Kenya’s cut-flower industry has blossomed since the 1980s, and now holds the biggest market share for exports to Europe. Kenya’s flower producers are hoping direct flights set to open between Nairobi and New York City could help them put down roots in a new market — the United States.

On the cutting floor of a factory in Naivasha, about a hundred workers dressed in red smocks stand at sorting tables, some with blades at the ready. The remnants of their work lay scattered about on the gray cement floor. 

Naivasha is Kenya’s floriculture heartland and workers at Van den Berg Kenya are trimming, packing and refrigerating bundles of roses. 

With Valentine’s Day just around the corner, this is the busiest time of year for flower growers in Kenya — the world’s fourth-largest exporter of cut flowers, with most of the exports going to Europe, Australia and Japan.  

“We saw good growth of up to about 10 percent up to the year 2008,” said Jane Ngige, the outgoing CEO of Kenya Flower Council, which represents 115 of about 150 registered growers. “And, since then, it’s stabilizing at about 2 percent.”

Kenya’s cut-flower industry may be set to grow once again with direct flights opening in October to the United States. 

Kenya’s flower growers have been anticipating the direct flights for a few years now, according to Ngige. 

“And what we’re looking at is an opportunity to diversify our markets to the American market. And, we’re also looking — not to compete with the South Americans, who are the main producers or the main suppliers of flowers for North America — but look at complimenting the product. Because, our products are very different,” Ngige said.

Kenyan roses have a smaller head-size than the Columbian flowers that dominate the U.S. market, say growers in Naivasha, but Kenya’s varietals and low production costs could give it an edge. 

While a small fraction of Kenya’s flowers currently end up in the U.S., the air freight stopover in Europe is a costly barrier to greater market access. 

The managing director of Flamingo Horticulture Kenya, Jonathan Ralling, agrees that direct flights are a good opportunity — if there is enough cargo space. 

“I think it will depend on how much freight is available, in terms of what can leave the country, and also of course how competitive Kenya can be against the South American exporters, which are very, very strong in terms of the U.S.,” Ralling said.

There are 100,000 workers directly employed in Kenya’s flower industry, but Kenya Flower Council says indirect services and products account for another 400,000 jobs, providing livelihoods for around two million people. 

The hope is that, with better access to the U.S. consumer market, Kenya’s flower industry — and the number of people it supports — can only grow. 
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U.S. stocks tumbled again Thursday as investors continued to fret about the possibility of rising inflation and higher interest rates. 

For the second time in four days, the Dow Jones industrial average sank more than 1,000 points, or 4.2 percent, to end Thursday day at 23,860.

The Standard and Poor’s Index, the benchmark for many index funds, also shed 100.66 points, or 3.8 percent, to close at 2,581. It last hit that low in mid-November.

The two indexes have dropped 10 percent from their all-time highs, set on January 26. That means they are in what is known on Wall Street as a “correction,” fueled by fears that a long stretch of low interest rates and tame inflation, which helped driven up stock prices, might be coming to an end.

As the day wore on, it became evident major U.S. stock indexes were headed toward their fifth loss in the last six days, erasing big gains in the first weeks of the new year.

Stocks began to tumble last Friday after the U.S. Labor Department reported wages grew rapidly in January, sparking concern of higher inflation and lower corporate profits.

Earlier in Europe, stock prices declined and bond yields increased after the Bank of England said it may boost interest rates in response to a strong global economy. Britain’s FTSE-100 Index fell 1.5 percent and Germany’s DAX plunged 2.6 percent.

The picture was brighter in Asia, where Japan’s Nikkei 225 Index climbed just over 1 percent, South Korea’s Kospi Index rose five-tenths of one percent, and Hong Kong’s Hang Seng Index gained four-tenths of one percent. 
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China’s export growth accelerated in January amid mounting trade tension with Washington while imports surged as factories stocked up ahead of the Lunar New Year holiday.

Exports rose 11.1 percent compared with a year earlier to $200.5 billion, up from December’s 10.9 percent growth, trade data showed Thursday. Imports surged 36.9 percent to $180.1 billion, up from the previous month’s 4.5 percent.

China’s politically sensitive trade surplus with the United States widened by 2.3 percent from a year ago to $21.9 billion, while its global trade gap narrowed by 60 percent to $20.3 billion.

“Export growth remained robust in January, indicating steady global demand momentum,” said Louis Kuijs of Oxford Economics in a report.

“While we expect the favorable external setting to continue to support China’s exports, rising U.S.-China trade friction remains a key risk,” Kuijs said. “We expect the U.S. administration to scale up on measures impeding imports from China.”

US import duties

Beijing’s steady accumulation of multibillion-dollar trade surpluses with the United States has prompted demands for import controls.

