Germany’s most powerful newspaper removed its top editor Monday after months of defending his sexual relationships with women in the workplace as the scandal began to envelop the paper’s globally ambitious parent company, Axel Springer.
Bild, a center-right tabloid that has fed popular anger at Chancellor Angela Merkel and her Covid-19 restrictions, dismissed the editor in chief, Julian Reichelt, after The New York Times reported on details of Mr. Reichelt’s relationship with a trainee, who testified during an independent legal investigation that in 2018 he had summoned her to a hotel near the office for sex and asked her to keep a payment secret. Hours after Mr. Reichelt was ousted, the newsmagazine Der Spiegel published allegations that Mr. Reichelt had abused his position to pursue relationships with several women on his staff.
The dismissal marked the belated arrival of the global #MeToo movement at Axel Springer — and it came as the German company is making significant investments in the American market, including its acquisition this summer of Politico for $1 billion. Axel Springer faced pressure in the United States and Germany to explain two recent revelations: What the investigation into Mr. Reichelt’s conduct found, and how the chief executive, Mathias Döpfner, responded to the investigation. In a text message to a friend obtained by The Times, Mr. Döpfner seemed to link the scrutiny of Mr. Reichelt’s behavior to the editor’s divisive politics, casting him as a bulwark against a return of Communist-style oppression in the guise of Covid rules.
The company said in a statement that Mr. Reichelt had “not clearly separated private and professional matters,” and had misled the board. Mr. Döpfner, in a statement, also praised Mr. Reichelt for his journalistic leadership and for launching Bild-Tv, a new television station in the combative style of American cable news. He said Mr. Reichelt’s replacement, Johannes Boie, would combine “journalistic excellence with modern leadership.” Mr. Reichelt has denied abusing his authority, and didn’t respond to an email seeking comment.
surge in right-wing European media while capturing a new global online generation. Its acquisition of publications like Politico and Business Insider, which it bought for $442 million in 2015, is a major part of that strategy.
The move to dismiss Mr. Reichelt was a significant reversal for a company that prides itself on standing up to Germany’s more liberal media establishment. Axel Springer had been bracing for reaction from its new American employees to the reports of Mr. Reichelt’s conduct, but two people familiar with the company’s decision Monday said that a furious storm in German media added pressure on Mr. Döpfner to act. German critics blasted the company, in particular, for its role in killing a story by a rival publisher, Ippen, whose journalists said in a letter that they were set to reveal details of Mr. Reichelt’s alleged abuse of power.
“That made the whole story bigger than it was before,” said Moritz Tschermak, the co-author of a recent book about Bild. “Somehow it became not a story about Reichelt and Springer but a story about freedom of the press.”
In an inquiry this spring, the company said it had cleared Mr. Reichelt, who apologized at the time for unspecified “mistakes” and remained in his role. Axel Springer appeared to blame the opaque German legal process in part for its reversal, releasing a statement noting that it learned some details of its own lawyers’ inquiry from the media. The company also said it had learned unspecified new information about Mr. Reichelt’s conduct, and that the editor had misled the company’s board.
Axel Springer also said in its statement that it would take legal action against third parties who it claimed tried to illegally influence the company’s compliance investigation, “apparently with the aim of removing Julian Reichelt from office and damaging Bild and Axel Springer.”
Mr. Döpfner, the chief executive, said in a statement in March. “However, having assessed everything that was revealed as part of the investigation process, we consider a parting of the ways to be inappropriate.”
Mr. Reichelt was reinstated with a co-editor in chief, Alexandra Würzbach, the editor of Bild’s Sunday edition, who had taken over his duties in his absence.
In explaining its decision on Monday to remove Mr. Reichelt as editor, the publisher cited “revelations” about his behavior that had “come to light in recent days, following media reports.”
Pressure built in Germany after Ippen Media, which publishes a group of websites as well as a print competitor to Bild in Munich, decided on Friday to pull its own in-depth investigation into Mr. Reichelt. That revelation, in The Times and then in a letter from Ippen’s own investigative team, outraged reporters in Berlin, leading one to ask Chancellor Merkel’s spokesman at a news conference on Monday whether that decision had raised concerns in the German government that freedom of the press could be in danger. Ms. Merkel’s spokesman, Steffen Seibert, declined to comment.
article published Monday in the magazine Der Spiegel, which first broke the news this spring of the investigation into Mr. Reichelt. The article described Mr. Reichelt as a man “obsessed with power” who had a “pattern” of both promoting and seducing young women at Bild.
His sexual relationships with women on his staff were known in Bild’s office, Der Spiegel reported.
The magazine also raised further questions about Axel Springer’s internal investigation, which had promised anonymity to women who testified. Nonetheless, one of the women received a message from a “confidant” of Mr. Reichelt, urging her not to speak to investigators, Der Spiegel reported.
Germany’s publishing world is dominated by large companies, largely run by men, where reluctance to be seen as criticizing one another runs deep. Ippen cited such a motivation behind its last-minute decision to withhold the report.
The Frankfurter Rundschau, based in Frankfurt am Main, one of the regional newspapers owned by the Ippen Media company that had planned to publish the investigation, ran an editorial on Monday calling the decision damaging to their relationship of trust with their readers.
