Spare parts were needed by its manufacturer Boeing, but because of U.S. sanctions reinstated by the Trump administration, civilian aircraft sales, including servicing and parts, were forbidden in Iran.

“Norwegian’s Boeing 737 MAX has taken off from Shiraz Airport in Iran and will land at Stockholm Arlanda Airport early Saturday morning. After two months in Iran, it’s a big relief to finally get the aircraft back home,” airline spokeswoman Astrid Mannion-Gibson said in an email.

The U.S. Embassy in Oslo was not available for comment. Boeing was also not immediately available when contacted.

Norwegian had said on Wednesday that it was in the process of having a new engine flown to Iran but the spokeswoman did not elaborate further on Friday.

Any product that contains more than 10 percent of U.S.-origin goods or technology require a U.S. license in order to be sent to Iran.

Norwegian Air has previously said that the paperwork needed to service the plane had taken longer than usual, partly because the company had to familiarise itself with regulations in Iran, where the firm does not operate.

The 186 passengers and six crew that were onboard on Dec. 14 were able to fly out of Shiraz the next day. (Reporting by Lefteris Karagiannopoulos; editing by Grant McCool)

WASHINGTON (Reuters) – Court, avoid or sideline?

Barely a month into the new Congress, financial lobbyists in Washington are already strategizing how to handle the star power of rookie Democrat lawmaker Alexandria Ocasio-Cortez.

The Democratic Socialist and Wall Street critic joined the 60-member House Financial Services Committee in mid-January and more than a dozen lobbyists interviewed by Reuters say the 29-year-old activist and former bartender is too high-profile to ignore.

Richard Hunt, chief executive of the Consumer Bankers Association, said he had not encountered a lawmaker like Ocasio-Cortez in more than 20 years in Washington. “She has the ability to influence unlike a lot of other freshmen.”

The youngest woman ever to serve in Congress, Ocasio-Cortez has become a social media phenomenon with her posts and live-streams on everything from climate change to skin care tips attracting millions of followers across Twitter and Instagram.

The New York native has proved adept at using humor to explain complex concepts or rebuke opponents, often while preparing dinner or hanging out in her pajamas. A video of the lawmaker dancing outside her Congressional office last month has been viewed 21 million times.

An economics major and self-confessed “science nerd,” Ocasio-Cortez campaigned on issues that put her at odds with the financial industry, including separating commercial and investment banking, breaking up large banks, and forgiving student debt.

Central to her campaign has been the rejection of corporate campaign dollars, closing off a traditional avenue for industry access and influence on Capitol Hill.

Now lobbyists fear that her enlarged platform will help the first-term junior lawmaker push her ideas into the mainstream and are trying to figure out how best to respond.

Lobbyists representing big banks, such as JPMorgan Chase & Co, Citigroup, Bank of America Corp, Wells Fargo and Morgan Stanley, which have embraced progressive causes such as diversity, inclusion, gun control or above-minimum wages, want to push these credentials. They also want to highlight how they employ thousands of people in Ocasio-Cortez’s district in Queens and the Bronx, they said.

Smaller and mid-size firms, meanwhile, want to distance themselves from Wall Street titans and emphasize their critical role as community lenders.

Several financial lobbyists, noting she lacks a financial services background, said they were keen to meet with Ocasio-Cortez to explain their business models and issues.

Paul Merski, executive vice president at the Independent Community Bankers of America, said the group had contacted the lawmaker’s office and was hoping to schedule a meeting. He added his focus would be to draw the distinction between larger financial firms and ICBA’s members, which as small community lenders have built-up “tremendous goodwill” across the aisle.

Spokespeople for JPMorgan, Citigroup, Bank of America, Wells Fargo, and Morgan Stanley declined to comment.

Speaking to Reuters on the sidelines of a Capitol Hill event on Wednesday, Ocasio-Cortez said the appointment of progressives like her to the panel “sends a very powerful message” to the financial industry.

She said she wanted to pursue aggressive oversight and expose financial corporations’ role in broader areas of concern, such as the detention of children in privately-funded facilities on the Mexico border.

“We can leap back in and say, what does a responsible financial sector looks like?”

