On 16 July 2014, the Supreme Court provided clarity on the nature of a principal’s entitlement to recovery of a secret commission or bribe received by an agent.  The court ruled that when an agent acquires a benefit as a result of his fiduciary position, including a secret commission or bribe, he is to be treated as having acquired the benefit on behalf of his principal and so holds it on trust for the principal.  The ruling is significant in the context of insolvency, as the effect of the decision is to give a principal a preferential claim over the assets of his agent, as against an unsecured creditor.  It also permits the principal to trace the bribe into the hands of others (where they are not bona fide purchasers), which can be crucial where the agent has dissipated his assets.  This ruling confirms a principle which has, to date, been treated inconsistently by the courts since the nineteenth century.

Facts of the case : In December 2004, FHR European Ventures LLP (FHR) purchased the issued share capital of the Monte Carlo Grand Hotel SAM from Monte Carlo Grand Hotel Ltd (the Seller).  Cedar Capital Partners LLC (Cedar) were consultants who acted as FHR’s agent in negotiating the purchase of the hotel.  However, Cedar had also entered into an “Exclusive Brokerage Agreement” (Agreement) with the Seller, under which Cedar received a €10m fee on conclusion of the sale and purchase of the hotel in or around January 2005.

In November 2009, the claimants brought proceedings to recover the €10m fee from Cedar on the basis that they had failed to disclose the Agreement to the claimants and breached their fiduciary duties.  The claim was successful at first instance, but the judge refused to give the claimants a proprietary remedy in respect of the monies (which would otherwise have put the claimants in a favorable position over unsecured creditors in the event of insolvency).  Instead, FHR was held to have a personal claim against the agent.

The Court of Appeal granted the claimants’ appeal on this point and made a declaration that Cedar received the €10m fee on constructive trust for the claimants and so was entitled to a proprietary remedy.  This decision has now been upheld by the Supreme Court.

The argument focused on the limits of the application of a rule of equity that an agent who acquires a benefit as a result of his fiduciary position or pursuant to an opportunity resulting from his fiduciary position, is to be treated as holding that benefit on behalf of, and so on trust for, the principal. If the rule applied in the context of a bribe or secret commission, it would give the principal a proprietary claim to the bribe as well as a personal claim against the agent; if not, the principal would have only a personal claim against the agent. Cedar argued that the claimants should not be entitled to a proprietary remedy in such a case, on the basis that a bribe or secret commission was always intended to be made to the agent, not his principal; it was never the principal’s property.  Accordingly, it would be wrong to assume a constructive trust and there should be an exception to the equitable rule to that extent.  FHR argued that the equitable rule should apply, on the basis that equity does not permit an agent to rely on their own wrong to justify retaining a benefit received as a result.    Lord Neuberger, who delivered the judgment, reviewed the conflicting authorities and concluded that it was not possible to decide the case on the basis of clear legal authority and so it was necessary to consider the matter from the perspective of principle and practicality.  He considered Cedar’s argument to be the more complicated to justify and also unattractive, given that in a situation where the agent receives a bribe or secret commission from a third party, there would be a strong possibility that that payment would disadvantage the principal.  Looking at the facts of the case, Lord Neuberger considered that had the Sellers not paid the €10m to Cedar, it may have accepted a reduced price to reflect the fact it did not have to pay the large fee to the consultant.  Furthermore, given the heightened awareness and concern about bribery, the Supreme Court said that it expected “the law to be particularly stringent in relation to a claim against an agent who has received a bribe or secret commission” (at paragraph 42).

FHR’s arguments had the merit of simplicity and were consistent with the fundamental principles of the law of agency.  They were also consistent with the position in other common law jurisdictions, namely Australia, New Zealand, Singapore, Canada and the US.  It also seemed curious that if Cedar’s arguments were preferred, this could have the effect that a principal whose agent wrongly accepted a bribe would be worse off (in terms of recovery) than where the principal had obtained a benefit “in far less opprobrious circumstances” (at paragraph 41).

Accordingly, the Supreme Court favored the claimant’s argument, concluding that “there is no plainly right answer, and, accordingly, in the absence of any other good reason, it would seem right to opt for the simple answer” (at paragraph 35).  This decision provides a welcome clarification of the position of the status of bribes and secret commissions paid to agents.  It provides a departure from the jurisprudential differentiation between different types of benefits that an agent may receive in breach of his duties that had occupied the minds of lawyers and their textbooks for many years.  The judgment is likely to have a significant impact on cases where the agent in question has dissipated his assets or has become insolvent, such that the principal may not otherwise have been able to (1) recover the full amount of the bribe or secret commission from the remaining assets when other creditors are taken into account and/or (2) trace the funds into the hands of non-bona fide purchasers.  Of course, where a principal seeks to recover what is, in effect, a bribe paid to the agent, this may create other issues for the principal to grapple with, not least the money laundering provisions in the proceeds of crime legislation.  If not carefully considered and complied with, the principal may find himself committing a criminal offence by recovering “criminal property”.

