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Ben Fowler, the founder of the iconic Burger Bar in Roy, died of natural causes Monday. He was 96. Readers remembered the original “Big Ben” Friday. Here are some of the things the community shared about Fowler’s passing.
NEW YORK (AP) — Striking Verizon employees may be back to work next week after the company and its unions reached an agreement in principle for a four-year contract.
About 39,000 landline and cable employees in nine Eastern states and Washington, D.C., have been on strike since mid-April, one of the largest strikes in the U.S. in recent years.
Verizon had trained other workers to step in but there were still delays in installations for Fios customers.
Verizon said that it had high health care costs for its unionized workers, which have shrunk as it sold off large chunks of its wireline unit and focused on its mobile business, which was not unionized. It also wanted the union workers, just over one-fifth of its U.S. workforce, to agree to move around to different regions when needed, which the union opposed.
The union and Verizon are not giving details of the contract, so it’s not clear yet what the agreement entails for workers. As the number of organized workers shrinks, union fights in recent years have tended to be defensive, aimed at holding the line for their members rather than winning new benefits, said Jake Rosenfeld, sociology professor at Washington University, in an interview before the agreement was announced.
The president of the Communications Workers of America union, Chris Shelton, did say in a statement that the agreement is a “victory for working families” and that there will be new union jobs at Verizon. The International Brotherhood of Electrical Workers union did not immediately respond to a request for comment.
Verizon released a statement saying it’s pleased with the agreement, which has “meaningful changes and enhancements” that will make its wireline business more competitive.
The deal does include a first contract for Verizon wireless employees, says the CWA. It applies to about 165 workers in six wireless stores in Brooklyn, New York, and one store in Massachusetts.
Labor Secretary Thomas Perez said Friday that the agreement is being written and will be submitted for approval by union members, and he expects workers back on the job next week.
The workers had been working without a contract since last August.
New York-based Verizon Communications Inc. and the unions have been negotiating at the Department of Labor for the past 13 days, Perez said.
Verizon Communications Inc. shares rose 46 cents to $50.62. They are up 2 percent over the past year.
This story has been corrected to show that just over one-fifth of Verizon’s U.S. workforce is unionized, instead of about 30 percent.
Follow Tali Arbel at http://twitter.com/tarbel and read more articles at http://bigstory.ap.org/content/tali-arbel
ATLANTA (AP) — Travelers who were dreading long airport security lines ahead of the Memorial Day weekend instead reported moving quickly through checkpoints Friday after authorities opened extra screening lanes and used bomb-sniffing dogs to give some passengers a break from removing their shoes.
“Wow. I mean, wow,” said Mike Saresky, who flew into Chicago from Philadelphia, where he breezed through airport security in 12 minutes and got to leave his shoes on. “I thought it was going to be a lot worse.”
The extra dogs were concentrated at the nation’s largest airports, but they were not used for all screenings, meaning that many travelers still had to observe the usual procedures.
But as the busy summer travel season kicked off, the federal Transportation Security Administration tried to offer travelers some relief after weeks of slow-moving lines blamed on an increase in the number of air travelers and a shortage of TSA security officers.
A TSA spokesman said the extra dogs would remain well beyond the holiday.
At Hartsfield-Jackson Airport in Atlanta, known as the world’s busiest, all 16 security lanes at the main checkpoint were open Friday morning as a bomb-sniffing dog and its handler walked among waiting passengers. Wait times were slashed to less than 15 minutes, compared with backups of nearly an hour in recent weeks.
“All the natives were telling me, ‘Brace yourself,‘” said Carl Pluim, who arrived in Atlanta to fly home to Denver. “I left myself two hours before my flight, so I think I’ll be OK.”
When she flew barely two weeks ago, LaGretta Watkin recalled security lines that were “so chaotic” that travelers “could barely move.”
“But today it’s smooth sailing and refreshing,” Watkin said as she started a trip from Atlanta to Jacksonville, Florida. “And I’m loving it.”
