In the Blind Spot (The proliferation of dual-use corporations)

— There’s been a Cambrian explosion of high-signal news the past month, and Izzy wonders if it has something to do with AI helping everyone join the dots.

— What if most of the private sector is actually dual use? Izzy considers the impact on valuations if the purple economy — aka the legally illegal sector — is much bigger than presumed.

— Why Commerzbank is the first casualty of Mario Draghi’s reforms.

Dear subscribers, I’m afraid we ducked out of last weekend’s Blind Spot due to a combination of health and travel factors. But, hopefully, the delay means we’ve had time to reflect on the seemingly unprecedented newsflow and can serve you all the more effectively this week.

Reflection on the news, we think, is needed more than ever these days. The system is currently undergoing a Cambrian explosion of high-signal news.

The past few weeks in particular have overloaded our senses and spread us very thin.

The top-quality flow is welcome relief after years of noise, no doubt, but there are major setbacks to this sudden volumetric increase, as we will point out below.

Frankly, all I want to do is watch Bake Off.

As usual, this newsletter is brought to you by Izabella Kaminska and Dario Garcia Giner.

Email us with tips (if you dare) on [email protected] and [email protected].

AI INFOAPOCALYPSE: We don’t know what’s behind the explosion of high-quality news. Perhaps it’s just the busy September effect.

But one obvious culprit is AI.

Across the board, AI systems have gotten significantly more useful and effective over the summer. With that, journalists have finally cottoned on to how AI can enhance their research and investigation skills.

This is now allowing news media to join the dots like never before, delivering significant factoids and context that helps increasingly with the “why this matters” side of the story.

The result is heightened inquiry and evidence that can no longer be ignored or dismissed by newsroom bosses, especially when it comes to topics that might otherwise have been ignored or brushed under the table because the analytical or data work is too burdensome.

If the learnings compound, and we believe they will, we might be set for a Cytokine storm of revelations. A mini involuntary Glasnost for the system. 

Consider the things we’ve learned the past couple of weeks alone: No supply chain is safe from clandestine booby-traps; P. Diddy had a music industry kompromat ring; sexting your way to scoops with political sources like RFK Jr is normal practice; Mohammed Al Fayed forced would-be sexual attack victims to be signed off by Harrods’ Occupational Health dept; JP Morgan banked Prighozin… and private intelligence firms have been drawing on MPs’ parliamentary privilege to smear short-sellers unearthing uncomfortable truths. 

That’s without even mentioning the drama surrounding undisclosed gifts to Labour party members, Sue Gray(zone)’s enormous paycheck, and the growing social media speculation surrounding “an open secret” about Keir Starmer that may have been repressed.

Since we wrote that intro btw, there have been even more developments: The Saudis are supposedly buckling on production discipline; the chip wars are escalating; there’s been boardroom drama at both 23 and me and OpenAI; Elon has suspended journalists for linking to the leaked JD Vance dossier, and the German AfD has become increasingly shameless about its agenda: it’s now openly touting this remigration song.  

And while we’ve got your attention, don’t forget there’s been yet another assassination plot against Trump revealed (the third), plus rumors that the Sinaloa cartel are planning to use ground-to-air missiles to shoot Trump Force One down.  

In markets, gold continues to make record highs (which seems some sort of signal) while crypto markets are getting excited about the movement of some early coins — implying, perhaps, that even Satoshi’s secret isn’t safe for much longer. 

Cui bono from all these revelations? In theory, us, the little guy. 

In practice, it’s only those who choose to know and inform themselves. 

Ever more shocking things keep happening, but the speed and pace of the revelations is overwhelming and desensitizing all of us. Are we destined to become passive observers rather than active participants in demanding accountability or change? Perhaps. 

STORYIFICATION OVER FACT: The bigger repercussion of all this is that shocking developments are not igniting public outrage the way they should be. That poses something of an information paradox. We are both more informed than we’ve ever been in certain pockets of the system and completely underinformed in others.

