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Putin evokes Stalingrad to predict victory over ‘new Nazism’ in Ukraine

  • Russian president speaks in Volgograd
  • 80 years have passed since Soviet victory in Stalingrad
  • Putin draws parallels with Russia’s campaign in Ukraine
  • This content was produced in Russia, where the law restricts coverage of Russian military operations in Ukraine.

VOLGOGRAD, Russia, Feb 2 (Reuters) – President Vladimir Putin evoked the spirit of the Soviet army that defeated Nazi German forces at Stalingrad 80 years ago to declare on Thursday that Russia would defeat a Ukraine supposedly in the grip of a new incarnation of Nazism.

In a fiery speech in Volgograd, known as Stalingrad until 1961, Putin lambasted Germany for helping to arm Ukraine and said, not for the first time, that he was ready to draw on Russia’s entire arsenal, which includes nuclear weapons.

“Unfortunately we see that the ideology of Nazism in its modern form and manifestation again directly threatens the security of our country,” Putin told an audience of army officers and members of local patriotic and youth groups.

“Again and again we have to repel the aggression of the collective West. It’s incredible but it’s a fact: we are again being threatened with German Leopard tanks with crosses on them.”

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Russian officials have been drawing parallels with the struggle against the Nazis ever since Russian forces entered Ukraine almost a year ago.

Ukraine – which was part of the Soviet Union and itself suffered devastation at the hands of Hitler’s forces – rejects those parallels as spurious pretexts for a war of imperial conquest.

Stalingrad was the bloodiest battle of World War Two, when the Soviet Red Army, at a cost of over 1 million casualties, broke the back of German invasion forces in 1942-3.

Putin evoked what he said was the spirit of the defenders of Stalingrad to explain why he thought Russia would prevail in Ukraine, saying the World War Two battle had become a symbol of “the indestructible nature of our people”.

“Those who draw European countries, including Germany, into a new war with Russia, and … expect to win a victory over Russia on the battlefield, apparently don’t understand that a modern war with Russia will be quite different for them,” he added.

“We don’t send our tanks to their borders but we have the means to respond, and it won’t end with the use of armoured vehicles, everyone must understand that.”

VICTORY PARADE

As Putin finished speaking, the audience gave him a standing ovation.

Putin had earlier laid flowers at the grave of the Soviet marshal who oversaw the defence of Stalingrad and visited the city’s main memorial complex, where he held a minute’s silence in honour of those who died during the battle.

Thousands of people lined Volgograd’s streets to watch a victory parade as planes flew overhead and modern and World War Two-era tanks and armoured vehicles rolled past.

Some of the modern vehicles had the letter ‘V’ painted on them, a symbol used by Russia’s forces in Ukraine.

Irina Zolotoreva, a 61-year-old who said her relatives had fought at Stalingrad, saw a parallel with Ukraine.

“Our country is fighting for justice, for freedom. We got victory in 1942 and that’s an example for today’s generation. I think we’ll win again now whatever happens.”

The focal point for the commemorations was the Mamayev Kurgan memorial complex, on a hill overlooking the River Volga dominated by a hulking statue called The Motherland Calls – of a woman brandishing a giant sword.

The five-month-long battle reduced the city that bore Soviet leader Josef Stalin’s name to rubble, while claiming an estimated 2 million dead and wounded on both sides.

A new bust of Stalin was erected in Volgograd on Wednesday along with two others, of Soviet marshals Georgy Zhukov and Alexander Vasilyevsky.

Despite Stalin’s record of presiding over a famine that killed millions and political repression that killed hundreds of thousands, Russian politicians and school textbooks have in recent years stressed his role as a successful wartime leader who turned the Soviet Union into a superpower.

Reporting by Tatiana Gomozova
Writing by Andrew Osborn
Editing by Mark Trevelyan and Kevin Liffey

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Adani’s market losses top $100 billion as shelved share sale spooks investors

NEW DELHI/MUMBAI, Feb 2 (Reuters) – India’s Adani group shares sank on Thursday after it abandoned its flagship company’s $2.5 billion stock offering, swelling the conglomerate’s market losses to more than $100 billion and sparking worries about the potential systemic impact.

The withdrawal of Adani Enterprises’ (ADEL.NS) share sale caps a dramatic setback for Gautam Adani, the school dropout-turned-billionaire whose fortunes rose rapidly in recent years but dwindled over the past one week after a U.S.-based short-seller published a critical research report.

The events are an embarrassing turn for Adani who has forged partnerships with foreign giants such as France’s TotalEnergies (TTEF.PA) and investors such as Abu Dhabi’s International Holding Company as he pursues a global expansion of businesses that stretch from ports and mining to cement and power.

Adani late on Wednesday called off the share sale as a stocks rout sparked by short-seller Hindenburg’s criticisms intensified, despite the offer being fully subscribed on Tuesday.

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Adani Enterprises plunged nearly 20% on Thursday, trading at its lowest since March 2022. Other group companies were also under pressure – Adani Ports and Special Economic Zone (APSE.NS) was down 5%, while Adani Total Gas (ADAG.NS), Adani Green Energy (ADNA.NS) and Adani Transmission (ADAI.NS) lost 10% each.

Since Hindenburg’s report was released on Jan. 24, group companies have lost nearly half their combined market value. Adani Enterprises – described as an incubator of Adani’s businesses – alone has lost $24 billion in market capitalisation.

