Who is Rishi Sunak
On Friday (8 July), former chancellor Rishi Sunak announced his bid to become Prime Minister and leader of the Conservative Party. A slick video that emphasized his Indian heritage and the importance of his “family” kicked off his campaign on social media.
While vowing to “rebuild the economy, restore trust, and reunite the country,” the Indian-origin Tory leader stressed the importance of “patriotism, fairness, and hard work.”
Sunak’s announcement comes after a tumultuous week in the UK, which culminated in Boris Johnson’s resignation on Thursday, a day before Sunak announced his bid. More than 50 ministers had resigned from the government posts after Johnson refused to resign despite growing criticism from within his own party. Two of the senior-most ministers, Rishi Sunak and Sajid Javid, left the cabinet on July 5, triggering the resignation spree.
Announcing his resignation as Chancellor of the Exchequer (or Finance Minister), Sunak wrote that “the public rightly expects government to be conducted properly, competently, and seriously”. According to him, “These standards are worth fighting for, and that is why I am resigning.”
The 42-year-old Tory MP is the son of Indian parents from Southampton in the UK. In the 1960s, his grandparents migrated from Punjab to East Africa before moving to Britain where they worked as administrators.
After attending Winchester College, he attended Oxford University and Stanford University, where he received his MBA and the prestigious Fullbright scholarship.
Being an investment banker at Goldman Sachs and at various hedge funds, he has an impressive resume. The billionaire owner of Infosys, Narayan Murthy, married Sunak’s wife Akshata Murty in 2009.
As a Conservative MP for Richmond, Yorkshire, Sunak began his political career in 2015. In former UK PM Theresa May’s government, he became a junior minister after being an early supporter of Brexit. The place of Chief Secretary to the Treasury was awarded to Sunak for supporting Boris Johnson in the 2019 Tory leadership election. In February 2020, Rishi Sunak was promoted to Chancellor of the Exchequer, the third most senior ministerial post behind the deputy prime minister and the prime minister.
When the Coronavirus pandemic raged across the globe and lockdowns were imposed in the UK, he faced the challenging task of leading the economy. The BBC reported that he pledged to “do whatever it takes” to help UK citizens, launching a £350 billion financial rescue package which increased his personal poll ratings dramatically. In addition to this scheme, Reuters reports that he implemented a costly job retention program that averted mass unemployment.
Despite Sunak’s rapid rise through the Conservative Party, he has been criticized by both the opposition and the public during his tenure as chancellor.
During the Covid-19 lockdown, Sunak was reportedly criticized for not providing sufficient financial support to households. In his tax-and-spend budget for 2021, where the government would impose high taxes on the public and spend the proceeds, he would also place Britain on track for its highest tax burden in around 70 years, undermining his claim that he supports lower taxes.
Consumer prices rose by approx 9 per cent in April this year during his tenure as chancellor, with warnings from the Bank of England that they would rise by another 11 per cent. In response, various unions have begun striking in the UK to demand higher salaries. A mass walkout by over 40,000 rail workers last month marked Britain’s largest rail strike in 30 years, and other groups have threatened industrial action as well.
During controversy over his wife Akshata Murty’s finances, the ‘golden boy’ of British politics also suffered personal scandals. As a result of her non-domicile status in Britain, she did not pay tax in the UK on her overseas income.
Murty stated that she would begin paying UK taxes following the controversy. According to reports, she saved approximately £20 million in dividend taxes on her Infosys shares.
As a result of the ‘partygate scandal,’ media reports and government investigations revealed that government officials including Johnson and Sunak had breached Britain’s strict lockdown rules by attending parties. They were both fined by the Metropolitan police in June 2020 for attending Johnson’s birthday party.
Although Sunak has been criticized, polls indicate that his approval rating remains high. On July 7, YouGov published a poll of 716 Conservative party members showing Sunak third among the candidates, behind Defence Secretary Ben Wallace and Minister of State for Trade Policy Penny Mordaunt.