With revelations of wrongdoing increasingly not weighing on the public consciousness due to newsflow fatigue, what matters now more than ever is not what the news is, but rather how it’s delivered. 

A good example is the Postmaster Horizon scandal —a story that was publicly known for years but failed to gain traction or any official corrective action until an ITV dramatization made the story relatable to the average person. Only then was there enough public outrage for politicians to care. 

(On that note, we wonder how many of you have read my former colleague’s excellent account of how a bunch of Kazakh billionaires captured the SFO by exploiting its under-resourced nature? I’m sure not enough.)

So if disclosure of wrongdoing no longer guarantees accountability, how do we journalists get the public to care? By the same measure, if you’re the wrongdoer being exposed, how do you keep ensuring they don’t?  

Is it a coincidence that the week all these stories burst through the filter most people’s minds became fixated with Donald Trump saying “They’re eating the cats”?

Whatever the case, the side effects are troubling. Whistleblowers or those impacted by crime, often speak to journalists because they feel that only publicity of their plight can protect them. The same applies to journalists engaging in important investigative work. If there’s no guarantee that their revelations will gain public traction, they will lack the protective blanket that comes along with public notoriety.

That positions our information landscape at a peculiar moment. In theory, all the information you could possibly want is out there. The real “value add” is having someone point you to where it is and to tell you what you don’t know you need to know.

But inevitably one day the Grossman Stiglitz paradox will strike. And it will strike hard. At that point, there will no longer be an incentive to invest in investigative reporting, and this will lead to less information gathering and lower overall news quality. And everyone being misdirected.

DUAL-USE CORPORATES. The world was rocked this month by the extraordinary news that Israeli special services had penetrated deep into Hezbollah supply chains, loading them with booby-trapped electronic devices that could be remotely set off to kill and maim high-level operatives.

Many pro-Israel voices viewed the operation as ingenious due to its highly targeted and, thus, de facto “ethical” nature. Palantir co-founder Joe Lonsdale even saw fit to hint that the data-fusion specialist may itself have been involved. Many more did not.

But regardless of the intrinsic moral wrongs and rights of the operation, one of the biggest consequences of the attack was the sudden and undeniable realization that no supply chain is safe from intervention by covert forces. A clear case in point: it didn’t take long for reports to emerge that Chinese companies were already benefiting from booming orders for electronic devices from the Middle East. 

This raises the awkward question of just how far clandestine services are prepared to penetrate the real economy to achieve their objectives and what that means for our understanding of the economy at large. What if it isn’t just fringe activity? Do all the economists and equity analysts scrutinizing the system really know what they’re talking about if a huge chunk of the system is dual use?

Black budgets: According to CIA docs declassified in 2011 which reference previously published content, the so-called black budget back in 1987 was roughly equal to all federal spending on health care, meaning more than a dime of every defense dollar was concealed. If that remained the case today we’d be talking about some $1.5 trillion of black budget funding.

As the referenced Washington Monthly article noted “putting a program in the black budget doesn’t just mean Congress can’t check up on it, but that its very existence won’t be acknowledged, and that its price tag generally won’t be revealed.”

That by definition makes it impossible to analyze and renders it a form of dark matter in our economic cosmos.

WHAT IF EVERYTHING IS DUAL USE?  Within hours of the blasts, journalists had linked the pagers involved to a Taiwan-based company whose branding had been detected on the devices. It didn’t take too much longer for them to figure out that the buck didn’t stop there. The AR-924 model used in the attack, as POLITICO reported, was actually sold by a Hungarian company called BAC Consulting, which had a license to use its brand on the pagers.

But this too turned out to be a bit of a goose chase. Hungarian authorities asserted they had “confirmed that the company in question is a trading intermediary, with no manufacturing or operational site in Hungary,” adding: “It has one manager registered at its declared address, and the referenced devices have never been in Hungary.”