The TSA began deploying extra canine teams to the busiest airports months ago. While the goal was to shorten waits at larger airports, the reshuffling could also result in longer lines at airports that lost dog teams.
The dogs “have the ability to screen large groups of passengers for explosives, making the removal of shoes and laptops and such unnecessary,” TSA spokesman Mike England said.
The agency has 900 dog teams nationwide, England said. He declined to say which airports they were sent to for the holiday weekend or how long they might stay.
“This is not just for Memorial Day weekend,” England said. “I wouldn’t expect that it would go away any time soon.”
At O’Hare Airport in Chicago, which had some of the worst screening meltdowns in recent weeks, lines moved briskly Friday, though still swelled at times. Typical security procedures appeared to be in place, with passengers removing belts and shoes and taking computers from bags and items out of pockets. Bomb-sniffing dogs were making rounds in pre-security areas.
Terri Hale, arriving in Chicago from Cleveland, said security there seemed, if anything, tighter than usual. Passing through the millimeter-wave scanner, she was stopped and asked to empty her pocket for what turned out to be a tiny piece of foil from a gum wrapper.
“When she found that I was like, OK,‘” Hale recalled with a laugh, as a security dog sniffed around her in the O’Hare baggage claim area.
Security lines were fairly short at LaGuardia Airport in New York. Arlene Dobren, who was flying to Atlanta, said she and her husband arrived early to find “the lines are like no lines.”
Harrison Pavlasek, departing for Texas, said he had been prepared to make the best of the situation if lines were long.
“It is just one of those things we are going to have to live with,” Pavlasek said. “Whether it is the airlines’ fault or TSA’s fault or our own fault, it is unfortunately the consequences we have to live with at this point in time.”
Travelers at the San Diego airport said security lines were moving faster Friday than in recent weeks. Adam Hutson noticed improvements as he returned from a two-week trip to Hawaii.
“When we left two weeks ago, it was very slow here,” said Hutson, a San Diego business manager who waited over an hour in lines on his way to Hawaii. He said his wait leaving Maui was 30 minutes.
“I think the scrutiny over the last week has really paid off in a big way,” said Gary McGoffin of Lafayette, Louisiana, who was traveling through San Diego on vacation with his wife.
Nationwide, AAA estimated that 2.6 million Americans would fly during the long weekend. That’s out of an anticipated 38 million domestic travelers, most of whom will probably drive to their destinations. AAA predicted 2016 would have the second-highest Memorial Day travel volume on record and the most since 2005.
Bynum reported from Savannah, Georgia.
Associated Press writers Jason Keyser in Chicago, Julie Watson in San Diego, Joe Frederick in New York and Johnny Clark in Atlanta and contributed to this report.
NEW YORK (AP) — Stocks rose Friday to wrap up their strongest week in almost three months. Banks gained ground after Federal Reserve Chair Janet Yellen said the central bank intends to keep raising interest rates provided the economy continues to improve.
Stocks turned higher over the last few hours of trading to finish at their highest levels of the day. Banks made the largest gains, as they stand to make bigger profits on lending if interest rates rise further. Phone companies traded higher after Verizon reportedly agreed in principle to a new contract with striking employees. Alphabet led technology stocks higher.
Yellen said it will be “appropriate” to raise interest rates in the next few months if the economy continues to improve, and emphasized that the Fed will move slowly and carefully. There were signs of that improvement throughout the week, including increased home sales, leading to big gains for stocks. On Friday the Commerce Department said the U.S. economy grew a bit more in the first quarter than it previously estimated. In recent months stocks have slumped when investors thought the Fed might be about to raise interest rates. That may have changed this week.
“Both inflation and growth are on an upward trend,” said Jon Adams, senior investment strategist for BMO Global Asset Management. He said investors may be worrying a bit less about the Fed’s plans because the economy could be getting onto more solid footing, but the central bank must remain careful in dealing with investor expectations.
“The Fed’s kind of walking a tight rope here,” he said.
