BusinessDay 03 Apr 2018

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Tuesday 03 April 2018 FT FINANCIAL TIMES C002D5556 BUSINESS DAY A11 World Business Newspaper Trump threatens Nafta in immigration spat with Mexico US president renews attack on Monday morning by demanding action on southern border SAM FLEMING Mark Zuckerberg hits back at Tim Cook over criticism Donald Trump claimed he is prepared to halt the North American Free Trade Agreement if Mexico fails to help secure its border with the US in an angry escalation of his year-long fight with his southern neighbour. In a series of tweets on Sunday, the president accused the Mexican government of doing little or nothing to stop the flow of people from other Latin American countries over their southern border and then on into the US. “They must stop the big drug and people flows, or I will stop their cash cow, NAFTA,” he wrote, repeating his desire to erect a wall along the boundary between the two countries. Mr Trump also suggested he was no longer willing to support an agreement with US Democrats to secure the status of individuals brought illegally into the country as children — the so-called Dreamers — as he called on lawmakers to push through tough new laws to harden America’s border. Mr Trump has repeatedly threatened to pull out of Nafta, which covers a quarter of the global economy. The US, Canada and Mexico have been engaged in the painstaking process of renegotiating the agreement since last August, even as the US president vows to pursue hardline trade policies aimed at protecting sections of American manufacturing. The president opted to temporarily exclude allies including Canada, Mexico and the EU from his steel and aluminium tariffs last month. Mr Trump renewed his Twitter attack on Monday morning, writing that it was incumbent on the Mexican government to stop “caravans” of immigrants passing through Mexico trying to reach the US border from other Latin American countries. The Monday attacks echoed the main focus Mr Trump’s Easter ire, which targeted Mexico’s handling of Summit offer adds to the erratic nature of Washington’s stance on Moscow migration issues and drug trafficking. He accused the country of laughing at America’s “dumb immigration laws” and suggested any deal on Nafta would hinge on Mexico’s ability to clamp down on flows of people over its borders. He also complained that US border patrol agents were not able to do their jobs properly, and declared that a deal over the Deferred Action for Childhood Arrivals programme was no longer on the table. “NO MORE DACA DEAL!” the president declared. He renewed that attack on Monday as well, calling on Congress to “immediately pass Border Legislation . . . to stop the massive inflow of Drugs and People”. The Obama-era Daca policy protected some individuals who had entered the country illegally as children from deportation, but the Trump administration decided to cancel it last year. The White House had aimed to end it in early March, but the move has been stalled by battles in the federal courts. Mr Trump’s hardline tone on immigration issues is motivating for his core supporters as the Republicans prepare for midterm elections later this year. But polling from Quinnipiac University in February suggested 80 per cent of the electorate wants to allow undocumented children brought to the US to remain and eventually apply for citizenship. The president had previously said he was open to a compromise on Daca, before then attacking Democrats for failing to strike a deal in Congress. Mr Trump on Sunday said the situation with the US-Mexico border was “getting more dangerous”, claiming that “caravans” of people were coming. Asked on his way to an Easter service in Florida about his Daca tweet, Mr Trump renewed his claim that the Democrats had scuppered hopes of a deal. “Mexico has got to help us at the border. If they’re not going to help us at the border, it’s a very sad thing.” Trump invited Putin to White House during Skripal storm KATHRIN HILLE AND KATRINA MANSON Page A12 President Donald Trump invited his Russian counterpart, Vladimir Putin, to a summit meeting at the White House at the height of a storm over Moscow’s alleged involvement in a nerve agent attack in Britain, the Kremlin revealed on Monday. That Mr Trump was willing to afford Mr Putin such an honour just days before the US expelled 60 Russian diplomats in solidarity with the UK over the poisonings in Salisbury, is another sign of the Trump administration’s bewilderingly inconsistent stance towards Russia. “When our presidents talked on the phone [on March 20], Trump proposed to conduct the first meeting in Washington, in the White House,” Yuri Ushakov, Mr Putin’s foreign policy adviser, told Russian media. Mr Ushakov called Mr Trump’s invitation “a pretty interesting and positive idea”. The White House confirmed the report but played down its significance. “As the president himself confirmed on March 20, hours after his last call with President Putin, the two Continues on page A12 Swiss bankers’ hopes for EU access dashed by Brexit Technical talks on cross-border business have become ‘very political’ Swiss bankers’ hopes of securing improved access to EU markets have been dashed by Britain’s plans to quit the bloc, the head of Switzerland’s banking association has said. Herbert Scheidt, said Brexit had politicised technical talks about encouraging