Web archive searches then showed BAC Consulting had been operating since at least 2021, headed by a 49-year-old woman called Cristiana Bársony-Arcidiacono. When press contacted the Italian, Bársony-Arcidiacono denied all knowledge about the scheme, saying: “I don’t make the beepers. I’m just the intermediary. I think you have misunderstood.” Though, of course, she would.

Bársony-Arcidiacono’s former boyfriend, tracked down by the Daily Mail, told the British daily that whenever he had asked her about what her business involved “she would never actually say what she was doing, she would just say ‘trading as usual’, it was always a bit vague.”

Here is a pic of the strategic advisor in question via the website. As if butter wouldn’t melt…

But as one professional “mixer upper” — aka someone hired by all sorts of parties to use creative techniques to achieve political or ideological objectives — told us, everything about the site had the hallmarks of a fast-produced “for appearances only” deflection website, that he could knock up in an afternoon. 

The system, of course, is overloaded with such guff. 

Why it’s time to get familiar with the “third” economic category.

No one will be surprised to learn that the system, as it stands, is split between a formal (aka white) economy and a black/grey (aka informal or shadow) system. What they may be surprised to learn is that a third “purple” category — best thought of as the “official illegal” economy — is possibly much larger than anyone ever suspected. 

The distinction between the formal and shadow economies is straightforward. It boils down to the legality of the activities involved and whether they are considered beneficial and value-adding to society, or not.

The formal economy, with the exception of business failures and cases of capital misallocation, is typically viewed as contributing positively to society. In contrast, the shadow economy is seen as parasitic and destructive.

When criminal networks fail, society usually celebrates. 

And yet, despite these sharp contrasts, both the formal and shadow economies are driven by the same fundamental economic forces and incentives: demand, supply, revenue, profit, loss, talent acquisition, and, crucially, management strategies focused on efficiency and maximizing value for stakeholders.

A striking example of these commonalities is the increasingly corporate and professionalized nature of criminal enterprise, as highlighted in the many articles that marvel at the hyper-efficiency of criminal networks. Indeed, if you inadvertently find yourself working for a criminal enterprise, we wouldn’t be surprised at all if their operating style was so corporate and mundane, you might not even realize it. [Think the plot of the classic Grisham film The Firm, where Tom Cruise joins a prestigious law firm only to discover it operates as a front for a dangerous criminal organization.]

Traditionally, constructive and value-adding society is intuitively programmed to seek, expose and destroy criminality wherever it detects it. This means it is naturally drawn to exposing its many front businesses and underground operations. Moreover, in a functioning civil society, the state is supposed to play a critical role in helping everyone seek out and crush such activity. 

But sometimes, to do that, the State has to enmesh itself in the criminal underworld first. Other times it might find it useful to engage with, tolerate or even benefit from criminal activity directly “for the sake of the greater good”.

And finally, sometimes, the lines between the grey and black economy might blur so much the State loses its moral compass and becomes a criminal enterprise outright.

So what happens to the effectiveness of the economy when a good chunk of criminal enterprise is protected in one way or other by a state actor? It’s a point worth considering because it could be weighing on investment portfolios in unusual ways.

Stacking up the numbers: Tracking down the size of the shadow economy is actually very hard. What numbers are available are either very dated or insufficiently comprehensive. The most repeated and officially accepted estimate is that the shadow economy represents about a fifth of the size of the official economy. 

Market impact: Superficially, the world’s analysts and market watchers are attuned to how the official and unofficial economies interact. There are, after all, substantial financial risks involved in inadvertently finding yourself caught up or exposed to a criminal enterprise, meaning there’s value in mechanisms and protocols to help detect fraud or criminality in the system. 

And yet, if and when the state is involved or happy to protect a fraud as long as it serves its agenda, the risk weightings change significantly. Suddenly, there is notable upside associated with investing money in a front or dual-use business (wittingly or unwittingly).

This is because, even if a company’s public-facing service may be loss-leading or uncompelling, knowing “other revenues” will always be forthcoming makes that stock a BUY.