A number of senior Conservative MPs have publicly endorsed Sunak’s candidacy and endorsed his ‘Ready for Rishi’ campaign, including Oliver Dowden, who resigned as party chairman in June, and Mark Spencer, the House leader.
In 2-3 months, we will know if the UK will have its first Indian-origin prime minister. In the coming week, the 1992 Committee of backbench Tory MPs (ministers without government or opposition posts) will release the schedule for the prime ministerial election. To participate in the race, a candidate must receive the nomination of at least eight other Conservative MPs. The number of contendars will be reduced to two by secret ballot if there are more than two. Afterward, the Conservative Party will hold a final vote, and the winner will become the party’s leader and PM.
Musk & Twitter in edge
According to Musk, Twitter breached their agreement by not sharing with him enough information to substantiate.
Elon Musk’s withdrawal from Twitter’s $44 billion deal could result in a renegotiation or settlement rather than a lengthy court battle, according to legal experts.
For acquirers to be allowed to abandon their deals in Delaware courts, where the dispute between the two sides will be litigated, there are high standards. A work out deal at a lower price or financial compensation is often preferred by target companies over a messy court battle that can last for months, according to three corporate law professors interviewed by Reuters.
According to Adam Badawi, a law professor at UC Berkeley, settlement is more cost-effective than litigation. “And this thing is so chaotic that it might not be worth the trouble.” Musk and Twitter spokespeople did not immediately respond to requests for comment.
It’s Musk’s main claim against Twitter that the San Francisco-based company breached their contract by not providing him with enough information to back up its claim that spam and fake accounts make up less than 5% of its active users. According to Twitter, the number of these accounts may be higher, but the company has stood by its estimate.
Musk also stated in a letter to Twitter on Friday that the company’s misrepresentation of spam accounts might amount to a “material adverse effect (MAE)” that would allow him to walk away from the deal.
But legal experts say Delaware courts view MAEs as dramatic, unexpected events that harm a company’s performance in the long run. A judge has ruled that an MAE has been legitimately triggered only once in the history of such litigation – when German healthcare group Fresenius Kabi AG ended its deal for U.S. generic drugmaker Akorn Inc in 2018.
According to the court, Akorn’s assurances to Fresenius that it was in compliance with its regulatory obligations were inaccurate. Akorn was also found to have concealed facts about its deteriorating performance that were disclosed by whistleblowers.
According to legal experts, Twitter would not suffer from the same problems as Akorn due to inaccurate spam account numbers.
A Delaware court allowed Mirae Asset Capital Co of South Korea to walk away from a $5.8 billion luxury hotel deal because Anbang Insurance Group of China changed its ordinary hotel operations because of the pandemic.
Generally, courts favor the target companies and order acquirers to complete their deals – a legal remedy known as “specific performance.”
As an example, Tyson Foods, the largest chicken processor in the United States, decided not to purchase IBP Inc. in 2001. As a result of a judge’s order, the deal was completed.
However, many companies settle with their acquirers to eliminate uncertainty about their futures, which can be unsettling for employees, customers, and suppliers.
In 2020, the COVID-19 pandemic caused a global economic shock and this occurred more frequently. The French retailer LVMH threatened to pull out of a deal with Tiffany & Co. A $425 million reduction in the purchase price has been agreed upon by the U.S. jewelry retailer.
A controlling stake in rival Taubman Centers Inc was purchased by Simon Property Group Inc for $2.65 billion, 18% lower than its original purchase price.
Financial compensation is sometimes exchanged for letting the acquirers walk away. Boston Scientific Corp tried to walk away from its $275 million deal with medical technology firm Channel Medsystems Inc. Boston Scientific paid Channel Medsystems an undisclosed settlement in 2019 after a judge ruled the deal should be completed.
Corruption allegation against the dismissed chief of bullet train project
In 1982, Satish Agnihotri, an Indian Railway Service of Engineers officer, did not meet the advertised age criteria of mid-fifties, so he was not considered for the position.
On Thursday (July 8), Satish Agnihotri was ousted from his position as the head of the National High Speed Rail Corporation Ltd (NHSRCL).