Case reference: FHR European Ventures LLP and Others (Respondents) v Cedar Capital Partners LLC (Appellant) [2014] UKSC 45 

Just days after the tragic crash of a Malaysian Airlines flight over eastern Ukraine, Western politicians and media joined together to gain the maximum propaganda value from the disaster. It had to be Russia; it had to be Putin, they said. President Obama held a press conference to claim – even before an investigation – that it was pro-Russian rebels in the region who were responsible. His ambassador to the UN, Samantha Power, did the same at the UN Security Council – just one day after the crash!

While western media outlets rush to repeat government propaganda on the event, there are a few things they will not report.. They will not report that the crisis in Ukraine started late last year, when EU and US-supported protesters plotted the overthrow of the elected Ukrainian president, Viktor Yanukovych. Without US-sponsored “regime change,” it is unlikely that hundreds would have been killed in the unrest that followed. Nor would the Malaysian Airlines crash have happened.  The media has reported that the plane must have been shot down by Russian forces or Russian-backed separatists, because the missile that reportedly brought down the plane was Russian made. But they will not report that the Ukrainian government also uses the exact same Russian-made weapons. They will not report that the post-coup government in Kiev has, according to OSCE monitors, killed 250 people in the breakaway Lugansk region since June, including 20 killed as government forces bombed the city center the day after the plane crash! Most of these are civilians and together they roughly equal the number killed in the plane crash. By contrast, Russia has killed no one in Ukraine, and the separatists have struck largely military, not civilian, targets. They will not report that the US has strongly backed the Ukrainian government in these attacks on civilians, which a State Department spokeswoman called “measured and moderate.” They will not report that neither Russia nor the separatists in eastern Ukraine have anything to gain but everything to lose by shooting down a passenger liner full of civilians. They will not report that the Ukrainian government has much to gain by pinning the attack on Russia, and that the Ukrainian prime minister has already expressed his pleasure that Russia is being blamed for the attack. They will not report that the missile that apparently shot down the plane was from a sophisticated surface-to-air missile system that requires a good deal of training that the separatists do not have. They will not report that the separatists in eastern Ukraine have inflicted considerable losses on the Ukrainian government in the week before the plane was downed. They will not report how similar this is to last summer’s US claim that the Assad government in Syria had used poison gas against civilians in Ghouta. Assad was also gaining the upper hand in his struggle with US-backed rebels and the US claimed that the attack came from Syrian government positions. Then, US claims led us to the brink of another war in the Middle East. At the last minute public opposition forced Obama to back down – and we have learned since then that US claims about the gas attack were false. Of course it is entirely possible that the Obama administration and the US media has it right this time, and Russia or the separatists in eastern Ukraine either purposely or inadvertently shot down this aircraft. The real point is, it’s very difficult to get accurate information so everybody engages in propaganda. At this point it would be unwise to say the Russians did it, the Ukrainian government did it, or the rebels did it. Is it so hard to simply demand a real investigation?

COPENHAGEN, Denmark – The European Parliament gave a tacit nod to Kurdish aspirations of independence on Thursday, when for the first time its motion over the Iraq conflict did not stipulate that the country must stay together. Until now resolutions passed by European Union MPs, gathered in Brussels in the wake of the crisis in Iraq, had stressed: “Iraq’s unity, sovereignty and territorial integrity are essential for stability and economic development in the country and the region.”Dellawar Ajgeiy, ‎‎‎the Kurdistan Regional Government’s (KRG) representative in the European Union capital expressed delight over that omission. "Until now, the European Parliament had stressed the importance of the unity of Iraq, but we feel that the reversal means they had to take account of the new realities," he said.  "We think it is very positive, because one cannot dictate to Iraqis and Kurds something that is not in their interest." The joint motion took note of the announcement by the KRG of a planned referendum for independence. The EU “appeals, however, to the parliament and the President of KRG, Massoud Barzani, to uphold an inclusive process in respect of the rights of the non-Kurdish minorities living in the province,” the motion said.
Rudaw has learnt that the United States, France, Italy, Britain, Turkey, Jordan, Kuwait and the United Arab Emirates are among states that have assured KRG officials they would show understanding, should Kurdistan declare independence.
Various politicians in Europe have expressed their views on the issue. “The Kurds, just like all people, have the right to decide themselves about their future, according to international law,” Annika Lillemets, member of the Swedish parliament for the Green Party, told Rudaw. Earlier this week the British Ambassador to Turkey Richard Moore said the UK's stance on an independent Kurdistan is the “same as Turkey's,” and stressed the importance of Iraq’s territorial integrity. “We think that what we need is a unified Iraq. We are very clear with the KRG that we recognized the need for them to protect their security," Moore said.