President Donald Trump’s administration has increased duties on Chinese-made washing machines, solar modules and other goods it says are being sold at improperly low prices. It is set to announce results of a probe into whether Beijing improperly pressures foreign companies to hand over technology, which could lead to further penalties.

Exports to the United States rose 12.1 percent in January from the same time last year to $37.6 billion while imports of U.S. goods rose 26.5 percent to $15.7 billion, according to the General Administration of Customs of China.

Exports to the European Union, China’s biggest trading partner, rose 11.6 percent to $33.7 billion while purchases of European goods rose 44.4 percent to $23.8 billion. China reported a $9.9 billion trade surplus with the EU but that was down 29.8 percent from a year earlier.

Trade war accusations

Chinese authorities have accused Trump of threatening the global trade regulation system by taking action under U.S. law instead of through the World Trade Organization. Beijing has filed a challenge in the WTO against Washington’s latest trade measures.

Beijing announced an anti-dumping investigation last weekend of U.S. sorghum exports. In response to suggestions the move was retaliation for Trump’s increase tariffs, Chinese government spokespeople say it is a normal regulatory step.

January’s import growth was driven in part by demand from factories that are restocking before shutting down for the two-week holiday. Each year, the holiday falls at different times in January or February, distorting trade data.

Forecasters expect Chinese demand to weaken this year as Beijing tightens controls on lending to slow a rise in debt. That is a blow to its Asian neighbors, for which China is the biggest export market, and for suppliers of iron ore and other commodities such as Brazil and Australia.
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Dutch lender Rabobank’s California unit agreed Wednesday to pay $369 million to settle allegations that it lied to regulators investigating allegations of laundering money from Mexican drug sales and organized crime through branches in small towns on the Mexico border.

The subsidiary, Rabobank National Association, said it doesn’t dispute that it accepted at least $369 million in illegal proceeds from drug trafficking and other activity from 2009 to 2012. It pleaded guilty to one count of conspiracy to defraud the United States for participating in a cover-up when regulators began asking questions in 2013.

The penalty is one of the largest U.S. settlements involving the laundering of Mexican drug money, though it’s still only a fraction of the $1.9 billion that Britain’s HSBC agreed to pay in 2012. It surpasses the $160 million that Wachovia Bank agreed to pay in 2010.

Three execs behind cover-up

Under the agreement, the company will cooperate with investigators. The federal government agreed not to seek additional criminal charges against the company or recommend special oversight.

The settlement describes how three unnamed executives ignored a whistleblower’s warnings and orchestrated the cover-up. Two of the executives were fired in 2015 and one retired that year.

“Settling these matters is important for the bank’s mission here in California,” said Mark Borrecco, the subsidiary’s chief executive.

In 2010, Mexico proposed new limits on cash deposits at the country’s banks, resulting in more tainted deposits at Rabobank branches in Calexico and Tecate, according to the plea agreement. Accounts in the two border towns soared more than 20 percent after Mexico’s crackdown, and bank officials knew the money was likely tied to drug trafficking and organized crime.

Risky customers escaped scrutiny, including one in Calexico who funneled more than $100 million in suspicious transactions. Customers in Tecate withdrew more than $1 million in cash a year from 2009 to 2012, often in amounts just under federal reporting requirements.

“The cartels probably thought these were sleepy towns, no one’s going to notice,” said Dave Shaw, head of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations in San Diego. “When you bring in $400 million, someone is going to notice. The bank should have known and they just chose not to report any suspicious activity.”

Punishment for cover-up, not crime

Heather Lowe, legal counsel and government affairs director at research and advocacy group Global Financial Integrity, said the illegal activity bore similarities to what happened with HSBC and Wachovia.

But those banks were charged with laundering Mexican drug proceeds, while Rabobank only acknowledged covering it up.

“It seems in this case we have the bank taking the hit for lying but not for the violations themselves,” said Lowe, who expects the three unnamed executives will be prosecuted.

A whistleblower alerted two of the three executives to suspicious activity in 2012 and shared her concerns with the bank’s “executive management group,” according to the plea agreement. She also spoke with regulators amid concerns in the company that the government scrutiny could endanger a pending merger. She was fired in July 2013.

The government has a cooperating witness in former compliance officer George M. Martin, who agreed in December to cooperate with authorities in a deal that delayed prosecution for two years.

Martin, a vice president and anti-money laundering investigations manager, acknowledged he oversaw policies and practices that blocked or stymied probes into suspicious transactions and said he acted at the direction of supervisors, or at least with their knowledge.

Martin told investigators that he and others allowed millions of dollars to pass through the bank.

Rabobank, based in Utrecht, Netherlands, said last month that it set aside about 310 million euros ($384 million) to settled allegations against its subsidiary. Sentencing is scheduled May 18.
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