Newcastle Knights new chairman Brian McGuigan. Picture Jonathan Carroll
THE first step towards solving any problem is to recognise that there is an issue in the first place.
And with that in mind, I have to take my hat off to new Knights chairman Brian McGuigan and his six fellow directors after their first full board meeting this week.
During the three years that Newcastle’s NRL franchise was owned by Hunter Sports Group’s administration, it seemed the standard response to any drama was to (a) vehemently deny anything was amiss or (b) bunker down behind website statements and hope for the controversy to blow over.
When it came to dealing with player misbehaviour, there was a distinct impression that a bloke’s ability on the field was the primary consideration.
When Mark Taufua made inappropriate comments on Twitter, he was fined $5000 and publicly hung out to dry, even though he had played his last game for Newcastle and already signed for Cronulla.
Taufua was of no further use to the Knights, so they made an example of him.
Yet when Willie Mason was found guilty of drink driving, if any club sanction was imposed it was never disclosed.
Worst of all, when new recruit Russell Packer bashed a man unconscious and stomped on his head, the club was prepared to stand by him even though they knew he would plead guilty.
Even after Packer was jailed for 12 months, there were discussions behind the scenes about taking him back once he was released.
The overriding impression was that nothing mattered more than ensuring Newcastle had the strongest possible team. It seemed the Knights did not sack Packer immediately because they felt he was too valuable. I reckon they expected he would be stood down by the NRL for a period and then allowed to resume his career.
It was only after he was incarcerated that they decided to terminate his contract.
Following hot on the heels of the Packer scandal were other assault cases involving young prop Zane Tetevano and Knights official Ben Rogers, and then last week it was revealed that rising star Joseph Tapine had been charged after an alleged incident in which a man’s jaw was broken.
So in the space of 12 months, the club’s reputation has been tarnished four times by employees appearing in court, charged with serious crimes.
Throw in the 2007 admission from Newcastle’s greatest-ever player, Andrew Johns, that he used recreational drugs throughout his illustrious career and the 2009 arrest that led to Danny Wicks being jailed, and the club’s image has taken a battering for a sustained period. Fans are entitled to expect better.
Such incidents undermine all the good work that the Knights do in the community.
The vast majority of their players are positive role models, but it is an unfortunate reality that no amount of hospital visits or junior coaching clinics will create as many headlines as a players disgracing themselves with drunken violence.
It is unrealistic to expect young footballers to behave like angels 24/7. But if a club has strong leaders who are willing to enforce a strict code of conduct, at least players know where they stand.
Whenever such standards are applied inconsistently, the likelihood of anti-social behaviour increases.
So Sporting Declaration can only applaud McGuigan for his statement of intent after this week’s board meeting.
‘‘We see it as one of the major issues that we have to address, the code of conduct,’’ McGuigan told me on Wednesday.
‘‘We have a great board and two of those members [Katie Brassil and Eileen Doyle] are two very capable ladies and you can quite understand how they are concerned about our image and the way we approach certain things … our history in this area needed to be addressed.
‘‘That’s one of the major issues that we are confronting.’’
This new board face myriad challenges in rebuilding the club and reconnecting with the community after the dysfunctional HSG era.
But cracking down on player misconduct and holding any offenders to account would seem a good place to start.
After the issues of the past 12 months, enough is enough.
Players need to lift their game, off the field. McGuigan and his board have identified this. Now it is up to them to enforce it, by whatever means are necessary.
BIG BLOW: Marcos Flores at training on Friday before straining his hamstring. Picture: Peter StoopFOR the best part of two frustrating years, Mitch Cooper has been on the periphery at the Jets.
Life had become one long rehabilitation program after consecutive knee reconstructions stopped the midfielder in his tracks.
A headline grabber when controversially plucked from youth league to captain the now defunct Gold Coast United on debut at the wish of owner Clive Palmer, Cooper has not added to his 11 A-League appearances – five for the Jets – since March 2013.
But the wait and angst finally appears over.
Cooper is in the Jets squad for the battle against Wellington Phoenix at Hunter Stadium on Saturday.
The 20-year-old comes in for Marcos Flores, who limped off the training pitch on Friday after straining his hamstring.
Coach Phil Stubbins will not finalise the starting side until Saturday, but Joel Griffiths is expected to start for Flores.
