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Deutsche Bank sees its future with crypto

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Deutsche Bank AG has cemented a partnership with Swiss crypto technology firm, Taurus SA. This collaboration propels Deutsche Bank closer to unveiling its digital assets custody service.

A venture into digital custody

Taurus SA’s cutting-edge technology will be pivotal for Deutsche Bank, enabling them to offer both custody and tokenization services. This strategic alliance aligns with the bank’s previously disclosed plans to venture into the digital custody domain. Paul Maley, Deutsche Bank’s global head of securities services, had hinted at this collaboration in an earlier interview with Bloomberg News. He said:

“As the digital asset space is expected to encompass trillions of dollars of assets, it’s bound to be seen as one of the priorities for investors and corporations alike. As such, custodians must start adapting to support their clients.”

Tokenised financial assets is the future

Paul Maley emphasised the growing significance of the digital asset sector, predicting its potential to manage trillions in assets. He stressed the need for custodians to evolve and cater to this burgeoning demand. Earlier this year, Deutsche Bank had also invested in Taurus during a $65 million funding round, reinforcing its commitment to the digital asset space.

According to Maley, the bank plans to first offer crypto custody services for select cryptocurrencies and stablecoins. However, he says that Deutsche bank sees most growth in tokenised financial assets.

Deutsche Bank laid the groundwork for its move into crypto by applying for a crypto custody licence from Bafin, the German regulator, back in June. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

#Deutsche #Bank #sees #future #crypto

‘Defending the portfolio’: buyout firms borrow to prop up holdings

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Private equity firms have started to borrow against their funds to backstop overly indebted portfolio companies, a new financial engineering tactic meant to cope with higher interest rates and a slowdown in dealmaking.

The manoeuvres, which lenders have dubbed “defending the portfolio”, have cropped up as many older private equity funds run low on cash just as the companies they own struggle with their own debt loads.

Buyout firms have turned to so-called net asset value (NAV) loans, which use a fund’s investment assets as collateral. They are deploying the proceeds to help pay down the debts of individual companies held by the fund, according to private equity executives and senior bankers and lenders to the industry.

By securing a loan against a larger pool of assets, private equity firms are able to negotiate lower borrowing costs than would be possible if the portfolio company attempted to obtain a loan on its own.

Last month Vista Equity Partners, a private equity investor focused on the technology industry, used a NAV loan against one of its funds to help raise $1bn that it then pumped into financial technology company Finastra, according to five people familiar with the matter.

The equity infusion was a critical step in convincing lenders to refinance Finastra’s maturing debts, which included $4.1bn of senior loans maturing in 2024 and a $1.25bn junior loan due in 2025.

Private lenders ultimately cobbled together a record-sized $4.8bn senior private loan carrying an interest rate above 12 per cent. The deal underscores how some private equity firms are working with lenders to counteract the surge in interest rates over the past 18 months.

Vista borrowed money at what it felt were more attractive prices that would allow it to cut Finastra’s interest costs, according to a person familiar with thinking at the firm. The person added that the dislocation in the riskiest corners of credit markets was a “market issue” that Vista believed was unrelated to Finastra.

While it was unclear what rate Vista had secured on its NAV loan, it is below a 17 per cent second-lien loan some lenders had pitched to Finastra earlier this year.

Executives in the buyout industry said NAV loans often carried interest rates 5 to 7 percentage points over short-term rates, or roughly 10.4 to 12.4 per cent today.

Vista declined to comment.

The Financial Times has previously reported that firms including Vista, Carlyle Group, SoftBank and European software investor HG Capital have turned to NAV loans to pay out dividends to the sovereign wealth funds and pensions that invest in their funds, or to finance acquisitions by portfolio companies.

The borrowing was spurred by a slowdown in private equity fundraising, takeovers and initial public offerings that has left many private equity firms owning companies for longer than they had expected. They have remained loath to sell at cut-rate valuations, instead hoping the NAV loans will provide enough time to exit their investments more profitably.

But as rising interest rates now burden balance sheets and as debt maturities in 2024 and 2025 grow closer, firms recently have quietly started using the loans more “defensively”, people involved in recent deals told the FT.

“This is early days for this asset class and as it becomes more mainstream and people employ these facilities more frequently, it’s only natural that you’ll see different uses of them,” said Richard Sehayek, managing director at Ares, one of the world’s largest private lenders. “The defensive play is just one of the drivers for it and as the universe itself grows, that particular part will as well.”

