Senators push sanctions to send Putin election meddling warning

WASHINGTON (Reuters) – A pair of prominent Republican U.S. senators said on Sunday that the United States must move promptly to prepare new sanctions against Russia to discourage interference in upcoming elections.

FILE PHOTOS: Republican U.S. Senators Marco Rubio (L) and Lindsey Graham are seen in this combination photo from U.S. Senate hearings on Capitol Hill in Washington, U.S. on March 14, 2018 and on June 18, 2018 respectively. REUTERS/Joshua Roberts/File Photos

Senator Lindsey Graham said additional sanctions needed to be teed up before President Donald Trump holds a second meeting with Russian President Vladimir Putin after the U.S. leader came under heavy criticism for failing to confront Putin about interference in the 2016 election at a summit last Monday.

“You need to work with Congress to come up with new sanctions because Putin’s not getting the message,” Graham said on CBS’ “Face the Nation.” “We need new sanctions, heavy-handed sanctions, hanging over his head, and then meet with him.”

Undaunted by the backlash in his own party to his first meeting, Trump invited Putin to a White House meeting sometime this autumn. Congressional elections will take place in November.

Representative Trey Gowdy, the Republican chairman of the House Oversight and Government Reform Committee, questioned the wisdom of Putin being ushered into the White House.

Talking to Putin about matters such as the civil war in Syria, Gowdy said, “is very different from issuing an invitation. Those should be reserved for, I think, our allies like Great Britain and Canada and Australia and those who are with us day in and day out.” Gowdy made his remarks during an interview on television’s “Fox News Sunday.”

Republican Senator Marco Rubio wants a vote on a bill called DETER that would impose new sanctions if U.S. intelligence officials determine Russia meddled in U.S. elections. Rubio co-authored the legislation with Democratic Senator Chris Van Hollen, a bipartisan effort revived by the fallout of last week’s summit.

“What I think is indisputable is that they did interfere and they will do so in the future,” Rubio said on CNN’s “State of the Union.”

Last Thursday, Rubio and Van Hollen, noting the “urgency of the challenge before our nation,” wrote to the chairmen of the Senate Banking and Foreign Relations committees pressing them to hold hearings on the legislation before the start of an early August recess.


Putin has denied that Russia tried to influence the 2016 presidential election after the U.S. intelligence community concluded Russia interfered through cyber attacks and social media in a bid to boost Trump’s candidacy.

Under pressure from Congress, which last year passed a tough sanctions law targeting Russia, the U.S. Treasury in April imposed sanctions on Russian officials and oligarchs for election meddling and “malign” activities.

The DETER Act would make sanctions more automatic and aim to punish Russia’s finance, energy, defense and other sectors.

The U.S. director of national intelligence would be required to conclude if any foreign nations interfered in elections one month after Americans cast their votes, triggering strict sanctions within 10 days if interference was detected.

Republican Senate Majority Leader Mitch McConnell last week identified the bill as a potential step Congress could take to push back against Russia as Senate Democratic leader Chuck Schumer called for sanctions and other deterrents.

But the U.S. oil and gas industry is lobbying against the bill because of worries that heightened sanctions could affect U.S. investments in Russia, congressional sources said.

U.S. businesses could face an uphill battle, however, if they aim to block or defang the legislation.

“The sanctions are only implemented if Russia is deemed to have interfered in our election. Pretty hard to say: ‘C’mon guys, don’t take that too seriously.’ I mean, what representative of any industry could credibly make that argument? That’s pretty tough,” Democratic Senator Chris Coons said in a hallway interview late last week with Reuters.

Reporting by Pete Schroeder; Writing by Amanda Becker and Richard Cowan; Editing by Mary Milliken and Peter Cooney

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SABIC deal lets Saudi Arabia delay Aramco IPO, spend on growth: sources

DUBAI (Reuters) – A proposed reshuffle of state assets would allow Saudi Arabia to delay the listing of national oil giant Aramco until 2020 or beyond while still spending on economic development projects, according to three sources familiar with the matter.

FILE PHOTO: The logo of Saudi Aramco is seen at Aramco headquarters in Dhahran, Saudi Arabia May 23, 2018. REUTERS/Ahmed Jadallah/File Photo

Late last week Aramco confirmed a Reuters report that it was working on a possible purchase of a “strategic stake” in local petrochemicals maker Saudi Basic Industries Corp 2010.SE from the Public Investment Fund (PIF), the kingdom’s top sovereign wealth fund.

The deal could inject tens of billions of dollars into the PIF, giving it resources to proceed with its plans to create jobs and diversify the economy beyond oil exports, including a $500 billion business zone in the northwest of the country.

A major goal of the planned Aramco listing – which was initially slated for the end of 2018 and could prove the biggest IPO in history – was to raise money for the PIF, making the fund an engine for transforming the Saudi economy.