The Dow Jones industrial average rose 44.93 points, or 0.3 percent, to 17,783.22. The Standard & Poor’s 500 index added 8.96 points, or 0.4 percent, to 2,099.06. The Nasdaq composite index picked up 31.74 points, or 0.6 percent, to 4,933.50.
The Commerce Department said the U.S. economy was a bit stronger in the first quarter than it initially believed. The agency said the gross domestic product grew 0.8 percent in the first three months of the year, above its original estimate of 0.5 percent. That’s still sluggish, but experts think the economy will grow about 2 percent in the current quarter.
Bank stocks were led higher by Bank of America, which rose 18 cents, or 1.2 percent, to $14.88, and Citigroup, which picked up 47 cents, or 1 percent, to $46.58. Bank stocks have struggled this year because the Fed has pushed back plans to raise rates. Bond prices dipped and yields rose, another sign investors expect interest rates to increase. The yield on the 10-year U.S. Treasury note rose to 1.85 percent from 1.83 percent. The yield on the Treasury note is closely tied to interest rates.
Labor Secretary Thomas Perez said Verizon and its unions agreed in principle to a new four-year contract. About 39,000 landline and cable employees in the Eastern U.S. went on strike in April. They had been working without a contract since August. Verizon gained 46 cents to $50.62.
Google’s parent company Alphabet rose after a federal jury said the company did not need permission to use tools made by Oracle when it built its Android software. Oracle said Google stole its intellectual property and sought $9 billion in damages, and it plans to appeal the ruling. Alphabet stock added $10.67, or 1.4 percent, to $747.60.
Benchmark U.S. crude oil lost 15 cents to $49.33 a barrel in New York. Brent crude, which is used to price international oils, gave up 27 cents to $49.32 a barrel in London.
Machinery maker Terex dropped after Chinese heavy equipment maker Zoomlion abandoned its effort to buy the company. Zoomlion offered to buy Terex at the start of the year, after Terex accepted an offer from Finland’s Konecranes. Terex backed out of that deal and will instead sell its crane business to Konecranes. Terex stock sank $3.44, or 14.1 percent, to $20.89.
Scientific equipment maker Thermo Fisher said it will buy electron microscope maker FEI for $107.50 per share in cash, or about $4.2 billion. The deal comes about two months after Thermo Fisher paid $1.3 billion to buy Affymetrix, a company that makes equipment to analyze genetic codes. FEI stock climbed $13.55, or 14.3 percent, to $108.13 and Thermo Fisher added 93 cents to $152.13.
The price of gold fell $6.60 to $1,213.80. Gold has slipped about 5 percent over the last two weeks. Silver fell 7 cents to $16.27 an ounce. Copper rose 1 cent to $2.11 a pound.
Wholesale gasoline rose 1 cent to $1.63 a gallon. Heating oil fell 1 cent to $1.49 a gallon. Natural gas rose 2 cents to $2.17 per 1,000 cubic feet.
Germany’s DAX and the FTSE 100 in Britain both rose 0.1 percent, and France’s CAC 40 gained a bit less than that. Japan’s benchmark Nikkei 225 index added 0.4 percent and South Korea’s Kospi gained 0.6 percent. Hong Kong’s Hang Seng climbed 0.9 percent.
The dollar rose to 110.38 yen from 109.72 yen. The euro dipped to $1.1114 from $1.1191.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP . His work can be found at http://bigstory.ap.org/journalist/marley-jay
WASHINGTON (AP) — The U.S. economy is showing signs of more life after a less-than-stellar start to the year.
The government said Friday that first-quarter growth, while disappointing, wasn’t as bad as first thought. And a number of more recent indicators are showing decent gains in key areas like consumer spending and housing.
All the signs point to an economy that has probably doubled its momentum this quarter. But faster growth also raises the prospect that the Federal Reserve will want to nudge interest rates higher.
Fed Chair Janet Yellen said exactly that at an appearance Friday at Harvard University. She noted that after weak growth in the fourth quarter of last year and the first three months of this year, it “looks to be picking up from the various data that we monitor.”