In theory, where those revenues come from — whether from condoned shadow economy operations, bottomless VC pockets aligned with a government mission or continuously rolled-over government contract work — should not go unscrutinized in a market economy.

In practice, many of these stocks are categorised simply as “momentum” plays. Fundamentals may not justify why the stock is going up, but investors buy anyway on the presumption more informed players know what’s really going on and it pays to take their lead.

This raises the question: Do standard funding rates even apply to dual-use corporates? Or do they, like ESG stocks, benefit from preferential (shadow) rates associated with being companies that are quasi-government backed or de facto subsidized by the state? 

One thing is certain. If it were revealed that secretly state-backed companies were more abundant in the economy than appreciated, there would be profound effects on global corporate valuations.

In the first instance, valuations would rise as DCF models were adjusted for lower risk, extended cash flow projections, and implicit government guarantees — much like, err, what happened post-2008.

But as any MBA student should be able to tell you, such exposure would also heighten fears about distorted market efficiency and moral hazard, and the assessment of the true health of the global economy. A bit like, errr, what’s happening now. (And like what happened to the Soviet Union).

Let’s theorize that up to a fifth of corporates (including blue chips) are operating as fronts for clandestine government services, or are deemed strategic enough that they won’t ever be allowed to fail even if it’s exposed that the bulk of their cashflows are generated by criminal or shadow activity. What would the market distortions look like before this became publicly known?

Chances are that covertly supported firms would tend to chronic overvaluation while profit-driven companies that serve real people and represent what the market really wants (perhaps like Gamestop), would chronically underperform. In tandem, real corporate efficiencies, innovation and profitability, meanwhile, would increasingly originate from the one sector of the economy allowed to operate under unconstrained capitalist principles: The illicit negative-sum economy. 

If and when this became apparent investors would likely have to reassess risk premiums, leading to higher discount rates and lower valuations in many sectors. Trust in market efficiency and transparency would erode, causing market volatility and driving a shift in investment strategies toward more transparent and fundamentally sound businesses. 

But before that happened — say, at the moment of near revelation but not yet full public or market awareness — the State would have an incentive to make as much of its unofficial support official as quickly as possible. (And seemingly democratically accountable.) Some of that would happen by making the previously illegal legal (crypto, drugs, illegal migration). But a whole lot more of that would happen by trying to normalize state intervention and investor repression more widely (Bidenomics, Draghi, Securonomics etc).

The problem is, if by then the entire economy was subject to a surveillance web that nobody ever voted for or consciously funded, it might be impossible to find the spare capital to restructure the system more wholesomely. It might also be impossible to raise any funding that challenges state supported sectors since the system would now be determining exclusively who can and cannot transfer funding.

FOREIGN HOLDINGS OF US TREASURIES’ ROSE IN JULY: ICYMI, Treasury Department data released earlier this month showed that Japan’s U.S. government bond assets fell to their lowest level since October. Foreign holdings of U.S. treasuries rose to $8.3 trillion in July from only $8.2 trillion in June. But both Japan and China, the largest foreign holders of U.S. Treasury securities respectively, cut their holdings by several billion during this time period.

IS CHINA REALLY A CAPITALIST DREAM? X’s chief China booster, Arnaud Bertrand, went to town summarizing a recent interview given by Louis-Vincent Gave, CEO of Gavekal, in which the contrarian investor praised the Chinese real economy’s resilience to stock market fluctuations. This, according to Gave, is because the Chinese economy is not as financialized, because only 10 percent of people own stocks versus 70 percent in the U.S.

A fascinating paradox: But, according to Bertrand, the real twist is that despite the lack of capital ownership, there is much more competition between firms in the Chinese market, and many more bankruptcies, than there is in the U.S. “I can name you 10 Chinese bankruptcies over the past three or four years of automakers, solar panel manufacturers, real estate developers, etc. Here we are in the Western world, whether in France, in the UK, in the US, and we pat ourselves on the back about how capitalist we are, about how we’re red-blooded capitalists, etc. Yet when was the last big bankruptcy? Are we capitalist if nobody ever goes bust? How does that work? How does capitalism work without bankruptcy?,” Gave said.