‘‘Mitch Cooper is a player I rate very, very highly,’’ Stubbins said.
‘‘Certainly in terms of the dynamism and wanting to play in a certain way.
‘‘He brings a lot of weapons that allow you to play in such a way and really get on the front foot.
‘‘The sooner Mitchell gets to a point where he is starting to play games for us and gets some minutes under his belt, the better it will be for everyone.’’
Cooper has played five games in youth league since returning from his second major surgery.
The attacking midfielder tore the anterior cruciate ligament in his left knee when caught in a challenge against Western Sydney Wanderers in youth league in January.
That match was his second NYL start and fifth appearance after reconstructive surgery on his right knee.
‘‘It does take time for these players to reach full condition,’’ Stubbins said.
Flores, who has also returned from a knee reconstruction, was starting to find his rhythm and form.
‘‘It’s disappointing for him and the team, but it gives an opportunity to someone else,’’ Stubbins said.
‘‘We have some good players who will be able to step into the breech.’’
Apart from replacing Flores, Stubbins said he would ‘‘freshen up’’ the side as they search for their first win of the campaign.
‘‘There will be a couple of changes in personnel to [counter] what we feel Wellington bring to the table,’’ the coach said.
‘‘Andrew Hoole has done very well.
‘‘I think he is in a good space and has certainly matured in the time I have been at the club.
‘‘Whether he starts, we will have to wait and see.
‘‘It’s all about the supporters for us this week.
‘‘We really want to put on a show and strive to do everything we can to make them feel happy after the game.
‘‘It will be a tough game but we will be up for it.
‘‘If you look at the A-League, if you get yourself a win you shoot up the ladder.
‘‘It is massively important to everyone at the club.
‘‘We need to stick together and be very positive in our outlook.
‘‘A win can change everything.’’
The Jets have led in four of the eight games but have been unable to convert the advantage into three points.
‘‘It would be nice to score one and then another one, and keep a clean sheet,’’ Stubbins said.
‘‘I watched the Chelsea game against Spurs. After 15 minutes of parity at the start, Chelsea dominated the first half [and led 2-0].
‘‘In the second half they backed off and were very compact in defence and didn’t give Spurs a look in.
‘‘If we can get ourselves into a position where we are in front, we need to recognise the situation for what it is.
‘‘Mentally the boys are in a better place to deal with that.
‘‘We have to get that goal first.’’
Wellington are fresh from a 5-1 dismantling of Melbourne City.
The Kiwis have won four games and lost four.
‘‘If they get the ascendancy as they showed last week, they are capable of going on with it,’’ Stubbins said.
‘‘Melbourne City, in the first half hour, should have had a couple of goals.
‘‘But when Wellington got on a roll they certainly took it to Melbourne City.
‘‘They didn’t back off, they were quite relentless and good for the five goals in the end.
‘‘They certainly have some wonderful players.’’
Nathan Burns, who played 12 games on loan for the Jets last season, has led the way for the Phoenix with seven goals.
‘‘Nathan is a great player and a great kid,’’ Stubbins said. ‘‘I was fortunate to work with him at Adelaide United. He showed all the signs and the promise as a youngster. He has kicked on with that now.’’
Caption. Built on coal: Liangshuijing Coal Mine, Shenmu County. Photo: Sanghee Liu
Shenmu is a ghost town Photo: Sanghee Liu
Ripple effect: A coal-generated power station in Shenmu County, China. Photo: Sanghee Liu
Empty apartments in a ghost town in Shenmu. Photo: Sanghee Liu
By the time Wang Xia had borrowed enough money to usefully invest in China’s construction-driven resources boom, in 2012, real estate and resource prices had been surging for eight years.
Her outpost town of Shenmu, in the shadows of the western reaches of the Great Wall, had become known as “China’s Kuwait” for the 50 billion tonnes of coal reserves buried beneath its loess sands. As many as one in every 100 of Shenmu’s 400,000 residents had each amassed assets worth more than one 100 million yuan ($19 million), according to one study. The local construction, finance and coal barons were reportedly writing multi-million IOU’s on scraps of paper, flipping mining tenements as if they were shares and lining brand new six-lane streets with their Lamborghinis, Bentleys and Ferraris.