Relying on NAV loans is not without its risks.

Private equity executives who spoke to the FT noted that the borrowings effectively used good investments as collateral to prop up one or two struggling businesses in a fund. They warned that the loans put the broader portfolio at risk and the borrowing costs could eventually hamper returns for the entire fund.

“We get pitched left and right,” said one executive at a large US buyout firm that has resisted such loans. “To me, it seems like pretty risky financial engineering.”

Large banks like Goldman Sachs and JPMorgan have long provided NAV loans, but there has been a growing number of lenders entering the space broadening the usage of the debt. Banks now compete with a specialised group of private NAV lenders like 17 Capital and Whitehorse Liquidity Solutions, in addition to new entrants to the marketplace like private lenders Apollo Global, Ares and HPS.

“Everyone is talking about it,” said a senior banker who advises large US private equity firms. “It is easier to borrow at the fund level with all the NAV financing available than it is at the portfolio company level for certain companies facing distress.”

Executives in the NAV lending industry said that most new loans were still being used to fund distributions to the investors in funds. One lender estimated that 30 per cent of new inquiries for NAV loans were for “defensive” deals.

Private equity executives warned that rising interest rates were making the loans expensive and could come back to haunt investors.

“It could be a big drag to overall performance,” warned one executive.

“People are going to start to feel tight,” predicted the buyout firm executive. “In this cycle, we haven’t seen any car crashes yet.”

#Defending #portfolio #buyout #firms #borrow #prop #holdings

MTRCB head target of online hate

MTRCB head target of online hate

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THE MOVIE and Television Review and Classification Board (MTRCB) released a statement yesterday defending its head, MTRCB chairperson Diorella “Lala” Sotto-Antonio, who it says has become “the target of alarming online attacks.”

“Over the past weeks, we have experienced an unfortunate surge in threatening messages on our official social media pages, including explicit rape and death threats directed at Chairperson Lala Sotto,” said the MTRCB statement.

The statement came with screenshots of what seem to be Messenger posts sent to the MTRCB. The names and faces of the senders were partially blurred. Most of the post seemed to be insults such as “Tangina ni Lala Sotto noh? Walang delicadeza! Ang kapal!” and “pakisabi sa chairman nyo na napakabobo niya” (“Lala Sotto is a son of a bitch, no? She has no dignity. Shameless!” and “please tell your chairman that is is so stupid”).

Other though made what seem to be threats. One post read “kailan po mamatay ang pamiliya ni lala sotto sana mauna na ung mama nia” (when will lala sotto’s family die, hopefully her mother goes first). Another read “#RapeLalaSotto,” while yet another message, which was all in emojis, included three knife emojis. One message is a photo of Ms. Sotto with the words “rest in peace” written on it along with her full name and designation, and “Died: Sept. 05, 2023.”

Some of the messages made mention of the “icing” incident which led the MTRCB to suspend the airing of the noon time show It’s Showtime (see story on this page).

The statement included messages of support for the MTRCB chairperson from her fellow board members.

“(She) is a dedicated public servant who has spent her career advocating for responsible and inclusive media content. She has consistently championed the importance of media content that respects cultural sensitivities while contributing positively to the Philippine entertainment industry,” said MTRCB Vice-Chairman Njel De Mesa.

“No Filipino deserves such kind of unfounded personal attack. We must not resort to personal attacks because our agency is just doing its mandate. We are happy that our Chair is very active in discharging the functions of our office based on existing laws,” the statement quoted MTRCB Executive Director II Atty. Mamarico Sansarona, Jr.

The statement says that while the MTRCB “recognizes the importance of constructive criticism and open dialogue, it strongly condemns any form of threats, harassment, or violence, both online and offline. Such behavior is not only illegal but also runs counter to the principles of a Filipino value-based media and entertainment culture that the MTRCB upholds.”

It does not say if the MTRCB or its chairperson will pursue legal relief. — Brontë H. Lacsamana

#MTRCB #target #online #hate

20% TCS on foreign remittances from October 1: Know how it will impact your forex payments, international trips, and education

The new rates of tax collected at source (TCS) under the Liberalised Remittance Scheme (LRS) of the Reserve Bank of India will be applicable from October 1, 2023. You will now have to pay a higher TCS amount in case you spend more than a specified amount during a financial year with regard to international trips, going abroad for higher studies or making a credit card payment for a purchase from a foreign country, among others.

