This is an audio transcript of the FT News Briefing podcast episode: ‘Sam Bankman-Fried arrested in Bahamas

Marc Filippino
Good morning from the Financial Times. Today is Tuesday, December 13th, and this is your FT News Briefing.

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Sam Bankman-Fried was arrested in the Bahamas last night. And a corruption scandal involving the European Union and Qatar is widening. Plus, German businesses are struggling to adapt to the loss of Russian gas. I’m Marc Filipino and here’s the news you need to start your day.

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Police in the Bahamas yesterday arrested the disgraced crypto tycoon Sam Bankman-Fried after formal notification from the US that it had filed criminal charges. Bankman-Fried, or SBF, as he’s known, headed cryptocurrency exchange FTX, which went bankrupt last month. An indictment is due out this morning. To find out more, I’m joined by the FT’s US managing editor, Peter Spiegel. Hi, Peter.

Peter Spiegel
Good to be here, Marc.

Marc Filippino
All right, Peter, a little bit of late breaking news last night. What do we know so far?

Peter Spiegel
Yeah, much to the surprise of us. And frankly, I think Sam Bankman-Fried himself. He was arrested by the Bahamian authorities in his apartment complex in Nassau, in the Bahamas, where the late, great FTX is now based. Essentially, the order of events was the US attorney’s office here in Manhattan has filed, we don’t know when exactly because it is under seal, they filed an indictment against him. They informed the authorities in the Bahamas that the charges are now here in court in Manhattan and that they please we’d like to extradite him at some point. So the Bahamian authorities basically have arrested him on the basis that there are charges pending in the US. Now, the Bahamian authorities have also said Monday night that the violations that he’s been charged with in the US also violate Bahamian law. So that will have to be played out in the courts as well.

Marc Filippino
All right. So there’s a bunch that we don’t know still, but we do know that Sam Bankman-Fried was supposed to testify before US Congress today. Not sure how that’s gonna shake out. What are you and the rest of our journalists looking out for as this story continues to unfold?

Peter Spiegel
Yeah. So the thing we’ll be watching for most is going to be Tuesday morning. I mean, probably in a matter of hours for some of your listeners. We are awaiting the Southern District of New York, which is the federal prosecutors here in Manhattan to unseal the indictment. And that’s gonna be, usually these indictments are treasure troves of information for journalists and for everyone else who is following this, including investigators on Capitol Hill, at the SEC and elsewhere. Most of the bankruptcy proceedings and a lot of focus has been on this trading firm, almost like a syndicate for its own hedge fund called Alameda Research. And what we’ve been told and he’s acknowledged this, is that upwards of $8bn of customer funds that was invested in FTX trading was borrowed by Alameda to make all sorts of investments in various coins and also even other sort of venture capital investments. So it’s sort of misappropriation of customer funds, and I think that’s likely I think we’re going to be looking for because that seems to be the most serious allegation right now against him and against the company.

Marc Filippino
Peter Spiegel is the FT’s US managing editor. Thanks, Peter.

Peter Spiegel
Great to be here, Marc.

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Marc Filippino
Belgian police raided a European parliamentary office yesterday. It’s part of an ongoing corruption investigation involving European lawmakers and officials from the Gulf state of Qatar. Four people, including a lawmaker, have been charged with money laundering, corruption and participating in a criminal organisation. They’ll appear before a judge in Brussels tomorrow. Here’s the FT’s EU correspondent, Alice Hancock.

Alice Hancock
So the claims, so far as we understand it, is that Qatari officials were trying to buy influence, particularly in light of Qatar holding the World Cup and this spotlight on labour rights and human rights abuses in Qatar. Parliament in last month actually approved a resolution condemning those. We know that €600,000 was found at one in his home and allegedly a holiday worth €100,000 was granted to a former Italian MEP by the Qataris in the hope that they, these MEPs would paint Qatar in a better light.

Marc Filippino
Also yesterday, top politicians called for a crackdown on corruption. And European Commission president Ursula von der Leyen called for the creation of an EU wide ethics body. Alice told us that the EU already tracks lobbyists.

Alice Hancock
But that lobbying register in the parliament is voluntary, so MEPs don’t have to declare what money they might be getting from sources such as lobbyists, industry bodies, NGOs and so on. The scrutiny on this is that, you know, normally lawmakers would be actually immune to arrests, but unless they are found literally in the acts and this particular MEP’s father was found leaving with €600,000 in cash going to the airport. What Ursula von der Leyen is suggesting is a more EU wide or just standardise ethics across the institutions.