She said if the growth continues and the labor market keeps improving, then “probably in the coming months, such a move (rate hike) would be appropriate.”
Yellen, who stressed that the Fed’s plan is to raise rates “gradually and cautiously,” did not specify when exactly a rate hike might occur. But many economists believe it could come as soon as the Fed’s next meeting on June 14-15.
Expectations of a possible June hike have been climbing since the central bank surprised investors last week with the release of the minutes of the April meeting. The minutes showed that Fed officials were prepared to raise rates at the June meeting if the economy kept improving.
The Fed boosted rates by a quarter-point in December after leaving them at a record low near zero for seven years. At the time, it indicated that four more rate hikes could occur this year. But it has so far put further increases on hold in the wake of financial market turbulence in January and February triggered by unexpected weakness in the global economy.
Yellen’s remarks Friday came after the Commerce Department reported that the gross domestic product, the broadest measure of economic output, grew at an annual rate of 0.8 percent in the first quarter.
That was slightly better than the initial estimate of 0.5 percent but still marked the second straight quarter in which growth has slowed. The GDP increased at a modest 1.4 percent rate in the fourth quarter.
Economists, however, are forecasting a rebound. Based on recent better-than-expected reports, they have been revising their second-quarter growth estimates higher, up from less than 2 percent to around 2.5 percent.
After the new GDP report, some economists said growth could hit 3 percent in the current quarter.
The optimism stems from hopes that strong employment gains will boost household incomes and fuel consumer spending, which accounts for 70 percent of economic activity.
For the first quarter, consumer spending grew at a rate of 1.9 percent, the weakest showing in a year. But recent strength in retail sales, points to a second quarter rebound. And a separate report Friday showed that the University of Michigan’s consumer sentiment survey rose to 94.7 in May, the highest level in nearly a year.
The revision in the GDP report came from slightly less economic drag from the trade deficit and a less severe slowdown in inventory growth, as well as stronger gains in housing that initially reported a month ago.
Business investment remained weak with investment in structures falling at a rate of 8.9 percent, slightly less than the 10.6 percent plunge that was first reported. This category has suffered because of sharp cutbacks in drilling and exploration by energy companies.
While business investment remained weak, investment in residential construction was growing at a sizzling 17.1 percent rate, the strongest advance in more than three years.
The U.S. economic expansion will celebrate its seventh birthday next month, making it the fourth longest recovery since World War II. But it has also been the slowest, averaging modest annual growth of 2.1 percent.
Financial markets went into a nosedive at the beginning of the year, dragged down by worries about global growth and a sharp slowdown in China, the world’s second largest economy.
Since then, markets have recovered all their early-year losses. Many economists believe that the Fed’s decision on whether to raise rates in June will hinge largely on how the labor market performs in May. A report on May employment comes out on June 3.
SHIMA, Japan (AP) — Japanese Prime Minister Shinzo Abe claimed success Friday in winning support for his approach to fighting off a possible economic crisis from fellow leaders of the Group of Seven wealthy nations, despite mounting evidence the formula is failing to yield promised results in Japan.
In meetings at an isolated seaside resort renowned for its crayfish and pearls, Abe appealed for more action to stave off a downturn, insisting that an earlier lack of urgency contributed to the financial crisis of 2008-2009.
Wrapping up the gathering with a sweeping declaration and several additional “action plans,” the leaders acknowledged increasing risks for the global economic outlook, including terrorism, legions of displaced people, and conflicts that “pose a serious threat to the existing rule-based international order.”
But they said their countries had strengthened policies to avoid relapsing into crisis.
Attention swiftly shifted from the G-7 finale as Abe and U.S. President Barack Obama traveled to Hiroshima, where Obama became the first sitting American president to visit the city devastated by a U.S. atomic bomb in 1945 in the closing days of World War II.
