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Samsung Boss Indicted for Bribery, Embezzlement

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  • Samsung Boss Indicted for Bribery, Embezzlement

The heir to the Samsung empire, Lee Jae-Yong and four other top executives were indicted Tuesday on multiple charges including bribery and embezzlement, South Korean prosecutors said in the latest blow to the world’s biggest smartphone maker.

The AFP reported that the presentation of formal charges against Lee Jae-Yong and his colleagues makes them almost certain to face trial, casting new uncertainty over South Korea’s biggest business group as it seeks to recover from a humiliating recall.

As well as charges of bribery, embezzlement and hiding assets overseas, Lee is accused of perjury, said the spokesman for prosecutors probing a corruption and power abuse scandal that has seen President Park Geun-Hye impeached.

Three of the five men — but not Lee, the vice-chairman of flagship subsidiary Samsung Electronics — resigned their positions, the conglomerate said.

The group said it was “dismantling” its Future Strategy Office, the coordinating body that oversees major decisions such as acquisitions or entering new business.

The move, described as a “reform plan”, was announced in a brief five-line statement emailed minutes after the indictment.

Under the scheme, each Samsung unit will be allowed to run more independently, a powerful group body handling government lobbying will be disbanded and decisions over donations will be made more transparent, it said.

But Chung Sun-Sup, the head of chaebol.com, a private watchdog forum on conglomerates, said: “It is yet to be seen whether this is another cosmetic measure aimed to divert public criticism.”

In the past, he told AFP, “Samsung has dissolved group-controlling organisations when it got caught in breach of laws, only to revive them afterwards under different names”.

The Lee family could be “expected to continue wielding power and influence over the whole group”, he added, although professionals might get a greater voice in operating each of its subsidiaries.

The tech giant, whose group revenues are equivalent to a fifth of the country’s GDP, is struggling to recover from the embarrassing recall crisis over its Galaxy Note 7 smartphone last year.

The PR disaster is partly blamed on the group’s top-down management style, in which each Samsung unit simply follows orders from the elite Future Strategy Office without question.

– Merger deal –

The corruption scandal centres on Choi Soon-Sil, who is accused of using her close ties with President Park to force local firms to “donate” nearly $70 million to non-profit foundations, money which Choi allegedly used for personal gain.

Samsung was the single biggest donor to the foundations. It is also accused of separately giving millions of euros to Choi to bankroll her daughter’s equestrian training in Germany.

The 48-year-old Lee, the scion of Samsung’s founding Lee family, has effectively been at the helm of the conglomerate since his father suffered a heart attack in 2014.

One of the policy favours which Lee allegedly sought from Park was state approval for a controversial merger in 2015 of two Samsung units seen as a key step to ensure a smooth power transfer to him.

The deal was opposed by many shareholders who said it had wilfully undervalued shares of one of the two firms. But it eventually went through after the national pension fund — a major Samsung shareholder — approved it.

A former welfare minister who had overseen the pension fund was charged with abuse of power last month for pressuring it to vote in Samsung’s favour.

Lee has denied all accusations.

Samsung Electronics shares closed up one percent on Tuesday, at 1,922,000 won per share.

Tuesday’s indictments came a day before the special prosecutors — who were appointed in December — were set to hand back the case to state prosecutors after the government rejected a request to extend their inquiry.

It would be up to the state prosecutors to probe other South Korean conglomerates, including Hyundai Motor and retail giant Lotte Group, the special prosecutors’ spokesman said.

During their term they indicted a total of 31 suspects — 17 of them on Tuesday — including an ex-arts minister and former presidential chief of staff.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Rise in Asian Trade as Supply Concerns Heighten Amid Russian Attacks

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Oil prices surged on Monday during the Asian trading session as concerns over global supply intensified amidst ongoing attacks on Russian energy infrastructure.

Brent crude oil, against which Nigerian oil is priced, climbed by 47 cents to $85.81 a barrel while the U.S. West Texas Intermediate (WTI) crude rose by 49 cents to $81.53 a barrel.