Adani, 60, is also no longer Asia’s richest person, having slid in the rankings of the world’s wealthiest to 16th, as per Forbes’ list, from third last week.

Reuters Graphics

“Unless Adani is able to regain the confidence of institutional investors, stocks will be in freefall,” said Avinash Gorakshakar, head of research at Mumbai-based Profitmart Securities.

Adani’s plummeting stocks have raised concerns about the likelihood of a wider impact on India’s financial system.

India’s central bank has asked local banks for details of their exposure to the Adani group of companies, government and banking sources told Reuters on Thursday. CLSA estimates that Indian banks were exposed to about 40% of the 2 trillion rupees ($24.53 billion) of Adani group’s debt in the fiscal year to March 2022. read more

Citigroup’s (C.N) wealth unit has stopped extending margin loans to its clients against securities of Adani group and decided to cut the loan-to-value ratio for credit against Adani securities to zero on Thursday, said a source.

“We see the market is losing confidence on how to gauge where the bottom can be and although there will be short-covering rebounds, we expect more fundamental downside risks given more private banks (are) likely to cut or reduce margin,” Monica Hsiao, Chief Investment Officer of Hong Kong-based credit fund Triada Capital, said.

In New Delhi, opposition lawmakers submitted notices in the Indian parliament, demanding discussion on the U.S. short-seller’s report. The Congress party demanded setting up a Joint Parliamentary Committee or a Supreme Court monitored investigation into the matter.

ADANI VS HINDENBURG

Hindenburg’s report last week alleged an improper use of offshore tax havens and stock manipulation by the Adani group. It also raised concerns about high debt and the valuations of seven listed Adani companies.

The Adani group has denied the accusations, saying the short-seller’s allegation of stock manipulation has “no basis” and stems from an ignorance of Indian law. The group has always made the necessary regulatory disclosures, it added.

Earlier this week, the Adani group said it had the complete support of investors, but investor confidence has tapered in recent days.

As shares plunged after the Hindenburg report publication, Adani managed to secure the share sale subscriptions on Tuesday even though the stock’s market price was below the issue’s offer price. But on Wednesday, stocks plunged again.

Maybank Securities and Abu Dhabi Investment Authority, as well as India’s Life Insurance Corporation (LIFI.NS), had bid for the anchor portion of the issue. Those investments will now be returned by Adani.

In a late night announcement on Wednesday, the billionaire said he was withdrawing the share sale as the company’s “stock price has fluctuated over the course of the day. Given these extraordinary circumstances, the company’s board felt that going ahead with the issue will not be morally correct.”

Early on Thursday, Adani said in a video address the “interest of my investors is paramount and everything is secondary. Hence, to insulate the investors from potential losses we have withdrawn” the share sale.

Reporting by Chris Thomas, Nallur Sethuraman, Tanvi Madan, Ira Dugal, Aftab Ahmed, Sumeet Chatterjee, Anshuman Daga, Summer Zhen; Writing by Aditya Kalra; Editing by Muralikumar Anantharaman

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Airbus and Qatar Airways settle bitter A350 jet row

PARIS, Feb 1 (Reuters) – Airbus (AIR.PA) and Qatar Airways have settled a dispute over grounded A350 jets, the companies said on Wednesday, averting a potentially damaging UK court trial after a blistering 18-month feud that tore the lid off the global jet market.

The “amicable and mutually agreeable settlement” ends a $2 billion row over surface damage on the long-haul jets. The spat led to the withdrawal of billions of dollars’ worth of jet deals by Airbus and prompted Qatar to increase purchases from Boeing.

The cancelled orders for 23 undelivered A350s and 50 smaller A321neos have been restored under the new deal, which is also expected to see Airbus pay several hundred million dollars to the Gulf carrier, while winning a reprieve from other claims.

Financial details were not publicly disclosed.

The companies said neither admitted liability. Both pledged to drop claims and “move forward and work together as partners”.

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The deal heads off what amounted to an unprecedented public divorce trial between heavyweights in the normally tight-knit and secretive $150 billion jet industry.

The two sides had piled up combined claims and counter-claims worth about $2 billion ahead of the June trial.

French Finance Minister Bruno Le Maire welcomed the deal, which came in the wake of increasing political involvement amid close ties between France, where Airbus is based, and Qatar.

“It is the culmination of significant joint efforts. It is excellent news for the French aerospace industry,” he said.

Airbus shares closed up 1% before the announcement.

Qatar Airways had taken the unusual step of publicly challenging the world’s largest planemaker over safety after paint cracks exposed gaps in a sub-layer of lightning protection on its new-generation A350 carbon-composite jets.

Airbus had acknowledged quality flaws but, backed by European regulators, had insisted that the jets were safe and accused the airline of exaggerating flaws to win compensation.

DAMAGES

Supported by a growing army of lawyers, both sides repeatedly bickered in preliminary hearings over access to documents, to the growing frustration of a judge forced to order co-operation.

Analysts said the deal would allow both sides to feel vindicated, with Qatar Airways winning damages and recognition that the problem lay outside the manual and therefore required a new repair, and Airbus standing its ground on safety and spared the difficult task of finding a home for cancelled A350s.