The German Journalists’ Association criticized Ippen’s decision not to publish the investigation. But journalists discussing the reporting also raised questions about why the world of German publishing had struggled to have its own MeToo reckoning, and why it took attention from American media to prompt this action.
As the German media world focused on the turmoil at Axel Springer, the staff of Politico, whose acquisition by Springer is expected to close as soon as this week, was largely focused elsewhere. Journalists there are considering forming a union, and organizers have set a deadline of this month to gather support.
He also said the Bild workplace culture would not be replicated in the United States. “We will not tolerate any behavior in our organizations worldwide that does not follow our very clear compliance policies. We aspire to be the best digital media company in the democratic world with the highest ethical standards and an inclusive, open culture,” he said.
Axel Springer forwarded a letter from lawyers stating that Bild was not legally obliged to fire Mr. Reichelt.
But a March 1 message from Mr. Döpfner to a friend with whom he later had a falling out over the way the company handled the allegations against Mr. Reichelt, Benjamin von Stuckrad-Barre, suggests that, while Mr. Döpfner was central to deciding how to act on the investigation’s findings as chief executive, he may not have been impartial. In the message, sent after Axel Springer had become aware of the allegations, but before the investigation was underway, Mr. Döpfner referred to an opinion column by Mr. Reichelt complaining about Covid restrictions.
Mr. Döpfner wrote that “we have to be especially careful” in the investigation, because Mr. Reichelt “is really the last and only journalist in Germany who is still courageously rebelling against the new GDR authoritarian state,” according to a copy of the message that I obtained. (The reference to GDR, or Communist East Germany, in this context, is a bit like “woke mob.”) Mr. Döpfner also wrote that Mr. Reichelt had “powerful enemies.”
Mr. Döpfner’s political statement in that message may seem at odds with his stated plans for his new American properties, which The Wall Street Journal reported last week, will “embody his vision of unbiased, nonpartisan reporting, versus activist journalism, which, he said, is enhancing societal polarization in the U.S. and elsewhere.”
As Axel Springer was struggling to contain the fallout from the Bild investigation, Mr. Döpfner’s focus was on Washington. This spring and summer, he conducted secret, parallel conversations with executives at two rival news organizations based in Washington, Politico and Axios, the site started in 2016 by Jim VandeHei, Mike Allen and Roy Schwartz, all formerly of Politico.
Mr. Döpfner’s goal was to buy both and combine them into a mighty competitor to the nation’s largest news outlets. The Politico acquisition, announced in August, was a triumph for his company. But behind the scenes, Axel Springer’s courting style had alienated its other target.
TOKYO — With the world’s oldest population, rapidly declining births, gargantuan public debt and increasingly damaging natural disasters fueled by climate change, Japan faces deep-rooted challenges that the longstanding governing party has failed to tackle.
Yet in choosing a new prime minister on Wednesday, the Liberal Democratic Party elected the candidate least likely to offer bold solutions.
The party’s elite power brokers chose Fumio Kishida, 64, a stalwart moderate, in a runoff election for the leadership, seeming to disregard the public’s preference for a maverick challenger. In doing so, they anointed a politician with little to distinguish him from the unpopular departing leader, Yoshihide Suga, or his predecessor, Shinzo Abe, Japan’s longest-serving prime minister.
Elders in the party, which has had a near monopoly on power in the decades since World War II, made their choice confident that, with a weak political opposition and low voter turnout, they would face little chance of losing a general election later this year. So, largely insulated from voter pressure, they opted for a predictable former foreign minister who has learned to control any impulse to stray from the mainstream party platform.
slowly emerges from six months of pandemic restrictions that have battered the economy.
Taro Kono, an outspoken nonconformist whose common touch has made him popular with the public and with rank-and-file party members. Mr. Kishida prevailed in the second round of voting, in which ballots cast by members of Parliament held greater weight than ballots cast by other party members.
He will become prime minister when Parliament holds a special session next week, and will then lead the party into the general election, which must be held by November.
In his victory speech on Wednesday, Mr. Kishida acknowledged the challenges he faces. “We have mountains of important issues that lie ahead in Japan’s future,” he said.
They loom both at home and abroad. Mr. Kishida faces mounting tensions in the region as China has grown increasingly aggressive and North Korea has started testing ballistic missiles again. Taiwan is seeking membership in a multilateral trade pact that Japan helped negotiate, and Mr. Kishida may have to help finesse a decision on how to accept the self-governed island into the group without angering China.
As a former foreign minister, Mr. Kishida may have an easier time managing his international portfolio. Most analysts expect that he will maintain a strong relationship with the United States and continue to build on alliances with Australia and India to create a bulwark against China.
But on the domestic front, he is mostly offering a continuation of Mr. Abe’s economic policies, which have failed to cure the country’s stagnation. Income inequality is rising as fewer workers benefit from Japan’s vaunted system of lifetime employment — a reality reflected in Mr. Kishida’s campaign promise of a “new capitalism” that encourages companies to share more profits with middle-class workers.
close to 60 percent of the public is now inoculated. But Mr. Kishida has offered few concrete policies to address other issues like aging, population decline or climate change.