A SABIC deal would allow the government to buy time for the initial public offer of shares in Aramco, according to industry and international banking sources, who declined to be named due to the sensitivity of the matter.

It could raise roughly as much money for the PIF as an Aramco IPO, while giving the government more time to reach decisions on contentious aspects of the flotation such as whether Aramco shares should be listed on a foreign market as well as in Riyadh.

“The PIF will have more cash to invest and there is no need to IPO now,” one of the sources said.

Aramco declined to comment on its IPO plans, and a Saudi government official did not respond to a request for comment.

Aramco’s Chief Executive Amin Nasser said on Friday in an interview with Saudi-owned Al Arabiya TV that the SABIC acquisition was a complex deal and would need a certain timeframe to be completed, delaying the Aramco IPO.

“There is no doubt that the potential acquisition of a strategic stake in SABIC … will delay the IPO,” he said.


Final decisions on the listing rest with Prince Mohammed, the sources said.

The planned IPO is the centerpiece of an ambitious plan championed by the crown prince to diversify Saudi Arabia’s economy beyond oil. When he announced the plan to sell about 5 percent of Aramco in 2016, he predicted the sale would value the whole company at $2 trillion or more.

Since then, however, many estimates by oil and gas industry analysts have been far lower, around $1.0-1.5 trillion, implying the PIF would receive a $50-75 billion windfall from the IPO.

The fund owns 70 percent of SABIC, which has a market capitalization of $104 billion. Aramco has not said exactly how much of SABIC it might buy but two sources told Reuters on Monday that Aramco aims to become a “majority” owner; buying the PIF’s entire stake could give the fund over $70 billion.

The PIF has officially reported assets of over $220 billion but most of that is believed to be tied up in real estate or stakes in big Saudi companies, which could not be sold without undermining the local property and stock markets.

The SABIC deal would put temporary pressure on the finances of Aramco, the government’s main source of revenue. But higher oil prices this year have given Riyadh more money to play with.

Investment bank Jadwa forecasts state oil revenues of $154 billion this year instead of the $131 billion budgeted by Riyadh last December.


If the Aramco IPO eventually goes ahead, at least two problems will need to be resolved, according to several sources. One is the company’s valuation.

Prince Mohammed’s declaration of a $2 trillion valuation created a potential political headache. If the IPO produces a valuation much below $2 trillion, the Saudi public may conclude he is selling the country’s crown jewel too cheaply.

This might be finessed by selling part of the Aramco stake in a private placement, probably to deep-pocketed strategic investors in oil-consuming states such as China. A placement is being considered, one industry source said, but that would take many months to finalize.

The SABIC deal would boost Aramco’s valuation giving it access to petrochemicals assets domestically and abroad, the sources said.

The other major issue is whether some Aramco shares will be listed on a foreign exchange such as New York, London or Hong Kong. Prince Mohammed initially proposed an overseas listing to attract foreign capital and lift Saudi Arabia’s profile.

But some officials oppose the idea on the grounds it would dilute the benefits to Riyadh’s bourse of hosting Aramco. And an overseas exchange could impose tougher governance, disclosure requirements and legal risks for Aramco.

These risks may have strengthened the case for a Riyadh-only listing. But an IPO in Riyadh alone might have to be smaller than 5 percent because the market’s capitalization of just $535 billion would struggle to absorb a listing of Aramco’s size.

That may encourage authorities to delay listing Aramco until after Riyadh’s market enters emerging market equity indexes next year, making it more liquid. Entry could attract around $30-45 billion of fresh foreign money, funds estimate.

Riyadh will join FTSE Russell’s index in stages between March and December 2019, and MSCI’s index between May and August 2019. One banking source said some bankers had advised Prince Mohammed to wait until the arrival of foreign funds directly benchmarked to those indexes, since the funds could be counted on to buy Aramco shares as an index component.

Additional reporting by Hadeel Al Sayegh and Tom Arnold in Dubai, Clara Denina and Dasha Afanasieva in London and Jennifer Hughes in Hong Kong; Editing by Pravin Char

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Wavering Rand sets off Supreme Court spectacle

Rand Paul is one of a handful of senators who’ll determine whether Brett Kavanaugh lands on the Supreme Court — and the Kentucky Republican has every intention of maximizing his leverage.

Paul is again inviting fellow senators to play the will-he-or-won’t-he guessing game when it comes to his decision — expressing grave concerns about Kavanaugh’s approach to personal privacy while insisting his vote could go either way, depending on what the judge says in the coming weeks and months.

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“I am honestly undecided. I am very concerned about his position on privacy and the Fourth Amendment. This is not a small deal for me. This is a big deal,” Paul said in an interview last week. “Kavanaugh’s position is basically that national security trumps privacy. And he said it very strongly and explicitly. And that worries me.”