The reason to become more like China: Bertrand’s analysis is that it is China’s stronger management of the market that allows the market to work more dynamically in creating new companies, as well as destroying companies that don’t work anymore. “Whereas in the US, where it is arguably the reverse situation with capital having more control of the government, monopolies are being created in most sectors and companies are bailed out by the government in myriads of ways to avoid bankruptcy,” he adds.

Schumpeterian Xi: We’re arriving, the analysis continues, at a situation where “communist China” might be today the best example of free-market ‘creative destruction,’ whilst the “capitalist U.S.” seems to be calcifying into a form of corporate protectionism where big corporations are increasingly insulated from failure.

What’s the blind spot? All that may be true, but it’s also created a dejected and demoralized working and middle class that feels it has nothing to aspire to. Every time an investment seems to work, it gets busted in a controlled demolition by the state. The fact it’s no longer glorious to get rich in China but dangerous, as noted in the FT by Ruchir Sharma, the chair of Rockefeller International, might also be less about communist principles and the fact that the system is only prepared to tolerate billionaires when the economy is humming, and not so much when it’s tanking. 

BOTTOM LINE: The fact China is brutally capitalistic at the tail end of the market has been self-evident for ages (just watch the amazing American Factory documentary from 2019). But it’s also why there’s no welfare safety net. This, we would argue, is hardly something to aspire to. The true reality of the Chinese economy is a totalitarian system that allows its plebs to out compete each other for access to government subsidies, but then takes their wealth away from them as soon as it is created.

Meanwhile, GDP per capita in China remains at about $12,000 per year while the U.S. boasts a GDP per capita of $85,000 per year. Also, if we’re going to steelman the Western system, it’s worth considering what our national security position would be if those bailouts had never happened.

THE ITALIANS ARE COMING FOR COMMERZBANK: It’s been less than a month since Europe’s chief technocrat Mario Draghi declared that the quickest pathway to making “Europe Great Again” was giving up on internal protectionism and exchanging it for external EU-wide protectionism, and … well, we have our first high-profile casualty of the strategy is already emerging.

As my POLITICO colleagues reported this week, in the battle for Commerzbank, Monday proved to be the day when the gloves fully came off. It started with Italy’s UniCredit, led by veteran dealmaker Andrea Orcel, announcing out of the blue that it had entered into derivatives transactions that would raise its stake in Germany’s second-largest bank to 21 percent, making it the largest shareholder.

That prompted a furious reaction from German Chancellor Olaf Scholz, who denounced the move as an “unfriendly attack,” and damned what he called efforts “to aggressively acquire stakes in companies without any cooperation, without any consultation, without any feedback.” The exchange highlighted how sensitive and protective national governments are about control of their domestic financial sectors, despite years of endlessly calling for Europe to complete its banking union and capital markets union.

It also appeared to kill, in the near term, any chance of UniCredit taking control of Commerzbank and merging it with its current subsidiary HypoVereinsbank, to create what would be the largest bank in Germany and one of the largest in Europe. The hope that Commerzbank, whose share price has languished for 16 years, might one day be as valuable as UniCredit, appeared to die with it: its stock fell 5.7 percent in Frankfurt.

The real fear in Berlin is… that the Italians, should they take a bigger stake in Commerzbank than the German government, could sap lending to Germany’s prized Mittelstand, the small-and-medium sized manufacturers that are viewed as the backbone of the economy. These, somehow, have also withstood consolidation forces for generations, helping to prop up a significant and empowered German middle and industrial class.

The message from Draghi, however, is that Europe can no longer afford the luxury of industrial paternalism of this nature. It’s time for the markets to do their thing.

AFTER THOUGHT: Much of this, of course, is the ECB’s own fault. Having propped up Italian bonds at the cost of bunds, they’ve passed the Italians a helping funding hand to now go for increasingly distressed German entities. What a potential sweep up!