It’s important to understand how the enhanced tax rates on foreign remittances will impact your expenses on education abroad, foreign trips and forex payments to avoid any financial uncertainties.

New TCS rates on foreign remittance for education

Under the Liberalised Remittance Scheme (LRS), no TCS would be charged on up to Rs 7 lakh of foreign remittance spent on education. In case the remittance above Rs 7 lakh is paid via a loan from an authorised financial institution then a TCS of 0.5 per cent would be levied. While, remittances of more than Rs 7 lakh spent on foreign education would attract a TCS of 5 per cent from October 1, 2023. Moreover, the amount spent on travelling for foreign education would also be taxed at the same rate if the threshold of Rs. 7 lakh is crossed.

Revised TCS rates for medical expenses

A 5 per cent TCS would be charged on any foreign remittance for medical expenditure if the cost is higher than Rs 7 lakh. Also, any travel expenses related to foreign treatment will also be taxed at the same rate from October 1, 2023.  

TCS rates for overseas tour package

An overseas tour package would also attract TCS. However, the catch is that even if the money spent on these packages is lower than Rs 7 lakh, one is liable to pay the taxes. If the tour package is priced below the threshold, the TCS deducted would be 5 per cent. Conversely, if the expenditure is over Rs 7 lakh, 20 per cent TDS would be levied from October 1, 2023.

What are the TCS rates for foreign investments?

If you’re an investor in foreign stocks, crypto or mutual funds then be ready to pay TCS of 20 per cent from October 1, 2023, if your investments exceed Rs 7 lakh in a financial year. On the other hand, if you have invested in Indian mutual funds that deal in foreign investments, it won’t be considered as a remittance under the LRS scheme and hence, wouldn’t attract any TCS.

TCS on debit, credit, and forex cards

The payments made by credit cards don’t come under the scope of the LRS. However, payments made using debit, credit or forex cards do come under the ambit of LRS and if you pay more than Rs 7 lakh using these cards then TCS will be applicable at 20 per cent.

#TCS #foreign #remittances #October #impact #forex #payments #international #trips #education

Dreaded Bitcoin Death Cross Returns: Here’s What Happened The Last Time

Bitcoin has once again flashed another particularly deadly formation that often sends its price into a downward spiral. This time around, a death cross that has not been seen in the digital asset for more than one year has appeared again. This report takes a look at what happened the last time that this particular death cross was flagged.

Bitcoin Flashes Rare Death Cross

In a post on X (formerly Twitter), pseudonymous crypto analyst Game of Trades has alerted the Bitcoin community to an interesting formation on the BTC chart. The infamous death cross appeared just as the digital asset started marking its support above $25,800, sparking interest.

According to the analyst, this death cross is formed when the 50-day moving average crosses below the 200-day moving average, which took place on Wednesday, September 13. While death crosses can appear on the charts of digital assets fairly often, this one is important due to its implications.

Bitcoin death cross

Rare death cross appears | Source: X

The last time the 50-day moving average for Bitcoin had crossed below the 200-day moving average was back in January 2022. Following this formation, the price of the digital asset plunged rapidly, and by the time it was done in June, the BTC price had already lost over 60% of its value.

While this could very well be the case with Bitcoin this time around, the analyst pointed out that death crosses do not always mean the price would start falling right away. There have been instances where death crosses have appeared and the asset still went on to rally a bit before eventually falling.

Pointing to the times when such a thing has taken place, Game of Trades said, “April 2014 – Bitcoin saw upside first, followed by significant downside. Sept 2015 – Bitcoin saw no major downside following the death cross.”

What Happens To BTC If This Death Cross Follows 2022?

The price of Bitcoin is already trending low from its current level, so adherence to the January 2022 death cross would be devastating for its price. A 60% drop from the $26,300 that BTC is trading at the time of this writing would mean marking a brand-new cycle bottom.

However, in response to this, another crypto analyst known as @BigCheds on X points out that the death cross could be invalidated if the digital asset is able to hold above $25,000. So it is possible that nothing eventually comes of this formation, as can be the case sometimes.

Even though the death cross was flagged on Wednesday, the price is still holding well above $26,300 as of Thursday morning. This could suggest that there is enough demand in the market to neutralize such a bearish formation.

