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Former directors face questioning over Carillion’s collapse

The Insolvency Service is to start interviewing former directors of the collapsed government contractor Carillion as it steps up an investigation into one of the biggest corporate failures in recent British history.

Nearly seven months after Carillion entered liquidation, the government agency said it had finished transferring 278 contracts to new suppliers as part of a painstaking process designed to ensure smooth continuity of public services.

Officials are now expected to devote more time to an investigation into why the company failed, including a closer examination of the role played by former directors, who were branded “delusional” by MPs earlier this year.

The service has the power to disqualify people from serving as company directors for up to 15 years if it finds them guilty of misconduct and can pass information to criminal enforcement bodies in the most serious cases.

Earlier this year, the business secretary, Greg Clark, called on the government agency, which has 1,700 staff, to fast-track its investigation.

But while officials are understood to have been in contact with directors, who were accused of “recklessness, hubris and greed” in a report by MPs, they are yet to be interviewed.

The government’s official receiver, Dave Chapman, is expected to start the interview process in the coming weeks following the completion of the transfer of public and private sector contracts.

In a statement, the Insolvency Service said Chapman had “wide-ranging powers to obtain information, material and explanations”.

The inquiry will run alongside two parallel investigations into Carillion’s failure, which is likely to cost the government at least £150m due to the expense of hiring a team from the accountancy company PricewaterhouseCoopers to help manage its liquidation.

The Financial Conduct Authority is looking into allegations of insider trading, while the Financial Reporting Council (FRC) is examining the role played by its auditor, KPMG, and the former finance directors Zafar Khan and Richard Adam.

The Insolvency Service is turning its attention to the directors after completing the “trading phase” of the liquidation, which involved finding new companies to take on contracts for public services such as cleaning hospitals, serving school dinners, and road and rail projects.

A further 429 jobs have been rescued, taking the number saved since Carillion’s collapse to 13,945 – more than three-quarters of the company’s pre-liquidation workforce.

The number of redundancies has reached 2,787, while 1,272 have retired or found work elsewhere, the Insolvency Service said.

A further 240, mainly in Carillion’s former head office in Wolverhampton, have been retained by the Insolvency Service to help wind down its remaining activities.

Chapman said: “Carillion is the largest ever trading liquidation in the UK.

“The continued uninterrupted delivery of essential public service since the company’s collapse in January reflects the significant effort put in by its employees, supported by my team and those employed by the special managers [PwC].”

He said the Insolvency Service was still overseeing the transition of “limited” services to some suppliers and would also work with suppliers who have continued to provide goods and services during the liquidation to make sure they get paid.

“My investigation into the cause of the company’s failure, including the conduct of its directors, is also under way,” he said.

Carillion’s failure in January led to widespread recriminations, with former directors, regulators and the government all facing criticism over a company that managed huge construction projects and provided government services.

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Google just rebranded its $100 billion advertising business

Google, which books more than $100 billion per year in advertising revenue, announced on Tuesday that it is streamlining multiple advertising technologies into three main products called Google Ads, Google Marketing Platform and Google Ad Manager.

While the change is mostly cosmetic, it’s a subtle acknowledgment that consumers are increasingly accessing the internet and viewing ads on a variety of devices, not just on their computers.

About 85 percent of Google’s total revenue comes from its technologies that place advertising on its properties and partner sites. It dominates online advertising alongside Facebook, with the two companies taking in 56.8 percent of all U.S. digital advertising spending, per eMarketer.

Despite this massive success, the company is eliminating the AdWords brand, which launched in 2000 as one of Google’s first advertising products, and the DoubleClick brand, which it acquired in 2007.

AdWords allowed marketers to buy ads on Google properties and partner networks through search terms, text or banner ads (known as display), video ads, or in mobile apps. It brought in $95.4 billion last year according to Google’s government filings. But its name still reflects the days where desktop and websites were the main way to access the internet, and the internet is a much different place from when Google started selling advertising 18 years ago.

Google announced in 2016 that there were more searches coming from mobile than desktop in 10 countries including the U.S. and Japan. Advertisers realize this, and they want flexible ways to reach customers wherever they are, not just on the web.

Google Ads is primarily just a name change for AdWords. Like its predecessor, it will allow companies to buy ads on Google’s ad network across different platforms, including searches, YouTube videos, Google Maps, Google Play, Android Store apps and on partner sites. Instead of buying a specific type of behaviour (desktop viewer, mobile viewer, etc.), Google’s system will allocate advertising dollars across platforms based on the customers advertisers are trying to reach.

However, there’s one small change: Google Ads will make it easier for smaller businesses to advertise through Google. An option called Smart Campaigns will let companies create an ad within minutes through a set form, and set a goal like getting phone calls, sending people to their website or bringing customers to their store.

