Issue 33

Dr M in the spotlight over China visit
 

Tun Dr Mahathir Mohamad’s visit to China has garnered overwhelming interest from the media, both foreign and local.

Since news of the Prime Minister’s official trip was announced by the Chinese Foreign Affairs Ministry on Monday, The Star bureau and the Malaysian Embassy here had been swarmed with calls from Chinese journalists for details of his visit.

Foreign correspondents, including those from Asean countries, Japan, Pakistan, Britain and the United States, have also shown great interest in meeting the world’s oldest leader, who is well known for being incredibly energetic.

The interest increased when the Pakatan Harapan government revealed plans to drop several Chinese-backed infrastructure projects, including the East Coast Rail Link.

China Report Asean chief editor Tan Xingyu said he was looking forward to Dr Mahathir’s visit.

He said news reports on Malaysia’s plans to cancel the joint mega projects led to perception that bilateral relations between both countries had turned sour.

“But after some studies, and having considered the response from the Malaysian side, I think it’s otherwise.

“I believe this issue will not cause much damage to our friendship,” he said.

Tan, however, said certain statements made by the Pakatan government earlier had somehow soured the good reputation of Malaysia in the eyes of the Chinese.

“There are some anti-Malaysia voices on the Internet and the Chinese government is under public pressure,” he said.

He hoped that Dr Mahathir would explain further the Malaysian government’s stance, so that future plans could be mapped out for the mutual benefit of both nations.

The Chinese government is also anticipating Dr Mahathir’s arrival.

Referring to him as an old friend of China, China’s Foreign Affairs Ministry spokesman Geng Shuang said Dr Mahathir’s visit would bring bilateral relations to new heights.

Besides the media practitioners, fellow Malaysians based in China are also eager to meet their Prime Minister.

Malaysian Chamber of Commerce and Industry in China (Maycham China) chairman Will Fung said some 500 Malaysians would gather in the capital for a dinner with Dr Mahathir.

“They are from all over China, including Shanghai, Chengdu and Kunming, with some coming from as far as Hong Kong,” he said.

During his five-day visit to China beginning tomorrow, Dr Mahathir will meet President Xi Jinping and Premier Li Keqiang.
 

Artificial Intelligence Is Coming for Hiring,
and It Might Not Be That Bad

 
Artificial intelligence promises to make hiring an unbiased utopia. 

There’s certainly plenty of room for improvement. Employee referrals, a process that tends to leave underrepresented groups out, still make up a bulk of companies’ hires. Recruiters and hiring managers also bring their own biases to the process, studies have found, often choosing people with the “right-sounding” names and educational background. 

Across the pipeline, companies lack racial and gender diversity, with the ranks of underrepresented people thinning at the highest levels of the corporate ladder. Fewer than 5 percent of chief executive officers at Fortune 500 companies are women, and that number will shrink further in October when Pepsi CEO Indra Nooyi steps down. Racial diversity among Fortune 500 boards is almost as dismal, as four of the five new appointees to boards in 2016 were white. There are only three black CEOs in the same group.

“Identifying high-potential candidates is very subjective,” said Alan Todd, CEO of CorpU, a technology platform for leadership development. “People pick who they like based on unconscious biases.”

AI advocates argue the technology can eliminate some of these biases. Instead of relying on people’s feelings to make hiring decisions, companies such as Entelo and Stella.ai use machine learning to detect the skills needed for certain jobs. The AI then matches candidates who have those skills with open positions. The companies claim not only to find better candidates, but also to pinpoint those who may have previously gone unrecognized in the traditional process. 

Stella’s algorithm only assesses candidates based on skills, for example, said founder Rich Joffe. “The algorithm is only allowed to match based on the data we tell it to look at. It’s only allowed to look at skills, it’s only allowed to look at industries, it’s only allowed to look at tiers of companies.” That limits bias, he said.  

Entelo today released Unbiased Sourcing Mode, a tool that further anonymizes hiring. The software allows recruiters to hide names, photos, school, employment gaps and markers of someone’s age, as well as to replace gender-specific pronouns—all in the service of reducing various forms of discrimination.

AI is also being used to help develop internal talent. CorpU has formed a partnership with the University of Michigan’s Ross School of Business to build a 20-week online course that uses machine learning to identify high-potential employees. Those ranked highest aren’t usually the individuals who were already on the promotion track, Todd said, and often exhibit qualities such as introversion that are overlooked during the recruitment process.

“Human decision-making is pretty awful,” said Solon Borocas, an assistant professor in Cornell’s Information Science department who studies fairness in machine learning. But we shouldn’t overestimate the neutrality of technology, either, he cautioned.

Borocas’s research has found that machine learning in hiring, much like its use in facial recognition, can result in unintentional discrimination. Algorithms can carry the implicit biases of those who programmed them. Or they can be skewed to favor certain qualities and skills that are overwhelmingly exhibited among a given data set. “If the examples you’re using to train the system fail to include certain types of people, then the model you develop might be really bad at assessing those people,” Borocas explained.

Not all algorithms are created equal—and there’s disagreement among the AI community about which algorithms have the potential to make the hiring process more fair.