Qatar will get the in-demand A321neos needed to plan its growth, albeit three years later than expected, in 2026. Airbus’ decision to revoke that order, separate from the disputed A350 contract, had been criticised by global airlines group IATA.

Airbus said it had done its best to avoid pushing Qatar too far back in the queue, though some experts question whether it could have met the earlier schedule because of supply problems.

The settlement is also expected to stop the clock ticking on a claim for grounding compensation that had been growing by $6 million a day, triggered by a clause agreed upon after the repainting of a jet for the World Cup revealed significant surface damage.

Originally valued at $200,000 per day per plane, Airbus’ theoretical liability was ratcheting upwards by a total of $250,000 an hour for 30 jets – or $2 billion a year – by the time the deal was struck, based on court filings. Neither side commented on settlement details.

Airbus said it would now work with the airline and regulators to provide the necessary “repair solution” and return Qatar’s 30 grounded planes to the air.

Confirmation of a settlement came after Reuters reported a deal could arrive as early as Wednesday. In 2021, a Reuters investigation revealed other airlines had been affected by A350 skin degradation, all of whom said it was “cosmetic”.

The dispute has focused attention on the design of modern carbon-fibre jets, which do not interact as smoothly with paint as traditional metal ones, and shed light on industrial methods.

Additional reporting by Leigh Thomas, Michel Rose
Editing by David Goodman, Diane Craft and Gerry Doyle

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Adani loses Asia’s richest crown as stock rout deepens to $84 billion

BENGALURU, Feb 1 (Reuters) – Shares in Indian tycoon Gautam Adani’s conglomerate plunged again on Wednesday as a rout in his companies deepened to $84 billion in the wake of a U.S. short-seller report, with the billionaire also losing his title as Asia’s richest person.

Wednesday’s stock losses saw Adani slip to 15th on Forbes rich list with an estimated net worth of $76.8 billion, below rival Mukesh Ambani, the chairman of Reliance Industries Ltd (RELI.NS) who ranks ninth with a net worth of $83.6 billion.

Before the critical report by U.S. short-seller Hindenburg, Adani had ranked third.

The losses mark a dramatic setback for Adani, the school-dropout-turned-billionaire whose business interests stretch from ports and airports to mining and cement. Now, the tycoon is fighting to stabilise his businesses and defend his reputation.

It comes just a day after the group managed to muster support from investors for a $2.5 billion share sale for flagship firm Adani Enterprises on Tuesday, in what some saw as a stamp of investor confidence.

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The report by Hindenburg Research last week alleged improper use by the Adani Group of offshore tax havens and stock manipulation. It also raised concerns about high debt and the valuations of seven listed Adani companies.

The group has denied the allegations, saying the short-seller’s narrative of stock manipulation has “no basis” and stems from an ignorance of Indian law. It has always made the necessary regulatory disclosures, it added.

Shares in Adani Enterprises (ADEL.NS), often described as the incubator of Adani businesses, plunged 30% on Wednesday. Adani Power (ADAN.NS) fell 5%, while Adani Total Gas (ADAG.NS) slumped 10%, down by its daily price limit.

Adani Transmission (ADAI.NS) was down 6% and Adani Ports and Special Economic Zone (APSE.NS) dropped 20%.

Adani Total Gas, a joint venture with France’s Total (TTEF.PA), has been the biggest casualty of the short seller report, losing about $27 billion.

“There was a slight bounce yesterday after the share sale went through, after seeming improbable at a point, but now the weak market sentiment has become visible again after the bombshell Hindenburg report,” said Ambareesh Baliga, a Mumbai-based independent market analyst.

“With the stocks down despite Adani’s rebuttal, it clearly shows some damage on investor sentiment. It will take a while to stabilise,” Baliga added.

Reuters Graphics

SCRUTINY

Underscoring the nervousness in some quarters, Bloomberg reported on Wednesday that Credit Suisse (CSGN.S) had stopped accepting bonds of Adani group companies as collateral for margin loans to its private banking clients.

Deven Choksey, managing director of KRChoksey Shares and Securities, said this was a big factor in Wednesday’s share slides.

Credit Suisse had no immediate comment.

Scrutiny of the conglomerate is stepping up, with an Australian regulator saying on Wednesday it would review Hindenburg’s allegations to see if further enquiries were warranted.

Data also showed that foreign investors sold a net $1.5 billion worth of Indian equities after the Hindenburg report – the biggest outflow over four consecutive days since Sept. 30.

Headaches for the Adani Group are expected to continue for some time.

India’s markets regulator, which has been looking into deals by the conglomerate, has said it will add Hindenburg’s report to its own preliminary investigation.

State-run Life Insurance Corporation (LIC) (LIFI.NS)said on Monday it would seek clarifications from Adani’s management on the short seller report. The insurance giant was, however, a key investor in the Adani Enterprises share sale.

Hindenburg said in its report it had shorted U.S.-bonds and non-India traded derivatives of the Adani Group.

Reporting by Chris Thomas in Bengaluru and Aditi Shah in New Delhi; Additional reporting by Bharath Rajeshwaran and Aditya Kalra; Editing by Edwina Gibbs and Mark Potter

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France hit by new wave of strikes against Macron’s pension reform

  • Reform would raise retirement age to 64
  • Schools, transport networks, refinery deliveries hit
  • Macron: Reform vital to ensure viability of pension system

SAINT-NAZAIRE, France, Jan 31 (Reuters) – Striking workers disrupted French refinery deliveries, public transport and schools on Tuesday in a second day of nationwide protests over President Emmanuel Macron’s plan to make people work longer before retirement.