British MP Nadhim Zahawi believes that, since the fall of Mosul and about a third of Iraq to jihadi-led insurgents, Kurds now occupy a new world, and “there is no going back.” “To return to greater centralization would be to fundamentally undo the gains that were so hard-won over the past decade, especially in Kurdistan,” he said. But he added that breaking up Iraq would “not deliver stability, either.” He offered a new model of federalism.
“This model would recognize the realities on the ground and better serve the interests of all parties. It’s not a new concept, and has been used to recognize diversity in several other countries. In the UK, for example, we have been debating the greater devolution of powers to Scotland,” Zahawi said.He added that during his rule Iraqi Prime Minister Nouri al-Maliki had only made “a half-hearted attempt at decentralization. It’s now up to Iraq’s politicians to overcome their differences and construct a national platform.”  Ajgeiy, the KRG representative, confirmed that some European countries are skeptical about the prospect of an independent Kurdistan because they fear more instability. He said that fear was baseless.  "On the contrary, the KRG stands for security and stability in the region, with its good economy and energy resources.  We are close to Europe, historically, culturally and in terms of democratic values."Among his many meetings in Brussels, he has seen much sympathy from politicians who have an understanding of the Kurdish desire for secession. "But there are also many politicians who do not say loud that their countries will accept Kurdish independence, because they themselves have their own problems with breakaway regions," Ajgeiy said.  He believes several European former Soviet republics would accept an independent Kurdistan.

The Federal Security Services (FSB) is reporting today that Israel’s Ofek 10 spy satellite was “targeted and destroyed” during an over flight of the New South Wales region of Australia earlier today while it was attempting to gather “electronic signal and photographic information” from a suspected Central Intelligence Agency (CIA) aircraft surrounded at the Illawarra Regional Airport (Wollongong Aerodrome) since this past Tuesday by that nations Middle Eastern Organised Crime Squad (MEOCS) after it was discovered carrying a “highly sophisticated nuclear device”.

According to this report, Israel’s Defense Ministry successfully launched their Ofek 10 next-generation satellite on 9 April to provide them with highly-targeted surveillance of specific locations, and which on Tuesday had its orbit changed to target Australia.

Specifically being targeted by the Ofek 10 satellite, this report continues, was the mysterious Swearingen Merlin 3 twin-turbo prop plane that landed there on Tuesday after having originated its mission in long know CIA territory Punta Gorda, Florida, landing at CIA-operated facilities at both Guam and the Philippines before completing its journey to New South Wales after its nearly 16,000 km (10,000 mile) flight.

This FSB report further details that this mysterious plane was under the control of the Australian Secret Intelligence Service (SIS) throughout its entire journey through its mercenary offshoot identified as Snow Goose International, and which was founded last year by former Australia Air Force officer and SIS operative David Baddams as an “intelligence entity” able to perform “off the book” missions. Curiously, this report further states, SIS operative Baddams admitted to flying this mysterious plane from the US to the Philippines, but now says he has “no idea” how it got to New South Wales. The FSB further notes that according to Snow Goose International’s own records, this mysterious plane was owned by Oregonian Aeroclub LLC, a US-based company that has no record of existing, and prior to leaving the United States landed at Kirkland Air Force Base in Albuquerque New Mexico for fuel where it acquired a “highly troubling radioactive signature” detected by Russian satellites utilizing Measurement and Signature Intelligence (MASINT). This FSB report does note that the surreptitious transferring of nuclear weapons and materials by the US and its allies by means and methods such as was done in this instance is “common” for any number of security reasons, but left unexplained are a number of critical questions, specifically why and how this plane ended up in New South Wales, and why Israel’s Ofek 10 satellite was destroyed while attempting to conduct surveillance it.

When interest rates begin to rise, we're told they will top out at 3%. Don't worry, homeowners, say the rate-setters, crippling monthly payments are a thing of the past.

Charlie Bean, the former deputy governor of the Bank of England and one of the rate-setters until last month, made it clear that the scale of household debts made it impossible to return to something like normal within the next 10 years.