In a magazine questionnaire, he said that he needed “scientific verification” that human activities were causing global warming, saying, “I think that’s the case to some extent.”
Given the enduring power of the right flank of the Liberal Democratic Party, despite its minority standing in the party, Mr. Kishida closed what daylight he had with these power brokers during the campaign.
He had previously gained a reputation as being more dovish than the influential right wing led by Mr. Abe, but during the leadership race, he expressed a hawkish stance toward China. As a parliamentary representative from Hiroshima, Mr. Kishida has opposed nuclear weapons, but he has made clear his support for restarting Japan’s nuclear power plants, which have been idled since the triple meltdown in Fukushima 10 years ago.
And he toned down his support for overhauling a law requiring married couples to share a surname for legal purposes and declared that he would not endorse same-sex marriage, going against public sentiment but hewing to the views of the party’s conservative elite.
“I think Kishida knows how he won, and it was not by appealing to the general public, it was not by running as a liberal, but courting support to his right,” said Tobias Harris, a senior fellow at the Center for American Progress in Washington. “So what that’s going to mean for the composition of his cabinet and his priorities, and what his party’s platform ends up looking like, means he could end up being pulled in a few different directions.”
resigned last fall because of ill health. He had led the party for eight consecutive years, a remarkable stint given Japan’s history of revolving-door prime ministers. When he stepped down, the party chose Mr. Suga, who had served as Mr. Abe’s chief cabinet secretary, to extend his boss’s legacy.
Sanae Takaichi — a hard-line conservative who was seeking to become Japan’s first female prime minister — to revitalize his base in the party’s far right, analysts and other lawmakers said he helped steer support to Mr. Kishida in the runoff.
As a result, Mr. Kishida may end up beholden to his predecessor.
“Kishida cannot go against what Abe wants,” said Shigeru Ishiba, a former defense minister who challenged Mr. Abe for the party leadership twice and withdrew from running in the leadership election this month to support Mr. Kono.
“I am not sure I would use the word ‘puppet,’ but maybe he is a puppet?” Mr. Ishiba added. “What is clear is he depends on Abe’s influence.”
During the campaign for the party leadership, Mr. Kishida appeared to acknowledge some dissatisfaction with the Abe era with his talk of a “new capitalism.” In doing so, he followed a familiar template within the Liberal Democratic Party, which has been adept at adopting policies first introduced by the opposition in order to keep voters assuaged.
“That’s one of the reasons why they have maintained such longevity as a party,” said Saori N. Katada, a professor of international relations at the University of Southern California. “Kishida is definitely taking that card and running with it.”
Makiko Inoue, Hikari Hida and Hisako Ueno contributed reporting.
Richard Trumka’s 12 years as A.F.L.-C.I.O. president coincided with the continued decline of organized labor but also moments of opportunity, like the election of a devoutly pro-labor U.S. president. With Mr. Trumka’s death last week, the federation faces a fundamental question: What is the A.F.L.-C.I.O.’s purpose?
For years, top union officials and senior staff members have split into two broad camps on this question. On one side are those who argue that the A.F.L.-C.I.O., which has about 12 million members, should play a supporting role for its constituent unions — that it should help build a consensus around policy and political priorities, lobby for them in Washington, provide research and communications support, and identify the best ways to organize and bargain.
On the other side of the debate are those who contend that the federation should play a leading role in building the labor movement — by investing resources in organizing more workers; by gaining a foothold in new sectors of the economy; by funding nontraditional worker organizations, like those representing undocumented workers; and by forging deeper alliances with other progressive groups, like those promoting civil rights causes.
As president, Mr. Trumka identified more with the first approach, which several current and former union officials said had merit, particularly in light of his close ties to President Biden. Liz Shuler, who has served as acting president since Mr. Trumka’s death and hopes to succeed him, is said to have a similar orientation.
documents obtained by the website Splinter.
Ms. Shuler said in an interview on Friday that the department’s budget did not reflect other resources that go toward organizing, like the millions of dollars that the A.F.L.-C.I.O. sends to state labor federations and local labor councils, which can play an important role in organizing campaigns.
Although the rate of union membership fell by about 1.5 percentage points during Mr. Trumka’s tenure to under 11 percent, his influence in Washington helped lead to several accomplishments. Among them were a more worker-friendly revision of the North American Free Trade Agreement, tens of billions of dollars in federal aid to stabilize union pension plans and a job-creating infrastructure bill now moving through Congress.
sent hundreds of billions of dollars in aid to state and local governments, which public sector unions, increasingly the face of the labor movement, considered a lifeline.
But the cornerstone of Mr. Trumka’s plan to revive labor was a bill still awaiting enactment: the Protecting the Right to Organize Act, or PRO Act. The legislation would make unionizing easier by forbidding employers from requiring workers to attend anti-union meetings and would create financial penalties for employers that flout labor law. The federation invested heavily in helping to elect public officials who could help pass the measure.
