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DealBook Briefing: How an M.I.T. Lab Hid Links to Jeffrey Epstein

Good Monday morning. Programming note: I’m going to be in conversation with Blackstone’s Stephen Schwarzman about his new book, “What It Takes: Lessons in the Pursuit of Excellence,” the global economy and philanthropy for a DealBook TimesTalk in New York on Sept 16. Get your tickets here. (Was this email forwarded to you? Sign up here.)

Joichi Ito resigned as the head of M.I.T.’s Media Lab on Saturday after The New Yorker published an investigation into yearslong efforts by the research lab to disguise its links to Jeffrey Epstein.

Mr. Ito appeared to have led efforts to hide gifts from Mr. Epstein, Ronan Farrow of The New Yorker writes, citing emails and other documents:

• “Although Epstein was listed as ‘disqualified’ in M.I.T.’s official donor database, the Media Lab continued to accept gifts from him, consulted him about the use of the funds” and marked his contributions as anonymous.

• “Epstein appeared to serve as an intermediary between the lab and other wealthy donors, soliciting millions of dollars in donations from individuals and organizations, including the technologist and philanthropist Bill Gates and the investor Leon Black.”

• Those gifts included $2 million from Mr. Gates and $5.5 million from Mr. Black, donations that were described as having been “directed” by Mr. Epstein or made at his behest.

• “The effort to conceal the lab’s contact with Epstein was so widely known that some staff in the office of the lab’s director, Joi Ito, referred to Epstein as Voldemort or ‘he who must not be named.’”

Mr. Ito resigned from the Media Lab after the article was published. He had already apologized for taking money from Mr. Epstein, but continued to face calls for his resignation. (He also resigned from the boards of three other organizations, including The New York Times Company.)

But he still had some defenders. Reid Hoffman, the LinkedIn co-founder who is a donor to the Media Lab, reportedly stood up for Mr. Ito in emails with the journalist Anand Giridharadas before the New Yorker article was published.

Mr. Ito’s resignation shows that consequences from the investigations into Mr. Epstein are continuing to grow, implicating powerful figures in business, academia and beyond.


Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Lindsey Underwood in London.


The Japanese carmaker’s board will reportedly decide today whether to begin searching for a new leader, replacing Hiroto Saikawa after just 10 months, the WSJ reports, citing unnamed sources.

Mr. Saikawa became C.E.O. in November, after the arrest of Carlos Ghosn on charges of financial crimes.

But he has faced plenty of criticism. Skeptics have questioned his ability to steer the company back on track after the Ghosn scandal, and he recently admitted that his compensation had improperly been set too high. Nissan’s partner, Renault, has been unhappy with him because of his efforts to scuttle its planned merger with Fiat Chrysler.

Mr. Saikawa may offer to resign at a board meeting today. He told the Nikkei newspaper that he had long planned to hand over control of the company to a new generation. Potential candidates include Makoto Uchida, the head of Nissan’s China business, and Jun Seki, who is overseeing its turnaround.

Whoever takes the job faces a big challenge, Ben Dooley of the NYT writes. Weakening demand for cars in Europe and North America have dragged down Nissan’s earnings. The company’s profit was 94 percent lower in April through June than it was at the same time last year.

More than 40 state attorneys general are expected to announce today that they’re looking into potential antitrust violations by Google, while another group said on Friday that it was doing the same for Facebook. It’s a sign of increasing political heat on Big Tech.

• The Google inquiry is being led by Ken Paxton of Texas, a Republican, and will look at Google’s collection of data and how the company protects its dominance in search.

• And the Facebook investigation is being led by Letitia James of New York, a Democrat. It may focus on whether the company improperly stifled competition in the social networking business by buying rivals.

They’re joining various federal investigations, including those being run by the Trump administration and congressional committees. The House antitrust subcommittee is scheduled to hold its third hearing on tech on Thursday.

Republicans and Democrats have different reasons to poke around Big Tech, Steve Lohr of the NYT writes. President Trump and his allies say that tech giants are discriminating against them, while liberals say online platforms are “barely policed conduits for right-wing conspiracy theories and racism.”

There is political capital to be mined from taking on the tech industry. “This matters, because nothing is going to happen without political support,” Harry First, a former New York law enforcement official, told Mr. Lohr.

More: How Microsoft, once the biggest target of a tech backlash, has dodged criticism this time around.

A study by the I.M.F. and the University of Copenhagen found that shell companies are responsible for a third of the world’s foreign investments, Martin Sandbu of the FT reports.

• “A large proportion of the world’s stock of foreign direct investment is ‘phantom’ capital, designed to minimize companies’ tax liabilities rather than financing productive activity, according to research,” Mr. Sandbu writes.

• Almost 40 percent of foreign investments, or about $15 trillion, “passes through empty corporate shells” with “no real business activities.”

• “Nearly half of the phantom F.D.I. the researchers identified was in Luxembourg and the Netherlands.”

Signs that the trade battle between China and the U.S. is taking a toll on both countries have multiplied in recent days, even as officials in Washington and Beijing show no sign of rushing to reach a compromise.

In China:

• The country’s exports to the U.S. fell 16 percent last month, to $44.4 billion, while its imports of U.S. goods fell 22 percent, to $10.3 billion.

• China’s central bank moved on Friday to inject $126 billion into the country’s financial system to help spur borrowing.

