BusinessDay 26 Feb 2018
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Monday <strong>26</strong> <strong>Feb</strong>ruary <strong>2018</strong><br />
FT<br />
C002D5556<br />
BUSINESS DAY<br />
FINANCIAL TIMES<br />
A7<br />
Crunch Brexit talks hint<br />
at compromise within<br />
Conservative factions<br />
EU leaders push Theresa May to provide more<br />
clarity on Britain’s approach to Brexit<br />
GEORGE PARKER<br />
Theresa May’s Brexit inner cabinet<br />
ended eight hours of talks<br />
on Thursday night with signs<br />
that the factions in her top team have<br />
stitched together a fragile compromise<br />
on a plan for Britain’s future EU<br />
relationship.<br />
But the prime minister’s respite<br />
over Brexit was brief after it emerged<br />
that Jeremy Corbyn will shift Labour’s<br />
position on Brexit on Monday, arguing<br />
that — if the party were in government<br />
— it would seek to keep the UK in a<br />
customs union with the EU.<br />
If Labour sides with pro-European<br />
Conservatives, Mrs May could be<br />
forced by the House of Commons to<br />
negotiate to stay in the customs union,<br />
a move that she has rejected and which<br />
would outrage Tory Eurosceptics.<br />
The talks at Mrs May’s Chequers<br />
country retreat ended with Brexiters<br />
proclaiming that Britain was on<br />
course to make a clean break with the<br />
EU. “Divergence has won the day,”<br />
said one cabinet source.<br />
But pro-Europeans also insisted<br />
that the talks had gone well. One<br />
person in the room said it would be<br />
wrong to say that divergence had<br />
“prevailed”, adding: “It was genuinely<br />
positive and substantial.”<br />
Another person at the Chequers<br />
meeting said: “It all finished rather<br />
positively. It seems like everyone<br />
thinks they got what they wanted.”<br />
Asked about the Chequers meeting<br />
on Friday, Jean-Claude Juncker,<br />
EU commission president, said he<br />
would not comment until he knew<br />
the “exact outcome”of UK ministers’<br />
talks.<br />
“I know that there was a meeting<br />
Latvia’s embattled central<br />
bank governor Ilmars Rimsevics<br />
has claimed that he is the<br />
victim of a concerted campaign<br />
by several banks to have him removed<br />
from his position.<br />
Mr Rimsevics suggested that<br />
the bribery accusations against<br />
him had been manufactured by<br />
banks unhappy with his moves<br />
to improve transparency in the<br />
country’s 2m-strong outsized nonresident<br />
banking sector.<br />
“I just vehemently deny [these<br />
allegations],” the member of the<br />
European Central Bank’s governing<br />
council said in an interview<br />
with the Financial Times.<br />
“I could only guess that I have<br />
been a very inconvenient public<br />
figure for several financial institutions<br />
in this country, thus making<br />
them for an extended period of<br />
time try to gather some evidence<br />
or [organise] provocations in order<br />
with Theresa May in Chequers last<br />
night. I haven’t seen the results so I<br />
can’t comment on it,” he told reporters<br />
in Brussels, adding: “I am not a British<br />
prime minister, it would be good for<br />
Britain if I was.”<br />
Mark Rutte, prime minister of the<br />
Netherlands, also remained tightlipped<br />
but promised to keep bringing<br />
“difficult messages” to the UK prime<br />
minister, saying he would ask Mrs May<br />
“to be as clear as possible on what she<br />
wants to achieve on the second phase<br />
of negotiations”.<br />
Mrs May will give a public exposition<br />
on her approach to Brexit in a<br />
speech next week, although there are<br />
already signs that Brussels is likely to<br />
reject outright her vision of a future<br />
trading relationship.<br />
The 11-member Brexit cabinet<br />
committee was said by those at the<br />
Chequers meeting to have endorsed<br />
a proposal dubbed “Canada plus<br />
plus plus” by David Davis, the Brexit<br />
secretary.<br />
Under the plan, Britain would seek<br />
to negotiate a free trade agreement<br />
similar to the EU-Canada deal, but then<br />
try to embellish it by securing better<br />
access to the single market for goods<br />
and services through close regulatory<br />
co-operation.<br />
Brexiters seized on the broad agreement<br />
at Chequers that Britain should<br />
be able to set its own rules and regulations,<br />
allowing an “ambitious managed<br />
divergence” with the EU over time.<br />
But Remainers, led by Philip Hammond,<br />
the chancellor, insisted that the<br />
starting point should be that Britain<br />
