GREEK DEBT TALKS BREAK DOWN AGAIN | Another attempt at a bailout…

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GREEK DEBT TALKS BREAK DOWN AGAIN | Another attempt at a bailout agreement for Greece fell apart on Sunday night after Greek officials angrily contended that their European counterparts in the weekend talks did not have the authority to negotiate any kind of deal, James Kanter and Landon Thomas Jr. write in The New York Times. The Greek officials who traveled to Brussels for the talks were Nikos Pappas, a close confidant of Prime Minister Alexis Tsipras, and Yannis Dragasakis, the deputy prime minister. They met with senior-level European officials, none of whom had the same rank in their respective government posts. “They wanted us to hit our targets by slashing pensions and increasing taxes,” said one senior member of the Greek


negotiating team, Mr. Kanter and Mr. Thomas write. “But they had no mandate to negotiate.” The breakdown of the talks, coming on the heels of the International Monetary Fund’s decision on Thursday to recall its negotiators to Washington, increased fears of a default by Greece, which faces a June 30 deadline to pay 1.6 billion euros, or $1.8 billion, to the I. M.F. and needs to find €1.2 billion in cash to make pension and salary payments to public-sector workers by the end of the month, according to senior finance officials in Athens. European stock markets dropped when they opened on Monday, and the euro slid against the dollar. “Forging agreement is proving much more difficult than most expected,” Mujtaba Rahman, the practice head for Europe for the Eurasia Group, a political risk consultancy, said Sunday night, Mr. Kanter and Mr. Thomas write. “Unless Greek negotiators produce a credible set of reform proposals soon, this will amount to a spectacular miscalculation by Athens, resulting in default and capital controls in a matter of weeks.

” Further discussions are expected to take place on Thursday, when euro-area finance ministers hold their regular monthly meeting in Luxembourg. CONFLICTS OF INTEREST IN PRIVATE EQUITY FEE PRACTICES | Millions of people whose pensions are invested in private equity funds assume that they are being treated fairly by these firms, but Gretchen Morgenson of The New York Times sheds some light a little-known conflict of interest that stems from the fee practices at many private equity firms. Many firms receive discounts from lawyers and auditors but do not always share fully with investors, she writes, and the implications of such arrangements seem troubling: “ Wealthy private equity funds receive discounts on legal, accounting and other outside work while pension fund investors, like retired bus drivers, librarians and teachers, pay full freight or, in some cases, a premium.” An examination of regulatory filings over the last month revealed that 12 private equity firms said they had actual conflicts of interest in connection with such discounts, while 29 more described potential conflicts. The Securities and Exchange Commission has been looking into these discounts and the potential and actual conflicts of interest associated with them, and now officials at the $300 billion California Public Employees’ Retirement System are starting to question this fee practice as well. For example, Apollo Global Management, one of firms hired by Calpers to manage its money, said in a regulatory filing that Apollo and its funds receive discounts on basic legal work like employment contracts and regulatory filings. No discounts are given on investment transactions, including those charged to investor-owned funds managed by Apollo, however.

In fact, Apollo says that for these transactions, outside service providers often receive a premium beyond the level of customary rates. J. J. Jelincic, a member of the Calpers board, was critical of Apollo’s practice, saying that the firm was reducing its own costs by making investors pay a higher price. “It puts the lie to the fact that we are partners with the private equity firms,” Mr. Jelincic said. “We are simply a source of income to the general partners; we are not partners.” CHALLENGES OF MAINTAINING A BUSINESS DYNASTY | As Rupert Murdoch prepares to hand over the chief executive position at 21st Century Fox to his son James, he will be undertaking what is often “a hazardous task — trying to transfer control of a company to the next generation, while positioning it for future success,” David Gelles writes in The New York Times.

Mr. Murdoch, 84, is expected to remain influential at 21st Century Fox and at News Corporation, which could pose challenges for his son as he tries to put his own imprint on the family’s media empire. “James is going to be under a microscope, and everyone will be comparing him to a legend,” said Ted Clark, executive director of the Center for Family Business at Northeastern University. “It’s going to be really hard to measure up.” Not only will James Murdoch have to please his father, he’ll most likely need the support of his siblings, Mr. Gelles writes, noting that divisions among siblings have undone many a family dynasty. James’s brother, Lachlan, distanced himself from the company in 2005 and pursued his own interests in Australia, but he is now expected to become co-executive chairman, beside his father. Their sister Elisabeth, once briefly considered a successor, formed her own company, Shine Group, then sold it to her father for $673 million in 2011. “What’s less clear is how well the heirs work together,” Mr. Clark said. “If the siblings back James, this handoff will be very effective.” ON THE AGENDA | The Federal Reserve reports industrial production data for May at 9:15 a. m. The National Association of Home Builders housing market index for June is released at 10 a. m. Mario Draghi, the president of the European Central Bank, gives his quarterly update to the European Parliament’s economic and monetary affairs committee starting at 3 p. m. in Brussels (9 a. m. E. D.T.). W. James McNerney Jr., Boeing’s chief executive, is scheduled to be on CNBC at 6:30 a. m. and on Bloomberg Television at 6:45 a. m., and David M. Rubenstein, co-chief executive of the Carlyle Group, is on CNBC at 7:15 a. m. SAKS FIFTH AVENUE’S OWNER TO BUY GERMAN CHAIN | The Hudson’s Bay Company, the Canadian owner of Saks Fifth Avenue and Lord & Taylor, said on Monday that it had agreed to buy the Galeria Kaufhof department store chain in Germany and its Belgian subsidiary from the Metro Group for 2.83 billion euros, or about $3.2 billion, including debt, Chad Bray writes in DealBook. The deal would further expand Hudson’s Bay’s international operations: 103 Galeria Kaufhof stores in Germany, 16 Sportarena stores and 16 Galeria Inno department stores in Belgium, as well as logistics centers, warehouses and other properties.

If the transaction is completed, Hudson’s Bay would have 464 stores and combined annual sales of 13 billion Canadian dollars, or about $10.6 billion, and a third of its sales would come from Belgium and Germany.


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