Abe said the commitment by the leaders to “use all policy tools — monetary, fiscal and structural” was an endorsement of his own “Abenomics” three-pronged strategy for reviving Japan’s sluggish growth.
“We agreed to mobilize all our resources and launch three ‘arrows’ of monetary, fiscal and structural reform measures,” Abe said. “We will be launching Abenomics to the world.”
“In order to avoid risks of the world economy falling into crisis, Japan will also do its utmost to cooperate and take leadership, mobilizing all possible resources, and boost the engine of Abenomics,” he said.
More than three years after Abe took office vowing to “Bring Japan Back!” from more than two decades of economic doldrums, his formula has yet to deliver the desired results: rising wages, business investment and a sustained recovery that places the world’s third-largest economy into a “virtuous cycle.”
After a slight uptick in growth earlier this year, economists say conditions in Japan have deteriorated, partly due to the slowdown in China and other emerging economies.
But backing from his G-7 counterparts may give Abe a boost as his ruling Liberal Democratic Party heads into a July parliamentary election. It also could embolden him to put off an unpopular increase in the national sales tax, to 10 percent from 8 percent.
“Abenomics is not a failure at all,” Abe told reporters, declaring he would “rev up the engine of Abenomics to the highest level possible.”
While they did not formally concur with Abe that the world is poised on the brink of crisis, the G-7 leaders did claim a special responsibility for beefing up their own economic policies.
Christine Lagarde, head of the International Monetary Fund, also said the world was “no longer in a 2008 moment.”
“We are out of the crisis but we are suffering the legacy of the crisis,” Lagarde said, pointing to bad loans on the books of companies and banks as one of the biggest causes of concern.
But she said, “Many countries can do quite a lot and some more than they are currently doing.”
The G-7 summit brought together the leaders of Britain, Canada, France, Germany, Italy, Japan and the United States. Leaders of major international organizations and a select group of developing countries attended “outreach” sessions held after the G-7 summit meetings ended.
The group’s discussions addressed a wide range of issues, including terrorism and other risks to peace and global growth, the massive flows of refugees and migrants to Europe to escape conflict and poverty at home, global threats to public health, cybercrime, corruption and efforts to help girls and women.
The leaders also expressed unease over territorial tensions in the East and South China seas. The declaration does not specifically mention China and its expansion into disputed areas, but calls for respect for freedom of navigation and overflights and for resolving conflicts peacefully through law.
But the main focus was on economic challenges.
In their statement, the leaders denounced protectionism and trade barriers and noted the negative impact of overcapacity in some industries. One of the biggest headaches, Abe said, was a glut in China’s steel industry.
“It’s a root cause distorting the market, and unless it’s fundamentally resolved, the problem persists,” he said.
The group said Britain’s possible exit from the European Union, depending on the outcome of a June 23 vote, is one of many potential shocks for the global economy.
British Prime Minister David Cameron said staying in the EU is “all about Britain’s national interest.”
“The EU makes us better off. Better off in terms of jobs, better off in terms of growth. Better off in terms of investment by other countries into our economy that creates the growth and the jobs and the livelihoods that we need,” Cameron said.
Associated Press writers Miki Toda and Aritz Parra contributed to this report. Kurtenbach reported from Ise, Japan.
BEIJING (AP) — General Motors Co.‘s main Chinese joint venture is recalling 2.2 million cars to deal with insufficient corrosion resistance on crankcase valves.
The recall was ordered after Shanghai-GM received complaints about engine damage, according to the country’s product quality regulator. The automaker is a joint venture between GM and state-owned Shanghai Automotive Industries Corp.
The recall applies to Buick Excelle sedans and Chevrolet Cruzes, Epicas and Aveos. The product quality agency said GM will replace affected valves for free.
Sales by GM and its Chinese partners of GM-brand vehicles rose 5.2 percent last year to 3.6 million units.
SHANGHAI (AP) — In 2011, a respected anti-counterfeiting coalition in Washington escalated its fight against the Chinese e-commerce giant Alibaba, saying its websites served as a 24-hour market “for counterfeiters and pirates” and should be blacklisted.
