Weekend Box: Time to Talk Türkiye, Ed Sheeran Trial & more

AllWeekend Box
Written By Audley Ltd

Welcome to The Weekend Box, Audley’s weekly round-up of interesting or obscure political, business and cultural news from around the world.

TIME TO TALK TÜRKIYE

This weekend, Turks will go to the polls to choose their next president. Politico has described it as 2023’s most consequential election for Europe and the Middle East.

Türkiye’s strategically important position as the bridge between Europe and Asia makes the outcome of the contest of vital interest for the US and European governments.

The incumbent president, Recep Tayyip Erdoğan, has been a mercurial partner of the West. Türkiye is a NATO member but has been an awkward ally by not imposing economic sanctions on Russia and maintaining a veto on Sweden’s accession to the bloc. Türkiye is technically a candidate for EU membership, but Erdoğan’s ‘strongman’ tactics which have eroded the freedom of the country’s press, judiciary, and elections means it is not likely to join with him as leader.

The main opposition candidate, Kemal Kilicdaroglu, a soft-spoken former civil servant, promises closer union with NATO and the EU, together with greater freedom and democracy.

But for Turks, this election is less about geopolitics and more about the flatlining economy, soaring inflation (currently an eye-watering 50.5%), the influx of refugees, and the recovery from the devastating earthquakes which killed more than 50,000 people.

Voters are torn between the belief that, on the one hand, Erdoğan has presided over economic hardship, and on the other, he is a perceived source of stability.

The latest polls have Kilicdaroglu in the lead, but victory is far from guaranteed. Pollsters predict that no candidate will get more than 50% in the first round, meaning a run-off between the Erdoğan and Kemal Kilicdaroglu will follow. With concerns that voting will not be free and fair, lengthy, testy and potentially violent political manoeuvring awaits - all of which is of little value to the people of Türkiye.

FROM BUST TO BOOM?

Despite the recent tumult, profits in the US banking sector have reached a record high of $80bn in the first quarter, up 33% from a year ago.

One might think this peculiar, but it is, in fact, the downfall of banks such as Silicon Valley Bank and Signature Bank that has contributed to these results. Almost half of the increase in the industry’s aggregate profits came from the one-time gains recorded by First Citizens and Flagstar, who rescued the two failed banks. JPMorgan Chase, the nation’s largest bank by assets also came out on top with the highest profit of any lender, earning $11.7bn in the quarter after sweeping up the First Republic.

However, amid this economic uncertainty, on the other side of the pond, the Bank of England is taking no chances with UK challenger banks. According to reports, it is considering new rules which would require smaller banks to pre-pay into a deposit insurance scheme that would ensure depositors are paid in the event of a financial crisis and a lender going bust.

Some argue that these extra costs would be damaging to the sector, stifle competition and inhibit challengers from providing competitive savings rates for customers. As small lenders begin to trial innovative products such as Skipton Building Society, who have recently launched a 100pc mortgage, there are fears that Britain’s red tape could hold this innovation back. The co-founders of Revolut, a challenger bank which is valued at $33bn, have recently criticised Britain for its complex regulatory requirements and the higher capital requirements that are imposed on challenger banks vs regular banks.

While the collapse of regional banks in the US have given regulators much reason for caution, if the UK is going to be a “science and technology superpower,” it needs to think carefully about how it can enable the financial sector to innovate and grow.

ARCTIC COUNCIL GIVES MOSCOW COLD SHOULDER

In a delicate diplomatic act, this week Chairmanship of The Arctic Council was handed from Russia to Norway. The Council, one of the lesser-known intergovernmental alliances, was established in 1996 between eight member states in order to promote ‘cooperation, coordination and interaction among the Arctic States, Arctic Indigenous peoples and other Arctic inhabitants on common Arctic issues.’

Russia’s two-year chairmanship was punctuated by its invasion of Ukraine in February 2022, after which the seven other countries (the United States, Canada, and the five Nordic countries) ceased dialogue with Moscow. This in itself posed a tricky problem for the Council, as projects involving Russian co-operation were paused – two thirds of the Council’s work.

