Financial Times Europe - 06.09.2019

12 ★ FINANCIAL TIMES Friday6 September 2019

COMPANIES

T

wo decades afterGoogle irst turned insightsf about its users’ online behaviour into gold, the basic infrastructure underpinning the data economy still displays worrying flaws. The systems and tools required to support the collection and sharing of personal data on a mass scale — while also providing the security and control users might expect — do not always live up to their billing. The result has beena parade ofprivacy snafus and regulatory interventions, asa s eries of ailures comes to light.f One reading of this is that, with today’s greater scrutiny, more weaknesses are being exposed, resulting in the systems being tightened. If so, this could turn out to be a tran- sitional period in which old failures areweeded out. It could also be the case hat the systems failures reflectt conflicts of interest that will not be resolved so easily — and that more profound changes to business ill bew needed. Events of recent days have served to highlight some of the issues. On Tuesday oogle wasG fined $170m or failingf to prevent targeted advertising from being shown to chil- dren, as required by US law. As part of an agreement with regulators, it undertook to build a new system through which content providers on YouTubecould report when their videos are directed at minors, making it possible to limit the types of advertising that can accompany them. This sounds like an inherently weak form of compliance, relying as it does on self-reporting by partners who will have strong incentives not to comply. No doubt that is why YouTube lso promised more scanning of content, usinga machine learning to try to identify videos that haven’t been adequately flagged. Self-reporting and screening toolssuch as these should improve things. But the former are open to abuse and the latter are based on probabilistic techniques that can’t guarantee 100 per cent compliance. On the same day as the FTC fine, a potential Google failure of a completely different kind came to light. According to a complaint to data regulators in Ireland, the search company has beengiving advertisers ccess to uniquea identifiers about its users that can be used to target ads more effectively — even though it said last year it would no longer do this. Google said it needed to see more details of the complaint before dis- cussing the apparent failure. Ahead of a full investigation, it is hard to pass judgment. But claims that personal data are being leaked without user knowledge draw comparison to previ- ous failures. Facebook’s Cambridge Analytica can-s dal, for instance, stemmed from a failure adequately to police liberal data-sharing tools that were developed in a more permissive era. Bringing full transparency to how systemssuch as these operate is overdue. Tightening up the infrastructure is only part of the cor- rective, of course. Europe’s GDPR has helped to bring wider agreement on the key principles that should under- pin the data economy. But in many cases these principles, which seek to enshrine greater user control, have yet to be turned into detailed rules that can be baked into systems capable of supporting a more robust online data regime. Facebook’s call this week forwider discussion n theo principle of data portability is a case in point. Giving users the power to transfer their personal information to another online service sounds like an important online freedom, and one that could stimulate greater competi- tion. But, as Facebook points out, it can also bea slippery concept: the Cambridge Analytica scandal, for instance, stemmed from making user data more portable. It is tempting to view Facebook’s argument as self- serving, designed to put the brakes on making personal information more mobileto protect its ominance ofd social networking. The company questions, for instance, whether users should be free to export their “social graph” — network of contacts — to other services, since the information in part “belongs” to those contacts themselves. ButFacebook enefited greatly in its early days fromb being able to import entire contact lists from Google’s Gmail. The company then went on to blockTwitterfrom tapping into its own social graph in the same way. Thisprompts suspicions about Facebook’s motivation now. But that doesn’t mean there isn’t a trade-off that needs to be struck between increasing users’ protections and giving them more online freedom. These debates re aa sign of the more robust data infrastructure that is under development — and this time, it should at least come with greater deliberation and ransparency.t

[email protected]

INSIDE BUSINESS

TECHNOLOGY

Richard

Waters

Debates are a sign that

data privacy is being

taken more seriously

The collection

and sharing systems and tools

do not always live up to their billing

L AU R A N O O N A N —NEW YORK

Elisha Wiesel,Goldman Sachs’ chief
information officer nd a central figurea
in t he overhaul of its tech unctionsf , is
in talks about leaving to pursue a phil-
anthropic project, a person familiar
with the situationhas said.

Mr Wiesel heads the Wall Street group’s
engineering division, which has swelled
to around a quarter of its 35,600-strong
workforce in his two years at thehelm.
Technology has shifted centre stage in
the company’s bid to boost efficiency in
its trading businesses and gain a foot-
hold inareas such as consumer banking
and transaction services.
The bank declined to comment on his
potential departure, which wasfirst
reported y The Wall Street Journal,b

along with the potential departure of Steve Strongin, who heads Goldman’s research division. Two people familiar with the situation confirmed that both men were in talks about potentially leaving the bank or stepping back from their day-to-day management duties, but stressed that no final decisions had been made. The news comes the day after Gold- man announced the departure ofMarty Chavez, its one-time chief financial officer, who preceded Mr Wiesel as technology chief andco-heads the securities division. “You normally see[departure negoti- ations] in January,” one person familiar with the situation said, adding that some conversations had startedearlier this year as people contemplated

whether they wanted to commit to the multiyear delivery of the strategy that the bankwould present in January. The son of Holocaust survivor and activist Elie Wiesel, Mr Wiesel has described is arrival at Goldman as anh “accident” after his roommate urged him to go for an interview withJ. Aron when he was intent on a career in com- puter gaming. He went on to join Goldman after col- lege in 1994, when technology was still in its infancy in banking. More recently, he has been at the fore- front of initiatives such as embedding tech n Goldman Sachs’ core operatingi divisions nd developing the Marqueea platform, which allows clients to trade with Goldman electronically.