ARGENTINIAN GOLD MYSTERY: Javier Millei’s government admitted this week it had transferred about $4.5bn’s worth of gold out of the country in June, possibly to Basel or London, according to a report by El Pais. The final destination is still unknown. Long-standing claims by foreign creditors against often-bankrupt Argentina, however, mean that gold being transferred outside the country puts it at risk of being seized. The news leaked via a left-wing legislator, who lodged the Argentinian equivalent to a Freedom of Information Act to better understand specifics of the transfer.

VITOL STING: Be careful who you lunch with. Here’s the FBI footage of ex-Vitol oil trader Javier Aguilar discussing his bribery scheme, via Bloomberg’s Javier Blas.

DROUGHT FRAUD: Two Colorado ranchers, Patrick Esch and Ed Dean Jagers, orchestrated a scheme to manipulate federal crop insurance payouts by tampering with rain gauges across Colorado and Kansas. According to the Colorado Sun, between 2016 and 2017, the ranchers damaged weather stations to fabricate drought conditions, securing millions in fraudulent insurance claims based on falsified precipitation data. The tampering included cutting wires, plugging rain funnels with silicone, and covering gauges with cake pans.

Their scheme allowed them to collect $3 million in insurance payouts for non-existent drought losses. A whistleblower, a former farmhand involved in the tampering, eventually exposed the fraud after attempting to blackmail the ranchers. The investigation led to the conviction of both Esch and Jagers, who were ordered to pay $6.6 million in restitution and settlements. The ranchers served time in federal prison, while the whistleblower’s estate received $500,000 despite his death following a jail escape. The case highlights vulnerabilities in the federal crop insurance system and the rare but serious instances of fraud that undermine trust in government programs.

WAGNER’S VERY WESTERN BANKERS: The world’s most famous mercenary, the late Yevgeny Prigozhin, used JP Morgan and HSBC to settle major payments for the Wagner security group, an exposé by the Financial Times revealed this week. The banks involved claim their services were used without their knowledge. The transactions facilitated purchases of industrial equipment in China. JPMorgan denied these allegations, citing that, “After a review of the limited details shared with us, we have not found any records matching those transactions.”

FROM 23 TO ONE. Every member of 23andme’s board stepped down last week, with the exception of the CEO Anne Wojcicki, after the struggling genetics firm found it had “no adequate buyout offers.”

The news came after the Board rejected two buyout offers from CEO Anne Wojcicki.

The company is currently valued at $0.33 a share — a significant drop from its peak of $16 a share in February 2021. Despite 23andme’s hit DNA ancestry offering, the company has failed to turn a profit since it went public in 2021 and is in danger of burning through its cash reserves by 2025. The company also lost favor after it was subject to a high-profile hacking last year which saw 14,000 customers’ data leaked onto the dark web. Wired reported that the hackers had claimed the stolen data contained 1 million data points exclusively about Ashkenazi Jews.

The problem for everyone who has ever used the service is that its data is now its most valuable asset, and nobody can be sure how new owners would want to use that information. Apparently the company’s privacy policies make clear that in the event of a merger or an acquisition, customer information is a salable asset. 

WHO’S LEFT AT OPENAI? Chief Technology Officer Mira Murati quit taking Bob McGrew, chief research officer, and Barret Zoph, vice-president of research with her.

EVERYONE IS SELLING PALANTIR: Ever since Palantir stock hit an all-time high of $37.97 on Monday, September 23, the Palantir divestment wagon has been gaining speed. Peter Thiel, Palantir’s co-founder, reportedly sold 1 billion dollars worth this week, following in the footsteps of CEO Alex Karp, who sold about $300 million the week before. On Wednesday, Cathie Wood’s Ark invest sold about $2.3 million in Palantir shares. The stock sold by Peter Thiel is common equity stock, however, rather than special voting rights. While no reason has been given for Thiel’s sale of Palantir stock, it does correspond with a fantastic year for Palantir, as the software developer has surged by over 100 percent.