As Evan Bloom, a senior fellow at the Washington-based Wilson Center's Polar Institute and a former diplomat who helped establish the Arctic Council, said: “Right now, it leaves the concept somewhat in tatters... Russia makes up about half the Arctic. You can't really have an Arctic Council without Russia.”

During Thursday’s handover, the Council issued a seemingly-unanimous statement recognising its historic and unique role for constructive cooperation, stability and dialogue between people in the region and committing to work to safeguard and strengthen it going forward.

Whether Norway has the power to do so, remains to be seen.

‘YOUR CHEQUE’S IN THE MAIL!’

The Post Office’s postmaster scandal has taken a new turn, after it emerged that senior executives wrongly received bonuses for cooperation with an inquiry into the miscarriage of justice. Bonuses were paid for falsely recorded targets, even as nearly all of those wrongfully convicted still await full compensation.

Over 700 postmasters were prosecuted for theft and false accounting between 2000 and 2013, after the Post Office’s faulty Horizon computer system falsely showed shortfalls in their takings. Some went to prison and at least 59 others died before being cleared. Having admitted the wrongdoing, the Post Office was judged to have intentionally hindered giving compensation. A statutory inquiry was set up to investigate this, led by retired judge Sir Wyn Williams. The Post Office then tied 25% of its leadership team’s bonuses to full and timely cooperation with this inquiry.

Now an investigation has been ordered by the Government’s Postal Affairs Minister Kevin Hollinrake, after the Post Office’s remunerations committee wrongly recorded completion of a performance target saying that the executives had helped the inquiry to “finish in line with expectations.” It was recorded that Sir Wyn had signed this off yet this is patently untrue, as the inquiry continues.

Lisa Harrington, who chaired the pay committee, gave “an unreserved apology for the mistake.” Minister Hollinrake called the situation “extremely concerning and deeply regrettable,” after finding out a month after officials overseeing the government’s stake in the Post Office had done so. As condemnations flew, CEO Nick Read swiftly gave up part of his £455,000 bonus relating to the target. Others have yet to do so.

The investigation, ­­­­­led by Amanda Burton who joined the Post Office board as a NED last month, will ensure that executive pay policy is “consistent with corporate governance best practice.” With no board director having spotted the obvious mistake in their annual report, there still seems to be an absence of best practice at the Post Office.

ED SHEERAN TRIAL: ‘YOU’VE GOT TO GIVE IT UP’

While Britons were celebrating HRH at the Coronation Concert on the weekend, one of our pop royalty had a different reason to feel celebratory: Ed Sheeran, who was cleared of infringing the copyright to a Marvin Gaye classic after a two-week trial in New York.

The long-delayed trial began in late April after relatives of Ed Townsend, co-writer of Gaye’s beloved ‘Let’s Get It On’, sued Sheeran in 2016. Townsend’s relatives alleged that Sheeran took the “heart” of the single – its “harmonic progressions, melodic and rhythmic elements,” as opposed to any parts of the recording or composition used wholesale without credit – and copied it for his 2014 hit ‘Thinking Out Loud’.

Sheeran’s lawyer Ilene Farkas argued in court that any resemblance between the songs was due to the artists on either side of the case employing the same fundamental musical building blocks that form the ‘heart’ of pop music, which “songwriters now and forever must be free to use.”

Sheeran’s team were sure to have another infamous case on their minds while defending him: the 2015 lawsuit brought against Robin Thicke, Pharrell Williams, and T.I. by the heirs of Marvin Gaye, who alleged their hit single ‘Blurred Lines’ infringed the copyright to another Gaye classic, ‘Got to Give It Up’. Much as Townsend’s relatives argued Sheeran had copied the “heart” of ‘Let’s Get It On’, Thicke and co. were found to have effectively copied the “idea” of ‘Got to Give It Up’, setting a precedent for legal action to be taken against any artist who creates a song that sounds or ‘feels’ similar to another.

While it is now standard practice for writing credits of songs to be updated after release to avoid this, musicians and their teams should breathe a sigh of relief that the outcome of Sheeran’s case won’t make things any more complicated.

And that’s it for this week. I hope you found something of interest that you might want to delve into further. If so, please get in touch at cwilkins@audleyadvisors.com.

For now, that’s The Weekend Box officially closed.

Audley Ltd
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