Banks

Goldman tech boss Wiesel sets sights on exit

DAV I D K E O H A N E— PARIS

French judges have dropped charges against Air France andAirbus ver ao crash n 2009 that killed all 228 peoplei on board, putting the emphasis on human error for the loss of control of the plane.

Air France flight AF447,an Airbus A330, crasheden route from Rio de Janeiro to Paris on June 1 2009 after stalling during a thunderstorm. 216 pas- sengers and 12 crewdied, making the crash the deadliest inAir France history. French judges overruled investigating prosecutors who had recommended in July thatAir France stand trial, according to aFrench courts spokesper- son. The prosecutors had not recommended putting Airbus n trial.o

The judges wrote in their decision that the “accident is evidently due to a conjunction of elements that had never occurred before, and thus highlighted dangers that could not have been perceived before this accident”. Theyadded: “The direct cause of the accident is the crew’s loss of control of the aircraft’s trajectory”,saying that other airline crews in similar situations had maintained control. Both Air France, which is part ofAir France-KLM nd 14.3 per cent owneda by the French state, and Airbus had been put under formal investigationin 2011 or “involuntary manslaughter”.f The case has revolved around how Air France pilots responded toloss of speed readings after pilot probes, sensors that sit outside the body of the plane, were

blocked with ice, which meant the auto- pilot stopped flying the plane and the pilots took manual control. A 2012 civil probe by the BEA, het French air accident investigation office, put emphasis on failure of the pilot probes, the “crew’s failure to diagnose the stall situation and consequently a lack of inputs that would have made it possible to recover from it”, a lack of a clear display of the speed problem in the cockpit, and a lack of training. The main association for relatives of victims aid it hads launched an appeal against the judgment, which “insults the memory of the victims”. “They have laid the blame on the pilots who were also the victims,” said Danièle Lamy,president of Association entraide etsolidarité vol AF447.

Airlines

Case dropped against Air France over 2009 crash

L E O L E W I S— HONG KONG

Nissan as found that multiple seniorh
executives received excess payments as
part of an incentive scheme as the Japa-
nese carmaker prepares to conclude its
10-month probe into the finances and
governance of theCarlos Ghosn ra.e
The overpayment issue appears to
have extended toHiroto Saikawa, Nis-
san’s chief executive, who admitted to
reporters gathered outside his home
yesterday that the operation of the
incentive scheme was “different to what
it should have been”.
The excess payments add to a picture
of slack governance tandards that ana-s

lysts had long suspected were a problem at the company. Nissan has attempted to demonstrate that they were an effect of allowing too much power to accumulate in the hands of Mr Ghosn. The results of the investigation into the company’s governance under its former chairman are due to be pre- sented to Nissan’s board on Monday. Mr Ghosn, Mr Saikawa and others might have been overpaid by “several hundred thousands” of dollars each under a system that offered senior executives a bonus based on the per- formance of Nissan’s shares, according to people familiar with the Nissan investigation. The overpayments did not appear to have been illegal, theysaid. Mr Saikawa denies ordering any overpayments and has said that he plans to

return any excess funds, according to a person familiar with the group. The revelations have come to light as Nissan enters the final stretch of an investigation that has involved hun- dreds of people across the company’s global network. “Findings from Nissan’s internal investigation are scheduled to be reported to the board of directors on September 9,” Nissan said, commenting on Japanese media reports relating to the overpayments. “We have heard that stock apprecia- tion rights will also be part of this report,”it said, referring to a scheme that paid out cash according to the rise in share value over a specified period. The depth of the probe, coupled with the need to provide large quantities of data to Japanese prosecutors, has forced Nissan to hire big teams of lawyers,

accountants and forensic IT experts to unravel years of activity that have come under scrutiny since thearrest of Mr Ghosn n November 2018.i Mr Ghosn was indicted by Japanese prosecutors on a series of allegations relating to his remuneration and payments made from the company. He has consistently denied all charges, andis in Tokyoon bail s hea prepares for a trial expected to begin in early 2020. As an outcome of the arrest, Nissan hasconducted a probe into governance failures that were allowed to spiral during Mr Ghosn’s 18-year tenure at the carmaker. The results of that investigation prompted Nissan to pledgechanges to its governance. These haveincluded an overhaul of its independent board members.

Automobiles

Nissan finds excess payouts at the top

Senior executives were

mistakenly awarded too

much, probe discovers

Ghosn, Saikawa

and others might have

been overpaid by

‘several hundred

thousands’ of dollars

each

R O B E RT S M I T H A N D M I C H A E L P O O L E R
LONDON

Metals mogulSanjeev Guptalaunched
the first high-yield bond backed by a
companyin his family’s business
empire, in what will be atest of investor
appetite for hisGFG Alliance.