Follow Best Owie on Twitter for market insights, updates, and the occasional funny tweet… Featured image from National Parks at Night, chart from

#Dreaded #Bitcoin #Death #Cross #Returns #Heres #Happened #Time

Trucker Yellow Paid Managers Millions Just Before Bankruptcy

(Bloomberg) — Just weeks before closing its doors and dismissing thousands of employees, Yellow Corp. doled out millions of dollars in bonuses to executives so they wouldn’t leave the trucking firm during its chaotic unraveling, court papers show.

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Yellow paid bonuses totaling about $4.6 million to eight current and two former executives in the weeks before the company went bankrupt with plans to liquidate, according to corporate disclosures in Delaware bankruptcy court. The figure is higher than it would have been had Yellow managed to avoid a sudden bankruptcy filing, according to a person familiar with the matter.

Of the bonuses disbursed, nearly $2 million paid on July 14 were approved by Yellow’s board in June — when the company was in trouble, but before it was considering filing for bankruptcy, according to the person. Yellow’s public feud with a union representing much of its workforce escalated days later when a strike notice prompted the company’s customers to take their business elsewhere, Yellow has said.

The remaining bonuses paid on July 31 became necessary, then, as Yellow planned for a bankruptcy filing that would be used to repay creditors and wind down, according to the person, who asked not to be named discussing private deliberations. The company’s fleet of trailers, trucking terminals and other assets — all of which would need to be sold quickly and at the highest prices possible — had previously been valued at roughly $2.1 billion. A fire sale could seriously reduce the prices they fetched.

So-called retention bonuses are common in major restructurings, as they incentivize employees to stick around and help clean up failed firms. It’s less common to pay them prior to a bankruptcy filing when, as with Yellow, the company in question is shutting down for good.

The bonuses underscore an unintuitive logic that shows itself time and again when corporations fail: the executives who lead companies to bankruptcy are often the people best equipped to help repay their debts, if only because of the institutional knowledge they possess. Creditors, lower-level employees and even regulators frequently attack retention bonuses as unfair or unnecessary, but federal judges and restructuring advisers routinely find they help creditors hurt by bankruptcy recoup more than they otherwise would.

The July payments include a $1 million retention bonus to Yellow Chief Restructuring Officer Matthew Doheny, $1.08 million to Chief Operating Officer Darrel Harris and $625,000 to Chief Executive Officer Darren Hawkins, according to a company court filing.

Yellow also said it paid retention bonuses totaling roughly $249,000 to its former chief commercial officer and $23,000 to its former senior vice president of human resources. The company paid those bonuses because when it filed bankruptcy it explored the possibility of selling its logistics business as a going concern rather than shutting it down, the person said, but key lenders didn’t support that idea. The bonus payments were therefore used to offset severance payments totaling about $306,000 and $296,000, respectively, the person said.

Yellow didn’t return a message seeking comment. Doheny, Harris and Hawkins didn’t respond to LinkedIn messages seeking comment.

Sean O’Brien, general president of the International Brotherhood of Teamsters, said in a statement that the bonuses should be addressed by Congressional reforms “that workers in this country desperately need.” O’Brien criticized Yellow for making the payments while it skipped paying for employee benefits.

Congress in 2005 restricted companies from paying executive retention bonuses in Chapter 11, prompting companies to pay such awards before filing bankruptcy. There have been calls to curb such pre-bankruptcy bonuses in recent years. In 2021, the Government Accountability Office recommended that Congress require court oversight of executive retention bonuses after more than two hundred executives received around $165 million before their companies filed for bankruptcy.

Disputes over executive pay in bankruptcy court can become particularly heated when a labor union is involved, said Jared Ellias, a Harvard Law School professor who has researched Chapter 11 bonuses. “Given what’s gone on here, I can see why they paid out the bonuses before filing,” Ellias said by phone. Usually, they’re paid without controversy, with court permission, after a liquidation is complete, he said.

Yellow filed bankruptcy on August 6 with $1.2 billion in long-term debt, including a roughly $700 million US government pandemic rescue loan, debt the company said it expects to repay in-full. The shutdown will ultimately leave Yellow’s roughly 30,000 employees jobless, according to a prior company statement.

But the liquidation, now in full swing, has fostered heated competition from lenders and rival trucking companies that see value in Yellow’s assets. Lenders led by Apollo Global Management initially offered to finance the company’s wind-down, a proposal that was eventually supplanted by a better deal with Ken Griffin’s Citadel and hedge fund MFN Partners LP. Since then, Estes Express Lines and Old Dominion Freight Line Inc. have bid against each other for Yellow’s trucking terminals, with Estes most recently offering $1.525 billion.