business across the Swiss-EU border. “It makes it harder to improve market access at the speed we had hoped before Brexit,” the chairman of the Swiss Bankers Association told the Financial Times. Despite being surrounded by EU countries, Switzerland has repeatedly chosen not to join the bloc. Instead, economic and other relationships are governed by more than 120 bilateral contracts agreed over decades. Brussels fears any concessions given now to Switzerland could set a precedent for the Brexit talks, bankers in Zurich believe. “The EU cannot grant Switzerland something while still negotiating with the UK,” Brussels plans crackdown on ‘fake news’ in social media Cambridge Analytica scandal heightens concerns about European elections Brussels is preparing to crack down on social media companies who have been accused of spreading “fake news”, issuing a stark warning that scandals such as the Facebook data leak threaten to “subvert our democratic systems”. The European Commission fears that next year’s elections to the European Parliament are vulnerable to mass eurosceptic online “disinformation”. Its concern sharpened after a whistleblower alleged that Cambridge Analytica gathered personal information from up to 50m Facebook users and used it to target voters in the US presidential election. Cambridge Analytica has denied using Facebook data in its modelling. Julian King, European commissioner for security, is demanding a “clear game plan” for how social Sunni Saudi Arabia courts an ally in Iraq’s Shia Arriving for an Easter church service in Bethesda-by-the-Sea, Florida, with first lady Melania Trump, Donald Trump said Mexico ‘has got to help us at the border’ © AP RALPH ATKINS AND LAURA NOONAN MEHREEN KHAN AND MICHAEL PEEL Page A13 said one. Mr Scheidt said: “What has changed is the overall political environment. Brussels is currently very Brexit-centred, people have little time for topics related to Swiss banking.” Switzerland is the world’s largest manager of cross-border wealth, but its bankers’ direct access to potential clients in EU markets is restricted — although larger banks especially can circumvent the constraints by having units located in EU countries. A longstanding ambition of the affluent Alpine state had been to improve access via a financial services agreement, but that goal was quietly dropped from Switzerland’s negotiating objectives earlier this year. Before agreeing new market access deals, Brussels wants Switzerland to reorganise its EU relationships around an “institutional framework” agreement by which Swiss rules would change automatically in line with EU changes, and disputes would be resolved via mechanisms involving the EU judges. Such plans are controversial in media companies can operate during sensitive election periods — starting with European Parliament polls in May 2019. A letter from Sir Julian to Mariya Gabriel, commissioner for the digital economy, calls for more transparency on the internal algorithms that internet platforms use to promote stories, limits on the “harvesting” of personal information for political purposes, and disclosure by tech companies of who funds “sponsored content” on their websites. Sir Julian proposes a “more binding approach” than self-regulation, including “clearly and carefully defined performance indicators”. His proposals have backing from the other commissioners who are drawing up the EU’s first policy on how to fight “online disinformation” to be published later this month. The Cambridge Analytica revelations have turbo-charged the debate, Switzerland, however, where voters reject the jurisdiction of “foreign judges”. To increase the pressure on Bern, the EU last December dealt a blow to the Swiss stock exchange by announcing it would allow European and Swiss equities traders access to each others’ markets for just 12 months, leaving unclear what would happen after that. Bern denounced that move by Brussels as “unacceptable” discrimination. “It was a very short term decision,” Mr Scheidt said. “We have heard that it was because negotiations on an institutional framework had not moved forward — but that was never mentioned when we were in Brussels in late October, shortly before the decision.” Another potential flashpoint is access for Switzerland’s alternative investment fund managers. Fund managers had hoped the Swiss regulatory regime would be declared “equivalent” to the EU’s Alternative Investment Fund Managers Directive, which would allow Swiss-based asset managers to sell directly into the EU. with EU officials pushing for stronger guidance on how platforms should behave to safeguard democracy. The “psychometric targeting activities” such as those of Cambridge Analytica, a data analysis company, are just a “preview of the profoundly disturbing effects such disinformation could have on the functioning of liberal democracies”, Sir Julian wrote in the letter dated March 19. “It is clear that the cyber-security threat we are facing is changing from one primarily targeting systems to one that is also increasingly about deploying cyber means to manipulate behaviour, deepen societal divides, subvert our democratic systems and raise questions about our democratic institutions,” the letter adds. Brussels’ warning comes as a number of EU member states are drawing up “anti-fake news laws” amid a host of allegations over Russian interference in European elections in the past year.