The calculation, of course, isn’t that straightforward. GOP senators and strategists are skeptical that Paul would be willing to buck President Donald Trump, with whom he’s close, on such a monumental vote. For senators, it doesn’t get much bigger than a vote to confirm or reject a Supreme Court justice in waiting.

With Sen. John McCain (R-Ariz.) absent from the Senate, Paul could tank Kavanaugh if he joins with all Democrats in opposing him. And Paul has been more publicly critical of Kavanaugh than moderate Sens. Susan Collins of Maine and Lisa Murkowski of Alaska, two other pivotal GOP votes.

Paul must also reckon with the possibility that if Kavanaugh’s nomination fails, Republicans could lose the Senate this fall and with it the ability to confirm Trump’s nominees unilaterally.

Yet the civil libertarian community is bashing Kavanaugh. And Paul is still the de facto leader of that wing of his party given his views on privacy, torture and non-interventionism.

The GOP senator has not come out as strongly against Kavanaugh as he did against Secretary of State Mike Pompeo, for whom he eventually voted, and CIA Director Gina Haspel, who he followed through in opposing. Other like-minded Republicans have been more adamant.

“There are many potential nominees with a conservative record on abortion, guns, and regulations,” Rep. Justin Amash (R-Mich.), the most outspoken of them, wrote on Twitter. “The only question is will the Senate confirm one who is really bad on the #4thAmendment, when so much is at stake in upcoming digital privacy battles.”

Paul understands this is not a black-and-white call, and that political considerations will come into play. He has pointedly left himself some wiggle room to be convinced that the nominee understands where he’s coming from.

“Wouldn’t you rather have Kavanaugh than Ruth Bader Ginsburg? He’s probably good on economic liberty and overzealous regulation and things like that. So I don’t want to have it sort of in a vacuum,” Paul said. “I’ll have to weigh that versus other aspects that he may be a lot better than a Clinton appointee.”

A handful of red-state Democrats might end up backing Kavanaugh and take pressure off of Paul as potentially the deciding vote. But those Democrats are expected to withhold their opinions until all Republican senators have stated their intentions.

That means Paul could be headed for a familiar routine during his tenure: fellow Republicans pleading with him to be a team player and resist his impulses to go his own way. Many GOP senators have already come out in support of Kavanaugh before he’s even had his hearing, and some are beginning to gently prod Paul.

“There’s no doubt that Rand’s concerns about privacy and the Fourth Amendment are longstanding and genuine and existed long before this nomination. And I share many of those concerns,” said Sen. Ted Cruz (R-Texas). But not when it comes to Kavanaugh, Cruz said: “I think the body of Judge Kavanaugh’s work merit confirmation.”

“To me the best guide of what the likely outcome will be will be what happened with [Justice Neil] Gorsuch,” whom Paul supported, said Senate Majority Whip John Cornyn of Texas. “They’re different human beings for sure, but they have similar experience and judicial philosophy.”

But Paul contends that Gorsuch and Kavanaugh differ markedly on privacy rights. He is most concerned with Kavanaugh’s views on government metadata collection. “In my view, critical national security need outweighs the impact on privacy occasioned by this program,” Kavanaugh, a judge on the U.S. Court of Appeals for the District of Columbia Circuit, wrote in a 2015 opinion.

The senator said he’s worried that Kavanaugh “cancels out Gorsuch’s vote.”

“Gorsuch is probably the best on the Supreme Court right now on the Fourth Amendment and privacy. Better than anybody,” Paul said. “He believes that when you bank or have a phone that you do not give up your privacy interest.”

If Paul’s concerns about a high-profile Senate issue sound familiar, they should. He has a long record of becoming the center of attention in the Senate as the GOP’s contrarian: He shut down the government briefly once this year, threatened another shutdown, fought Senate Majority Leader Mitch McConnell on the PATRIOT Act in 2015 and famously filibustered former CIA Director John Brennan for 13 almost hours in 2013.

Paul and Trump are friendly despite Paul’s votes against some of his nominees. They spoke by phone last week after Paul came to Trump’s defense over his much-criticized meeting with Vladimir Putin. Privately, some Republicans believe Paul will ultimately fall in line, since opposing Kavanaugh could wreck the senator’s relationship with the president.

But allies of Paul aren’t so sure. Brian Darling, a former Paul aide who still speaks with the senator, said that Paul will push hard to see where Kavanaugh draws the line on privacy and legitimately could go either way.

“He very well could vote no if the senator doesn’t get some assurances that Kavanaugh has some respect for the Fourth Amendment,” Darling said.

“He has said he’s undecided. I haven’t seen very many Senate Republicans who have said they’re undecided,” said Sen. Ron Wyden (D-Ore.), who has routinely teamed with Paul to fight what he views as intrusive surveillance programs. “This nominee’s record as it relates to metadata, as it relates to location tracking, is right out of the Big Brother program.”