Wang, a 55-year-old mother-of-two, gathered one million yuan from banks and family members and entrusted it to a luxury car dealer, who promised interest returns more than 10 times bank rates while comforting her with the “security” of a showroom filled with gleaming BMWs, Audis and Land Rovers. “They told me, ‘we are car traders and will never collapse – if one day we don’t have money, you can take our cars’,” says Wang.
Six months later the showroom cars all disappeared, and so too did her private bankers.
For Shenmu investors, who are chasing embezzled funds upwards of Yuan20 billion in a country without an effective consumer or corporate regulator, there seems precious little left to salvage. The cranes across the Kuyu River have slowed to a crawl, as officials and their favoured developers abandon dreams of building an entire new city.
The nation’s most generous public health and education programs, which Shenmu once enjoyed, have all been halted. The county Communist Party chief has been removed from his post. In a moment of fleeting fame, the nation was entertained by a local bank deputy – dubbed “Sister House” – who explained in court that accumulating 40 Beijing properties under various names was a relatively normal thing to do in some parts of the country.
“I wake up in the middle of the night, my hair has gone all grey,” says Wang.
This week, in Canberra, it was Treasurer Joe Hockey looking decidedly grey, as he fought with his Prime Minister and the Senate to inject some budget rectitude before the full force of China’s construction slowdown hits. Prime Minister Tony Abbott – who came to power with relentless attacks on the Rudd and Gillard government’s failure to balance the budget – told reporters that the end of history’s greatest resources boom was really just a short term blip. “I accept the terms of trade are declining but these are cyclical factors, they are not structural factors,” he said.
Those who watch the internal dynamics of the Chinese economy more closely, however, sense a severe case of denial.
In the short run, says Dong Tao, chief economist for the Asia region at Credit Suisse investment bank, President Xi Jinping’s anti-corruption campaign and the parlous state of local government finances “make it impossible to continue what they’ve done in the last five years”. And in the medium term, he says, it will be even harder. Tao says the “golden age” of endless infrastructure, housing, exports and government stimulus is over. “This is where people are too optimistic, believing that within one or two years things will be better.”
China’s transition to a services-based and consumption-driven economy means that its appetite for commodities such as Australian iron ore is going to “shrink dramatically”, says Tao.
It’s now well known that China’s decade of hyper-industrialisation led to unprecedented prices for key Australian commodities. The most rigorous study, a recent Reserve Bank discussion paper led by Peter Downes, found the mining boom (effectively defined as China’s acceleration of industrial output) delivered an extra 13 per cent in disposable income to the average Australian household for what was, in most cases, no extra effort.
The paper shows that by 2013 the mining boom had pushed up wages (by 6 per cent), employment (3 per cent) and even population (1 per cent). It prompting a sustained housing boom across the country despite interest rates being 2 per cent higher than otherwise. It pushed up the Australian dollar and therefore massively improved purchasing power for tradeable goods which led, for example, to 30 per cent more motor vehicle sales than would otherwise have been the case. Manufacturers were hurt on exports but benefited from supplying the huge surge in mining investment, which quadrupled as a share of GDP.
The biggest single beneficiary, however, was Canberra. These super corporatetax revenues were redistributed in the form of family benefits, baby bonuses and eight years of consecutive personal income tax cuts. Perhaps the Abbott Government’s central political predicament is that those multi-billion dollar windfalls were much easier to give than take away.
Contrary to Abbott’s bold claim, plunging terms of trade have already shredded his election promise to return to a balanced budget by 2018-19. The imbroglio about whether and how to push health and education spending cuts through a hostile Senate – the “barnacle debacle” – was a minor foretaste of things to come.
This week Treasury Secretary Martin Parkinson delivered a “serious warning” about the politically-challenging reforms that will be necessary to avert a fiscal and broader economic crisis. “Unless we tackle structural reform, including fixing our fundamental budget problem, we will not be able to guarantee rising income and living standards for Australians,” he said. Parkinson speaks from personal experience . The esteemed economist is about to be sacked as punishment for guiding the previous government’s work in reforming the tax base with a carbon tax and emissions trading scheme.
The week began with figures showing Chinese manufacturing has slumped again and the country is on track for the lowest GDP reading since 1990. China is likely to fall short of the 7.5 per cent growth target for the first time in 15 years, according to Bloomberg’s consensus forecast of economists.