Crowds marched through cities across France to denounce a reform that raises the retirement age by two years to 64 and which is a test of Macron’s ability to push through change now that he has lost his working majority in parliament.

On the rail networks, only one in every three high-speed TGV trains were operating and even fewer local and regional trains. Services on the Paris metro were thrown into disarray.

Buoyed by their success earlier in the month when more than a million people took to the streets, trade unions which have been battling to maintain their power and influence urged the public to turnout en masse.

“We won’t drive until we’re 64!” bus driver Isabelle Texier said at a protest in Saint-Nazaire on the Atlantic coast, adding that many careers involved tough working conditions.

Others felt resigned ahead of likely bargaining between Macron’s ruling alliance and conservative opponents who are more open to pension reform than the left.

“There’s no point in going on strike. This bill will be adopted in any case,” said 34-year-old Matthieu Jacquot, who works in the luxury sector.

Unions said half of primary school teachers had walked off the job. TotalEnergies (TTEF.PA) said 55% of its workers on morning shifts at its refineries had downed tools, a lower number than on Jan. 19. The hard-left CGT union said the figure was inaccurate.

For unions, the challenge will be maintaining a strike movement at a time when high inflation is eroding salaries.

At a local level, some announced “Robin Hood” operations unauthorised by the government. In the southwestern Lot-et-Garonne area, the local CGT trade union branch cut power to several speed cameras and disabled smart power meters.

“When there is such a massive opposition, it would be dangerous for the government not to listen,” said Mylene Jacquot, secretary general of the CFDT union’s civil servants branch.

Opinion polls show a substantial majority of the French oppose the reform, but Macron intends to stand his ground. The reform was “vital” to ensure the viability of the pension system, he said on Monday.

A street march in Paris takes place later in the day.

‘BRUTAL’

The pension system reform would yield an additional 17.7 billion euros ($19.18 billion) in annual pension contributions, according to Labour Ministry estimates.

Unions say there are other ways to raise revenue, such as taxing the super rich or asking employers or well-off pensioners to contribute more.

“This reform is unfair and brutal,” said Luc Farre, the secretary general of the civil servants’ UNSA union. “Moving (the pension age) to 64 is going backwards, socially.”

French power supply was down by 4.5% or 3 gigawatts (GW), as workers at nuclear reactors and thermal plants joined the strike, data from utility group EDF (EDF.PA) showed.

TotalEnergies said deliveries of petroleum products from its French sites had been halted because of the strike, but that customers’ needs were met.

The government made some concessions while drafting the legislation. Macron had originally wanted the retirement age to be set at 65, while the government is also promising a minimum pension of 1,200 euros a month.

Prime Minister Elisabeth Borne has said the 64 threshold is “non-negotiable”, but the government is exploring ways to offset some of the impact, particularly on women.

Hard-left opposition figure Jean-Luc Melenchon, a vocal critic of the reform, said parliament would on Monday debate a motion calling for a referendum on the matter.

“The French are not stupid,” he said at a march in Marseille. “If this reform is vital, it should be possible to convince the people.”

Reporting by Forrest Crellin, Benjamin Mallet, Sudip Kar-Gupta, Leigh Thomas, Blandine Henault, Michel Rose, Dominique Vidalon, Benoit Van Overstraeten; Writing by Ingrid Melander and Richard Lough; Editing by Janet Lawrence

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Western allies differ over jets for Ukraine as Russia claims gains

  • Biden says ‘no’ when asked about F-16s for Ukraine
  • Zelenskiy says Moscow seeks ‘big revenge’
  • Russian administrator claims foothold in Vuhledar
  • Kyiv could recapture ground when Western weapons arrive – group

KYIV, Jan 31 (Reuters) – Ukraine’s defence minister is expected in Paris on Tuesday to meet President Emmanuel Macron amid a debate among Kyiv’s allies over whether to provide fighter jets for its war against Russia, after U.S. President Joe Biden ruled out giving F-16s.

Ukraine planned to push for Western fourth-generation fighters like F-16s after securing supplies of main battle tanks last week, an adviser to Defence Minister Oleksiy Reznikov said on Friday.

Asked at the White House on Monday if the United States would provide F-16s, Biden told reporters: “No.”

But France and Poland appear to be willing to entertain any such request from Ukraine, with Macron telling reporters in The Hague on Monday that “by definition, nothing is excluded” when it comes to military assistance.

In remarks carried on French television before Biden spoke in Washington, Macron stressed any such move would depend on several factors including the need to avoid escalation and assurances that the aircraft would not “touch Russian soil.” He said Reznikov would also meet his French counterpart Sebastien Lecornu in Paris on Tuesday.

In Poland on Monday, Prime Minister Mateusz Morawiecki also did not rule out a possible supply of F-16s to neighbouring Ukraine, in response to a question from a reporter before Biden spoke.

Morawiecki said in remarks posted on his website that any such transfer would take place “in complete coordination” with NATO countries.

Andriy Yermak, head of the Ukraine president’s office, noted “positive signals” from Poland and said France “does not exclude” such a move in separate posts on his Telegram channel.