One type of machine learning relies on programmers to decide which qualities should be prioritized when looking at candidates. These “supervised” algorithms can be directed to scan for individuals who went to Ivy League universities or who exhibit certain qualities, such as extroversion. 

“Unsupervised” algorithms determine on their own which data to prioritize. The machine makes its own inferences based on existing employees’ qualities and skills to determine those needed by future employees. If that sample only includes a homogeneous group of people, it won’t learn how to hire different types of individuals—even if they might do well in the job.

Companies can take measures to mitigate these forms of programmed bias. Pymetrics, an AI hiring startup, has programmers audit its algorithm to see if its giving preference to any gender or ethnic group. Software that heavily considers ZIP code, which strongly correlates with race, will likely have a bias against black candidates, for example. An audit can catch these prejudices and allow programmers to correct them.

Stella also has humans monitoring the quality of the AI. “While no algorithm is ever guaranteed to be foolproof, I believe it is vastly better than humans,” said founder Joffe. 

Boracas agrees that hiring with the help of AI is better than the status quo. The most responsible companies, however, admit they can’t completely eliminate bias and tackle it head-on. “We shouldn’t think of it as a silver bullet,” he cautioned.

 
From – Bloomberg
 
 

Musk says Silver Lake, Goldman advising
on taking Tesla private


Tesla Inc (TSLA.O) Chief Executive Elon Musk on Monday tweeted that he would work with buyout firm Silver Lake and investment bank Goldman Sachs as financial advisers on a proposal to take private the electric car maker.

But a source said Silver Lake was offering its assistance to Musk without compensation and had not been hired as a financial adviser in an official capacity. Moreover, Silver Lake is not currently discussing participating in the deal as an investor, the source said. Silver Lake declined to comment.

Musk, who is still looking for funding for the plan, also said law firms Wachtell, Lipton, Rosen & Katz and Munger, Tolles & Olson would be legal advisers on the plan.

Musk shocked markets last week with the tweeted announcement that he was considering taking Tesla private for $420 a share, a price that valued Tesla at more than $70 billion, and that he had “funding secured.”

What exactly Musk had intended by saying “secured” has emerged as a potential legal and regulatory minefield for the Silicon Valley billionaire after his unorthodox disclosure.

No investors have stepped forward publicly as being involved, and Musk now faces investor lawsuits claiming securities fraud and a reported SEC probe into the tweets.

Goldman and the two law firms were not immediately available for comment.

The chief executive of the electric car company said earlier on Monday that the manager of Saudi Arabia’s sovereign wealth fund had voiced support for the company going private several times, including as recently as two weeks ago, but also said that talks continue with the fund and other investors.

Musk said he is also working on figuring out what share of investors will likely roll their stake into a new private company, and by extension exactly how much capital he needs to buy remaining investors out.

Tesla shares rose 0.26 percent to $356.41. They had closed at $376.57 on Tuesday after jumping 11 percent on Musk’s announcement.

“I left the July 31st meeting (with the Saudi fund) with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving,” Musk said.

“This is why I referred to ‘funding secured’ in the August 7th announcement.”
The Saudi fund over nearly two years had approached him repeatedly about taking the company private, Musk said, and the latest meeting came after it took a nearly 5 percent stake in Tesla.

Saudi Arabia’s Public Investment Fund (PIF) manages more than $230 billion in assets, but about 65 percent of that is stakes in large Saudi companies and most of the rest has been committed in overseas deals such as funding commitments to Blackstone Group LP’s (BX.N) U.S. infrastructure fund or SoftBank Group Corp’s (9984.T) Vision Fund.

The Saudi fund intends to sell its $70 billion stake in Saudi Basic Industries to oil giant Aramco, which could free up funds for new deals, but that sale may take months to conclude.

Yasir Othman al-Rumayyan, managing director of the PIF, referred Reuters to the corporate communications team, which did not immediately respond to a request for comment.


FUNDING QUANDARY
Musk said that since his Twitter post on the possibility of a deal the managing director of the Saudi fund had expressed support for proceeding subject to financial and other due diligence.

PIF officials have said in the past that decisions at the sovereign wealth fund are made with care, emphasizing corporate governance. The PIF board is headed by the Crown Prince Mohammed bin Salman. Musk on Monday said he was talking to other potential investors but did not provide any details on the exact source of funding.

Meanwhile, Musk faces scrutiny of his tweet on secured funding.

Securities lawyers said U.S. law requires executives and companies to have a “reasonable basis” on which to make statements, meaning the fact Musk said he believed he had secured a verbal agreement for the funding after the July 31 meeting could put him on a firmer footing with the SEC.

It remains unclear if his definition of “secured” matches those of a reasonable shareholder, who may believe the statement indicated Musk had a written agreement, they said.

“This supports the idea that there was reasonable basis on which to believe that funding could be secured but it doesn’t eliminate the concern with respect to whether ‘secured’ was an overstatement and only underscores how inappropriate Twitter was for such a disclosure,” said Zachary Fallon, a former SEC attorney and principal at law firm Blakemore Fallon.

