This is an audio transcript of the FT News Briefing podcast episode: ‘Sunak’s early election gamble’
Marc Filippino
Good morning from the Financial Times. Today is Thursday, May 23rd. This is your FT News Briefing.
UK Prime Minister Rishi Sunak made a splash in the rain yesterday and Nvidia continues its impressive run. Plus, Adani Group faces yet another corruption allegation.
Dan McCrum
We were looking into fraud in the supply of coal. The quality and the price of coal was being inflated to rip off the Indian power stations.
Marc Filippino
I’m Marc Filipino and here’s the news you need to start your day.
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The UK’s prime minister, Rishi Sunak, yesterday set a date for a general election. It will be on Thursday, July 4th. Just a reminder for our non-British listeners, Sunak is required by law to call an election before January 2025. Most people thought that would mean elections later this fall, so July 4th is earlier than anticipated and it gives Conservatives six weeks to turn things around. They’re expected to get walloped. The FT’s Lucy Fisher was at Parliament as Sunak’s announcement unfolded.
Lucy Fisher
It was a day characterised by feverish speculation gripping Westminster, ministers, MPs, journalists all appealing to each other both in the corridors of the Palace of Westminster on WhatsApp to try and find out what was going on. Essentially, Rishi Sunak kept this decision very tightly to his chest. You know, even his cabinet were only informed at the 11th hour of his plan. And immediately afterwards, Rishi Sunak came out into pouring rain to make this announcement without an umbrella or any kind of covering.
Rishi Sunak audio clip
Now is the moment for Britain to choose its future. Over the next few weeks, I will fight for every vote. And I will prove to you that only a Conservative government led by me, will not put our hard-earned economic stability at risk.
Lucy Fisher
I think Sunak’s shock decision to cut and run for an early general election this summer was mainly influenced by his decision with the chancellor, their thoughts that actually the economic picture isn’t necessarily going to look better in the autumn. And in actual fact, there might not be the fiscal headroom to announce more tax cuts. Another big theme in the UK is immigration, and they’re hoping that the election will now take place around the time that the first deportation flights of asylum seekers to Rwanda takes place. So I think those were the key factors.
Marc Filippino
Lucy Fisher is the FT’s Whitehall editor and the host of the Political Fix podcast.
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Nvidia just keeps finding ways to make investors happy. The US chipmaker reported record sales of artificial intelligence chips during yesterday’s earnings call. Revenue was up an astonishing 262 per cent in the past quarter. That, of course, beat investors expectations. Now, if that wasn’t impressive enough, Nvidia is expecting revenue to grow again this quarter. Plus, it announced that it was raising its quarterly cash dividend 150 per cent. All of this boosted its share price in after-hours trading yesterday.
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Some Federal Reserve officials said they were open to raising interest rates if inflation got more aggressive. That’s according to minutes from the Fed’s most recent meeting. In the run-up to that meeting, inflation had come in above analyst expectations all year. Investors were not thrilled about the idea of rates going up. The S&P 500 fell as much as 0.7 of a per cent yesterday.
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Adani Group passed off low-quality coal as cleaner fuel and made a bunch more money off it. That’s according to an FT investigation. The Indian conglomerate sold the coal to a state power provider in 2014. I’m joined now by the FT’s Dan McCrum to talk about the latest in a growing list of corruption accusations for Adani Group. Hi, Dan.
Dan McCrum
Hi there.
Marc Filippino
All right, Dan, so you were the one investigating this. What exactly did you find?
Dan McCrum
We were looking into fraud in the supply of coal. What we tracked was 22 shipments which left Indonesia, and they were carrying low-quality coal. But when it arrived in India to be burnt in power stations, something had happened. The coal was said to be actually very high quality and very expensive, too. And that’s where the fraud seems to lie. The price was three times as much. The quality and the price of the coal was being inflated to rip off the Indian power stations.
Marc Filippino
Wow. OK, so that’s quite the disparity. Was that a one-time deal? Did that happen just in 2014, or is this happened on multiple occasions?
Dan McCrum
These accusations have sort of daunted Adani for a long time. And we published an investigation which was much more recent that showed Adani had booted about $5bn worth of these coal imports through some quite obscure offshore middlemen. And as it was doing that, the price was jumping. And the best way to explain that, although we don’t have the proof to show it, it’s actually fits the pattern, would be buying cheap, low-quality coal in Indonesia and then pretending it’s much higher quality when you get to the power station.
Marc Filippino
How has Adani responded to these accusations?
Dan McCrum
Adani hasn’t precisely addressed the fact that we have seen this invoice in which the coal supplied was said to be low quality. It’s assured us that there was multiple testing when the coal left, when the coal arrived, again at the power station, and surely the coal that it delivered was higher quality and that the prices paid were appropriate. So it says there’s nothing to it whatsoever.
Marc Filippino
Now we should mention that this investigation comes on the back of a lot of accusations of fraud and corruption. I mean, how does this instance play into the larger reputational hits that Adani has been taking on over the past two years or so?
Dan McCrum
Rewind a year or two, the Adani group was accused by a New York short-selling outfit called Hindenburg Research that said actually a lot of the basis of the company’s valuation, its profits were fraudulent. And since then, there’s been a lot of attention on the allegations by Hindenburg, which Adani denies. And this bigger picture question about Indian politics, because we’re right in the middle of an election there. And really, there are big questions about the power of India’s billionaires. And the question particularly with Adani is, has the government been protecting it because it has faced multiple investigations over the last decade, but these have tended to proceed very, very slowly.
Marc Filippino
Does this investigation or the pile-up of accusations move anything in India? Will there be any consequences potentially for Adani?
Dan McCrum
Let’s not get ahead of ourselves. I think it’s important to try and expose, well, what is the source of the wealth of these billionaires, but also get to a deeper issue. Pollution from coal-fired power station is killing huge numbers of people, millions of people in India. I mean, India’s largest source of power is from coal and its largest source of pollution is from coal. And so if people are cheating by putting in low-quality coal and saying it’s great, you’re not only having to burn more coal, produce more of these pollutants, but then you’re also pushing up the price of electricity bills, the amount of money that people are having to pay. And so there is a real question here about exploitation that is really being felt by the Indian people in lots of different ways.
Marc Filippino
Dan McCrum is an investigative reporter for the Financial Times. Thanks, Dan.
Dan McCrum
Thank you.
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Marc Filippino
Before we go, mosquito bites suck. That’s probably not an unpopular opinion, right? But what if I told you that there’s an experiment in the works to make it so that these bugs don’t bite? Djibouti is trying it out. The east African country is going to release a batch of genetically engineered, non-biting mosquitoes today. Officials are trying to stop the spread of malaria because the disease has taken off in urban areas there.
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You can read more on all of these stories for free when you click the links in our shownotes. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.
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