In 2018, the former Chairman and Managing Director of the Railway engineering PSU Rail Vikas Nigam Limited (RVNL) was 63 years old when he was brought back as MD of NHSRCL.
Shortly after his appointment, letters began to be received from people within the system with startling allegations of embezzlement, especially during Agnihotri’s nine years at RVNL, his last assignment before retirement. As a result of such allegations, officers’ private social media spaces were also flooded with them.
In September 2021, these allegations reached the Lokpal, the country’s highest corruption watchdog. The Lokpal formalized the case in November, detailing the allegations and seeking Agnihotri’s response.
The allegations were denied by Agnihotri by January of this year. He privately alleged that his “enemies” were working to bring him down, sources say. The CBI was ordered to investigate the allegations by a division bench of a Lokpal Court by June.
Considering the severity of the allegations, the government has decided that Agnihotri’s position is untenable.
There is an allegation that Agnihotri has ties with Hyderabad-based Navayuga Engineering Company Limited (NECL), which owns Krishnapatnam Rail Company Limited (KRCL), a Special Purpose Vehicle formed to lay railway lines to Krishnapatnam port. In addition to being the contractor of the project, RVNL, which Agnihotri headed, also owned a minority stake in the firm.
In the Lokpal case, the complainant alleges that Agnihotri directed railway funds to KRCL for years, while KRCL was unable to pay RVNL for its work. Officials turned a blind eye to the irregularity since RVNL was a partner in the company.
RVNL, which is basically the government, did not get its money despite the fact that the job was done and the private company benefited from the line. Despite the stipulated terms of engagement, RVNL could only do KRCL’s work after receiving advance payment.
Year after year, this money was shown as “receivable” from KRCL. In this way, the complaint stated, Public Sector Undertakings were not allowed to divert government funds to private entities.
RVNL could have negotiated for a larger stake in KRCL with the amount of money pumped in, but Agnihotri kept RVNL’s stake at 49 percent, just enough to keep KRCL a private company.
After adding interest at the market rate, the dues would amount to Rs 1,600 crore, according to the complaint. In subsequent years, RVNL’s independent auditors mandated that this gap be corrected.
RVNL receives advance payments from SPVs for expenses incurred on their projects. According to the auditors, RVNL incurs project expenditures on a regular basis, but does not receive any payments from KRCL,” by 2021 RVNL had crossed Rs 1,200 crore in receivables. RVNL was instructed to recover the money after the complaint came to light last year.
Agnihotri took up employment with NECL as its CEO right after retiring in 2018, without waiting for the mandatory one-year cooling-off period or obtaining special permission from the government. According to the Lokpal complaint, his daughter was also employed by NECL.
It was mentioned in the FIR that the house was leased by NECL, which was also responsible for paying the dues of the local Residents’ Welfare Association (RWA), in which Agnihotri allegedly argued with the landlord.
According to allegations, Agnihotri utilized his contacts and inside knowledge to secure the Rishikesh-Karnaprayag line contract from RVNL worth Rs 1,900 crore.
The PSU’s CMD Agnihotri is accused of “manipulating” and creating a Performance Related Pay (PRP) system. He allegedly kept easy-to-achieve targets and received “outstanding” ratings every year. The complaint states that the PRP was greater than his annual salary in 2018-19, according to the company’s annual report. There were some directors in the company who received pay equal to or greater than their salaries.
According to the Lokpal bench, the Department of Public Enterprises (DPE) should review the policy of granting performance-based pay to employees of PSUs that receive government work on nomination basis.
Despite the complaint naming Agnihotri as well as a former Director (Finance) of RVNL, the Lokpal court found no evidence of quid pro quo against the other officer, so no further action was necessary.
Agnihotri’s charges are serious enough for the CBI to investigate whether the ex-MD of the bullet train project violated provisions of the Prevention of Corruption Act, 1988. Among the allegations are quid pro quo, misuse of official authority to benefit private parties, and embezzlement of hundreds of crores of government funds. Reports are expected to be submitted by December this year by the CBI.
itted by December this year by the CBI.
edited and proofread by nikita sharma