Google Marketing Platform is aimed for larger advertisers and media buyers, and will combine advertising technology from DoubleClick, which Google acquired in 2007, and data management from Google Analytics 360 to help companies purchase and track the effectiveness of their ads.

Google Ad Manager is a product to help publishers manage spaces on their sites available for advertising, otherwise known as ad inventory. It subsumes DoubleClick for Publishers and DoubleClick Ad Exchange.

Smaller web sites will continue to use AdSense, which lets advertisers place small ads on their sites, and mobile app developers will continue to use AdMob, which lets them earn money from mobile ads in their apps.

To continue to thrive across all these platforms, Google will have to continue tracking user behaviour, especially as advertisers grow more demanding. As people grow increasingly wary of technology firms monitoring what they do online and more regulation comes into effect, Google will have to tread a line between helping marketers find customers and keeping personal data private.

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Dutch entrepreneurs optimistic about Chinese business climate

This week, BenCham presented the key findings of the Sino Benelux Business Survey at the Embassy of the Kingdom of the Netherlands in Beijing. Every year, BenCham investigate the business climate for Benelux businesses in China. “It is great to see that Benelux businesses are performing very well and are expecting to profit even further from the current business climate. Many are actually outperforming the local market,” said Mr. Bas Pulles, Deputy Head of Mission of the Netherlands Embassy in Beijing.

Favorable Business Climate

Dutch and Benelux businesses are optimistic about doing business in China. A majority experiences the business climate as favourable. 89% of Dutch companies realized equal or increased profits according to the survey. The success of Dutch companies may be due to their competitive position in the market, which according to businesses is thanks to their high product quality and good management. Expectations for the business results in 2018 are overall very positive.

Economic Slowdown

The Chinese economy has entered a new phase after its years of high-speed GDP growth. The aim of the government is to stimulate qualitative rather than quantitative growth by focusing on domestic consumption. So far, the effects of the Chinese economic slowdown on Benelux businesses appear limited. More than half of the businesses do not expect any impact.

“Even though we expected the economic slowdown to severely impact businesses, it seems we are already transforming towards ‘the new normal’ and the impact is limited. We believe this is mainly because many Benelux businesses are active in sectors which are booming because of economic trends such as urbanization, made in China 2025 or the rise of the middle classes,” said Mr. Roland Reiland, Deputy Head of Mission of the Luxembourg Embassy in Beijing.

Rising Salary & Regulatory Costs

Businesses experienced positive results, based on higher turnovers, better use of technology and increased efficiency. However there were also negative drivers. There is an increasing financial burden because of rising salary and regulatory costs, which makes that some businesses are considering leaving China. Also, the unlevelled playing field is making things increasingly difficult for Benelux businesses: many businesses feel local competitors receive preferential treatment. Moreover competition from other foreign owned (and Chinese) companies is growing. Also, more so than last year, businesses perceive the government regulations as restrictive.

“It is an interesting paradox really: many businesses are profiting in the current business climate but at the same time we see an increasing number of businesses contemplating to leave the Chinese market,” said Mr. Karel van Hecke, Deputy Head of Mission and Head of the Economic Department of the Belgium Embassy in Beijing. “A possible explanation may be that businesses who came here many years ago purely for cheap production are now struggling, but more recent entrants to the market are thriving,” mentioned Mr. Raoul Schweicher of Moore Stephens Advisory.

Belt & Road Initiative

For the first time the BenCham questionnaires and the Sino-Dutch survey were merged. When the 2016 edition of the Sino Benelux Business Survey was presented, little was known about the impact of the Belt and Road Initiative. Right now, more details on projects are available. However, only 16% of Dutch respondents has come across opportunities arising from BRI, and a vast majority 81% feels they don’t have enough information about BRI to profit from it.

“Let us not forget that many projects are currently being branded as a BRI-project. This makes it difficult for entrepreneurs to discover what BRI actually entails. For instance, we are already seeing some impact on for instance the logistics sector, with air routes being used much more frequently. This is due to BRI-projects, but not directly linked. It’s important that local authorities start defining BRI projects more clearly so that we can actually gain insight into the opportunities,” said Mr. Van Hecke.

Mr. Pulles added: “Because so many projects are branded as a BRI-project, businesses are very unsure of concrete opportunities. Right now, we notice most opportunities are within really specific projects for very specific parts or subprojects, for instance in the field of technology or ports. As embassies, we need to share more information on BRI and work on translating high-level BRI projects into such concrete opportunities.”

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Lessons for business leaders to take from World Cup 2018

We’ve seen it all before. We’re a likeable bunch of tryers who will put in a shift, but then watch depressed as the organised and efficient Germans prove too much for us.