• And analysts say the slowdown in China’s economic growth is worse than official government data suggest.

In the U.S.:

• The Labor Department’s jobs report on Friday showed that 130,000 positions had been added in August — a number that was both below expectations and artificially buoyed by hiring for the 2020 census.

• American manufacturers have slowed down investments in their businesses.

The developments suggest that mounting pressure could push both governments to reach a deal soon. Representatives from Washington and Beijing are set to revive trade talks next month.

But neither seems to see a political benefit to stopping it now. President Trump appears to believe that attacking America’s trade deficit with China will help him win re-election next year, while President Xi Jinping of China seems unwilling to appear to be compromising with the U.S. And Mr. Xi has enough control of the Chinese government to keep up his end of the fight.

King Salman named one of his sons, Prince Abdulaziz bin Salman, as the country’s new energy minister over the weekend. It’s a potentially huge change in how the world’s top oil exporter will manage its oceans of petroleum.

Prince Abdulaziz replaces Khalid al-Falih, whose powers were reduced in recent weeks. Mr. al-Falih had been stripped of responsibility for Saudi Arabia’s industry policy and lost the chairman role at Saudi Aramco, the country’s giant oil company.

There’s reason to think little will change in the short term. The prince is a veteran diplomat and was an adviser to a previous energy minister who is well regarded within OPEC. “At the moment, we can’t assume Abdulaziz’s oil policy will be any more driven by the monarchy than Falih’s was,” Ellen Wald, the president of Transversal Consulting, told the NYT.

But analysts worry about longer-term ripple effects. Analysts think that Prince Abdulaziz will be charged with raising oil prices, which remain well below their highs from earlier in the decade, although it’s unclear how much he can do to lift them.

The change comes amid efforts by Saudi Arabia’s de facto ruler to exert more control. Crown Prince Mohammed bin Salman, who effectively runs the country, has sought to install allies in key government positions.

John Ferriola will retire as C.E.O. of the steel maker Nucor at the end of the year. He’ll be replaced by Leon Topalian.

Two senior executives at KPMG, Mike Walters and Harps Sidhu, have left after their boss was ousted for misconduct found in WhatsApp messages.

CVS has hired Adam Pellegrini, a former Fitbit executive, to oversee the company’s consumer health efforts.

The online beauty company Glossier has hired Melissa Eamer, a former executive at Amazon, as its C.O.O.

The Premier League, Britain’s professional soccer association, is widening its search for a new C.E.O.


• WeWork’s I.P.O. could value the company at less than $20 billion amid skepticism from investors. Their worries include potential conflicts of interest at the company. (WSJ)

• The private equity firms Permira and Advent International are said to be seeking to buy Symantec for more than $16 billion. (WSJ)

• JPMorgan Chase is reportedly close to winning the lead advisory role for Saudi Aramco’s I.P.O. (Reuters)

• San Francisco has offered $2.5 billion to buy the P.G.&E. power lines serving the city. (WSJ)

• “One of the consequences of shrinking public stock markets is that investors now route ever more of their money through private market vehicles.” (FT)

Politics and policy

• The Fed chairman, Jay Powell, hinted that the central bank will cut interest rates again this month. (NYT)

• The Justice Department is investigating Ford, Volkswagen, Honda and BMW over the deal they struck with California to reduce auto emissions. (NYT)

• House Democrats are expected to expand their impeachment inquiries into President Trump to examine allegations of corruption. (NYT)

• Former Governor Mark Sanford of South Carolina said he would challenge Mr. Trump in the Republican primary. (NYT)

• Mr. Trump’s re-election campaign plans to start its own social networking app. (Politico)


• Amber Rudd has resigned as the British government’s work and pensions secretary over its handling of Brexit. (BBC)

• Members of Britain’s governing Conservative Party have rebelled against Prime Minister Boris Johnson in a way that Republicans haven’t against President Trump. (NYT)

• Leo Varadkar, Ireland’s prime minister, played down the prospects of a Brexit breakthrough. (NYT)


• U.S. officials warned the U.A.E. over its role in helping Iran sell oil. (WSJ)

• The Trump administration plans to push the E.U. to impose harsher sanctions on Venezuela. (FT)


• Businesses are scrambling to meet a January deadline for complying with California’s new consumer privacy law. (WSJ)

• The big selling point for new iPhone models scheduled to be unveiled tomorrow: better cameras. (WSJ)

• Apple pushed back against a Google report on an iPhone security flaw, saying it was not an issue that affected most Americans. (CNBC)

• Netflix almost sold itself to Amazon in 1998 for “low eight figures.” Its market value today: $125 billion. (WSJ)

Best of the rest

• The drug maker Mallinckrodt has tentatively agreed to a $30 million opioid settlement in Ohio. (WSJ)

• Hurricane Dorian is expected to cost insurers $3 billion in the Bahamas. (FT)

• The financier Raj Rajaratnam, who was convicted of running a huge insidertrading ring, has been released from prison nearly two years early. (Bloomberg)

• A start-up for rape kits is drawing criticism. (Vox)

• The progressive news site ThinkProgress has folded. (NYT)

• On “The Weekly,” the NYT’s Matt Apuzzo examines how vulnerable American democracy is to Russian hackers. (NYT)

Thanks for reading! We’ll see you tomorrow.

You can find live updates throughout the day at nytimes.com/dealbook.

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