A12 BUSINESS DAY C002D5556 Tuesday 03 April 2018 FT Trump invited Putin to White House during.... NATIONAL Anti-apartheid leader Winnie Madikizela-Mandela dies aged 81 Ex-wife of Nelson Mandela kept South African movement alive during his imprisonment JOSEPH COTTERILL Winnie Madikizela-Mandela, the former wife of Nelson Mandela who helped keep South Africa’s antiapartheid movement alive while her husband spent 27 years in prison, has died at the age of 81. Continued from page A11 had discussed a bilateral meeting in the ‘not-too-distant future’ at a number of potential venues, including the White House,” said Sarah Sanders, the press secretary. Such an invitation would mark the closest Mr Putin has come to a proper summit with Mr Trump, a goal the Kremlin has been pursuing since before Mr Trump’s inauguration in January last year. It has proved elusive, not least because of the intense political backlash in the US over Russian interference in the 2016 presidential election. Mr Trump telephoned Mr Putin two days after he won another term in presidential elections, congratulating him on his victory even though he was reportedly urged not to do so by his aides. The offer of a White House summit was made just as the British government was pressing its allies to kick out Russian officials over the nerve agent attack on Sergei Skripal, a former Russian double agent, and his daughter. “This is a classic unforced diplomatic error by Trump,” said Andrew Weiss, former Russia director at the National Security Council under Bill Clinton, adding that the Kremlin’s revelation of the White House invitation opened up apparent cracks in western unity. “The Kremlin is all too happy to exploit any openings that let it plant wedges between the UK and other western countries that have registered their anger over the Skripal attack.” Mr Weiss said the revelation from the Kremlin showed continued lack of discipline inside the White House and left observers with even less faith in Mr Trump ever agreeing with his national security team on “a more tough-minded approach” on Russia. Kremlin officials started discussing options for a first meeting between the two presidents almost immediately after Mr Trump’s election victory, screening potential locations in a number of European countries seen as sufficiently neutral to make the meeting comfortable and politically acceptable to both sides. Some of Mr Putin’s aides hoped that if the two men established a positive personal relationship early on, they could improve the bilateral ties that have been deteriorating for several years. But the snowballing investigations into alleged Russian meddling in the US election and mounting public distrust of Russia, in addition to Mr Trump’s seemingly erratic foreign policy agenda, quickly destroyed Moscow’s hopes for an early meeting. Instead, the two presidents met only on the sidelines of the G20 summit in Hamburg last summer. Her family said Ms Madikizela-Mandela died early on Monday morning at the Netcare Milpark Hospital in Johannesburg. “Mrs Madikizela-Mandela was one of the greatest icons of the struggle against apartheid,” the family said in the statement. “She fought valiantly against the apartheid state and sacrificed her life for the freedom of the country.” Despite Mrs Madikizela-Mandela’s role as one of the leaders of South Africa’s liberation movement, as white rule crumbled and Mr Mandela rose to become the first post-apartheid president, “Mama Winnie” also emerged as one of the most complicated and enigmatic politicians of South Africa’s young democracy. Her militancy and associations with violence earned her many enemies in Mr Mandela’s own African National Congress, Mark Zuckerberg said Facebook’s advertising and data-led business model allowed the service to reach more people Mark Zuckerberg hits back at Tim Cook over criticism Facebook founder calls Apple chief’s comments on data failure ‘extremely glib’ MATTHEW GARRAHAN Mark Zuckerberg has hit back at Tim Cook’s veiled criticism of Facebook’s data policies, saying the suggestion that his company did not care about its users was “extremely glib” and “not at all aligned with the truth”. The Apple chief executive took a swipe at the Facebook founder last week in the aftermath of the Cambridge Analytica scandal, when asked what he would do if he were in the Mr Zuckerberg’s position. Mr Cook drew a distinction between Apple and Facebook, saying: “I wouldn’t be in this situation.” The iPhone maker was deliberately leaving money on the table by refusing to use data to target advertising to its hundreds of millions of customers, he told MSNBC. “We care about the user experience and we’re not going to traffic in your personal life.” But in an interview with Vox, Mr Zuckerberg defended Facebook’s advertising and data-led business model. “The reality here is that if you want to build a service that helps connect everyone in the world, then there are a lot of people who can’t afford to pay,” he said. “Having an advertising-supported model is the only rational model that can support building this service to reach people.” “If you want to build a service which is not just serving rich people, then you need to have something that people can afford,” he added. Mr Zuckerberg acknowledged that Facebook’s ambition of connecting the world had changed following the global “rise of isolationism and nationalism”. “I think it’s clear that just helping people connect by itself isn’t always positive,” he said. “A much bigger part of the focus for me now is making sure that as we’re connecting people, we are helping to build bonds and bring people closer together, rather than just focused on the mechanics of the connection and the infrastructure.” Facebook also had “a big responsibility” to “help support high-quality journalism”, he said, pointing to the importance of subscriptions as a key revenue for news organisations. “There are certainly a lot of things that we can do on Facebook to help people, to help these news organisations, drive subscriptions.” Mr Zuckerberg raised the prospect of a third party body ruling on disputes about content published on the platform. “Over the long term, what I’d really like to get to is an independent appeal,” he said. “You can imagine some sort of structure, almost like a UK banks sell asset-backed securities at fastest rate in years NICHOLAS MEGAW UK banks are selling assetbacked securities at the fastest rate in years, with activity set to increase further as the withdrawal of a Bank of England support programme forces lenders to find alternative sources of funding. Banks and building societies that had been eligible for the BoE’s Term Funding Scheme issued €4.4bn worth of securitised products — where assets such as mortgages or consumer credit are packaged together and sold like bonds — in the first quarter of 2018, compared with zero in the same period last year, according to data from JPMorgan. The TFS, introduced to encourage banks to continue lending after the Brexit vote, allowed them to borrow at the central bank’s base rate, reducing the need for them to Supreme Court, that is made up of independent folks who don’t work for Facebook, who ultimately make the final judgment call on what should be acceptable speech in a community that reflects the social norms and values of people all around the world.” Facebook continues to weather the fallout from the Cambridge Analytica scandal, when it was revealed that the UK data analytics company had accessed the personal information of 50m Facebook users. The political outcry has not abated and regulators on both sides of the Atlantic are exploring tighter restrictions on social networks. Brussels is preparing to crack down on social media companies, issuing a stark warning that scandals such as the Facebook data leak threaten to “subvert our democratic systems”. Julian King, European commissioner for security, is demanding a “clear game plan” for how social media companies operate during sensitive election periods, starting with European Parliament polls in May 2019. A letter from Sir Julian to Mariya Gabriel, commissioner for the digital economy, called for more transparency on the algorithms that tech companies use to promote news stories, as well as limits on the “harvesting” of personal information for political purposes. raise funds elsewhere. The scheme ended at the end of February. Santander in March completed the largest dollar-denominated mortgage-backed security issue by any UK company since 2012, while Lloyds sold more than £500m worth of notes linked to a credit card portfolio, helping bring total issuance over the first three months of the year to its highest level since the first quarter of 2016. and her national reputation was dimmed in the decades following their divorce in 1996. In 2003, she was convicted of fraud and theft but, like an earlier charge of kidnapping, the conviction was lessened on appeal and she was given a suspended sentence. Ukrainian bank files $3bn claim against PwC for audit breaches PrivatBank asks Cypriot court to rule if auditor should have spotted decade-long fraud ROMAN OLEARCHYK PrivatBank, Ukraine’s largest commercial lender, has filed a $3bn legal claim against PwC saying that “serious and extensive breaches” at the auditing group allowed alleged accounting abuses that forced the state to nationalise the bank. The bold Ukrainian attempt to secure significant damages from PwC in a Cyprus court marks the latest reputational blow to the “Big Four” accountancy firms that has prompted regulators to intensify scrutiny through probes and hefty fines. Petr Krumphanzl, PrivatBank’s chairman, said in a statement on Monday that PwC “failed absolutely to identify the ongoing operation of the huge fraud within the bank over many years which resulted in virtually the entire corporate loan book of the bank being non-performing and without any or any adequate security”. “It will now be for the Cyprus court to determine the claims being brought by PrivatBank against PwC in due course,” he added. PrivatBank, which was previously owned by two Ukrainian oligarchs, said it had filed the legal proceedings on Friday in a Nicosia court against two PwC group affiliates, one registered in Ukraine and another in Cyprus. PrivatBank, which was nationalised in late 2016, cited a December High Court of London order freezing more than $2.5bn of “worldwide” assets belonging to the bank’s former oligarch owners Igor Kolomoisky and Gennady Bogolyubov. It described the claims against PwC as “the next significant step being taken . . . to seek to recover substantial compensation for the huge losses it has suffered, the burden of which thus far has fallen in large part on the state of Ukraine.” Ukraine’s central bank revealed in January that an investigation by corporate consultancy Kroll had found that PrivatBank was “subjected to a large scale and co-ordinated fraud over at least a 10-year period . . . which resulted in a loss of at least $5.5bn” before the state stepped in. There was no immediate response from PwC, Mr Kolomoisky or Mr Bogolyubov. All have in previous comments denied wrongdoing in relation to the financial woes that occurred at PrivatBank. In July last year, Ukraine’s central bank pulled PwC’s domestic bank auditing rights, citing its alleged shortcomings in identifying the alleged fraud.
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BusinessDay 03 Apr 2018

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