NATO Secretary-General Jens Stoltenberg was in Japan on Tuesday where he thanked Tokyo for the “planes and the cargo capabilities” it is providing Ukraine. A day earlier in South Korea he urged Seoul to increase its military support to Ukraine.

Biden’s comment came shortly after Ukrainian President Volodymyr Zelenskiy said Russia had begun exacting its revenge for Ukraine’s resistance to its invasion with relentless attacks in the east, where it appeared to be making incremental gains.

Zelenskiy has warned for weeks that Moscow aims to step up its assault after about two months of virtual stalemate along the front line that stretches across the south and east.

Ukraine won a huge boost last week when Germany and the United States announced plans to provide heavy tanks, ending weeks of diplomatic deadlock on the issue.

While there was no sign of a broader new Russian offensive, the administrator of Russian-controlled parts of Ukraine’s eastern Donetsk province, Denis Pushilin, said Russian troops had secured a foothold in Vuhledar, a coal-mining town whose ruins have been a Ukrainian bastion since the outset of the war.

Pushilin said that despite “huge losses” Ukrainian forces were consolidating positions in industrial facilities.

‘BATTLE FOR EVERY METER’

Pushilin said Ukrainian forces were throwing reinforcements at Bakhmut, Maryinka and Vuhledar, towns running from north to south just west of Donetsk city. The Russian state news agency TASS quoted him as saying Russian forces were making advances there, but “not clear-cut, that is, here there is a battle for literally every meter.”

Ukrainian military analyst Oleh Zhdanov said Ukraine still controlled Maryinka and Vuhledar, where Russian attacks were less intense on Monday.

Pushilin’s adviser, Yan Gagin, said fighters from Russian mercenary force Wagner had taken partial control of a supply road leading to Bakhmut, a city that has been Moscow’s focus for months.

A day earlier, the head of Wagner said his fighters had secured Blahodatne, a village just north of Bakhmut, although Kyiv said it had repelled assaults on Blahodatne.

Reuters could not independently verify the battlefield reports. But the locations of the reported fighting indicated clear, though gradual, Russian gains.

In central Zaporizhzhia region and in southern Kherson region, Russian forces shelled more than 40 settlements, Ukraine’s General Staff said. Targets included the city of Kherson, where there were casualties.

The Russians also launched four rocket attacks on Ochakiv in southern Mykolaiv, the army said, on the day Zelenskiy met the Danish prime minister in Mykolaiv city, to the northeast.

WESTERN DELAYS

Zelenskiy is urging the West to hasten delivery of its promised weapons so Ukraine can go on the offensive, but most of the hundreds of tanks pledged by Western countries are months away from delivery.

British Defence Minister Ben Wallace said the 14 Challenger tanks donated by Britain would be on the front line around April or May, without giving an exact timetable.

Kremlin spokesperson Dmitry Peskov said Western countries supplying arms leads “to NATO countries more and more becoming directly involved in the conflict – but it doesn’t have the potential to change the course of events and will not do so.”

The U.S.-based Institute for the Study of War think-tank said “the West’s failure to provide the necessary materiel” last year was the main reason Kyiv’s advances had halted since November.

The researchers said in a report that Ukraine could still recapture territory once the promised weapons arrive.

The Belarusian defence ministry said on Tuesday that Russia and Belarus had started a week-long session of staff training in preparation for joint drills in Russia in September.

The Russian invasion of Ukraine, which Moscow justifies as necessary to protect itself from its neighbour’s ties with the West, has killed tens of thousands of people and driven millions from their homes.

Reporting by Reuters bureaus; Writing by Doina Chiacu and Stephen Coates; Editing by Cynthia Osterman & Simon Cameron-Moore

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U.S. court rejects J&J bankruptcy strategy for thousands of talc lawsuits

Jan 30 (Reuters) – A U.S. appeals court on Monday shot down Johnson & Johnson’s (JNJ.N) attempt to offload tens of thousands of lawsuits over its talc products into bankruptcy court. The ruling marked the first major repudiation of an emerging legal strategy with the potential to upend U.S. corporate liability law.

J&J is among four major companies that have filed so-called Texas two-step bankruptcies to avoid potentially massive lawsuit exposure. The tactic involves creating a subsidiary to absorb the liabilities and to immediately file for Chapter 11.

The court ruled the healthcare conglomerate improperly placed its subsidiary into bankruptcy even though it faced no financial distress. J&J’s two-step sought to halt more than 38,000 lawsuits from plaintiffs alleging the company’s baby powder and other talc products caused cancer. The appeals court ruling revives those lawsuits.

Reuters last year detailed the secret planning of Texas two-steps by Johnson & Johnson and other major firms in a series of reports exploring corporate attempts to evade lawsuits through bankruptcies.

Monday’s decision by the U.S. 3rd Circuit Court of Appeals in Philadelphia dismissed the bankruptcy filed by the J&J subsidiary in 2021. Before the filing, J&J had faced costs of $3.5 billion in verdicts and settlements.

J&J shares closed down 3.7% – the biggest one-day percentage decline in two years. The company said in a statement that it would challenge the ruling and that its talc products are safe.

Plaintiffs attorneys and some legal experts have argued the two-step could set a dangerous precedent, providing a blueprint for any corporation to easily avoid undesirable litigation. The appeals court decision could force companies considering the strategy to more carefully consider its risks, two legal experts said.