But the Chinese GDP slowdown masks a much greater impact on the commodities prices which underwrite the Australian economy and particularly the budget. Wednesday’s national accounts showed Australia has just endured an “income recession”, with national income falling in the two quarters up until September. And that was before the prices of iron ore, coal and oil (which is linked to LNG pricing) really fell through the floor, reaching new lows this week.
These latest negative surprises have pushed the Reserve Bank to consider lowering interest rates at its next board meeting in February, according to a report by The Age economics editor Peter Martin. But the bank, like everybody else, is groping in the dark for clues on how China’s notoriously complex and opaque political-economy will evolve from here.
To this end, the bank has invited one of China’s foremost economists, Yu Yongding, to spend a month in its Martin Place headquarters with the team of nine specialist China watchers that it has been nurturing since the Global Financial Crisis. Professor Yu, formerly a member of the monetary policy committee of the People’s Bank of China, says the slowdown in GDP growth is a “necessary cost” of transitioning from resource-intensive construction towards a more sustainable growth and economic model based on services and consumption.
“The good news is that the real estate bubble has been contained,” says Yu, noting that China’s addiction to real estate construction was more extreme than any significant nation in history, with the possible exception of Spain before the bursting of its bubble. “China is still a poor country in per capita terms and yet home ownership has surpassed 90 per cent. There are so many luxury hotels, skyscrapers and magnificent government buildings – I call it madness.”
The bad news, says Yu, is that China will also need to embark on broad and bold reforms if it is to make the transition to sustainable growth.
China’s most pressing economic problem is the most rapid accumulation of debt that any country has ever known. Standard Chartered calculations show that China’s debt to GDP ratio has surged from 150 to 250 per cent in just five years. In other words, in the absence of reform, China is stuck in a savage debt-spiral where ever-increasing volumes of credit are producing diminishing returns.
Last month one of the United State’s most respected economic institutions, The Conference Board, released a major report that projected China’s trend growth rate to fall to 5.5 per cent for the remainder of this decade, and 3.5 per cent through to 2025, unless major reforms are enacted to provide space and necessary institutions for consumers and non-state-backed investors to thrive. It’s a far cry from projections of 8 per cent endless growth which were common until the difficulties of this year.
“The observable reality is things are not going in a more marketised or liberalised direction,” says the director of the Conference Board’s China Centre, David Hoffman, listing recent crackdowns on information flows and policy debates, campaigns against Western corporations, and an apparent de-institutionalisation of top policy processes as indicators of “anti-reform”.
Hoffman says that, longer term, the Chinese Communist Party is likely to choose liberalising reform but only after exhausting all other options. “‘Kicking the can’ is a proverb in every country,” he says.
It turns out that structural reform is hard in every country. And all the more so in political systems where unsuccessful leaders risk losing far more than just their jobs.
“The politics are very important behind the scene,” says Yu, the renowned economist currently assisting the Reserve Bank. “If the country is politically very stable then people are tolerant to mistakes made by leadership. But if politically you are not that strong then you tend to solve short term problems and leave those structural problems to your successors to deal with. The psychology is ‘not now, you have to wait till next year, and next year you think maybe the next year’.”
Yu, like Hoffman, thinks it likely that the Xi Jinping administration will ultimately choose to tackle the country’s economic structural problems, if only because there is no other viable choice.
“Passing the parcel, passing the grenade – this government is unlucky because the grenade is in their hands and there is no one to pass it to in the next five years,” says Yu.
Yu says Chinese authorities have not yet begun to create the kinds of institutions that are required for efficient markets to be sustained. And nor have they shown any willingness to let growth fall very far. “Five per cent could mean the debt-to-GDP ratio blowing out of control, capital flight, and even social upheaval,” he says. The result of this intolerance for slow growth is that Beijing will continue to flirt with policies that enable the construction of even more buildings that nobody wants. This will put a floor under the short term price of Australian commodities and make the future more precarious.
“You have to rally morale so people understand and give their support and then say ‘lets tighten our belts’,” says Yu, providing a lesson in public policy making that could apply equally in Australia. “But we haven’t reached this stage yet. I think Xi Jinping is trying to consolidate his leadership and form consensus and then can carry out some dramatic reforms. You have to prepare before going to war.”
In recent weeks there have been some more encouraging reform-oriented signs, including an ambitious free trade agreement with Australia.