The case is Yellow Corp. 23-11069, US Bankruptcy Court for the District of Delaware (Wilmington).

(Adds comment from union official in paragraph 10.)

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#Trucker #Yellow #Paid #Managers #Millions #Bankruptcy

Methane from Oil and Gas Are Worse Than Reported to UN, Satellites Show

Emissions of the potent greenhouse gas from oil and gas operations are much higher than reported to the UNFCCC, according to a new study that analyzed satellite observations.

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(Bloomberg) — Observed methane releases from global oil and gas operations are 30% higher than what countries estimate in reports to the UN, according to a new study that analyzed satellite observations of the potent greenhouse gas. 

The world’s four largest oil and gas emitters, the US, Russia, Venezuela and Turkmenistan, account for most of the overall discrepancy, according to the report published last month in Nature Communications. The satellite data challenges figures reported to the UN, which rely on so-called emissions factors — estimates for how much methane equipment might normally release — applied to production and use rates. 

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The real-world data recorded by satellites suggests those estimates are way too low. The authors used a “top-down” approach to model and estimate emissions for most of the world with fossil fuel production by using 22 months of detections from the European Space Agency’s Sentinel-5P satellite. 

“Satellite data should be used to monitor the accuracy of the national emission inventories submitted” to the UN, said Daniel Jacob, one of the authors and a professor at Harvard University’s department of earth and planetary sciences.

Adding top-down methods to the bottom-up estimates currently used would more accurately pinpoint who and what is responsible for methane emissions and offer governments a clearer picture of how to make the cheapest and most effective cuts. The new research is notable for its breadth, covering 96% of global emissions from oil and gas and bolstering previous studies that have detailed underreporting of methane emissions.

Methane is the primary component of natural gas, but it can also leak from the Earth during oil and coal production. The potent greenhouse gas has more than 80 times the warming power of carbon dioxide during its first two decades in the atmosphere. Curbing releases of the gas could do more to slow climate change than almost any other single measure. 

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Three of the ten largest oil and gas methane emitters identified in the report — the US, Canada, Uzbekistan and Saudi Arabia — have signed the the Global Methane Pledge, which targets a 30% reduction in global emissions of the gas by the end of this decade from 2020 levels. If methane generated from human activity is responsible for a larger share of the world’s total emissions, including from natural sources, then a 30% cut from that activity would have a bigger effect on overall methane concentrations, according to Jacob. 

Read more:  The Cheap and Easy Climate Fix That Can Cool the Planet Fast

The study identified significant opportunities to reduce methane emissions in Venezuela, Turkmenistan, Uzbekistan, Angola, Iraq, Ukraine, Nigeria and Mexico, all of which have methane intensities between 5% and 25% for their oil and gas industries. Lowering those intensities to the global average of 2.4% would reduce emissions from the sector globally by 18%. 

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#Methane #Oil #Gas #Worse #Reported #Satellites #Show

Goldman Sachs Says Rally in AI Tech Stocks Is No Bubble

According to Goldman Sachs, the spike in AI stocks is here to stay, and reflects the beginning of a new tech wave, not a bubble.

Global investment banking and financial services firm Goldman Sachs (NYSE: GS) has stated that the current explosion in artificial intelligence (AI) adoption is not a bubble. Despite worries that the spike in AI interest and related tech stocks might be weak, Goldman Sachs states that the popularity of these stocks is more of a revolution than a bubble.

Some analysts believe the pump in tech stocks from the ongoing AI boom might eventually pass quickly. However, Goldman Sachs thinks otherwise. In a Monday publication, Goldman Sachs admits that current valuations in the tech sector are high “by historic standards”. It also noted that the current P/E (price-to-earnings) ratio in the sector is at the top, especially when compared with the 10-year median and range. However, according to Goldman Sachs Research Chief Global Equity Strategist Peter Oppenheimer, the substantial rally in stocks points to a bubble. He said:

“We believe we are still in the relatively early stages of a new technology cycle that is likely to lead to further outperformance.”

Oppenheimer however advised investors to carefully choose companies using the PEARLs framework. The framework classifies AI stocks into five groups. These include the Pioneers, Enablers, Adapters, Reformers, and Laggards. He believes that although knowing how successful an AI company would be is impossible, the PEARLs classification helps investors figure out which ones are the most likely to succeed.