In the interview, Paul said he’s worried that advancing technology makes out-of-control government monitoring of Americans a real possibility, one that could easily come before the Supreme Court — and Kavanaugh if he is confirmed. But he said it could be awhile before he reaches a conclusion after examining Kavanaugh’s record and speaking personally with the nominee.

Until then, Republican leaders are laying off Paul for the most part, figuring a heavy hand won’t work.

“I hope he’s gettable. I hope in the end he’ll be there,” said Sen. John Thune of South Dakota, the No. 3 GOP leader. “He’s somebody who’s obviously going to come to his conclusions on his own.”

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‘Treasure-laden’ Russian shipwreck sparks controversy

A recently discovered 113-year-old Russian shipwreck that may contain more than $130 billion in gold bars and coins is sparking controversy.

In a statement released Tuesday, salvage company Shinil Group confirmed that the stern of the vessel, the Dmitry Donskoi, once part of the Russian Imperial Navy, had been discovered off South Korea’s Ulleungdo Island. The 5,800-ton ironclad cruiser was badly damaged following an attack by Japanese warships during the Russo-Japanese War and was scuttled in the Sea of Japan on May 29, 1905.

The company speculated about 200 tons of gold bars and coins that are worth 150 trillion won ($132 billion) would still likely be aboard the ship.


The news sparked an investor frenzy in South Korea, prompting the country’s financial regulator to issue a warning against possible investment losses.

Shinil is unlisted but its president recently agreed to acquire shares in a local company, Jeil Steel.

Russian first-class armored cruiser Donskoii (PRNewsfoto/Shinil Group)

The stern of the Dmitry Donskoi. The ship has seen better days.

 (PRNewsfoto/Shinil Group)

After Shinil’s announcement on the Russian ship, Jeil’s stock price rose by 30 percent on South Korea’s KOSDAQ market on Tuesday. They continued their steep rise on Wednesday morning before Jeil in a regulatory filing clarified that Shinil’s president would be its second-largest shareholder, not the largest, if the deal goes through. Jeil also said it has “no relation to the treasure ship business.” Jeil’s stock prices dropped more than 20 percent after Thursday’s trading.

South Korea’s Financial Supervisory Service said Thursday that it’s closely monitoring trade activity involving the shares of Jeil Steel. An agency official said that the regulator was watching out for possible deceptive practices involving the trade of Jeil shares, including inducing investors through false information.

“Investors should beware because it’s uncertain whether the ship is salvageable and whether Shinil would be able to gain ownership of the assets even if it gets permission to raise it,” said the official, who didn’t want to be identified citing office rules. “Dong-Ah Construction made similar claims over the same ship but failed to deliver on its promises and went bankrupt, causing huge losses for investors.”


Shinil Group has also launched a cryptocurrency exchange linked to the ship’s discovery. “Shinil Group is turning the dream of salvaging the Donskoi ship into reality,” it explains, on its website, adding that it will “share its profits with the public.” People signing up for the exchange will receive virtual currency dubbed Shinil Gold Coins, with additional ‘Coins’ given to those who attract additional members.

The Dmitrii Donskoi Armoured Cruiser of the Imperial Russian Navy on 3 October 1891 at anchor off Brest, France.  (Photo by Hulton Archive/Getty Images)

File photo of the Dmitry Donskoi. Are there riches to be found in its hulking wreckage?


Coins can be exchanged for “cultural vouchers” that can be exchanged at the likes of bookstores and other and other retail outlets, according to Shinil Group.

Fox News has reached out to Shinil Group with a request for comment on this story.

The Dmitry Donskoi was in a fleet of 38 Russian Imperial Navy ships deployed from the Baltic to the Pacific. Citing historical accounts, The Express reports that the Dmitry Donskoi may be treasure-laden. In addition to carrying port expenses and salaries for the fleet’s sailors and officers, she may have held gold reserves of other Russian ships damaged in the Battle of Tsushima in May 1905.


Rumors of a gold hoard on the ship have swirled for decades, although the possibility of a sunken treasure has also been viewed with skepticism. According to The New York Times, one historian told Bloomberg in 2000 that it would have been safer to send the gold to the Russian Pacific port of Vladivostok by rail, as opposed to using a ship.


Subs were used to discover the wreck in the Sea of Japan

 (Shinil Group)

Some experts also said it’s unlikely that the Donskoi, a thickly armored warship with more than 12 artillery pieces, 500 sailors and presumably 1,600 tons of coal, would have had room for 200 tons of gold, which would be double the current gold reserves at South Korea’s central bank. Similar skepticism has been expressed on social media. And there’s questions about the gold’s worth being estimated at $132 billion — the Bank of Korea’s 104 tons of gold reserves are valued at around $4.8 billion.

It’s unclear whether Shinil would receive South Korean government approval of its salvage plans.

The Associated Press contributed to this article.