During an interview with The New York Times in March, Mr. Trumka characterized the PRO Act as, in effect, labor’s last best hope. “Because of growing inequality, our economy is on a trajectory to implosion,” he said. “We have to have a way for workers to have more power and employers to have less. And the best way do that is to have the PRO Act.”
Ms. Shuler echoed that point, arguing that labor will be primed for a resurgence if the measure becomes law. “We have everything in alignment,” she said. “The only thing left is the PRO Act to unleash what I would say is the potential for unprecedented organizing.”
But so far, placing most of labor’s hopes on a piece of legislation strongly opposed by Republicans and the business community has proved to be a dubious bet. While the House passed the bill in March and Mr. Biden strongly supports it, the odds are long in a divided Senate.
When asked whether the A.F.L.-C.I.O. could support Mr. Biden’s multitrillion-dollar jobs plan if it came to a vote with no prospect of passing the PRO Act as well, Mr. Trumka refused to entertain the possibility that he would have to make such a decision.
video game industry and other technology sectors.
Such funding can help support workers who want to help organize colleagues in their spare time, as well as a small cadre of professionals to assist them. “You have 100 people who you pay $25,000 per year, and 15 people full time, and the people can build something where they live,” Mr. Cohen said.
Stewart Acuff, the A.F.L.-C.I.O.’s organizing director from 2002 to 2008 and then a special assistant to its president, said the federation’s role in organizing should include more than just directly funding those efforts. He said it was essential to make adding members a higher priority for all of organized labor, as he sought to do under Mr. Trumka’s predecessor.
“We were challenging every level of the labor movement to spend 30 percent of their resources on growth,” said Mr. Acuff, who has criticized the direction of the federation under Mr. Trumka. “That didn’t just mean organizers. It meant using access to every point of leverage,” like pressuring companies to be more accepting of unions.
Mr. Acuff also said that the A.F.L.-C.I.O. must be more willing to place long bets on organizing workers that may not pay off with more members in the short term, but that help build power and leverage for workers.
succeeded in many ways even though it has produced few if any new union members. The A.F.L.-C.I.O. has supported the Fight for $15 but not provided direct financial backing.
Mr. Cohen and Mr. Acuff both cited the importance of building long-term alliances with outside groups — like those championing civil rights or immigrant rights or environmental causes — which can increase labor’s power to demand, say, that an employer stand down during a union campaign.
speech he made in Ferguson, Mo., after a young Black man, Michael Brown, was shot to death by a police officer there in 2014.
But Mr. Trumka faced a backlash on this front from more conservative unions, who believed the proper role of the A.F.L.-C.I.O. was to focus on economic issues affecting members rather than questions like civil rights.
“There were some unions — not just the building trades — who felt like that work was not what we should be focusing on,” Carmen Berkley, a former director of the A.F.L.-C.I.O.’s Civil, Human and Women’s Rights Department, said in an interview last year.
argued for diverting much of the tens of millions of dollars the labor movement spends on political activities to help more workers unionize.
But Ms. Shuler insists that deciding between investing in organizing and the federation’s other priorities is a false choice.
“I don’t think that they are mutually exclusive,” she said. “The way modern organizations work, you no longer have heavy institutional budgets that are full of line items. We organize around action. We identify a target where there’s heat.” Then, she said, the organizations raise money and get things done.
Isabella Casillas Guzman, President Biden’s choice to run the Small Business Administration, inherited a portfolio of nearly $1 trillion in emergency aid and an agency plagued by controversy when she took over in March. She has been sprinting from crisis to crisis ever since.
Some new programs have been mired in delays and glitches, while the S.B.A.’s best-known pandemic relief effort, the Paycheck Protection Program, nearly ran out of money for its loans this month, confusing lenders and stranding millions of borrowers. Angry business owners have deluged the agency with criticism and complaints.
Now, it’s Ms. Guzman’s job to turn the ship around. “It’s the largest S.B.A. portfolio we’ve ever had, and clearly there’s going to need to be some changes in how we do business,” she said in a recent interview.
When the coronavirus crisis struck and the economy went into a free fall last year, Congress and the Trump administration pushed the Small Business Administration to the forefront, putting it in charge of huge sums of relief money and complicated new programs.
confusing, often-revised loan terms and several technical meltdowns — the program enjoyed some success. Millions of business owners credit it with helping them survive the pandemic and keep more workers employed.
Economists are skeptical about whether the program’s results justify its huge cost, but Mr. Trump and Mr. Biden both embraced the effort as a centerpiece of their economic rescue plans. As the pandemic stretched on and the economy plunged into a recession, the Paycheck Protection Program morphed into the largest business bailout in American history. More than eight million companies got forgivable loans, totaling $788 billion — nearly as much money as the government spent on its three rounds of direct payments to taxpayers.
Fraud is a major concern. Thousands of people took advantage of the rushed program’s minimal documentation requirements and sought illicit loans, according to prosecutors, to fund gambling sprees, Lamborghinis, luxury watches, an alpaca farm and a Medicare fraud scheme. The Justice Department has charged hundreds of people with stealing more than $440 million, and scores of federal investigations are active. (During her confirmation hearing, Ms. Guzman promised that she would “prioritize the reduction of fraud, waste and abuse.”)