In August, Palantir entered into a partnership with Microsoft to deliver services for classified networks in U.S. defense and intelligence agencies.

PUTIN’S TRADER: The same day that Russia engaged in a multijurisdictional prisoner swap, and all eyes were focused on the return of Wall Street Journal reporter Evan Gershkovich, CNBC put out a fascinating mini-doc about one of the lesser known swaps. In light of the shadow economy narrative we’ve just presented, if you didn’t catch it then, we strongly advise revisiting it now. The doc tells the story of the dual-use hedge funds that helped the Russian state monetize illegally obtained market-sensitive information for the purpose of raising funds for clandestine operations on U.S. soil. Do also read our thread on X about it.

HISTORIC DOMINIC CUMMINGS: The thing about Dominic Cummings’ blogs is that they often make no sense when you’re reading them. But sometimes, many years later, they do somehow make sense. Here’s one of his thought experiments from 2018 that’s worth a gander.

Tangential thought experiment: if you were in charge of an organisation like the KGB, why would you not hack hedge funds like Renaissance Technologies and use the information for your own ‘black’ hedge fund and thus dodge the need for arguments over funding (a ‘virtuous’ circle of espionage, free money, resources for more effective R&D and espionage plus it minimises the need for irritating interactions with politicians)? How hard would it be to detect such activity IF done with intelligent modesty? Given someone can hack the NSA without their identity being revealed, why would they not be hacking Renaissance and Deep Mind, with a bit of help from a Milla Jovovich lookalike whose reading a book on n-dimensional string theory at the bar when that exhausted physics PhD with the access codes staggers in to relax?

SATOSHI REVELATIONS INCOMING? Bitcoin Magazine reported that around 250 BTC from the early days of Bitcoin, known as the “Satoshi era,” were transferred on Friday in five separate transactions, each moving around 50 BTC to new wallets. The total value of the transfers was close to $16 million. We hear there’s a documentary coming in October that might shed some light.

CASH FOR QUESTIONS, SHORT-SELLER EDITION: A private intelligence firm working for a disgraced U.S. healthcare operator fed what appears to be false information to a British politician, leading him to claim in parliament that a well-known businessman was a Russian agent, leaked communications show.

– DoJ notified of suspected faulty welds intentionally made on subs, aircraft carriers at Newport News Shipbuilding (U.S. Navy Institute News)

— Tunisian presidential candidate Zammel sentenced to six months in prison (Al Jazeera)

— How Tunisia’s president has used the law to secure his election victory (Carnergie Endowment)

— Who is Japan’s new prime minister, Shigeru Ishiba? (Guardian)

— Newsmax and Smartmatic settle 2020 US election defamation lawsuit (Guardian)

— China concealed sinking of newest nuclear submarine, U.S. says (Nikkei Asia)

— The director of the most secretive U.S. spy agency does a podcast (Wtop News)

— Christine Lagarde spoke with the Daily Show’s Jon Stewart and told him that AI’s impact on labor “is a big concern,” adding that “the discussions that are taking place now actually in New York — concerning the governance of AI around the world and how it should be enhancing workers’ position and contribution to the economy rather than replacing workers — is a vital discussion to be had.”

— Canada’s CSIS says a former parliamentarian may have worked on behalf of a foreign government (CTV News)

— Climateer on who owns Burisma? It’s a series though, so here’s part four, and the other parts, three, two and one.

– Slovak PM Robert Fico got a bullet in the mail.

– The Russian bot army that conquered online poker.

— Bayesian superyacht sinking: Safes on tycoon Mike Lynch’s sunken boat ‘may contain intelligence service data’ (MSN)

— The UN adopted a groundbreaking pact for the future to transform global governance. (UN) This included a digital compact that stands to carve up the world’s internet into decentralized compartments that operate according to different rules, which ICANN believes is a top down attempt to minimize the role of the technical community. We will have much more on this next week.