“It is a push back on the notion that any company anywhere can use the same tactic to get rid of their mass tort liability,” said Lindsey Simon, a professor at University of Georgia School of Law.

Bankruptcy filings typically suspend litigation in trial courts, forcing plaintiffs into often time-consuming settlement negotiations while leaving them unable to pursue their cases in the courts where they originally sued.

The 3rd Circuit ruling does not directly impact three other Texas two-step bankruptcies, filed by subsidiaries of Koch Industries-owned Georgia Pacific, global construction giant Saint-Gobain(SGOB.PA), and Trane Technologies (2IS.F). Those cases fall under the jurisdiction of the 4th Circuit appeals court. 3M (MMM.N) attempted a similar maneuver, which is currently pending in the 7th Circuit.

Those companies did not comment on the 3rd Circuit ruling or did not immediately respond to inquiries. All have previously defended the bankruptcies as the best way to fairly compensate claimants. Plaintiffs’ attorneys have countered that the Texas two-step is an improper manipulation of the bankruptcy system. The strategy uses a Texas law to split an existing company in two, creating the new subsidiary meant to shoulder the lawsuits.

New Jersey-based Johnson & Johnson, valued at more than $400 billion, said its subsidiary’s bankruptcy was initiated in good faith. J&J initially pledged $2 billion to the subsidiary to resolve talc claims and entered into an agreement to fund an eventual settlement approved by a bankruptcy judge.

“Resolving this matter as quickly and efficiently as possible is in the best interests of claimants and all stakeholders,” J&J said.

A three-judge panel on the appeals court rejected J&J’s argument, finding the company’s subsidiary, LTL Management, was created solely to file for Chapter 11 protection but had no legitimate need for it. Only a debtor in financial distress can seek bankruptcy, the panel ruled. The judges pointed out that J&J assured that it would give LTL plenty of money to pay talc claimants.

“Good intentions – such as to protect the J&J brand or comprehensively resolve litigation – do not suffice alone,” the judges said in a 56-page opinion. “LTL, at the time of its filing, was highly solvent with access to cash to meet comfortably its liabilities.”

‘PROJECT PLATO’

The decision could force J&J to fight talc lawsuits for years in trial courts. The company has a mixed record fighting the suits so far. While the firm was hit with major judgments in some cases before filing bankruptcy, more than 1,500 talc lawsuits have been dismissed and the majority of cases that have gone to trial have resulted in verdicts favoring J&J, judgments for the company on appeal, or mistrials, according to its subsidiary’s court filings.

A December 2018 Reuters investigation revealed that J&J officials knew for decades about tests showing that the company’s talc sometimes contained traces of carcinogenic asbestos but kept that information from regulators and the public. J&J has said its talc does not contain asbestos and does not cause cancer.

Facing unrelenting litigation, J&J enlisted law firm Jones Day, which had helped other companies execute Texas two-step bankruptcies to address asbestos-related lawsuits.

J&J’s effort, as Reuters reported last year, was internally dubbed “Project Plato,” and employees working on it signed confidentiality agreements. A company lawyer warned them to tell no one, including their spouses, about the plan.

Jones Day did not immediately respond to a request for comment.

The Texas two-step has garnered criticism from Democratic lawmakers in Washington, and inspired proposed legislation that would severely restrict the practice.

Senator Sheldon Whitehouse, a Democrat from Rhode Island, cheered Monday’s appeals court decision. Whitehouse chaired the first congressional hearing scrutinizing two-step bankruptcies in February of last year.

“Bankruptcy is meant to give honest debtors in unfortunate circumstances a fresh start,” he said, not to allow “large, highly profitable corporations” to avoid accountability for wrongdoing with a legal “shell game.”

Reporting by Tom Hals in Wilmington, Delaware; Mike Spector in New York; and Dan Levine in San Francisco; additional reporting by Dietrich Knauth and Chuck Mikolajczak in New York; editing by Bill Berkrot and Brian Thevenot

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Tom Hals

Thomson Reuters

Award-winning reporter with more than two decades of experience in international news, focusing on high-stakes legal battles over everything from government policy to corporate dealmaking.

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Biden says no F-16s for Ukraine as Russia claims gains

  • Russian administrator claims foothold in Vuhledar
  • Kyiv says Russian gains come at huge cost
  • Think-tank says delay in Western arms halted Ukraine’s advance

KYIV, Ukraine/WASHINGTON Jan 30 (Reuters) – The United States will not provide the F-16 fighter jets that Ukraine has sought in its fight against Russia, President Joe Biden said on Monday, as Russian forces claimed a series of incremental gains in the country’s east.

Ukraine planned to push for Western fourth-generation fighter jets such as the F-16 after securing supplies of main battle tanks last week, an adviser to Ukraine’s defence minister said on Friday. A Ukrainian air force spokesman said it would take its pilots about half a year to train on such fighter jets.

Asked if the United States would provide the jets, Biden told reporters at the White House, “No.”

The brief exchange came shortly after Ukrainian President Volodymyr Zelenskiy said that Russia had begun exacting its revenge for Ukraine’s resistance to its invasion with relentless attacks in the east.

Zelenskiy has warned for weeks that Moscow aims to step up its assault on Ukraine after about two months of virtual stalemate along the front line that stretches across the south and east.