There were other problems. Female and minority business owners were disproportionately left out of the relief effort. A last-minute attempt by Mr. Biden to make the program more generous for solo business owners came too late to help many of them. This month, a new emergency popped up: The program ran short of money and abruptly closed to most new applicants.
“There was no warning,” Toby Scammell, the chief executive of Womply, a company that helps borrowers get loans, said of the latest debacle. His company alone has more than 1.6 million applicants caught in limbo.
low-interest disaster loans of up to $500,000 and new grant funds, created by Congress, for two of the hardest-hit industries: the Shuttered Venue Operators Grant for live-event businesses and the Restaurant Revitalization Fund. (The hotel industry is pushing for its own version.)
Today in Business
Each required the agency to create policies and technology systems from scratch. The venue program has been especially rocky. On its scheduled start day, in early April, the application system completely failed, leaving desperate applicants hitting refresh and relying on social media posts for information and updates.
“I turned to my associate director and said, ‘I figured something like this would happen,’” said Chris Zacher, the executive director of Levitt Pavilion, a nonprofit performing arts center in Denver. The Small Business Administration revived the system three weeks later and has received 12,200 applications, but it does not anticipate awarding grants until late May.
have turned into primal screams of pain. (“I SERIOUSLY CANNOT TAKE THIS WITH SBA ANY LONGER” is one of the milder replies.) She said she understood the urgency.
“It’s definitely unprecedented — across the board, across the nation — and we are seeing multiple disasters at the same time,” she said. “The agency is highly focused on just still responding to disaster and implementing this relief as quickly as possible.”
This is Ms. Guzman’s second tour at the Small Business Administration. When President Barack Obama picked Maria Contreras-Sweet in 2014 to take over the agency, Ms. Guzman went along as a senior adviser and deputy chief of staff. The women had met in the mid-1990s. Ms. Guzman, a California native with an undergraduate degree from the University of Pennsylvania’s Wharton School of Business, was hired at 7Up/RC Bottling by Ms. Contreras-Sweet, an executive there.
“I was always impressed with her ability to handle jobs with steep learning curves — she has a quick grasp of complex concepts,” Ms. Contreras-Sweet said.
Ms. Guzman spent her first stint at the agency focused on traditional projects like its flagship lending program, which normally facilitates around $28 billion a year in loans. The time, the job is radically different.
community navigators” program, which will fund local organizations, including nonprofits and government groups, to work closely with businesses owned by people with disabilities or in underserved rural, minority and immigrant communities. It’s an expansion of a grass-roots effort by several nonprofits to get vulnerable businesses access to Paycheck Protection Program loans.
Ms. Guzman said she was bullish about that effort and other agency priorities, like expanding Black and other minority entrepreneurs’ access to capital — but first, like the clients it serves, the Small Business Administration has to weather the pandemic.
And to do that, it has to stop shooting itself in the foot.
The much-awaited second attempt at opening the Shuttered Venue Operators Grant fund was preceded by one final debacle: The agency announced — and then, less than a day before the date, abandoned — a plan to open the first-come-first-served fund on a Saturday. For those seeking aid that has not yet arrived, the incident felt like yet another kick in the teeth.
Ms. Guzman said she was aware of the need for her agency to overcome its limitations and rebuild its checkered reputation.
“This is a pivotal moment in time where we can leverage the interest in small business to really deliver a remarkable agency to them,” she said. “I value being the voice for the 30 million small and innovative start-ups around the country. What I always say to my staff is that I want these businesses to feel like the giants that they are in our economy.”
When Jeffrey Epstein gave The Times columnist James Stewart a tour of his apartment a few years ago, he boasted of his expansive Rolodex of billionaires — and the dirt he had on them. A year and a half after the financier’s death by suicide in a New York jail, the fallout for those in the registered sex offender’s orbit, and increasingly those a step or two removed from it, continues to spread.
For example, the latest management reshuffle at Apollo, as we reported yesterday, can be linked back to Epstein. Tracing all the resignations and reshuffles directly and indirectly tied to the scandal will take a while (we’re working on it), but here’s a tally of some so far:
The Apollo co-founder Leon Black said in January that he would resign as C.E.O. but stay on as chairman, after an internal inquiry found he had paid $158 million to Epstein for tax advice. He unexpectedly quit both posts in March, and later stepped down as chairman of the Museum of Modern Art. Josh Harris, a fellow co-founder who had unsuccessfully pushed Black to quit immediately, said yesterday that he was stepping back from Apollo after failing to become the next C.E.O.; Marc Rowan, Apollo’s third co-founder and Black’s pick as successor, now leads the firm.
When the details of meetings between Epstein and Bill Gates burst into public view in late 2019, the billionaire’s wife, Melinda French Gates, hired divorce lawyers. The couple’s split, announced this month, could upend their numerous investments and philanthropic ventures
Les Wexner announced last February that he would step down as C.E.O. of the Victoria’s Secret parent company L Brands, under pressure from multiple internal investigations about his close ties to Epstein. Earlier this year, he and his wife, Abigail Wexner, said they would not stand for re-election to the L Brands board this month. (The company is now in the process of spinning off Victoria’s Secret.) Mr. Wexner was Epstein’s biggest early client and, a Times investigation found, the original source of the financier’s wealth.