and the EU would have high levels of<br />
alignment, with some sectors such as<br />
automotive and chemicals likely to be<br />
fully aligned with EU rules.<br />
Latvian central bank governor accuses<br />
banks of trying to oust him<br />
Ilmars Rimsevics tells FT that bribery allegations are ‘totally ridiculous’<br />
NEIL BUCKLEY<br />
Berkshire Hathaway<br />
gains $29bn on back<br />
of US tax reforms<br />
World Business Newspaper<br />
Page A9<br />
to remove me.”<br />
He added: “It is a well-orchestrated<br />
action in concert among<br />
several individuals and banks who<br />
have served non-resident clients<br />
at various times . . . to whom I have<br />
become a burden.”<br />
In events that have rocked the<br />
Baltic republic, Mr Rimsevics was<br />
detained by police last weekend<br />
before being released on bail on<br />
Monday.<br />
The country’s corruption prevention<br />
bureau said he was suspected<br />
of soliciting and receiving<br />
a bribe of at least €100,000, from a<br />
financial institution not currently<br />
functioning in Latvia.<br />
Separately, Grigory Guselnikov,<br />
main shareholder and chairman<br />
of Norvik Bank, Latvia’s eighthbiggest<br />
lender, alleged in an interview<br />
with the Associated Press<br />
on Monday that Mr Rimsevics had<br />
personally, or through intermediaries,<br />
tried to extort bribes from<br />
Continues on page A8<br />
Theresa May’s inner Brexit cabinet gathered at Chequers on Thursday to hammer out a strategy for future ties with the EU<br />
European leaders deny link to Manafort in Mueller investigation<br />
Former Italian prime minister, Polish president and Austrian chancellor reject allegations<br />
SHAWN DONNAN, DEMETRI<br />
SEVASTOPULO, JAMES POLITI<br />
Three prominent former European<br />
leaders have denied they<br />
were paid to lobby on behalf of<br />
Ukraine by former Trump campaign<br />
chairman Paul Manafort after US<br />
prosecutors said he had funneled<br />
more than €2m to a group of European<br />
politicians in a secret campaign to<br />
soften Kiev’s image in the west. Romano<br />
Prodi, the former Italian prime<br />
minister and European Commission<br />
president, Alfred Gusenbauer, the<br />
former Austrian chancellor, and Aleksander<br />
Kwasniewski, Poland’s former<br />
president, all said on Saturday that<br />
they had been big backers of stronger<br />
EU-Ukraine ties in 2012 and 2013<br />
when Mr Manafort’s secret lobbying<br />
campaign was allegedly underway.<br />
But all three denied that they had<br />
received any funds from Mr Manafort,<br />
who has been accused by US special<br />
counsel Robert Mueller of stashing<br />
millions of dollars offshore to avoid<br />
taxes and finance a secret lobbying<br />
campaign that targeted both US and<br />
European policymakers. As part of<br />
that lobbying campaign, Mr Manafort<br />
is accused of financing the creation of<br />
a secret group of senior former European<br />
leaders known as the “Hapsburg<br />
Group” that was led by an unnamed<br />
former European chancellor, according<br />
to court documents filed on Friday.<br />
Disclosures filed with the US justice<br />
department show that Mr Gusenbauer,<br />
who served as Austria’s chancellor from<br />
2007 to 2008, Mr Kwasniewski and Mr<br />
Prodi all took part in meetings with<br />
members of the US Congress in 2013<br />
on behalf of the European Centre for<br />
a Modern Ukraine, a Brussels-based<br />
group that US prosecutors allege was<br />
at the centre of Mr Manafort’s secret<br />
lobbying scheme.<br />
Those meetings were organised by<br />
two lobbying groups that were working<br />
with Mr Manafort and Richard<br />
Gates, one of his top associates, at<br />
the time.<br />
Mr Gates, who served as Mr<br />
Trump’s deputy campaign chair,<br />
on Friday pleaded guilty to conspiracy<br />
charges related to his and Mr<br />
Manafort’s work with Ukraine as part<br />
of a plea deal that increases the pressure<br />
on Mr Manafort to cooperate with<br />
the Mueller investigation into Russian<br />
meddling in the 2016 election.<br />
In a statement, Mr Prodi said he<br />
Trump’s protection<br />
plan to keep ‘competitor’<br />
China at bay<br />
Page A10<br />
backed a campaign in 2012-13 for the<br />
EU to sign an “association agreement”<br />
with the then pro-Russian government<br />
in Kiev of Viktor Yanukovych.<br />
“Such a commitment translated<br />
into numerous meetings and public<br />
speeches (some of them regularly<br />
paid), which took place in a variety of<br />
European capitals. These are serious<br />