Whether Xi, or Abbott, are preparing for reformist wars to rescue their respective economies is open to speculation. In Shenmu, however, in the same region where President Xi’s father made his name as a revolutionary in the 1930s, it seems clear that time is running out.
All that remains at the epicentre of history’s biggest resources boom is thousands of bankrupt families and row after row of empty multi-storey apartments and office blocks, dotted with shuttered luxury stores and expensive restaurants, bearing down on wide empty thoroughfares and a vacant city square. Here, at least, it’s hard to see how the Chinese economy can continue it’s extraordinary success without market and government institutions that price risk, reward effort and punish mal-investment.
Li Chunfei, a ruddy-cheeked 37-year-old taxi driver, says his faith in an inexorably-growing economy has evaporated. “Everyone is trying to sell,” says Li, explaining that he had entrusted his money to a developer who absconded three months ago.
Zhao Gangliang, who drives shuttle buses for state-owned coal giant Shenhua, and has lost his lifetime savings, explains: “90 per cent of people in Shenmu have been burnt one way or another”. .
Wang Xia, the mother-of-two who lost a million yuan of borrowed money to the luxury car dealers, is still hoping against hope that something will turn up. “I’m under a lot of pressure from my family,” she says. Helpfully, red banners warn against partaking in “illegal fundraising”, alongside posters that advertise asset forfeiture auctions of second-hand BMWs, Audis and Land Rovers.
Opposition leader Bill Shorten and ACT Chief Minister Katy Gallagher take a walk around Parliament house after Ms Gallagher announced her departure. Photo: Jay CronanACT Chief Minister Katy Gallagher declares for the SenateRight-hand man Barr set to take over as Chief MinisterAndrew Barr set to become Australia’s first openly gay state or territory leaderAndrew Barr’s Chief-of-Staff, Meegan Fitzharris in line to take Gallagher’s spotKate Lundy to leave as ACT Labor senator
Bill Shorten did not waste any time asking Katy Gallagher to run for the Senate.
Shortly after outgoing ACT Senator Kate Lundy announced her decision to leave politics at an ALP dinner last Wednesday, Mr Shorten called Ms Gallagher to say she would have his full support if she decided to have a go.
Mr Shorten had been thinking about options to replace Ms Lundy since she earlier advised him she would not recontest the next federal election. From his point of view, there was one obvious choice: the ACT Chief Minister.
As he explained on Friday: “She is such a distinguished candidate … whatever Katy does, she is good at it”.
He got the thumbs up from Ms Lundy and Penny Wong, as Labor Senate Leader, before he made his pitch to Ms Gallagher. While he has made plain he does not want to intervene in the local pre-selection process, he did want to use the opportunity of the vacant but very safe Labor seat to boost the party’s firepower. A captain’s suggestion if you will.
Ms Gallagher seemed surprised to get Mr Shorten’s call last Wednesday and told the Labor leader she would think about the idea. This Thursday, she called Mr Shorten back to say she was quitting the Legislative Assembly to have a tilt at the Senate.
As far as bombshells go in Canberra, Ms Gallagher’s decision is right up there.
The mood among Labor circles at the Assembly on Friday was wake-like after Ms Gallagher made her shock statement. Sure, everyone knew that there was a vacant spot that would need to be filled by someone. But the (entirely misplaced) gossip around town was that the ABC’s Virginia Haussegger might get the gig.
Federal Labor MPs also expressed surprise about what was a very well kept secret for once in politics – even though they furiously agreed with the idea of Ms Gallagher’s candidacy.
From Ms Gallagher’s perspective, the move is a really, really smart one. She has only been chief minister for three years, yes, but has been a minister for 12 and an MLA for 13. If she does not want her political career to end with the inevitable end of her chief ministership, then it makes a lot of sense to seize the Senate seat now.
Opportunities do not come up very often for federal Labor seats in the ACT. After all, Ms Lundy was in the Senate for almost 20 years before she decided to move forward last week. In the lower house, the safe seats of Fraser and Canberra are currently occupied by two ambitious MPs at the start of their parliamentary careers.
And with plans for Ms Lundy to go in the first half of 2015, Ms Gallagher will have a tidy amount of time to learn the ropes of the Senate (which is more complicated than it looks) and the federal caucus (which is as jungly as it seems) before the next federal election.