Follow James Rogers on Twitter @jamesjrogers

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Australian love-scam victim wins her appeal in Cambodia

An Australian woman serving a 23-year prison sentence in Cambodia has achieved a stunning legal victory after her 2014 drug smuggling conviction was quashed by Cambodia’s Supreme Court.

The woman, 46-year-old Yoshe Ann Taylor, a kindergarten teacher and mother of two from Queensland, fell victim to an internet scam, revealed by Fairfax Media in 2016 to have been run by an international drug smuggling syndicate.

Australian woman Yoshe Ann Taylor, imprisoned in Cambodia for her role in attempting to smuggle 2.2kg of heroin to Australia in 2013.

Australian woman Yoshe Ann Taylor, imprisoned in Cambodia for her role in attempting to smuggle 2.2kg of heroin to Australia in 2013.

Photo: Supplied

Ms Taylor, who was lured to the Cambodian capital Phnom Penh on the promise of starting a business in the arts and crafts, was arrested at the airport in September 2013 after being caught trying to leave the Cambodia with two kilograms of heroin concealed in her luggage.

The Cambodia Supreme Court’s decision means that her case will now be remitted to the Cambodian Court of Appeal to be redetermined.

Unbeknown to Cambodian authorities at the time of Taylor’s 2014 trial, or her unsuccessful appeal in 2016, her co-accused, Nigerian national, Nwoko Precious Chineme, who went by the online pseudonym “Precious Max”, had duped several other Australian nationals caught entering Australia with drugs after making similar trips Cambodia.

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Trump Stands His Ground on Putin

“Treason, Bribery, or other high Crimes and Misdemeanors.”

Under the Constitution, these are the offenses for which presidents can be impeached.

And to hear our elites, Donald Trump is guilty of them all.

Trump’s refusal to challenge Vladimir Putin’s claim at Helsinki — that his GRU boys did not hack Hillary Clinton’s campaign — has been called treason, a refusal to do his sworn duty to protect and defend the United States, by a former director of the CIA.

Famed journalists and former high officials of the U.S. government have called Russia’s hacking of the DNC “an act of war” comparable to Pearl Harbor.

The New York Times ran a story on how many are now charging Trump with treason. Others suggest Putin is blackmailing Trump, or has him on his payroll, or compromised Trump a long time ago.

Wailed Congressman Steve Cohen: “Where is our military folks? The Commander in Chief is in the hands of our enemy!”

Apparently, some on the left believe we need a military coup to save our democracy.

Not since Robert Welch of the John Birch Society called Dwight Eisenhower a “conscious agent of the Communist conspiracy,” have such charges been hurled at a president. But while the Birchers were a bit outside the mainstream, today it is the establishment itself bawling “Treason!”

What explains the hysteria?

The worst-case scenario would be that the establishment actually believes the nonsense it is spouting. But that is hard to credit. Like the boy who cried “Wolf!” the establishment has cried “Fascist!” too many times to be taken seriously.

A month ago, the never-Trumpers were comparing the separation of immigrant kids from detained adults, who brought them to the U.S. illegally, to FDR’s concentration camps for Japanese-Americans.

Some commentators equated the separations to what the Nazis did at Auschwitz.

If the establishment truly believed this nonsense, it would be an unacceptable security risk to let them near the levers of power ever again.

Using Occam’s razor, the real explanation for this behavior is the simplest one: America’s elites have been driven over the edge by Trump’s successes and their failure to block him.

Trump is deregulating the economy, cutting taxes, appointing record numbers of federal judges, reshaping the Supreme Court, and using tariffs to cut trade deficits and the bully pulpit to castigate freeloading allies.

Worst of all, Trump clearly intends to carry out his campaign pledge to improve relations with Russia and get along with Vladimir Putin.

“Over our dead bodies!” the Beltway elite seems to be shouting.

Hence the rhetorical WMDs hurled at Trump: Liar, dictator, authoritarian, Putin’s poodle, fascist, demagogue, traitor, Nazi.

Such language approaches incitement to violence. One wonders if the haters are considering the impact of the words they are so casually using. Some of us yet recall how Dallas was charged with complicity in the death of JFK for slurs far less toxic than this.

The post-Helsinki hysteria reveals not merely the mindset of the president’s enemies, but the depth of their determination to destroy him.

They intend to break Trump and bring him down, to see him impeached, removed, indicted and prosecuted, and the agenda on which he ran and was nominated and elected dumped onto the ash heap of history.

Thursday, Trump indicated that he knows exactly what is afoot, and threw down the gauntlet of defiance:

“The Fake News Media wants so badly to see a major confrontation with Russia, even a confrontation that could lead to war. They are pushing so recklessly hard and hate the fact that I’ll probably have a good relationship with Putin.”