Ukraine won a huge boost last week when Germany and the United States announced plans to provide heavy tanks, ending weeks of diplomatic deadlock on the issue.

“The next big hurdle will now be the fighter jets,” Yuriy Sak, who advises Defence Minister Oleksiy Reznikov, told Reuters on Friday.

While there was no sign of a broader new Russian offensive, the administrator of Russian-controlled parts of Ukraine’s eastern Donetsk province, Denis Pushilin, said Russian troops had secured a foothold in Vuhledar, a coal-mining town whose ruins have been a Ukrainian bastion since the outset of the war.

Pushilin said Ukrainian forces were continuing to throw reinforcements at Bakhmut, Maryinka and Vuhledar, three towns running from north to south just west of Donetsk city. The Russian state news agency TASS quoted him as saying Russian forces were making advances there, but “not clear-cut, that is, here there is a battle for literally every meter.”

Pushilin’s adviser, Yan Gagin, said fighters from Russian mercenary force Wagner had taken partial control of a supply road leading to Bakhmut, a city that has been Moscow’s main focus for months.

A day earlier, the head of Wagner said his fighters had secured Blahodatne, a village just north of Bakhmut.

Kyiv said it had repelled assaults on Blahodatne and Vuhledar, and Reuters could not independently verify the situations there. But the locations of the reported fighting indicated clear, though gradual, Russian gains.

Zelenskiy said Russian attacks in the east were relentless despite heavy casualties on the Russian side, casting the assaults as payback for Ukraine’s success in pushing Russian forces back from the capital, northeast and south earlier in the conflict.

“I think that Russia really wants its big revenge. I think they have (already) started it,” Zelenskiy told reporters in the southern port city of Odesa.

Mykola Salamakha, a Ukrainian colonel and military analyst, told Ukrainian Radio NV that Moscow’s assault in Vuhledar was coming at huge cost.

“The town is on an upland and an extremely strong defensive hub has been created there,” he said. “This is a repetition of the situation in Bakhmut – one wave of Russian troops after another crushed by the Ukrainian armed forces.”

WESTERN DELAYS

The hundreds of modern tanks and armoured vehicles pledged to Ukraine by Western countries in recent weeks for a counteroffensive to recapture territory are months away from delivery.

This leaves Kyiv to fight through the winter in what both sides have described as a meat grinder of relentless attritional warfare.

Moscow’s Wagner mercenary force has sent thousands of convicts recruited from Russian prisons into battle around Bakhmut, buying time for Russia’s regular military to reconstitute units with hundreds of thousands of reservists.

Zelenskiy is urging the West to hasten delivery of its promised weapons so Ukraine can go on the offensive.

Kremlin spokesman Dmitry Peskov said Western countries supplying arms leads “to NATO countries more and more becoming directly involved in the conflict – but it doesn’t have the potential to change the course of events and will not do so.”

The U.S.-based Institute for the Study of War think-tank said “the West’s failure to provide the necessary materiel” last year was the main reason Kyiv’s advances had halted since November.

That allowed Russia to apply pressure at Bakhmut and fortify the front against a future Ukrainian counter-attack, its researchers said in a report, though they said Ukraine could still recapture territory once the promised weapons arrive.

Zelenskiy met Danish Prime Minister Mette Frederiksen on Monday in Mykolaiv, a rare visit by a foreign leader close to the front. The city, where Russia’s advance in the south was halted, had been under relentless bombardment until Ukraine pushed the front line back in November.

Russia’s invasion, which it launched on Feb. 24 last year claiming it was necessary to protect itself from its neighbour’s ties with the West, has killed tens of thousands of people and driven millions from their homes.

Additional reporting by Pavel Polityuk, Kevin Liffey, Ronald Popeski and Reuters bureaus; Writing by Peter Graff, Philippa Fletcher and Doina Chiacu; Editing by Gareth Jones, William Maclean and Cynthia Osterman

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German economy unexpectedly shrinks in Q4, reviving spectre of recession

  • Q4 GDP at -0.2% Q/Q vs forecast of 0.0%
  • Decline due mainly to falling private consumption
  • Economists reckon mild recession is likely

BERLIN, Jan 30 (Reuters) – The German economy unexpectedly shrank in the fourth quarter, data showed on Monday, a sign that Europe’s largest economy may be entering a much-predicted recession, though likely a shallower one than originally feared.

Gross domestic product decreased 0.2% quarter on quarter in adjusted terms, the federal statistics office said. A Reuters poll of analysts had forecast the economy would stagnate.

In the previous quarter, the German economy grew by an upwardly revised 0.5% versus the previous three months.

A recession – commonly defined as two successive quarters of contraction – has become more likely, as many experts predict the economy will shrink in the first quarter of 2023 as well.

“The winter months are turning out to be difficult – although not quite as difficult as originally expected,” said VP Bank chief economist Thomas Gitzel.

“The severe crash of the German economy remains absent, but a slight recession is still on the cards.”

German Economy Minister Robert Habeck said last week in the government’s annual economic report that the economic crisis triggered by the Russian invasion of Ukraine was now manageable, though high energy prices and interest rate rises mean the government remains cautious.

The government has said the economic situation should improve from spring onwards, and last week revised up its GDP forecast for 2023 — predicting growth of 0.2%, up from an autumn forecast of a 0.4% decline.

