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Old ways linger - Can one do business in Europe the #Russia way?



Late in 2018, bad news came in for DIA Group, a Spanish supermarket chain and Europe's third largest food sector franchiser. As reported by the FT, by December the chairwoman and chief executive had resigned, the head of finance had been fired, the company’s shares fell 80% just over a year, and dividends plummeted.

In that dramatic context, a DIA’s shareholder and at the time owner of 29% of the company Russian magnate Mikhail Fridman made an generous offer of a €500m injection, and a buy out of a significant bulk of shares.

The voluntary tender offer was complemented with a ‘rescue plan to secure the future of DIA’.  L1 Retail (the company that manages Fridman’s assets) announced that ‘under the right leadership and governance, DIA could re-establish its leading position in Spain to the benefit of the Spanish economy’. L1’s offer was supported by the majority of shareholders, so in May 2019, L1 got control of just under 70% of DIA’s capital, with the obvious plan of getting the total ownership in the end.

The L1 Retail rescue plan consists of three stages. With two of them behind (the injection and buy-out), the remaining part is a transformation, led by L1 Retail. ‘The idea is to save the company.  It’s extremely badly managed and we think it could be a great company,’ Fridman told the FT.

The story looks like a positive scenario of saving a business in distress with an established businessman in the lead role, yet at the moment Fridman is probably the least popular person in Spain.

There are particular reasons for the Spanish authorities to doubt Fridman’s good intentions, based on a symptomatic precedent. Currently, the Spanish National court has Fridman under official investigation for corruption - he has been accused of having designed and arranged the bankruptcy of another Spanish company by running ‘a series of actions that led to the insolvency of ZED Worldwide SA... in order to buy it at a ridiculously low price, much lower than that of the market,’ the court document says.

The businessman was a shareholder and creditor for ZED, and according to the National Court had ‘a privileged position for any type of decision in the group’. He also controlled Vimpelcom, a huge mobile phone operator that by altering contracts with ZED caused a significant drop in its revenue, which in its turn made it impossible for ZED to handle a €140-million loan, in part provided by one of the banks that Fridman controls.

After ZED applied for bankruptcy in June 2016, Fridman’s people bought ZED for €20 million, ‘much less than its value when blockage maneuvers controlled by Mr. Fridman started,’ claim the Spanish prosecutors. When referring to L1’a actions they use the word ‘raiding’.

Could DIA be repeating  ZED’s fate? Very likely, says the Spanish press.

After the Russian businessman got his 29% stake, he got the power to dictate terms. That’s when the chairwoman and chief executive left the company and were replaced by L1’s people. As reported by El Pais, it launched the worst period in DIA’s history – the sales and goods quality dropped, there appeared more and more flaws in the supply and logistics processes, while the suppliers couldn’t get their pay in time. The staff grew so worried about their future that they went on strikes, making the situation still worse.

As for the shares, at the moment of L1’s latest buyout they cost under €0.40 – a drastic change from the price of €4 they were trading at when Fridman bought the 29% stake.

In his interview to Radio Liberty  DIA’s shareholder Rodrigo Fernando Perez said: “It seems that the company gets damaged intentionally in order to then buy all of its shares at a lower price. And there is just one person behind this, Mr. Mikhail Fridman. He has a lot of money; he is a very rich man. And he apparently wants to buy DIA very cheap. Does it border on fraud? Absolutely. Not to mention the fact that hundreds of people get ruined."

Yet some people say they saw that coming. When L1 made the offer to buy DIA’s shares out, not all comments from the business community sounded optimistic. In particular, Fridman’s peers from back in Moscow said that in Spain the magnate seemed to be performing his signature trick of hostile takeover, the one he had perfected in the turbulent world of Russian business.

Hostile takeover, or as some mildly put it, ‘aggressive negotiations’ have long been considered Fridman’s trademark. His Russian A1 Group features  in dozens of ‘aggressive acquisitions’ stories: food and beverage producing, pharmaceutical,  metallurgical and mining enterprises, oil and gas companies would all go into the list of A1’s controversial business endeavours.

“Fridman and his partners… are all but the only Russian billionaires building big new businesses in the west — which is all the more interesting since their investment ideas and corporate wars are so reminiscent of Alfa’s Russian past,” wrote the Bell.