“LIKE TALKING TO THE FBI”

Other lobbyists worry, however, engaging her could backfire, especially if Ocasio-Cortez uses social media to publicize the meeting. For example, she went on Twitter to name and shame corporate lobbyists at a Congressional freshman orientation event in December.

     “The fear is, it’s like going in to talk to the FBI, anything you do or say can be used against you,” said one lobbyist for a major bank.

Lobbyists note how Ocasio-Cortez has already ignited a public debate on climate change and inequality by calling for a Green New Deal and proposing a 70 percent tax on income exceeding $10 million, an idea Nobel Laureate Paul Krugman has endorsed.

    Waleed Shahid, a former campaign aide and a spokesman for Justice Democrats, the progressive group that recruited Ocasio-Cortez, said her ability to raise public awareness about complex issues had caught the establishment’s attention.

“She can really explain what is happening with Wall Street in a way the public can understand it, and that’s why Wall Street is terrified.”

Speaking to Reuters, Ocasio-Cortez did not rule out listening to industry concerns to arrive at responsible regulation, but said “they have more than enough sympathetic ears” on the committee.

“We also saw in 2008 just a lot of advocacy for policies that were at its core totally irresponsible. But they were dressed up as conservative fair-minded measures,” she added.

The financial industry faced a similar challenge in 2012 when newly elected progressive firebrand Elizabeth Warren joined the Senate Banking Committee and her grilling of bank executives and regulators won her a national following.

    But while Warren was well-known as a consumer advocate before joining Congress, she did not have the same social media platform as Ocasio-Cortez. Isaac Boltansky, director of policy research at Washington-based boutique investment bank Compass Point Research & Trading, said that whichever bank slips up next will get “taken to the woodshed in a way that we haven’t seen before.”

Often caught flatfooted by Warren, the industry hopes to rebuild bipartisan support it enjoyed in Congress before the 2007-2009 financial crisis. And with many incumbent centrist Democrats smarting after Ocasio-Cortez called them out for doing big business’s bidding, some see an opportunity to divide and conquer.

    Several lobbyists told Reuters they believed they could isolate Ocasio-Cortez and other progressives on the financial services committee by building coalitions with moderate Democrats, such as fellow New York Representative Gregory Meeks, and centrist Republicans.

    They said they would also lean on Committee Chairwoman Maxine Waters, a Democrat and a liberal who has pledged to work across the aisle, to rein in the progressive wing.

A spokeswoman for Waters declined to comment.

    In a statement, Meeks said his priority this Congress would be to promote policies that “support our financial system, but ensure everyone benefits from its successes.”

SAO PAULO, Feb 6 (Reuters) – Shareholders in Brazil’s reinsurer IRB Brasil Resseguros SA is preparing a secondary share offering involving at least 9 percent of its capital within weeks, three sources with knowledge of the matter said on Wednesday.

State-run bank Caixa Economica Federal is expected to sell an 8.9 percent stake in IRB, worth around 2.4 billion reais ($648.4 million), owned by a Brazil’s government fund responsible for financing student loans.

Other shareholders, however, still may join, increasing the offering size. State-controlled lender Banco do Brasil SA , for instance, is also considering the sale of some shares, but has not decided yet if it will join Caixa in this offering.

Although the government owns a larger stake in IRB, Caixa decided to sell first the 8.9 percent stake owned by the fund because the approval of the sale is easier than for stakes held by other government entities, one of the sources said.

According to one of the sources, the offering may happen within weeks. IRB reports fourth-quarter earnings on Thursday.

Caixa Economica Federal, manager of the fund, Banco do Brasil SA and the investment banking units of Banco Bradesco SA, Itaú Unibanco Holding SA and Bank of America Corp will manage the offering, the sources added.

Caixa, Banco do Brasil, Bradesco, Itaú and BofA declined comment.

Earlier on Wednesday, newspaper O Estado de S. Paulo reported the hiring of the banks for the offering.

Caixa’s Chief Executive Officer Pedro Guimaraes said last week the bank wants to accelerate initial public offerings of its subsidiaries and sell all stakes held by Caixa in publicly listed companies. ($1 = 3.7014 reais) (Reporting by Tatiana Bautzer and Carolina Mandl; editing by Grant McCool)