Wall Street had voiced doubts about Musk’s ability to pull off what could be the largest-ever go-private transaction, valued at as much as $72 billion.

Musk on Monday estimated two-thirds of existing Tesla shareholders would roll over their holdings into a private company, but said that he was still talking with major shareholders and advisers before settling on a structure for the deal.

Musk added that most capital for the deal would come from equity and it would not be “wise” to burden the company with added debt. Discussing full details on the plan, including the source and nature of the funding, would be “premature” now, he said.

A major investment from Saudi Arabia would likely trigger a review by the Committee on Foreign Investment in the United States, which scrutinizes deals for potential national security concerns.

Jeremy Zucker, co-head of Dechert’s International Trade practice, said two key determinations would be made if a deal moved forward: whether Tesla contained critical technologies and whether the involvement of Saudi financing was a national security issue.

The multi-agency oversight operation could also determine whether the investment gave the Saudi’s access to critical technology.

 
From – Reuters
 
 

Private investor closes in on deal for Tronc
 
The financial challenges facing the newspaper industry haven't deterred potential acquirers just yet.

Donerail Group, a newly formed investor led by former hedge fund executive Will Wyatt, is reportedly close to a deal to buy Tronc, the newspaper publisher that owns the New York Daily News, The Baltimore Sun and a handful of other dailies across the US. The news comes a day after the Tronc-owned Chicago Tribune reported that multiple private equity firms were circling Tronc, and that one had offered to buy the publisher for between $19 and $20 per share, marking a healthy premium to it's $14.77 closing share price on Tuesday. The take-private deal would value the business at more than $700 million. 

Wyatt previously worked at activist hedge fund Starboard Value, where he spearheaded investments in the media sector, per Reuters. That includes a bet on US television operator Tribune Media, which coincidentally canceled its planned $3.9 billion merger with Sinclair Broadcast on Thursday.

If Donerail does make a deal for Tronc, it would end months of rumors about potential buyers. The New York Post reported in April that Apollo Global Management had engaged the newspaper conglomerate in takeover talks, but Leon Black's buyout shop reportedly lost interest when Tronc sold The Los Angeles Times, The San Diego Union-Tribune and other newspaper holdings to billionaire Patrick Soon-Shiong for $500 million. SoftBank, Gannett and others were also reportedly interested in Tronc at one point.

Then, last month, Politico reported that a PE firm—which may or may not be the same investor mentioned in the recent Chicago Tribune report—could buy Tronc for that same price of $19 to $20 per share. Tronc's stock inched upward with the new sale talks, closing Thursday up 2%, at $16.96 per share, to give the business a market cap of some $617 million. The stock surged as high as $17.30 on Wednesday before trading was temporarily halted. 

A sale would mark a huge win for Michael Ferro, who stepped down as Tronc's chairman in March when he was accused by multiple former employees of sexual harassment (but not before receiving a $15 million lump payment as a "consulting fee"). Ferro subsequently agreed to sell his 25.6% take stake in the business to McCormick Media in April for more than $208 million, but that deal eventually fell through. 

 
From – PitchBook
 
 


U.S. investor sues AT&T for $224 million over loss of cryptocurrency

U.S. entrepreneur and cryptocurrency investor Michael Terpin filed a $224 million lawsuit on Wednesday against telecommunications company AT&T (T.N), accusing it of fraud and gross negligence in connection with the theft of digital currency tokens from his personal account.

In a 69-page complaint filed with the U.S. District Court in Los Angeles, Terpin alleged that on January 7, 2018, the tokens were stolen from him through what he alleged was a “digital identity theft” of his cellphone account. In the complaint, he said AT&T was his service provider.

In an emailed response, an AT&T spokesman said: “We dispute these allegations and look forward to presenting our case in court.”

At the time of the theft, the three million stolen tokens were worth $23.8 million, the complaint said. Terpin is also seeking $200 million in punitive damages.

The complaint said that AT&T had been previously contacted by law enforcement authorities about such frauds.

Cryptocurrencies have a market capitalization of about $200 billion, according to data from virtual coin tracker coinmarketcap.com. Nine years after bitcoin came into existence, the market has seen the emergence of more than 1,800 digital currencies.

Terpin, represented by Los Angeles litigation firm Greenberg Glusker, claimed in the lawsuit that after the theft of the digital currency, his cellphone account was transferred to an international criminal gang.

Terpin co-founded the first angel group for bitcoin investors, BitAngels, in early 2013, and the first digital currency fund, the BitAngels/Dapps Fund, in March 2014. He is a senior advisor to Alphabit Fund, one of the world’s largest digital currency hedge funds.

The complaint claimed that the theft of the tokens occurred through what is called a SIM swap fraud. SIM stands for subscriber identification module, and SIM cards are used to authenticate subscribers on mobile phones.

SIM swapping consists of tricking a provider into transferring a subscriber’s phone number to a SIM card controlled by someone else. Once that person gets the phone number, it can be used to reset the subscriber’s passwords and access online accounts.



From – Reuters
 
 
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