Almost casually, this picture painted by Bean has become generally accepted: that monetary policy will be determined largely by how long it takes to nurse homeowners back to health. Not just this year and next, when the recovery is sustainable, but for much longer, by which he means until their finances are considerably more robust.

There are several critics of this view, including Boris Johnson's economic adviser Gerard Lyons, who said last week that rates should canter towards 6%. Lyons, a former City analyst, is among a minority in the Square Mile who subscribe to a more optimistic outlook for the nation's economic health and the consumer's ability to shop and pay their debts at the same time.

Yet this possibly London-centric view underestimates the sheer scale of debts already accumulated and, after a brief period of repayment, the need to feed consumption with debt. There is also the government balance sheet to consider. With increasing burdens on its spending, the ability of governments to support consumer spending – as they have done in recent years with a constant diet of tax credits and tax cuts – will become limited.

A report published this month by the independent Office for Budget Responsibility (OBR) mapped out how Whitehall faces a massive squeeze on its finances over the next 45 years just to cope with an ageing society. The report said this would amount to 4.8% of GDP, or £79bn a year in today's terms.

It's a guesstimate, yet it is only a partial view of the total mismatch between income and expenditure.

In recent months, anti-poverty campaigners have grown agitated about the broader legacy of debt.

Since its inception, private finance initiatives have created about £239bn of liabilities for the taxpayer, with costs being carried forward over the next 20 to 30 years.

The university tuition-fee reforms, which allowed the government to transfer almost the entire cost to undergraduates, also kicked the repayments well into the future. Earlier this year, the House of Commons public accounts committee reported current outstanding student debt of £46bn on the government's books, a figure set to rise to £200bn by 2042 with an estimate attached that shows more than £70bn will never be repaid.

Costs for the National Health Service are also growing rapidly and a £30bn shortfall on current spending is predicted by health chiefs as early as 2020.

The pension protection fund (PPF), which looks after the pensions of 6,150 schemes of crashed companies, has a shortfall of about £110bn. Despite the firepower that comes with managing more than £1.1tn of assets, the PPF is dependent on strong growth from the corporate sector in the UK and beyond. At the moment that gap is growing.

As we are on the subject of pensions, there is also the collective deficit of the UK's solvent private-sector schemes, which according to the pension provider JLT currently stands at £177bn. Technically, it is shareholders that are on the hook for the PPF's deficit. History, and the banking crash in particular, tells us that there could come a time when the shortfall looks permanent and the taxpayer is called in for another bailout.

Next in line are the UK's public-sector pensions. Some are partly funded, some not. All are on the taxpayers' mounting bill, which is officially estimated to be £600bn over the next 60 to 80 years and £1tn by more conservative pension experts.

Of course, governments, businesses and households will continue to enjoy incomes and on current projections, they will be able to afford debt payments. The point is that they won't be able to afford much else.

The funding gap is growing and with deficits on so many fronts, it is hard to see how promises to pensioners and health service users can be met without a dash for growth that is unsustainable, a switch to dramatic cost-cutting in other areas or higher taxes on those who came through the recession relatively unscathed.

George Osborne, by common consent, has been more lenient with cutting the deficit than his rhetoric would lead most people to believe, mostly because he is complicit in dodging many politically unpalatable decisions. To close the widening public-sector funding gap that he has forecast up to 2020 will take severe cuts in spending, such that even Ed Miliband talked on Saturday about how to run a government when budgets get smaller every year.

To some extent the answer will be to dodge many of the debts steadily piling up. Look at how consumers react. To keep spending on the high street, households are returning to a form of hire purchase popular during the inter-war years. Just like the people who pay for interest-only mortgages, finance plans for car purchases mean that they are in effect leasing the vehicle rather than buying it. In 2013, all the growth in car sales hail from the manufacturer's low-interest offers. Soon we'll begin to hear that young middle-income families are marrying their newfound love of Aldi and Lidl to renting their fridge and washing machine to avoid upfront costs. Many are turning to self-employment, and as a study published last week by the Pensions Policy Institute showed, are not saving for a pension at all. More than one million of the 10 million employed people without a pension have joined the government's new scheme, but are paying such pitifully low contributions that it will not add up to much when they retire.

The Intergenerational Foundation, which aims to highlight the shift in incomes and wealth to favour the older generation, recently published research showing the struggle that graduates will face in gaining a masters degree or PhD under the new funding scheme [PDF].

The foundation's report shows how hard the next few years will be for anyone without well-off parents or a trust fund to enter the higher reaches of academia. Not only must they take out a loan to pay the fees and living costs, their first higher education teaching job will be on a zero-hours contract. When they are more experienced, they may become staff, but on a pension worth a fraction of the current scheme after the shocking £13bn deficit forced managers to cut longstanding benefits.