The market’s bullish sentiment was largely influenced by recent attacks on Russian refineries, which added $2-$3 per barrel of risk premium to crude last week.

These attacks persisted over the weekend, further heightening concerns about supply disruptions.

One of the strikes ignited a brief fire at the Slavyansk refinery in Kasnodar on Saturday. This refinery processes approximately 8.5 million metric tons of crude oil annually, equating to 170,000 barrels per day.

Consequently, a Reuters analysis revealed that these attacks have idled around 7% of Russian refining capacity in the first quarter of the year.

The impacted refining complexes play a crucial role in processing and exporting crude varieties to various markets, including China and India.

The escalating tensions in the Middle East also contributed to market unease. Israeli Prime Minister Benjamin Netanyahu confirmed plans to push into Gaza’s Rafah enclave, disregarding pressure from Israel’s allies.

This move raised concerns about regional stability, amplifying geopolitical risks in the oil market.

Investors are closely monitoring the outcome of the U.S. Federal Reserve’s two-day meeting scheduled to conclude on Wednesday.

The Fed’s decision regarding interest rates could provide further clarity on market direction, potentially impacting oil prices in the near term.

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Commodities

Commodity Trading Industry Hits $100 Billion Profit, Second-Best Year on Record

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The global commodities market has reported $100 billion in profits despite facing challenges and disruptions, making its second-best year ever. 

According to analysis from consultancy firm Oliver Wyman LLC, while earnings have dipped slightly from the record-breaking levels of 2022, this year’s profits easily surpass previous highlights, including those seen during the global financial crisis of 2008-2009.

Consultant Adam Perkins attributes this success to favorable margins driven by ongoing supply-demand dynamics, despite the volatility seen in various sectors.

While specific financial results for many players within the industry are yet to be made public, the report indicates that major independent trading houses are expected to show an average drop of over 30% from the record levels of 2022.

However, disruptions in supply chains and shortages of diesel and fuel oil have somewhat offset the decline in volatility related to Russian crude oil.

These profits have enabled commodity trading firms to bolster their positions as key providers of energy, metals, and food resources on a global scale.

With significant investments in oil refineries, storage facilities, power plants, and acquisitions of other trading companies, these firms are solidifying their roles in shaping global supply chains.

Moreover, the windfall profits have led to executives and partners within these firms becoming multi-millionaires, facilitating a generational shift in leadership as seasoned traders retire.

Despite the pressure to uphold legacies and navigate increased scrutiny, the influx of new leadership presents opportunities for innovation and growth within the commodity trading sector.

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Crude Oil

Oil Prices Surge as IEA Boosts Demand Forecasts and Trims Non-OPEC Supply Projections

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Oil prices skyrocketed following the International Energy Agency’s (IEA) adjustments to its demand and supply forecasts.

The IEA’s latest report, released Thursday, sent shockwaves through financial markets as it unveiled a robust upward revision in global demand estimates while simultaneously trimming projections for non-OPEC oil supply.

With unparalleled confidence, the IEA bolstered first-quarter global demand growth forecasts, citing improved outlooks in the United States and heightened bunkering demand due to extended voyages circumventing geopolitical hotspots.

This unexpected surge in demand projections has injected a newfound sense of optimism into an industry grappling with uncertainties amid a shifting geopolitical landscape.

Moreover, the IEA’s decision to slash its projections for non-OPEC supply further fueled market exuberance.

Factoring in recent cuts from the OPEC+ coalition and reduced output from non-OPEC nations, the agency’s revised supply forecast sent a clear signal to investors: the tide is turning in favor of tightening supply dynamics.

This monumental shift in market sentiment was reflected in Brent crude futures, which surged by 0.86% to $84.75 a barrel, marking a significant milestone in the oil market’s recovery.

U.S. West Texas Intermediate (WTI) crude followed suit, climbing 1.04% to $80.55 a barrel, as traders reacted swiftly to the IEA’s bullish outlook.

As the energy landscape undergoes a paradigm shift, industry experts anticipate a sustained rally in oil prices, driven by robust demand growth and tightening supply dynamics.

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