Prince Andrew of Britain gave up his public duties last November, days after a disastrous interview with the BBC centered on his relationship with Epstein. At least 47 charities and nonprofits of which he was a patron have since cut ties to the prince.
Joi Ito resigned as the director of the M.I.T. Media Lab, a prominent research group, in 2019 and as member of several corporate boards (including The New York Times Co.), after acknowledging that he had received $1.7 million in investments from Epstein.
Alexander Acosta resigned as Donald Trump’s labor secretary in 2019, amid criticism of his handling of a 2008 sex crimes case against Epstein when he was a federal prosecutor in Miami.
HERE’S WHAT’S HAPPENING
Morgan Stanley sets up its C.E.O. succession competition. The Wall Street firm gave new roles to four top executives, marking them as candidates to take over from James Gorman: Ted Pick and Andy Saperstein were named co-presidents; Jonathan Pruzan was named C.O.O.; and Dan Simkowitz was named co-head of strategy with Pick.
The U.S. endorses a global minimum tax of at least 15 percent. The proposal, which was lower than some had expected, is closely tied to the Biden administration’s plans to raise the corporate tax rate. Global coordination would discourage multinationals from shifting to tax havens overseas.
Treasury officials said they could capture at least $700 billion in additional revenue. That would involve hiring 5,000 new I.R.S. agents, imposing new rules on reporting crypto transactions and other measures.
U.S. customs officials block a Uniqlo shipment over Chinese forced labor concerns. Agents at the Port of Los Angeles acted under an order prohibiting imports of cotton items produced in the Xinjiang region.
U.S. steel prices are soaring. After years of job losses and mill closures, American steel producers have enjoyed a reversal of fortune: Nucor, for instance, is the year’s top-performing stock in the S&P 500. Credit goes to industry consolidation, a recovering economy and Trump-era tariffs. Unsurprisingly, steel consumers aren’t thrilled about it.
Oprah Winfrey to Blackstone, made its stock market debut yesterday, ending its first trading session with a valuation of about $13 billion. DealBook spoke with Oatly’s C.E.O., Toni Petersson, about the I.P.O. and what’s next for the company.
resignation letter offering both praise of SoftBank’s chief, Masa Son — and unusually pointed criticism of the company’s corporate governance.
Going out vs. staying in, charted
It’s been a while since we checked in on an alternative indicator of pandemic economic activity: the share price ratio of Clorox to Dave & Buster’s.
Wait, what? Nick Mazing, the director of research at the data provider Sentieo, came up with that metric to gauge the openness of the economy. The higher Clorox’s share price rises relative to Dave & Buster’s, the more people appear to be staying home and disinfecting everything than going out to crowded bars. By this measure, conditions have nearly returned to prepandemic levels — indeed, Dave & Buster’s recently lifted its sales forecast, as nearly all of its beer-and-arcade bars have reopened.
packed concert schedule, selling tickets to people who may have already binge-watched all of “Below Deck.” The second, however, suggests that people aren’t as eager to get back to huffing and puffing at the gym as they are content to exercise at home. As restrictions lift and people feel safer in crowds, drinking and dancing appear to be higher priorities.
new book, “Noise: A Flaw in Human Judgment,” the Princeton psychology professor and Nobel laureate Daniel Kahneman, along with co-authors Olivier Sibony and Cass Sunstein, argue that these inconsistencies have enormous and avoidable consequences. Kahneman spoke to DealBook about how to hone judgment and reduce noise.
DealBook: What is “noise” in this context?
Kahneman: It’s unwanted and unpredictable variability in judgments about the same situations. Some decisions and solutions are better than others and there are situations where everyone should be aiming at the same target.
Can you give some examples?
A basic example is the criminal justice system, which is essentially a machine for producing sentences for people convicted of crimes. The punishments should not be too different for the same crime yet sentencing turns out to depend on the judge and their mood and characteristics. Similarly, doctors looking at the same X-ray should not be reaching completely different conclusions.
How do individuals or institutions detect this noise?
You detect noise in a set of measurements and can run an experiment. Present underwriters with the same policy to evaluate and see what they say. You don’t want a price so high that you don’t get the business or one so low that it represents a risk. Noise costs institutions. One underwriter’s decision about one policy will not tell you about variability. But many underwriters’ decisions about the same cases will reveal noise.