It will, of course, mean a demotion in the short-term at least. It appears that Ms Gallagher will not get a frontbench spot straight away (there was no deal with Mr Shorten for an immediate one). She will be going from government to opposition for the first time in her career and from the small pond of the Legislative Assembly to the wilder and less forgiving waters of the Federal Parliament.
But Ms Gallagher is steelier than her approachable manner suggests (if anyone is in any doubt, they should just consult her personal back story).
From Labor’s point of view, you can see why Ms Gallagher was Mr Shorten’s first choice.
Without suggesting she is a political genius, she is universally regarded – at least on the Labor side of the show – as a politician of enormous ability and sense. She has proven passions for reform in key Labor areas such as education and welfare. And has been the country’s longest serving health minister.
Ms Gallagher is also known for her loyalty and down-to-earth approach. Along with the fact that she is regularly seen down at the local shops with her kids, she is not a showy or aggressive customer. At times, you could be forgiven for forgetting she is a politician.
So she should form an important part of Labor’s post Rudd-Gillard-Rudd renewal. While the 2013 election brought talent and optimism into the caucus with the likes of Jim Chalmers, Clare O’Neil, Terri Butler and Tim Watts, they don’t have anything like Ms Gallagher’s experience.
The outgoing ACT Chief Minister is also roughly the same vintage (early to mid-40s) as Jason Clare, Tony Burke, Tanya Plibersek and Chris Bowen – other rising Labor stars who will form the backbone of the next generation of Labor leadership.
And if some schnozes are put out of joint with Ms Gallagher’s eventual move to the Labor frontbench, it will be a relatively small price to pay.
The Legislative Assembly’s loss will be federal Labor’s great big gain. Potentially the country’s too.
Judith Ireland is a Fairfax Media journalist.
Kalynda Davis is in custody in China for allegedly trying to smuggle ice to Australia. Photo: SuppliedShe liked playing basketball, posting Instagram photos and going to music festivals.
But Sydney woman Kalynda Davis, 22, is now facing possible death by firing squad in China after being caught allegedly smuggling 75 kilograms of the drug “ice” out of the country.
Consular staff and the family of the young Penrith woman closed ranks on Friday in the hope of minimising publicity on the case.
A family member reported Ms Davis missing from their two-storey Glenmore Park home on November 5, only to find out several days later that she was in custody in China.
She was arrested with Peter Gardner, a 25-year-old from Richmond in Sydney’s north-west, and charged with smuggling a commercial quantity of methylamphetamine from Guangzhou city to Australia.
Friends suggested that Ms Davis had only recently met Mr Gardner and the bizarre turn of events were extremely out of character.
One friend, Cassandra Hoegal, posted online that she “got caught up with the wrong guy”.
Ms Davis was a talented basketball player, making it to state representative teams with the Penrith Panthers and once posting on a social media profile that basketball was “my life”.
Another friend who played netball with Ms Davis said it was “devastating” and “so very out of character”.
She went to a Christian school and was raised in a well-off family in Sydney’s west. Her father Larry, an ANZ banker, did not return calls on Friday and a spokesman for the Department of Foreign Affairs and Trade said it would not be commenting.
Her Instagram and Facebook profiles, which she used prolifically to share photos from music festivals and basketball games, were shut down.
A NSW police spokesman said Ms Davis was reported missing to them on November 5 and when she was arrested in China the matter was referred to DFAT.
The two are the latest in a spate of arrests of Australians on drug-related charges, some whom are potentially facing the death penalty.
China’s drug laws state that people found guilty of possessing more than 50 grams of meth or heroin, or other narcotic drugs of “large quantities”, could be subject to the death penalty.
DFAT is currently extending consular assistance to nine Australians who are detained on serious drug charges.
The flurry of arrests prompted DFAT to issue an updated travel advisory in September warning travellers of China’s severe drug laws, and the “substantial risks involved in carrying parcels for others which may conceal narcotics”.
“We have some concerns that there may be a pattern in the cases of some of the individuals being arrested,” a spokesman said at the time.
The arrests have been centred on the southern province of Guangdong, a notorious hub for methamphetamine production and home to an anti-drug sweep codenamed Operation Thunder, which has netted hundreds, including dozens of foreigners.
with Nick Ralston
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