A World Cup prophecy? No. That’s an analysis of European productivity rates.

The World Cup holders may have suffered a shocking 1-0 loss to Mexico on Sunday, but the characteristics of Germany’s first 11 – a well-organised unit who know their individual roles inside and out, and work hard to achieve their team’s goals – are also reflected in the country’s working economy.

But what are the other lessons that business leaders can take from the greatest tournament in sport? Are skills transferable from the beautiful game into the office?

Team Structure

Few bookmakers are tipping England to be the team to lift the World Cup trophy. According to some sports data analysts, England has less chance of winning the tournament than Peru.

However, that hasn’t deterred some fans who – for the first time in decades – are cautiously optimistic about the national team’s prospects.

In terms of ability, most would argue that past England teams have been superior “on paper”, but previous managers have failed to find the right formation to suit the team’s strengths.

Where earlier squads have failed, this year’s team has a clear plan in place. Rather than a set of square pegs for round holes, Gareth Southgate, our current manager, is going for a three-four-three formation that suits the players’ abilities perfectly.

Similarly, businesses can get the best results out of their staff by establishing the right team structure. This means creating specialised roles within clearly defined departments that are geared towards completing a specific set of tasks. It’s important that each staff member understands the requirements of the job, and is given the training and support they need to perform to the best of their abilities.

Recruitment

As the 32 managers taking part in this year’s tournament know, people decisions are often the most difficult.

When choosing their 23-man squads, the national managers were tasked with recruiting the right characters into the team without upsetting the apple cart.

Unlike England’s balanced squad, Argentina suffers from a weak defence, while boasting several of the world’s finest attacking players, from established stars like Lionel Messi to up-and-coming talents like Paulo Dybala. I’d go as far as to say that the lack of balance and cohesion jeopardises Argentina’s chances of winning.

Their top-heavy squad is a lesson to any business that fails to consider its recruitment process carefully. Organisations must employ the right balance of junior and senior staff in each department, and each function is serviced by the right number of people.

Motivation

History shows that many of the stars billed to shine at the start of the World Cup often fail to make an impact. Perhaps it’s a result of the pressure involved in the tournament, but often it’s the unexpected players and teams that capture the imagination.

Business managers can similarly reap the dividends if they are able to provide staff with the motivation and encouragement they need to perform at their peak. Ultimately, this comes down to confidence. Managers should remove barriers to staff development, and in time their self-confidence in their role will grow too.

It’s an age-old sporting cliche that youngsters play without fear. With the third youngest squad in the tournament, there is plenty of confidence in the England squad, and reason to believe that the Three Lions may yet ensure football’s coming home this summer.

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Post-Brexit trade: business leaders tell May time is running out

Leading European industrialists, including bosses from BP, Nestlé, E.ON and Royal Mail, have warned Theresa May that time is running out and said businesses want post-Brexit trade with the EU to be as frictionless as with a customs union.

At a private meeting in Downing Street with the prime minister and the Brexit secretary, David Davis, senior business figures from the European Round Table of Industrialists (ERT) warned that “uncertainty causes less investment”.

May has only committed to ensuring “trade at the UK-EU border should be as frictionless as possible”, a phrase repeated by a Downing Street spokesman after the meeting.

In a joint statement, the business leaders said they had expressed their concerns to May and warned there was an urgent need for clarity.

“The uninterrupted flow of goods is essential to both the EU and UK economies,” the statement said. “This must be frictionless as with a customs union. We need clarity and certainty, because time is running out. Uncertainty causes less investment.”

No 10 said the meeting had been an “open and productive discussion” and dialogue would continue. A spokesman said May “underlined the importance of ensuring that our future trading arrangements with the EU are as frictionless as possible”, adding that the future economic partnership would go “beyond existing models”.

The meeting was attended by senior members of British and other European businesses, including Carl-Henric Svanberg, chairman of BP, Vittorio Colao, Vodafone’s outgoing chief executive, Paul Bulcke, chairman of Nestlé, and Moya Greene, the outgoing chief executive of Royal Mail.

Others attended from firms including BMW, the aluminium company Norsk Hydro, the French multinational Capgemini and the energy company Iberdrola, which owns ScottishPower. More than 50 firms are members of the ERT, with combined revenues of more than £1.97tn and 6.8 million employees in Europe.

Downing Street said May “recognised the necessity of providing certainty for businesses”, pointing to the agreement of a transition period at the European council in March. May and Davis also discussed the future of regulatory standards, after a presentation by the Brexit secretary on the progress of the talks.