Fast forward to 2016. The same lobbying group, the International Anti-Counterfeiting Coalition, reversed its position. Alibaba had become “one of our strongest partners.” The group welcomed Alibaba as a member and invited its celebrated founder, Jack Ma, to be the keynote speaker at its spring conference in Orlando, Florida.
This is the tale of how one of China’s corporate giants won — and ultimately lost — a friend in Washington, using legal methods long deployed by corporate America: money and influence. But those time-honored tools weren’t enough to defuse the deep loathing that has greeted one of communist China’s greatest capitalist success stories.
Alibaba is at the forefront of China’s rise on the global stage. The anxiety and suspicion that have greeted the company abroad are, to some extent, anxiety and suspicion about China itself. A month after it became the first e-commerce company to join the anti-counterfeiting coalition, Alibaba got kicked out.
An Associated Press analysis of public filings shows that the coalition’s public comments shifted from criticism to praise as the personal and financial ties between Alibaba and the group deepened, even as other industry associations — and the U.S. and Chinese governments — continued to take a harder line. A probe by the U.S. Securities and Exchange Commission into Alibaba’s accounting practices and sales data, disclosed this week, has raised further questions about how the company does business.
How Alibaba fares in Washington could help shape the global fight against counterfeiting and impact the expansion of one of China’s most prominent companies.
Those who believe Alibaba intentionally profits from the sale of fakes fear the company could lobby its way out of having to make meaningful changes in the way it polices its platforms. That, critics say, would be a boon for the multibillion-dollar counterfeiting industry, which costs U.S. companies money, can imperil consumers’ safety, and feeds an underground money-laundering industry for criminal syndicates.
Alibaba was one of the first Chinese companies to play politics seriously inside the beltway, and may not have realized how even the smallest misstep can backfire, said Sean Miner, China program manager for the Peterson Institute for International Economics.
“Chinese firms are going to have a bigger spotlight on them,” he said. Miner said that as Alibaba tries to expand its global reach, “their reputation has preceded them. ... Some Americans might think, ‘Why don’t you go home and fix the problems first?‘”
Alibaba began 17 years ago in the modest living room of a gutsy man with a history of failure. Jack Ma struggled in school, and even Kentucky Fried Chicken refused to hire him.
Today, Alibaba is a $15.7 billion e-commerce ecosystem that supports the livelihoods of tens of millions of merchants. Some 423 million shoppers last fiscal year picked through the billion listings that Alibaba’s platforms host on any given day.
Alibaba doesn’t sell any merchandise. It merely facilitates transactions, deriving much of its revenue from advertising. Alibaba’s core is Taobao, a Chinese consumer-to-consumer platform much like eBay, only bigger. The company also operates Tmall, which offers merchants, including Nike and Macy’s, official storefronts to consumers in China. Two export platforms, Alibaba and AliExpress, connect businesses in China with buyers around the world.
Critics, among them some top brands and intellectual property lawyers, say Alibaba’s ecosystem has proven remarkably conducive to counterfeiting. They feared Alibaba’s inclusion in the anti-counterfeiting coalition would lend it undeserved credibility. In U.S. court filings, Gucci America and other brands belonging to France’s Kering Group have accused Alibaba of knowingly profiting from the sale of fakes — a charge Alibaba has dismissed as “wasteful litigation.”
Alibaba and its advocates argue that the only way to fight counterfeiting is to fight together. The company says it works diligently to improve its systems, and that it proactively took down 120 million listings of suspicious products on Taobao last year.
Still, it remains relatively easy to find knock-offs. Chat with a vendor on Taobao and the price of a Louis Vuitton Rivoli handbag listed at 15,200 yuan ($2,318) may magically drop to 980 yuan ($150). And despite the company’s repeated admonitions that it stands with brands in the global fight against fakes, skepticism reigns.