An arm of Goldman Sachs has raised $3 billion from clients to invest in later-stage start-ups. (WSJ)
SPACs have raised $100 billion this year through May 19, a record, but new fund listings dropped sharply last month. (Insider)
Politics and policy
President Biden issued an executive order directing government agencies to expand efforts to analyze and mitigate the economic risks tied to climate change. (Axios)
“As Paycheck Protection Program Runs Dry, Desperation Grows” (NYT)
CNN said the prime-time host Chris Cuomo inappropriately advised his brother, Gov. Andrew Cuomo of New York, on how to respond to sexual harassment allegations. (NYT)
Paul Romer was one of the tech industry’s favorite economists; now he is criticizing Silicon Valley giants for being too big. (NYT)
Amazon was recently pushed to ban prominent electronics accessory makers by the F.T.C. over fake-review schemes. (Recode)
Best of the rest
Bill Gates and Warren Buffett got more than 200 billionaires to pledge half their wealth to charity. Some are falling short, but still getting massive tax breaks. (Insider)
FIFA, the global soccer governing body, secretly considered supporting the European Super League, before reconsidering amid public outcry about the now-failed competition. (NYT)
Five questions to ask before you panic about inflation. (NYT)
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Vegan milk is now a multibillion-dollar business on Wall Street. Oatly, the oat milk maker, priced its I.P.O. at $17 a share, the top end of its range, valuing it at about $10 billion. Part of the reason it appeared to avoid broader market declines is that it courted investors focused on so-called E.S.G. principles.
Whatever you think about crypto, you’re right
Even by Bitcoin’s standards, it’s been a wild week. A particularly steep drop in the cryptocurrency yesterday seemed to drag the entire market down with it, and the frenzy led to outages at big exchanges like Binance and Coinbase. Then, it came roaring back in late trading (Elon Musk tweeted about it) and has held the gains so far today. Still, Bitcoin is down by about a third from the all-time high it set just over a week ago.
The episode proves the point of skeptics that digital assets are too volatile to be taken seriously, and of die-hard supporters who say that the ups and downs come with the territory. DealBook spoke with Changpeng “C.Z.” Zhao, the C.E.O. of Binance, the world’s largest crypto exchange, about what it all means.
Today in Business
“It was a busy day but it happens,” C.Z. said. “I think it’s pretty typical.” It’s a commonly held belief among the crypto crowd that big corrections are part of the journey to new heights. “If you look at 2017, where there was a bull market, there were at least two instances of 40 percent drawdowns,” he said. New investors rushing in “may or may not be fully committed” but he believes it’s good for the markets to “shake out” the jittery types.
Lawmakers aren’t so sure. Yesterday, the Senate Banking Committee chair, Sherrod Brown — a crypto skeptic — wrote to the acting Comptroller of the Currency, Michael Hsu, with concerns about crypto companies getting approved for national trust charters. In particular, Brown mentioned that the approvals came under the former acting comptroller, Brian Brooks, who once worked for Coinbase and recently became the C.E.O. of Binance’s U.S. division.
“Given the many uncertainties present in the digital asset landscape as identified by other regulators, the volatility of digital asset valuations, and the disproportionate influence individuals can have on entire cryptocurrency markets, the O.C.C. is not in a position to regulate these entities comparably to traditional banks,” Brown wrote.
All eyes are on the regulators. One factor in yesterday’s crash appeared to be a warning from China’s central bank that reiterated the ban on financial institutions in the country dealing in cryptocurrencies. Many of the crypto market’s ups and downs come amid questions about regulation driving mainstream acceptance (or not), as when the launch of a Bitcoin futures exchange in 2017 accompanied the last big run-up in crypto prices.
The next milestone, perhaps, is whether the S.E.C. will approve proposals for a Bitcoin E.T.F., which it will likely decide by the end of the year. Crypto’s champion at the S.E.C., commissioner Hester Peirce, last week responded to her colleagues’ qualms about Bitcoin by saying she hopes American investors will “finally” have access to crypto-based securities, so it’s clear where she stands.
“It was the right thing to do for the country.”
— Joseph Blount, the C.E.O. of Colonial Pipeline, in his first public interview about paying a ransom to hackers after a cyberattack crippled its systems. Colonial paid in Bitcoin worth $4.4 million, but the decryption tool it received in return didn’t immediately work, and the pipeline was shut for six days.
Zhang Yiming, who helped found TikTok’s parent company, the Chinese internet conglomerate ByteDance, and turned it into a globe-straddling giant, will step down as chief executive at the end of the year to focus on long-term strategy, he wrote in a letter to employees dated Wednesday.
ByteDance’s co-founder and head of human resources, Liang Rubo, will take the reins as chief executive.
“After handing over my role as C.E.O., and removing myself from the responsibilities of daily management, I will have the space to explore long-term strategies, organizational culture and social responsibility, with a more objective perspective on the company,” Mr. Zhang wrote.
Mr. Zhang, 38, is also ByteDance’s chairman. The letter, which ByteDance posted on its website, did not address whether the leadership transition would affect his role in that position.
ByteDance, founded in 2012, is China’s first truly global internet company. With TikTok, it has achieved a level of commercial success and cultural influence that none of the country’s other tech powerhouses have managed outside China’s borders.
Despite posting robust revenue and earnings during the pandemic of the past year, executives at McDonald’s are likely to face tough questions at Thursday’s annual shareholder meeting from critics who believed they mishandled the dismissal of the former chief executive Steve Easterbrook.
On Wednesday, the institutional investor Neuberger Berman became the latest investor to say it would not vote for the re-election of Richard Lenny, a former chief executive of the Hershey Company who has been on the McDonald’s board for 16 years and was chair of the compensation committee that awarded Mr. Easterbrook more than $44 million after he was terminated in 2019 for having a consensual sexual relationship with an employee.