May appeared to win some backing for her bid for a bespoke deal on data-sharing laws after Brexit. Downing Street said there was “consensus” in the room that a robust agreement on data-sharing was “vital to our future economic and security relationship with the EU”.

In a presentation to the EU negotiating team last week, UK officials asked for the Information Commissioner’s Office to have a seat on the body that applies data laws to companies, with preferential treatment over other non-EU countries after Brexit.

But the EU’s chief negotiator, Michel Barnier, said in a speech that such privileged access was impossible and would impact on the EU’s ability to make its own decisions.

“We cannot, we will not be able to share this decisional autonomy with a third country, undoubtedly a former member state but which no longer wants to be in the same legal ecosystem as us,” he said.

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South Africa: 5 municipalities that are open for business right now

There is no shortage of depressing news about local government dysfunction.

Reports about corruption, failing service delivery and incompetence are rampant. Last week, the auditor general revealed that only 33 of the 257 municipalities have received clean audits – a mere 7% of all local governments.

But not all is lost. Some municipalities are doing a good job at attracting business. We spoke to business organisations in some of these towns to find out where there is the necessary co-operation, transparency, and service delivery to support local companies.

Senqu

Senqu is one of the only two municipalities in the Eastern Cape that received a clean audit. The municipal area covers the towns of Barkly East, Rhodes, Sterkspruit and Lady Grey. According to Irmgard Tauber a former chairperson of the Barkly East Community Tourism Organisation, the municipality is well run because there is co-operation between the stakeholders in the tourism industry, business operators and the municipal officials.

She says the municipality organises events like soccer tournaments and festivals to attract visitors to the area and also aids guesthouse owners in getting skills. The towns are neat and kept clean and an effort is made to collect and prevent debt for services delivered. “The budget is well managed,” says Tauber.

Midvaal

Midvaal local municipality is the only municipality in Gauteng to receive a clean audit. It is the largest municipality in terms of surface size, but it has one of the lowest population densities. It is predominantly a rural area with a few large businesses and holiday resorts. Located to the south of Johannesburg, it encompasses the towns of Meyerton and Henley-on-Klip and the upmarket suburb of Vaal Marina.

According to Yvonne Malherbe, a former chairperson of the Midvaal Business Chamber and a local business owner, the municipality is successful because it is pro-active in encouraging businesses to move to the area.

She says the municipality will form partnerships with the private sector to build infrastructure to allow new businesses to establish themselves. “They think outside of the box and are very will to develop and support business,” says Malherbe.

Additionally, residents are paying their municipal accounts and the rate of indebtedness is low. The municipality is therefore able to provide services and maintain infrastructure.

Ehlanzeni

The Ehlanzeni district municipality saw a turnaround with the appointment of Neil Diamond as the new municipal manager in 2017 after a series of corruption scandals left the municipality’s ability to function in tatters, says Linda Grimbeek, chief operating officer of the Kruger Lowveld Chamber of Business and Tourism.

The district includes Mbombela (Nelspruit), Witrivier, Hazyview, Lydenburg and Malelane. Mbombela, the provincial capital of Mpumalanga, is one of the fastest growing towns in South Africa due to an influx of retirees and shoppers from neighbouring countries.

Grimbeek says although the municipality is struggling to survive, townspeople have seen an improvement in service delivery in recent months. “If there is certainty that water and power will be delivered, people are more willing to relocate or invest, and that is what we are seeing now,” says Grimbeek.

Ray Nkonjeni

Businesses in Ray Nkonjeni local municipality are delighted that their municipal authority achieved a clean audit, says Vijay Naidoo, president of the South Coast Chamber of Commerce and Industry. The municipality encompasses Port Shepstone, Port Edward, Hibberdene and Southbroom on the KwaZulu-Natal coast.

Naidoo says the clean audit instils confidence that processes and procedures are in place to promote business in transparent way. He says the municipality plays a pro-active role and listen to the concerns of business people in the area.

“The municipal officials try to accommodate business interests and created a very business friendly environment,” says Naidoo. The result is an upturn in investments in the tourism, health, and financial sectors.

Dawid Kruiper

The Dawid Kruiper municipality is part of the ZF Mgcawu district municipality in the Northern Cape.

Henk van der Merwe of the Upington Concerned Citizen group and a business owner in Upington says even though the infrastructure is old, the town is clean and well-kept, and it is a pleasure living and working in Upington.

He says the town’s economy is booming because the export table grape farmers are doing well. “We are dependent on the agricultural sector, but the municipality is also doing well to maintain water quality and provision,” he says.

Dawid Kruiper municipality is one of the few municipalities who does not owe Eskom money says Van der Merwe. The Upington Concerned Citizen group uses social media to highlight problems but also to praise the municipality for a job well done.