MR. MA GOES TO WASHINGTON
After Robert Barchiesi, a gruff-talking former New York cop, took over the anti-counterfeiting coalition in 2008, the group took a hard line, singling out Alibaba and Taobao for facilitating the large-scale sale of fakes.
The U.S. Trade Representative listened, and placed Taobao on a blacklist of markets notorious for sales of fakes in 2008.
Alibaba responded by ramping up its game in Washington. In 2012, Alibaba’s spending on lobbying shot up from $100,000 a year to $461,000, and has remained fairly steady ever since, according to Opensecrets.org.
Among its lobbyists was James Mendenhall, former general counsel for the U.S. Trade Representative. Mendenhall was part of a string of high-profile hires Alibaba would make, including a former chief of staff for the U.S. Treasury and a former White House staffer who went on to GE Capital. In April, Alibaba announced a further expansion of its government affairs office in Washington, with three new hires with experience in the White House, the Commerce Department, Congress and several blue-chip U.S. companies.
“Alibaba has engaged in a thoughtful, customer-focused dialogue with policy makers,” said Eric Pelletier, head of international government affairs for Alibaba Group. “Enabling U.S. businesses greater access to global markets, including China, will create more American jobs, which is good for everybody.”
The anti-counterfeiting coalition told the trade representative in 2012 that Taobao topped its list of concerns. “Advertisements for fakes of IACC member brands are often in the thousands and even millions,” the coalition wrote.
By the end of 2012, Alibaba was off the notorious markets list anyway. The U.S. Trade Representative commended Taobao for its “notable efforts” to work with rights-holders.
The next year, the coalition signed an agreement with Taobao to expedite the removal of counterfeit goods through a pilot program it called MarketSafe. The coalition charged its members $12,500 last year to participate, on top of annual dues as high as $8,400.
The coalition had found a way to monetize brands’ frustration with Alibaba’s take-down procedures. It was also starting to look like a family business. Barchiesi’s daughter-in-law, Kathryn Barchiesi, provided “investigative support” for MarketSafe. The coalition says the program is not profitable, but those fees helped the IACC more than double revenues, to $2.6 million, under Robert Barchiesi’s leadership.
In 2011, a fresh-faced man named Matthew Bassiur hired Barchiesi’s son, Robert Barchiesi II, to work as an investigator at Apple. Two years later, Bassiur was on the board of a foundation that awarded a private company run by Barchiesi’s other son, James Barchiesi, a contract for “fiscal and operational management.”
The coalition paid companies belonging to James Barchiesi nearly $150,000 from 2012 to 2014 for accounting, advertising and rent. The coalition says those contracts were market-rate or better.
Five weeks before Alibaba’s 2014 public offering on the New York Stock Exchange, Barchiesi went on CNBC and deflected attention from Alibaba, saying counterfeiting on Alibaba’s sites was a “microcosm of a bigger problem.” He praised the company for working “in good faith” with the coalition.
What Barchiesi didn’t say is that he too would buy shares in Alibaba Group Holding Ltd.
He bought shares on that first wild day of trading, at $91 each, according to the coalition, which also says his holdings represent a “small percentage” of his portfolio. Alibaba’s new shares shot up 38 percent in one day. It was the largest IPO in history, catapulting Ma to near-mythic status.
By 2015, the coalition had stopped complaining about Alibaba to U.S. officials, focusing instead on the “true cooperation and partnership” they enjoyed with Alibaba through the MarketSafe program. But neither the U.S. nor the Chinese governments were convinced the company had turned a corner.
In January 2015, Chinese regulators published a report stating that just 37 percent of the goods purchased on Taobao were genuine. Alibaba disputed the accuracy of the report, which disappeared from the Chinese internet.
Meanwhile, the American Apparel & Footwear Association, which represents over 1,000 brands, urged U.S. authorities to put Taobao back on the counterfeiting blacklist. It asked the Securities and Exchange Commission and the U.S. Trade Representative for help with “rampant proliferation” of counterfeit goods on Taobao, which it said had been getting worse. “The slow pace has convinced us that Alibaba is either not capable of or interested in addressing the problem,” the group concluded.