In 2013, after selling his most impressive asset (TNK-BP oil producer), Friedman moved to London, and started establishing his business in the West. The rumours say he wants to sell Alfa-Bank, his flagman business, and leave Russia for good, which he strongly denies. The magnate claims that he has moved the focus to Europe only to test his abilities in the new playground: ‘For me I think it’s a great interest, privilege, and challenge — to try to repeat our success that we made in Russia in a much more sophisticated and competitive market.’

Would he be able to? In the years of his formation as an oligarch in the chaotic post-Soviet Russia there was a lot one could get away with. Could these ‘old ways’ work to do business in Europe today? The answer is with the National court of Spain.


EAPM: There’s no ‘pandemic fatigue’ with the Alliance, and the newsletter is available!



Good afternoon, health colleagues, and welcome to the last European Alliance for Personalised Medicine (EAPM) update of October. We hope you are all looking forward to the best Hallowe’en you can enjoy under present circumstances, so on with the news, writes EAPM Executive Director Denis Horgan.

Newsletter, and no EAPM pandemic fatigue

As you will see from the update below, frustration and anxiety about coronavirus restrictions is being referred to as ‘pandemic fatigue’ - there is no such fatigue on the part of EAPM, as you will see from our ongoing work which is outlined in our newsletter, available here, as well as our upcoming work on the EU Beating Cancer Plan and the EU Health Data Space, as well as our engagement with the institutions.

EU to fund transfer of COVID-19 patients between countries

The European Union will finance the transfer of patients across borders within the bloc to prevent hospitals from getting overwhelmed as COVID-19 infections and hospitalisations spike in the continent. 

After a video conference of EU leaders to discuss the health crisis on Thursday (29 October), Commission President Ursula von der Leyen said the EU executive had made available €220 million ($260m) to move COVID-19 patients across borders. “The spread of the virus will overwhelm our healthcare systems if we do not act urgently,” she said. 

At the meeting, leaders agreed to better co-ordinate efforts to battle the virus as infections in Europe exceeded 10 million, making the continent again the epicentre of the pandemic. EU countries want to avoid divisions which dogged the 27-nation bloc at the beginning of the pandemic, when nations vied with each other to buy scarce medical equipment.

EPSCO unites

Following Thursday’s meeting, health ministers are meeting today (30 October) under increasingly dramatic and pressurized circumstances, as the spread of the coronavirus encounters growing resistance to government measures in Italy and Germany. 

EAPM will be closely following the work and outcomes of the EPSCO council, as well issues relating to key policy areas, as health ministers discuss how better to co-ordinate as countries return to one form or another of lockdown. 

On Thursday, Commission President Ursula von der Leyen announced a package of measures to help, which ranged from co-ordination on testing and a Europe-wide passenger locator form as well as the expansion of green lanes.

Pandemic fatigue

It is perhaps inevitable that after nearly eight months of restrictions and lockdowns, with people’s lives globally being forced to change in order to fight the pandemic, that frustrations and fatigue with the status quo will come to the fore. In recent weeks, many countries have been reporting an increase in ‘pandemic fatigue’ – people are feeling demotivated about following recommended behaviours to protect themselves and others from the virus. 

Finding effective ways to tackle this fatigue and reinvigorate public vigilance is a growing challenge as the crisis continues. Pandemic fatigue evolves gradually over time and is affected by the cultural, social, structural and legislative environment. 

High-level public health experts from more than 30 countries and many partner organizations from the World Health Organization (WHO) European region connected remotely to search together the root causes of this phenomenon and share national experiences and plans.

At the request of European member states, WHO/Europe developed a framework of policy recommendations to guide governments in the planning and implementation of national and subnational strategies to bolster public support for COVID-19 prevention measures.

It includes 4 key strategies:

  • Understand people: Collect and use evidence for targeted, tailored and effective policies, interventions and communication. 

  • Engage people as part of the solution. 

  • Help people to reduce risk while doing the things that make them happy.Acknowledge and address the hardship people experience, and the profound impact the pandemic has had on their lives. 

At their summit on Thursday, EU leaders pledged to promote co-operation in every aspect of their fight against the coronavirus — by keeping borders open, improving testing and contact tracing, monitoring critical care capacity and developing plans for the swift manufacture and distribution of vaccines. 

Dutch Prime Minister Mark Rutte said: “We have different situations in EU countries so it’s good that the handling of measures is in the hands of member states, but of course we need to co-ordinate.” 