and perfectly consistent initiatives for<br />
a former president of the European<br />
Commission,” his office said in the<br />
statement.<br />
“President Prodi denies both to<br />
have played a role in any lobbying<br />
effort and to be part of a secret lobby.<br />
Thus, he did not receive any money for<br />
these activities,” the statement added.<br />
Mr Gusenbauer told the Austrian<br />
Press Agency that he had never<br />
worked for Mr Yanukovych or his Party<br />
of Regions, which Mr Manafort was<br />
long associated with.<br />
His work in 2012 and 2013 included<br />
meetings and events across Europe<br />
and in the US and was only intended<br />
to bring Ukraine closer to Europe, he<br />
said. He stopped that work in 2013<br />
when it became clear it was futile.<br />
In interviews with Austria’s Die<br />
Presse newspaper and the BBC published<br />
on Saturday he also said he had<br />
only met Mr Manafort a few times for<br />
coffee.<br />
“I was not aware of the fact Mr<br />
Manafort was financing this activity<br />
and of course I was also not connected<br />
to his activities within the Ukraine,” Mr<br />
Gusenbauer told the BBC.<br />
Mr Kwasniewski told Onet, Polands’<br />
largest web portal, that he had<br />
known Mr Manafort since 2012. But<br />
he said: “No money was in play. I had<br />
no financial or political agreements<br />
with him. This is some sort of misunderstanding.”<br />
“In the years 2012 and 2013 many<br />
debates and conferences were arranged<br />
on the topic of Ukraine,” he<br />
said. “I took part in them, sometimes<br />
with Prodi, sometimes with<br />
Gusenbauer. Of course, we received<br />
fees. Maybe Manafort paid for them<br />
through his firms? But these were<br />
public, open debates.”<br />
Also identified in disclosures filed<br />
last year with the US justice department<br />
by two lobbying firms – the Podesta<br />
Group and Mercury Public Affairs – was<br />
former Ukrainian president Viktor Yushchenko.<br />
But Mr Yushchenko could not<br />
immediately be reached for comment.<br />
In a statement, Mercury said it<br />
was cooperating with Mr Mueller’s<br />
investigation.<br />
“While [Mr Gates] and others<br />
involved with this matter may have<br />
acted criminally and tried to hide it,<br />
we have acted appropriately, following<br />
our counsel’s advice from the start,”<br />
the group said.<br />
Tony Podesta, the founder of the<br />
Podesta Group, did not immediately<br />
respond to a request for comment.<br />
According to the indictment filed<br />
on Friday by Mr Mueller’s prosecutors,<br />
Mr Manafort’s lobbying scheme<br />
led him to use four offshore accounts<br />
to wire more than €2m to pay a “super<br />
VIP” group of former European<br />
leaders.<br />
The goal was for the group, managed<br />
by a “former European chancellor”<br />
working with Mr Manafort to be<br />
“politically credible friends who can<br />
act informally and without any visible<br />
relationship with the Government of<br />
Ukraine”, the indictment charges.<br />
“The plan was for the former politicians,<br />
informally called the ‘[Hapsburg]<br />
group’, to appear to be providing<br />
their independent assessments of<br />
Government of Ukraine actions, when<br />
in fact they were paid lobbyists for<br />
Ukraine,” prosecutors wrote.<br />
Paying the European politicians to<br />
lobby is not a crime under US law. But<br />
the indictment alleges Mr Manafort<br />
and Mr Gates illegally hid their lobbying<br />
scheme for years and failed<br />
to report they were working for the<br />
Ukrainian government. Mr Manafort<br />
also faces conspiracy and money<br />
laundering charges as well as charges<br />
of lying to investigators.<br />
Among the things Mr Gates acknowledged<br />
with his guilty plea on<br />
Friday was that he and Mr Manafort<br />
sought to hide their work with Mr<br />
Yanukovych’s government when they<br />
were first approached by investigators<br />
in August 2016 following news stories<br />
out of Ukraine disclosing payments to<br />
Mr Manafort.<br />
But Mr Manafort has insisted all<br />
along that he has done nothing wrong.<br />
“I continue to maintain my innocence,”<br />
Mr Manafort said in a<br />
statement issued on Friday. “I had<br />
hoped and expected my business<br />
colleague would have had the strength<br />
to continue the battle to prove our<br />
innocence. For reasons yet to surface<br />
he chose to do otherwise. This does<br />
not alter my commitment to defend<br />
myself against the untrue, piled-up<br />
charges contained in the indictments<br />
against me.”