Spot on. Trump is saying: I am going to call off this Cold War II before it breaks out into the hot war that nine U.S. presidents avoided, despite Soviet provocations far graver than Putin’s pilfering of DNC emails showing how Debbie Wasserman Schultz stuck it to Bernie Sanders.

Then the White House suggested Vlad may be coming to dinner this fall.

Trump is edging toward the defining battle of his presidency: a reshaping of U.S. foreign policy to avoid clashes and conflicts with Russia, and the shedding of Cold War commitments no longer rooted in the national interests of this country.

Yet, should he attempt to carry out his agenda — to get out of Syria, pull troops out of Germany, take a second look at NATO’s Article 5 commitment to go to war for 29 nations, some of which, like Montenegro, most Americans have never heard of — he is headed for the most brutal battle of his presidency.

This Helsinki hysteria is but a taste.

By cheering Brexit, dissing the EU, suggesting NATO is obsolete, departing Syria, trying to get on with Putin, Trump is threatening the entire U.S. foreign policy establishment with what it fears most — irrelevance.

For if there is no war on, no war imminent, and no war wanted, what does a War Party do?


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Exclusive: China Huarong trying to recall some loans as cash crunch bites – sources

SHANGHAI/HONG KONG (Reuters) – China’s biggest manager of bad debts is trying to exit early from at least three loans and investments as it wrestles with a liquidity crunch triggered by an anti-corruption probe into its chairman, people with knowledge of the matter said.

FILE PHOTO: Logos of China Huarong Asset Management Co are seen during a finance expo in Beijing, in this October 30, 2014 file photo. REUTERS/China Daily/File Photo

China Huarong Asset Management (2799.HK), one of four state-backed so-called “bad banks” formed in 1999, has been trying to raise cash since Lai Xiaomin resigned as chairman in April amid a graft probe, the sources said.

Huarong’s attempts to call back loans shows the extent of its liquidity woes. It has already begun divesting equity stakes that were bought as part of a diversification push and has also forced employees to take pay cuts.

Huarong did not respond to calls, emails and faxed requests for comment.

The asset manager is the latest major Chinese company to struggle in the wake of allegations of misconduct by its leader. Others include CEFC China Energy and Anbang Insurance, both of which are now undergoing government restructuring.

The exact nature of the allegations against Lai remain unknown, but sources with knowledge of the matter said the investigation had slowed down operations at China’s largest asset management firm and forced it to be cautious about taking on new business.

When a firm comes under investigation, “it’s possible that the efficiency of business will fall, which leads to a liquidity squeeze,” said Meng Shen, director of Chanson & Co, a boutique investment bank.

Shortly after the investigation became public, Huarong asked one fund to return millions of dollars it invested only a few months earlier, citing liquidity issues, one person with knowledge of the matter said. The fund is trying to negotiate early payment of management fees in return for the early termination, the source said.

And a multi-year loan of just under 2 billion yuan ($296 million) to a medium-sized developer made by Huarong via a Shanghai branch of a trust firm this year is another deal the bad debt manager is trying to exit, said a second person with direct knowledge.

Huarong has approached the developer directly and is currently trying to negotiate an early exit, citing liquidity issues, said the person. Since the investigation, the trust firm, which usually receives regular business from Huarong, has received no new deals from the asset manager, he added.

In another instance, Huarong has been trying to offload some loans in Hong Kong, including its portion in a two-year HK$5.81 billion syndicated loan to Huge Group Holdings Limited, a major shareholder of China Grand Auto’s (600297.SS), again citing liquidity concerns, said two separate people with direct knowledge who have been approached as buyers.

The loan was drawn down in August last year, the people added.

Two other people have also been informed of Huarong’s liquidity concerns.

Huge Group did not respond to requests for comment. The sources declined to be named because they were not authorized to speak to the media.


The investigation by China’s anti-corruption watchdog into Huarong’s ex-chairman Lai is expected to finish this month, two people said. Senior bank regulatory official Wang Zhanfeng was confirmed as Huarong’s new chairman last month.

At least two Huarong units in Hong Kong are seeking to reduce staff costs by cutting some employees’ pay by between 20 percent and 65 percent and not paying bonuses, said two people.

And many mainland employees have been asked to take an 18 to 20 percent pay hit and what was a monthly bonus will become a quarterly one, said two other people with knowledge of the issue.

In June, Huarong said it would refocus on its core bad-debt business in a shift after years of overseas acquisitions ranging from a Hong Kong broker to a Chicago hotel.

Divestments have already begun. In May, Chinese firm Northeast Pharmaceutical Group (000597.SZ) said that Huarong planned to unload a stake of up to 6 percent in the firm within six months.

Earlier this month, Chinese media reported that Huarong had sold a 36.2 per cent stake in a unit of CEFC China Energy which it had bought only in March.