Goldman Sachs is Optimistic about AI

Goldman Sachs is also bullish about AI technology and its positive effects on the S&P 500 index. Speaking to CNBC in May, Senior Strategist Ben Snider said AI could increase general productivity by 1.5% every year over the next 10 years. Snider believes this could also increase S&P 500 profits by 30% or more in the same time frame. According to Snider, many factors that contributed to an increase in S&P 500 earnings might be waning. However, he notes that AI has now presented a lot of optimism via productivity enhancements. Snider said:

“It’s clear to most investors that the immediate winners are in the technology sector. The real question for investors is who are going to be winners down the road.”

Goldman Sachs is also testing AI tools internally. The company’s Chief Information Officer Marco Argenti revealed that Goldman is working on a tool that helps developers with writing code. Argenti however specified that the tool is still in the experimental stage and not ready for production.

As part of the AI push, Meta Platforms Inc (NASDAQ: META) is reportedly developing an open-source AI system that will be more powerful than OpenAI’s GPT-4. The system is also expected to have twice the capacity of Llama 2, an AI model introduced in July by Meta and Microsoft Corporation (NASDAQ: MSFT). Meta should begin training for the new system in 2024 and will likely use Nvidia’s H100s chips to develop the tool. The Facebook parent recently increased investment in AI chips developed by Nvidia Corporation (NASDAQ: NVDA).


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Tolu Ajiboye

Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.

#Goldman #Sachs #Rally #Tech #Stocks #Bubble

Chinese defence minister under investigation by Beijing, US believes

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The US government believes that Chinese defence minister Li Shangfu has been placed under investigation, in the latest sign of turmoil among elite members of Beijing’s military and foreign policy establishment.

Three US officials and two people briefed on the intelligence said the US had concluded that Li, who has not been seen in public for more than two weeks, had been stripped of his responsibilities as defence minister.

The move comes two months after China’s president Xi Jinping removed the two top generals at the People’s Liberation Army Rocket Force, which oversees China’s rapidly expanding arsenal of long-range missiles and nuclear weapons.

The investigation into Li also follows the disappearance of Qin Gang, who was ousted as Chinese foreign minister in July.

People briefed on the intelligence did not say what had led the Biden administration to conclude that Li was being probed. The White House did not comment. The Chinese embassy in the US declined to comment.

Reuters on Thursday cited Vietnamese officials saying that Li abruptly cancelled a meeting last week because of a “health condition”. At one point in the run-up to the ousting of Qin, the Chinese foreign ministry explained his mysterious absence from official events as being health-related.

The Trump administration in 2018 imposed sanctions on Li in connection with China’s purchase of Russian weapons when he headed the PLA’s main department for procuring and developing weapons.

China has refused to arrange any meeting between US defence secretary Lloyd Austin and Li while Washington kept sanctions on the general, a situation that worsened already dismal bilateral military-to-military relations.

Rahm Emanuel, the US ambassador to Japan, last week stoked speculation about Li when he posted on X, formerly Twitter, that China’s government was “now resembling Agatha Christie’s novel And Then There Were None”.

“First, Foreign Minister Qin Gang goes missing, then the Rocket Force commanders go missing, and now Defence Minister Li Shangfu hasn’t been seen in public for two weeks,” he wrote with the hashtag #MysteryInBeijingBuilding.

The probe into Li raises questions about the effectiveness of the anti-corruption campaign that Xi, who serves as chair of China’s Central Military Commission, had pursued against the Chinese armed forces.

“If the removal of the defence minister and the Rocket Force leaders was because of corruption it indicates that Xi’s vetting process for selecting top officials is deeply flawed and suggests corruption is commonplace within the system despite Xi’s decade-long campaign against it,” said Dennis Wilder, a former top CIA expert on the PLA. 

Wilder added that the equipment department, which was formerly called the general armaments department, had a long history of having the “worst corruption” inside the Chinese military.

Bonnie Glaser, a China expert at the German Marshall Fund, said Li’s removal could help US-China military relations by removing the obstacle that China insisted would prevent any meeting with Austin.

“I don’t think it calls into question Xi Jinping’s control of the military but it should be a reminder about how much corruption exists in the system,” Glaser added.

#Chinese #defence #minister #investigation #Beijing #believes