Britain has become expert at putting off decisions and hoping for something to turn up. Without a return to ultra-cheap commodities, another technological/productivity revolution, or a return to more modest living and delayed gratification, it's a plan that is running out of time.(source guardian)

Israel must attack Gaza even more mercilessly, expel the population and resettle the territory with Jews, the deputy speaker of Israel’s parliament, the Knesset, has said. Moshe Feiglin, a member of Prime Minister Benjamin Netanyahu’s ruling Likud Party, makes the call in an article for the Israeli news website Arutz Sheva. Feiglin demands that Israel launch attacks “throughout Gaza with the IDF’s [Israeli army’s] maximum force (and not a tiny fraction of it) with all the conventional means at its disposal.” “After the IDF completes the ‘softening’ of the targets with its firepower, the IDF will conquer the entire Gaza, using all the means necessary to minimize any harm to our soldiers, with no other considerations,” Feiglin writes in one of several calls for outright war crimes.

Following the reconquest, Israel’s army “will thoroughly eliminate all armed enemies from Gaza. The enemy population that is innocent of wrongdoing and separated itself from the armed terrorists will be treated in accordance with international law and will be allowed to leave,” Feiglin writes. “Gaza is part of our Land and we will remain there forever,” Feiglin concludes. “Subsequent to the elimination of terror from Gaza, it will become part of sovereign Israel and will be populated by Jews. This will also serve to ease the housing crisis in Israel.” Feiglin has a long history of incitement. Last week he expelled Arab members of the Knesset who dared to criticize Israel’s ongoing slaughter in Gaza and called for Israel to cut off power to dialysis patients there. As of now, ninety percent of Gaza is without electricity, journalist Mohammed Omer reports, and most Palestinians in Gaza are getting as little as two hours of electricity per day. More than 100 Palestinians have been killed in the last 48 hours as Israel continues its indiscriminate attacks on Palestinians throughout the occupied Gaza Strip by land, sea and air. By last Saturday afternoon in Gaza, the thirteenth day of Israel’s current bombardment and invasion of the coastal territory, 339 people, the vast majority civilians, had been killed in total and 2,500 injured. Tens of thousands have fled their homes, primarily in the north and east of Gaza, seeking shelter from the Israeli assault in United Nations-run schools. Feiglin’s call for the destruction of the Palestinian community in Gaza has some resonance. Just a day before Feiglin’s article, Rabbi Ben Packer made a similar demand, calling the current assault “an opportunity for Israel to achieve a victory – to move the border” by conquering northern Gaza. Packer is the director of “Heritage House,” a settlement in occupied East Jerusalem that houses so-called “lone soldiers,” men recruited from overseas to join the Israeli occupation forces. Israel’s former settlers in Gaza, evacuated in 2005, would be given the first opportunity to “settle in the regained territory,” Packer said. Packer, a settler from the United States and volunteer in the Israeli army, previously served as the “Rabbi on Campus” at the University of North Carolina and Duke University. Calls like Feiglin’s and Packer’s for genocidal-scale violence against Palestinians are being heard with ever more frequency from Israeli leaders. A call for genocide of the Palestinians by Ayelet Shaked, a rising star in Israel’s Habeyit Hayehudi (Jewish Home) party, part of the government, received global notoriety after The Electronic Intifada translated and exposed it earlier this month.

KIEV, Ukraine — Prime Minister Arseniy P. Yatsenyuk, a pro-Western technocrat who has guided the Ukrainian government through the tumultous months since the ouster of President Viktor F. Yanukovyvch, resigned abruptly on Thursday, after the governing coalition of Parliament collapsed.

“I declare my resignation in connection with the collapse of the coalition and blocking of government initiatives,” Mr. Yatsenyuk said from the rostrum of Parliament, according to Ukrainian news services.

Earlier in the day, two major parties announced they were leaving the governing coalition, a step that would allow President Petro O. Poroshenko to dissolve Parliament and call elections for next fall.

That announcement followed weeks of negotiations between the parties, but the move was apparently not supported by Mr. Yatsenyuk’s Fatherland Party, which is led by the former prime minister, Yulia V. Tymoshenko, who had challenged Mr. Poroshenko for the presidency.

Under the Ukrainian Constitution, the Parliament chooses the prime minister, and members must vote to accept a resignation. It was not immediately clear if Mr. Yatsenyuk’s announcement meant he was leaving the government or if relinquishing the prime ministership was a symbolic step.