Marc Filippino
But how much of an impact will this investigation have?

Alice Hancock
It’s an interesting question because in 2011, the Sunday Times in the UK, some of their journalists posed as lobbyists and managed to get MEPs to take money in exchange for influence. And indeed, three MEPs were arrested as a result of that investigation. And yet, you know, here we are again ten odd years later, talking about the same thing. So there’s a question of, you know, do these storms really have an impact? I mean, I can tell you as we’re speaking, there’s another raid on the European parliament going on. So this could be a much more widespread thing than we think. And if that is the case, then perhaps it really could undermine trust in the EU institutions.

Marc Filippino
That’s the FT’s EU correspondent, Alice Hancock.

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Europe’s shift away from Russian gas means huge changes for Germany. German industry has long powered Europe’s growth, but it’s relied on cheap Russian gas. And now German businesses have to adapt to an era without it. Our Berlin bureau chief, Guy Chazan, has been speaking to German companies about this and he joins me now. Hey there, Guy.

Guy Chazan
Hi.

Marc Filippino
So, Guy, you went to the headquarters of one of Germany’s biggest companies, the chemicals giant BASF. What did you find?

Guy Chazan
Ludwigshafen is this incredible site. It’s absolutely enormous. It’s the size of a small town on the banks of the Rhine, and it runs on cheap Russian gas. Or at least it did until recently. BASF is still getting gas. It doesn’t have a shortage, but the price it has to pay is much, much higher. One of the most immediate ways it responded was by shutting down its ammonia plant and also reducing the run rate of its acetylene facility. These are two very important chemical building blocks for various modern industrial value chains. So it has a sort of enormous knock on effect on the production of all kinds of important goods. And then BASF announced in October that it was going much further and that it was gonna have to shave €1bn of costs over the next two years. And more than half of those cost savings would be borne by Ludwigshafen, the main German site.

Marc Filippino
But as you also report, BASF is also building up its business in China, which is already very sustainable, but it means it’s reliant on another country that has its own risks.

Guy Chazan
Well, yes, exactly. I mean, over the summer, when China started making very threatening noises towards Taiwan, there was a lot of hand-wringing and navel gazing in Germany because they worry that maybe a lot of companies were making the same mistake that they had made with Russia relying too much on a very unpredictable country with autocratic tendencies and aggressive intentions towards its neighbours. And BASF, it also is very heavily intertwined with China. It’s building a massive complex in southeastern China, and its €10bn is the biggest investment in the company’s history. And there was a lot of concern when it announced that it was going ahead with this investment, not only for the company, but more widely for Germany, because it’s a very important company that employs a lot of Germans.

Marc Filippino
Right. And what about the companies that don’t have the resources? I mean, BASF is one of the largest companies in Germany. It has the resources to adjust to the loss of cheap Russian gas. What about the smaller companies? How are they adapting?

Guy Chazan
I spoke to a porcelain manufacturer and I also spoke to a glass maker. Heinz-Glas is a small company that makes little bottles for the perfume and cosmetics industry. They paid €11mn for energy in 2019, and this year they’re gonna be paying €32mn. So this is extremely difficult for them, but they’re just emblematic of the crisis that is really reverberating through the entire energy intensive sector of the German economy. We’re talking about companies that make things like metals, that make wood products, that make print products, textiles, that kind of thing. And these are energy intensive industries that account for 23 per cent of all industrial jobs in Germany. And according to one leading economist, that means that 1.5mn workers in Germany are employed in industries which are currently under pressure as a result of the energy crisis.

Marc Filippino
So then, Guy, what do you think? Can German businesses make this huge pivot?

Guy Chazan
Well, it’s definitely the case that a lot of them, according to surveys carried out by various business associations, many of them are already thinking of shifting production to countries where energy is cheaper. And a lot of them are thinking that America might be a better place for them to invest because of these massive subsidies that have been announced as part of the Bargain Administration’s Inflation Reduction Act, which is creating a very, very attractive environment for companies that want to invest in green technologies especially.

Marc Filippino
Guy Chazan is the FT’s Berlin bureau chief. Thank you, Guy.

Guy Chazan
Thank you.

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Marc Filippino
You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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