Reporting by Engen Tham in SHANGHAI, Clare Jim, Julie Zhu and Kane Wu in HONG KONG; Additional reporting by Shanghai newsroom; Editing by Jennifer Hughes, Stephen Coates and Muralikumar Anantharaman

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Chinese premier orders investigation of vaccine makers

Chinese leaders are scrambling to shore up public confidence and oversight of the pharmaceutical industry after a rabies vaccine maker was found faking records, the latest in a slew of public health and safety scandals that have led outraged Chinese parents to direct their ire at the government.

Premier Li Keqiang declared in a statement Sunday that the case of Changchun Changsheng Life Sciences Ltd., which is accused of fabricating production and inspection records, “violated a moral bottom line.” He pledged an immediate investigation into the company and to “resolutely crack down” on violations that endanger public safety.

The premier’s remarks were aimed at assuaging Chinese parents who routinely complain about worrying over fake food, milk and medicine in a society that seems to lack a “moral bottom line” — and also competent, uncorrupt regulators.

“Defective vaccines are like child abuse and trafficking — it touches on the most sensitive, vulnerable part of the public’s hearts,” wrote Xi Po, a columnist for The Paper, a popular online news outlet backed by the Shanghai government. “But unlike in cases of child abuse, the vaccine scandals involve layers and layers of broken regulators and interest groups.”

There were no reports of injuries due to the rabies vaccine, but the disclosure has ricocheted around social media, touching a raw nerve for Chinese parents. Two years ago, a similar scandal erupted after police busted a criminal ring that had sold millions of faulty baby vaccines — but did not disclose the case for months.

Regulators announced last week that Changchun Changsheng, China’s second-largest rabies vaccine manufacturer, was ordered to stop production and recall its rabies vaccine. Days later, provincial authorities in northeast China announced that batches of DPT, or diphtheria-pertussis-tetanus, vaccine were found to be defective. But more than 250,000 doses of the DPT vaccine had been sold, China’s state broadcaster reported.

Public anger ratcheted up swiftly only over the weekend following a report by an anonymous author disclosing that regulators found production problems at Changchun Changsheng as early as November but did not publicize the findings or announce a recall until July. The post went viral and was censored by Sunday even as Chinese leaders launched a public relations response.

In his statement, Li, the premier, acknowledged the government’s lapse and pledged to punish offenders and regulators found in “dereliction of duty.” State media chimed in, with the China Daily urging the government to handle the matter in a “transparent manner” while the Communist Party-owned Global Times called on authorities to “follow up on people’s security demands, and supervise and regulate more effectively.”

Government censors have employed a relatively light touch, allowing online news outlets like The Paper and Caixin to pursue the story aggressively while giving netizens space to vent their frustration and rage. By Monday afternoon, the hashtag “Changchun Changsheng makes fake vaccines” had garnered more than 100 million views on Weibo.

The company’s phone lines were busy for several hours on Monday and executives could not be reached for comment.

Yang Yuze, another writer at The Paper, bluntly questioned whether national policies to prop up pharmaceutical companies were “opening the door” to corruption.

“The main problem is insufficient regulation, missing regulation, powerless regulation,” Yang wrote. “It’s easy to see how (lax regulation of the vaccine industry) are fig leafs and excuses for the transaction of money and power.”


AP Business Writer Joe McDonald contributed.

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Missouri duck boat tragedy: 9 of Tia Coleman’s family members died

BRANSON, Mo. — At first, the water splashing into the boat was comforting, a cool-down on a hot day.

But then came a massive swell that rocked the boat, and Tia Coleman started getting nervous. Before she knew it, another wave tore through, the boat sank, and she could not see or feel anything. Not the son who had been sitting next to her, not her other two children, not any of the 10 family members who had joined her on an amphibious tourist bus — or duck boat — Thursday afternoon.

“Lord, please let me get to my babies,” she prayed at one point, recalling the ordeal at a news conference Saturday.

“If they don’t make it, Lord, take me too,” she thought at another.

As it turned out, Coleman, 34, and her 13-year-old nephew, Donovan, were the only members of the Coleman family to survive one of the deadliest duck boat accidents in the country’s history.

The Colemans, who had been on their annual summer road trip, accounted for nine of the 17 deaths in the accident in this popular tourist destination in southern Missouri. In an instant, three generations of this Indianapolis-based family had perished, leaving Coleman with the unimaginable task of moving forward.

When the duck boat entered the lake the skies seemed fine, Coleman said. At one point, she said, one of the two employees on the vehicle — one operated it on water, the other on land — told them not to worry about putting on their life jackets.

“If I was able to get a life jacket, I could have saved my babies,” she said. “Because they could have at least floated up to the top, and somebody could have grabbed them. And I wasn’t able to do that.”

Federal law requires life jackets to be available for each passenger on a boat, including duck boats, but the crew has discretion on when to tell passengers to wear them.