German Chancellor Angela Merkel said: “A co-ordinated European approach is of great importance, especially for Germany as a country in the middle of Europe, it is important that the borders remain open.” 

Italian Prime Minister Giuseppe Conte said: “Close co-ordination between governments and the European Commission is essential to respond quickly and effectively to the new wave of COVID-19. The health response must go hand in hand with the economic one. Only a united Europe will overcome the crisis.” 

And that is all for this week and all for October, isn’t the year just flying by, despite all the stresses and strains of COVID-19? In November, EAPM will have two academic articles arriving, addressing two topics from multi-stakeholder authorship, including an article on gene therapy as well as one on Alzheimer’s and related dementia. 

Here is a link to our newsletter again – do try to have an enjoyable Hallowe’en weekend, stay safe and well, see you next week.

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Britain pressed to follow French and German lockdowns as COVID rates surge



Britain resisted pressure on Thursday (29 October) to impose a second nationwide lockdown after France and Germany ordered sweeping restrictions on social life to contain a surge in coronavirus infections that has pushed health services to their limits, write and .

Prime Minister Boris Johnson’s government has so far tried to avoid a nationwide lockdown, opting instead for a tiered system of local controls intended to tighten measures in affected regions while leaving others less restricted.

A new study by Imperial College in London underlined the dire situation facing Britain, the country with the largest number of coronavirus deaths in Europe, showing cases in England doubling every nine days.

Steven Riley, the author of the study, said the government should decide quickly if it wanted to follow France and Germany.

“And sooner is better than later for these,” Riley, a professor of infectious disease dynamics, told the BBC.

However Housing Minister Robert Jenrick said he did not think it was inevitable that the UK would follow France and Germany in imposing nationwide restrictions.

“The judgement of the government today is that a blanket national lockdown is not appropriate, would do more harm than good,” he told Times Radio.

Europe’s economies were plunged into their deepest recession on record by the blanket lockdowns imposed at the start of the crisis in March and April and the latest restrictions have snuffed out the faint signs of recovery seen over the summer.

Financial markets steadied somewhat on Thursday after a brutal selloff a day before as the prospect of a double dip recession came ever more clearly into view.

Governments have been desperate to avoid a repeat of the spring lockdowns but have been forced to move by the speed of new infections and a steadily increasing mortality rate across the continent.

While the French and German lockdowns will leave schools and most businesses open, they severely restrict social life by closing bars, restaurants, cinemas and the like and impose strict limits on people’s movements.

German Chancellor Angela Merkel, who addressed parliament on Thursday, said her government had moved quickly to prevent intensive care facilities being overwhelmed.

“We are in a dramatic situation at the start of the cold season. It affects us all, without exception,” Merkel told the Bundestag lower house of parliament, adding new restrictions to reduce social contact were “necessary and proportionate”.

However she warned of difficult months ahead and said: “The winter will be hard.”

After heavy criticism of a lack of coordination and planning in the initial phase of the crisis, European Union leaders aim to make progress on common testing and vaccination strategies at a video conference on Thursday.

The latest surge in new cases has put Europe back at the centre of the global pandemic, which has so far seen more than 44 million infections and 1.1 million deaths worldwide.

According to figures from the World Health Organization this week, the region accounted for almost half of new global infections in the previous seven days.

The United States has also seen a surge in new coronavirus cases in the run up to next week’s presidential election, with more than 80,000 new cases and 1,000 deaths reported on Wednesday.

By contrast, many Asian countries have begun to relax controls as the disease has been brought under control, with Singapore announcing it would ease restrictions for visitors from mainland China and the Australian state of Victoria.

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Commission approves prolongation of the Polish resolution scheme for cooperative and small commercial banks



The European Commission has approved, under EU state aid rules, the prolongation of the Polish resolution scheme for twelve months until 29 October 2021. The scheme was initially approved in December 2016. It has been prolonged four times, last time in April 2020. This fifth prolongation does not introduce any changes to the previous scheme. The measure will continue to be available for cooperative banks and small commercial banks with total assets below €3 billion, only if they are placed in resolution by the competent national authorities.

The objective of the scheme is to facilitate the work of the Polish resolution authorities, should a concrete case and need arise for it. The Commission found the prolongation of the scheme to be in line with EU state aid rules, in particular the 2013 Banking Communication and EU banking rules. More information will be available on the Commission's competition website in the case register under the case SA.58389 once any confidentiality issues have been resolved.

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