The board, which allowed the severance to be awarded even after determining Mr. Easterbrook had violated company policy and displayed poor judgment, later discovered he had engaged in several affairs with employees during his tenure. McDonald’s has sued Mr. Easterbrook to try to claw back the money.
The Easterbrook scandal is likely to be just one of the issues about the company’s culture brought up during the virtual meeting.
minimum wage to $15 an hour. The company is also facing myriad lawsuits involving claims of racial and sexual discrimination and harassment at some of its restaurants.
McDonald’s leadership is likely to play up its strong performance during the pandemic, taking a victory lap for producing a $4.7 billion profit during a rough-and-tumble year for the restaurant industry.
McDonald’s chief executive, Chris Kempczinski, who was hired in 2015 from Kraft Foods as a strategy chief and reported directly to Mr. Easterbrook, has made several moves in recent months to address the numerous controversies.
In February, the company set new diversity goals and tied those goals to executive compensation. In April, it mandated anti-harassment training at its restaurants. And last week, it said it would raise wages at 650 company-owned restaurants, a move that does not affect the 14,000 restaurants that are independently owned.
Still, questions continue to swirl around Mr. Easterbrook’s departure in November of 2019.
In April, Scott Stringer, New York City’s comptroller who oversees its pension funds, and CtW Investment Group, which oversees union pensions, wrote a letter to McDonald’s shareholders saying they would vote against Mr. Lenny as well as Enrique Hernandez Jr., the chief executive of Inter-Con Security Systems and McDonald’s chairman. They cited their roles in the “flawed and mismanaged investigation” into Mr. Easterbrook and the determination to terminate him “without cause,” resulting in an “unnecessary and costly” lawsuit filed in an attempt to recoup the money from Mr. Easterbrook.
In an emailed statement, McDonald’s said that its board believes there should be a balance of institutional knowledge and fresh perspectives among its directors, and that it is fully investigating all allegations of misconduct by Mr. Easterbrook and “has taken swift and unprecedented actions to address them.”
Whether the movement to oust Mr. Hernandez or Mr. Lenny from their seats has enough support remains unclear.
Two of the largest proxy advisory firms split their decision about the McDonald’s directors, with Glass Lewis recommending that shareholders vote against the two directors. Institutional Shareholder Services said both directors should keep their positions, giving the board credit for taking legal action to recoup the severance pay from Mr. Easterbrook.
Mr. Kilar, 50, fashioned himself as a disrupter inclined to break with the status quo in the pursuit of innovation. He became the chief executive of WarnerMedia in April 2020. He previously had started a video streaming company called Vessel and had managed Hulu, where he gained a reputation for thwarting the desires of the entrenched media executives overseeing the company.
HBO Max made a lackluster debut just two months after his arrival at WarnerMedia. By August, Mr. Kilar dismissed Bob Greenblatt and Kevin Reilly, two longtime television executives who were in charge of the streaming service’s programming. Mr. Kilar also laid off some 1,000 employees.
Those inside the company credit Mr. Kilar with two important decisions that have better positioned the company in the current media climate. He oriented all the divisions around HBO Max. He also hammered on the importance of making HBO Max a global streaming service, accelerating its rollout. HBO Max is set to expand into Latin America and the Caribbean next month. The European launch is scheduled for later this year.
But now the television veterans are in control.
Mr. Zaslav has run Discovery since 2007. He started his media career in 1989 at NBC, ultimately helping to create cable networks like CNBC and MSNBC and expanding USA and Bravo around the world. Known for celebrity-strewn parties at his East Hampton, N.Y., estate, Mr. Zaslav has long been one of the highest-paid chief executives in media. Last year, his compensation totaled $37.7 million. In 2018, when he signed a new contract, he received more than $100 million in Discovery stock.
Richard Gelfond, the chief executive of Imax, predicted in a CNBC interview that Mr. Zaslav would bring a “diplomatic soft touch” to WarnerMedia’s shifting movie releasing strategy. “He’s been an innovator, but he knows how to do it within the confines of the existing system,” Mr. Gelfond said.
Pulling strings in the background, per his style, will be Mr. Malone.
Nicknamed the “cable cowboy,” in part because his base of operation is in Colorado, Mr. Malone, 80, is the consummate deal maker. Mr. Zaslav in Monday’s call described him as “a teacher, and a best friend and really a father to me.” He has a reputation for putting together complex transactions that limit his tax exposure. He began amassing his fortune in 1973 when he took over Tele-Communications Inc., an almost-bankrupt cable company that he grew and then sold to AT&T in 1998 for $32 billion. A subsidiary, Liberty Media, was spun off into its own entity with Mr. Malone at the helm.
Liberty holds significant stakes in a variety of entertainment companies, including Discovery, the Atlanta Braves and SiriusXM. The company purchased Formula One racing in 2016 for $4.4 billion. And in 2017, Discovery purchased Scripps Network Interactive for $11.9 billion, which added HGTV, Travel Channel and Food Network to its media arsenal.
In 2019, after selling his shares of Lionsgate, Mr. Malone increased his ownership of Discovery, purchasing $75 million of additional shares for a total 23 percent stake.