InfraBuild, an Australian steel manu-
facturer, is seeking to raise $475m in
five-year debt after its stock market flo-
tation plan was shelved.
A commodities trader turned indus-
trialist, Mr Gupta swept into Australia
with the purchase of collapsed mining
and steel outfitArriumin 2017.
The deal was done through the GFG
Alliance, an umbrella grouping of his
family’sinterests, which span metals,
manufacturing, power and banking,
and have expanded rapidly through a
flurry of acquisitions.
The bond issuance,revealed on
Wednesday by the Financial Times, is
being led byJPMorgan, which will also
provide a A$250m (US$170m) asset-
backed lending facility that will rank
ahead of the unsecured bonds.
The bonds will carry Ba3 and BB- rat-
ings from Moody’s and Fitch, putting it
three notches below investment grade
for each credit rating agency.
InfraBuild comprises the steel recy-
cling, distribution and construction
products businesses of Arrium, but
GFG’s hopes of listing a minority of its
shares this year fell flat.
The business primarily makes steel
products for the construction industry,
with more than 60 per cent of its steel
produced to reinforce concrete.
The only wholesale business of its
type in Australia, it also has the biggest
share of the retail market.
The debt raised will be used to repay
A$745m of existing asset-backed debt
from private finance firmsWhite Oak
andGreensill Capital.
Australian financierLex Greensill, a
confidant of former UK prime minister
David Cameron, has provided much of
the financing for GFG’s rapid expansion
over the past few years.
The A$200m facility from White Oak,
a San Francisco-based lender to medi-
um-sized businesses, carried an expen-
sive double-digit annual interest rate,
according to people familiar with the
matter.
Repaying the debt facilities from the
two firms will release A$104m of cash,
which was restricted under the lenders’
strict terms.

Financials

Metals tycoon

tests investor

demand with

bond issue

M U R A D A H M E D SPORTS CORRESPONDENT

Juventus s targeting sponsorship dealsi across Asia, as it looks to stoke interest in Italy’swealthiest ootball teamf nda help to close the financial gapwith Europe’s highest-earning clubs.

The Turin-based side acquiredCris- tiano Ronaldo, considered one of the world’s best players, for a €100m fee last year. That superstar transfer was part of the club’s wider strategy to win the Champions League tournament follow- ing two defeats in the final in the past five seasons, attract supporters from around the world and raise the value of its corporate endorsement contracts. Juventushas grown confident of securing new eals despite acceptingd thatSerie A, Italy’s top division which it has won for eight consecutive years, is not as well followed in Asia as thePre- mier League nd Spain’sa La Liga. Giorgio Ricci, chief revenue officer, said the signing of Ronaldo nda recent performances n prestigious Europeani competitions had provided a foothold in

Asian sponsorship. “Having such a strong interest from the region, even if we pay a bit in terms of audience against other top European clubs, [means] we are able to deliver and sell our commer- cial rights,” said Mr Ricci. Andrea Agnelli, chairman, is also chair of the European Club Association, a body that representsmore than 200 clubs. He has advocated controversial reforms of European competitions to ensure more money-spinning ties between Europe’s biggest clubs. In the meantime, Juventus is focused on increasing its sponsorship income. In July,it announced a deal withKonami, the Japanese video game maker behind thePro Evolution Soccer ranchise.f Juventus declined to comment on its value, but people familiar with the terms saidit is worth €15m over three years, representing a substantial increase from past deals with“global partners” such as China’s Linglong Tire and Ganten mineral water, which are worth roughly €2m-€3m a year. The club also opened a ranch inb Hong Kong last month, and said it was in

talks vero deals. “Of course, Cristiano [Ronaldo] is one of the most important assets that we have, together with our brand and history and heritage which is very much appreciated over here,” said Federico Palomba, managing director of Juventus’s Hong Kong branch. Mr Ricci said new dealmaking with Asian sponsors helped spread the club’s brand across the region, providing a knock-on effect to the value on its kit sponsorship deals. He pointed toMan- chester United and the English club’s shirt sponsorship contract with US carmaker Chevrolet worth $559m over seven years. The deal is predicated on perceived reach in China, where United claims it hasmore than 100m followers. “Asia is a place where star power, in particular, makes a big difference,” said Tim Crow, a ports marketing adviser.s “In China, they follow stars rather than teams. I first saw it when David Beck- ham went from Manchester United to Real Madrid [in 2003]. Chinese fans went with him... It’s a well worn strategy, but [Asia] is a big place and is highly competitive.”

Travel & leisure

uventus aims to score Asia sponsorship dealsJ

‘Ronaldo is one of

the most important

assets that we have,

together with our

brand and heritage’

Star attraction: Turin-based Juventus hopes last year’s signing of Cristiano Ronaldo can help it win fans in China —Filippo Monteforte/AFP/Getty Images

SEPTEMBER 6 2019 Section:Companies Time: 9/20195/ - 18:29 User:timothy.digby Page Name:CONEWS1, Part,Page,Edition:USA , 12, 1