“He said, ‘Above you are your life jackets. There’s three sizes,’” Coleman recalled one of the workers telling the passengers. “He said, ‘I’m going to show you where they are but you won’t need them, so no need to worry.’ So we didn’t grab them.”

The National Transportation Safety Board has taken over the investigation into the accident, which had 14 survivors, including the captain of the boat.

Asked at the news conference whether she was happy that she had made it out of the lake alive, Coleman said, “I don’t know yet.”

“Going home, I already know it’s going to be completely, completely difficult,” she added. “I don’t know how I’m going to do it. Since I’ve had a home, it’s always been filled with little feet and laughter. And my husband.”

Flanked by family members holding her hands, Coleman spoke from Cox Medical Center Branson, where she was recovering from her injuries. She smiled at times when recalling fond memories of her family and sobbed at others when discussing what she would miss.

She had come to Branson with her three children, her husband, and her husband’s father, mother, uncle, sister and two nephews. They had rented a van and made the roughly seven-hour drive from Indianapolis in an annual ritual that has taken them to places as far-flung as Mackinaw City, Michigan, and Myrtle Beach, South Carolina.

Mackinaw City was Coleman’s favorite. Myrtle Beach was the children’s. But wherever the destination, the trips revolved around the children.

The plan originally had been to go to Florida this year. But because Coleman’s mother-in-law, Belinda, was having health problems, the family decided on someplace closer, said Carolyn Coleman, a relative who lives in Georgia. It was the family’s first trip to Branson.

They immediately gravitated to the pool at the hotel because the children loved water, Coleman said.

“I caught myself sneaking off to get in the hot tub, and here come those little bodies, coming in there with me,” Coleman said. “They’re like, ‘Oh this feels so good, this feels so good.’ I said, ‘Get back in the kiddie pool.’”

They ate at the Golden Corral, where Coleman told her children they could eat as much as they wanted. She plied them with indulgent treats like cotton candy and rainbow sherbet.

The Colemans decided to ride the duck boat because it seemed like just the type of thing Coleman’s oldest son, Reece, who was autistic, would enjoy.

What Coleman and her family did not know was that duck boats have a history of safety issues, with the NTSB ordering operators, including the one here in Branson, to make safety improvements after 13 people were killed when one sank in Hot Springs, Arkansas, in 1999.

Before leaving for the boat tour, Coleman said, someone at Ride the Ducks, the tour company, said that because of the storm warning, they would do the lake part of the tour before the road portion.

The Colemans planned to go to dinner after the duck boat ride. Instead, after a vigorous struggle in the water during which she said she gave up and just let her body float, Coleman was left to wonder what if.

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The Latest: Iranian officer: Trump ‘won’t dare’ to attack

The Latest on escalating rhetoric between Washington and Tehran (all times local):

3:30 a.m.

A high-ranking Iranian officer says President Donald Trump‘s warning of unprecedented “consequences” for Iran, should it threaten the United States, is nothing but “psychological warfare.”

Gen. Gholam Hossein Gheibparvar, the chief of the paramilitary Revolutionary Guard’s volunteer Basij force, also said on Monday that Trump “won’t dare” take any military action against Iran. Gheibparvar’s comments were reported by the semi-official ISNA news agency.

Iranian lawmaker Heshmatollah Falahatpisheh told The Associated Press that he doubted it would come to a military confrontation between Iran and the United States, despite the escalating rhetoric.

Falahatpisheh says that Trump and his Iranian counterpart Hassan Rouhani “express themselves through speeches since diplomatic channels are closed” as the two countries have had no diplomatic relations since 1979.

He says that unlike North Korea, “Iran never moved toward a nuclear bomb” and that therefore, “Iran is angry since Trump responded to Tehran’s engagement diplomacy by pulling the U.S. out of the nuclear deal.”


2:30 a.m.

Iran’s state-owned news agency has dismissed President Donald Trump’s warning tweet, issued all in capital letters, to Iranian President Hassan Rouhani, describing it as a “passive reaction” to Rouhani’s remarks.

The IRNA news agency, a government mouthpiece, also said on Monday that Trump’s Twitter missive was only mimicking and copying Iranian Foreign Minister Mohammad Javad Zarif who had in the past warned the West to “never threaten an Iranian.”

Rouhani had said Sunday that “American must understand well that peace with Iran is the mother of all peace and war with Iran is the mother of all wars.”



12:40 a.m.

President Donald Trump is warning Iranian President Hassan Rouhani that he will face dire consequences for threatening the United States.

Trump tweeted early Monday about the dangers to Iran of making hostile threats after Rouhani said Sunday “American must understand well that peace with Iran is the mother of all peace and war with Iran is the mother of all wars.” Trump responded early Monday with a tweet that warned: “NEVER EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKE OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE.”

Trump earlier this year pulled the United States out of the international deal meant to prevent Tehran from developing a nuclear weapon and ordered increased American sanctions.

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