As far as the European Central Bank goes, interest rate expectations are unlikely to be affected by Monday’s GDP figures as inflationary pressures remain high, said Helaba bank economist Ralf Umlauf.

The ECB has all but committed to raising its key rate by half a percentage point this week to 2.5% to curb inflation.

Monday’s figures showed falling private consumption was the primary reason for the decrease in fourth-quarter GDP.

“Consumers are not immune to an erosion of their purchasing power due to record high inflation,” said Commerzbank chief economist Joerg Kraemer.

Inflation, driven mainly by high energy prices, eased for a second month in a row in December, with EU-harmonized consumer prices rising 9.6% on the year.

However, analysts polled by Reuters predict annual EU-harmonized inflation will enter the double digits again in January with a slight rise, to 10.0%. The office will publish the preliminary inflation rate for January on Tuesday.

Reporting by Miranda Murray and Rene Wagner, editing by Rachel More and Christina Fincher

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Unilever names former Heinz exec Schumacher as CEO

  • To become CEO July 1
  • Activist shareholder says met Schumacher when at Heinz
  • First outsider CEO since Paul Polman appointed in 2008
  • Unilever shares outpace FTSE 100

LONDON, Jan 30 (Reuters) – Unilever on Monday appointed Hein Schumacher to replace Alan Jope as chief executive from July in a move that was welcomed by investors including board member and activist shareholder Nelson Peltz.

Schumacher, 51, rejoined Unilever in October last year as non-executive director and is currently the chief of Dutch dairy business FrieslandCampina.

He worked at Unilever more than 20 years ago before working for retailer Royal Ahold NV and packaged food maker H.J. Heinz in the United States, Europe and Asia.

One of the biggest consumer companies in the world with more than 400 brands ranging from detergent to ice cream, Unilever said in September said that Jope planned to retire at the end of 2023.

Billionaire activist investor Nelson Peltz, who heads investor Trian Partners, said he strongly supports Schumacher “as our new CEO and look(s) forward to working closely with him to drive significant sustainable stakeholder value.”

Peltz become a Unilever board member in July after it was revealed early last year that he had built a stake in the company.

“I first met Hein when I served as a director at the H.J. Heinz Company from 2006 to 2013 and was impressed by his leadership skills and business acumen,” Peltz said.

Peltz, through his Trian Fund, holds a nearly 1.5% stake in Unilever, making him the fourth largest shareholder, according to Refinitiv Eikon data.

Unilever shares were up 0.56% versus a FTSE 100 (.FTSE) index down 0.1% as of 1032 GMT.

The move was also cheered by other investors and analysts, who have felt in recent years that Unilever needed an outsider’s touch.

“Positive that he’s an external appointment,” Jack Martin, a fund manager at Unilever shareholder Oberon Investments, said. “Good CV from what I read, hopefully provides the impetus the company requires.”

‘ESG SAVVY, PRAGMATIC’

Unilever’s shares have underperformed European consumer staples and discretionary indices during CEO Jope’s tenure, which began in January 2019.

Reuters Graphics

His failed bids for GlaxoSmithKline’s (GSK.L) consumer healthcare business last year lost him some good faith among investors, including influential British billionaire Terry Smith, owner of Fundsmith.

Smith said at the time that Jope needed to focus less on sustainbility and more on building Unilever’s core business.

“Hein is ideal for Unilever — he’s got roots at the company but at the same time he’s external,” Allan Leighton, former CEO of British food retailer Asda and ex-chair of Britain’s Royal Mail, told Reuters.

Leighton, who worked with Schumacher on the board of C&A AG, described him as “ESG savvy but in a pragmatic and commercial way.”

Tineke Frikee, a fund manager at Unilever shareholder Waverton Investment Management, said: “It is good Schumacher has plenty of industry experience outside Unilever, particularly international.”

“I note though that his background is mainly in food, rather than beauty and personal care. This may lead the market to reduce the probability of a potential food spin-off.”

Unilever’s food business includes Ben & Jerry’s ice cream, Colman’s mustard, Hellman’s mayonnaise and Knorr stock cubes.

Some investors and analysts have speculated over the past year that Unilever might spin off what they feel is a weaker food business to focus on personal goods, beauty and home care.

“Why hire a food exec, if you are planning to sell the food business?” Bernstein analyst Bruno Monteyne said, adding that selling the food business “will always be on the cards, but I doubt that it is top priority in the short term.”

But Monteyne pointed out that some investors were hoping Unilever would name someone more well-established, globally.

“Investors we spoke to in recent weeks were hopeful for a more familiar name from a successful U.S.-based FMCG (fast-moving consumer goods) turnaround.”

Unilever had been considering internal and external candidates for the role.

Sources told Reuters in October that the candidates included finance chief Graeme Pitkethly, personal care division boss Fabian Garcia and Hanneke Faber, who heads the company’s nutrition group.

Reporting by Yadarisa Shabong and Richa Naidu; editing by Matt Scuffham and Jason Neely

Our Standards: The Thomson Reuters Trust Principles.

Richa Naidu

Thomson Reuters

London-based reporter covering retail and consumer goods, analysing trends including coverage of supply chains, advertising strategies, corporate governance, sustainability, politics and regulation. Previously wrote about U.S. based retailers, major financial institutions and covered the Tokyo 2020 Olympic Games.

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