Brands were quietly dropping off the membership roster of the International Anti-Counterfeiting Coalition. LVMH holding, Tory Burch, Hunter Boots, Columbia Sportswear, Cath Kidston, Sony Corp. and Lucasfilm all vanished between October and March. Those companies either did not respond or declined requests for comment on their reasons for leaving.
In December, the U.S. Trade Representative reported that Alibaba’s platforms had been “widely criticized” for selling large quantities of counterfeit goods. It urged Alibaba to “enhance cooperation.”
The next month, Robert Barchiesi’s friend, Bassiur, started work as Alibaba’s chief of global intellectual property enforcement.
The coalition continued to praise Alibaba to U.S. officials and in April welcomed it as the first e-commerce member, under a special new category that precluded voting and leadership rights.
U.S. luxury brand Michael Kors was the first to quit in protest. Its general counsel, Lee Sporn, told the coalition’s board in an April 21 letter that it had “chosen to provide cover to our most dangerous and damaging adversary.”
Then Gucci America defected.
The coalition and Alibaba jumped into action, announcing that MarketSafe would be free for all companies, whether or not they were members. The financial terms of the deal were not disclosed.
The storm soon intensified. The morning of May 11, an anonymous email went out to board members threatening a mass walk-out unless Alibaba was kicked out. The email contained a list of concerns, including personal ties between Bassiur and Barchiesi.
The coalition, the email said, “has become a revenue generating business rather than the non-profit organization we all so desperately need.” Alibaba’s membership, it added, “damages and weakens the enforcement and legal remedies we have with Alibaba group.”
Tiffany resigned its seat on the board that same evening, citing governance concerns.
On May 13, the AP reported Barchiesi’s ownership of Alibaba stock. The AP investigation also mapped the personal and financial ties between Barchiesi and Bassiur, and documented Barchiesi’s use of family members to help run the coalition, including hiring his son’s firm as the coalition’s “independent” accountant.
The board convened a call at noon that day. Barchiesi spoke first, defending his achievements. He did not offer to step down.
At 2 p.m., less than 12 hours after the AP’s report, the board informed members that the coalition was suspending Alibaba’s membership category, pending “further discussion.”
The board said Barchiesi’s “performance and accomplishments as President have been exemplary, and he has the Board’s full confidence and support.”
The coalition’s policy states that board members must be informed of conflicts of interest. But not all board members knew the head of their coalition owned stock in a company some of their membership regarded as an enemy. The board issued a statement saying that omission of “certain aspects of the disclosed conflict” was not Barchiesi’s fault, but arose from weak governance. They vowed to commission an independent review.
Dissenting coalition members were dismayed Barchiesi didn’t step down and contemplated a coordinated walkout. There was talk of boycotting Ma’s keynote at the coalition’s conference in Orlando.
Before that could happen, Alibaba announced Ma was pulling out, two days before his scheduled keynote. Alibaba president Michael Evans appeared in Ma’s place.
“We cannot and will not allow a tyranny of the minority to thwart progress,” Evans said at the conference last week. “If we are not invited to join you in this fight, then we invite you to join us. We have no competitors in this battle. Only a common enemy: the counterfeiters.”
Barchiesi remains at the helm of the coalition. The results of the governance audit are not expected for months.
Ma came to America anyway. What was meant to be a victory lap for the wiry former English teacher, now China’s second-richest man, had become a public relations debacle. Even so, he left no doubt that Alibaba has succeeded in making inroads with Washington.
On Tuesday, Ma had a quiet lunch with President Barack Obama. Reporters spotted him leaving the White House amid a crush of black umbrellas. He smiled beneath a gray sky and pronounced his meeting with the president “very good.”
Then he ducked into a waiting car and was gone.
Associated Press reporters Stephen Braun and Josh Lederman in Washington and researcher Fu Ting in Shanghai contributed to this report.
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