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Kremlin critic Browder urges forced oligarch whistleblowers

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By Jamey Keaten in Davos

DAVOS, Switzerland (AP) — Kremlin critic Bill Browder wants governments to step up efforts to get to the riches squirreled away by Russian oligarchs and linked to President Vladimir Putin by forcing the accountants, lawyers and others who set up murky legal and financial structures to become whistleblowers.

Browder, author of the nonfiction best-seller “Freezing Order: “A True Story of Money Laundering, Murder and Surviving Vladimir Putin’s Wrath,” says Russia’s war in Ukraine has increased attention on how oligarchs are custodians of the Russian leader’s wealth.

“But the oligarchs are not naïve,” Browder told The Associated Press on Tuesday at the annual World Economic Forum meetingin Davos. “They’ve hired the best lawyers, best asset protection specialists, and there are shell companies and trust companies and offshore companies and nominees and proxies — and the whole thing is extremely well thought-through.”

The founder of Heritage Capital, an early investor in post-Soviet Russia, Browder raised the alarm after his Russian tax adviser, Sergei Magnitsky, died in a Russian prison in 2009. He has become arguably one of the world’s biggest critics of Putin ever since.

Browder credited Biden administration efforts to put a squeeze on Putin and his government since the war began by putting a freeze on assets of Russia’s central bank, chasing the oligarchs, halting exports of technology to Russia and supplying weapons to Ukraine.

But when it comes to getting Russian oligarchs’ money, “we’re only scratching the surface,” Browder said.

“There’s only 35 oligarchs out of 118 who are on the Forbes (richest people) list who have been sanctioned by the either the U.S., EU, U.K., Canada or Australia. We need to get 118,” he said.

Browder says their money is held in top banks in places like London, New York and Zurich as well as in real estate, hedge funds and private equity funds:.

“It’s right in front of our eyes and the amounts are unbelievably big,” he said. “I estimate that since Vladimir Putin took power, he and the 1,000 people around him have stolen $1 trillion from the Russian state. And that money is stored in our financial capitals.”

He acknowledged that what he sees as the solution is “quite radical” — forcing “the people who set up these structures, the enablers, the lawyers, the accountants, the trustees under law to become whistleblowers for the government.”

“In other words, put an amendment into all money laundering and all sanctions law to say that people who are involved in setting up structures for sanctioned individuals have to come forward with the information to the government — or face a punishment of fines and imprisonment,” Browder said.

Jacques Attali, a former top French government official and past president of the European Bank for Reconstruction and Development, expressed hesitation about Browder’s idea.

To begin with, “it must be said that a lawyer shouldn’t do anything illegal — and that would be enough,” said Attali, an eminence grise at Davos. “A lawyer is necessarily at the service of his or her client.”

“You can strengthen legislation. You can’t ask a lawyer to turn in his or her client,” he said.

Vitaly Klitschko, mayor of the Ukrainian capital of Kyiv, supported the idea of further cracking down on Russian oligarchs’ money, saying, “I think we have to use every leverage to stop the aggression, and it’s not a secret that the Russians use the money for his (Putin’s) army.”

“Right now, sanctions work pretty well. Why? Because sanctions stop the financing of the Russian army,” Klitschko said.

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Economy

North American stock markets wrap up brutal quarter and first half of 2022

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By Ross Marowits in Toronto

Allan Small said the first half of 2022 has proven to be the worst run of his 25-year investment career.

Canada’s main stock index concluded its weakest quarter since before the pandemic while U.S. markets endured their worst six-months runs in decades on fears that rising interest rates will throw the economy into recession.

“As we hit the mid-point of the year, when you look back I think the first part of the year will be known for just a bloodbath in the markets,” the senior investment adviser at IA Private Wealth said in an interview.

The S&P/TSX composite index closed down 217.28 points to 18,861.36 to end the quarter off nearly 14 per cent for the biggest decrease since December 2019. The TSX is closed Friday for Canada Day while U.S. markets will be closed Monday for Independence Day.

In New York, the Dow Jones industrial average was down 253.88 points at 30,775.43. The S&P 500 index was down 33.45 points at 3,785.38, while the Nasdaq composite was down 149.15 points at 11,028.74.

The TSX is down 11 per cent so far this year, while the Dow is down 15 per cent, the S&P 500 is off 20.6 per cent for the worst six months in 50 years and Nasdaq fell a record 29.5 per cent.

“I don’t remember a year that started off the six months this poorly,” said Small.

Soaring inflation has been stoked by Russia’s invasion of Ukraine while supply chain bottlenecks have been accentuated by China’s COVID-19 lockdowns.

While markets endured steep declines in the past due to COVID-19 and the financial crisis, they were always followed by people buying the dip. This time, many investors remain on the sidelines after getting hammered and unsure about when markets will bottom out.

Economic data out of the U.S. on Thursday said core inflation numbers, the Fed’s preferred inflation measure, rose 4.7 per cent in May. That’s 0.2 of a per cent lower than April but still around 40-year highs.

In Canada, economic growth slowed in April to 0.3 per cent, while a preliminary estimate for May suggests it likely contracted 0.2 per cent. The U.S. previously said its economy slipped 1.6 per cent in the first quarter.

A negative number in the second quarter will mean the U.S. economy is technically in recession. But Small said many people think the economy is already there and that Canada is either in recession or about to go into one.

Small said he wouldn’t be surprised to see markets rise during a recession in anticipation of things getting better, with inflation moving down after peaking.

Real estate and utilities were the lone sectors in positive territory Thursday in a broad-based slump with six of nine sectors falling by more than one per cent.

Health care led the declines, losing 4.1 per cent with Canopy Growth Corp. plunging 18.5 per cent after the pot producer announced a convertible notes exchange.

Materials lost 3.6 per cent on a drop in metals prices, particularly copper.

The August gold contract was down US$10.20 at US$1,807.30 an ounce and the September copper contract was down 7.1 cents at US$3.71 a pound.

“Whenever you have fear of a recession, those types of metals which are used to build homes and build things, the fear is that you’re not going to need to use as much of these building materials,” Small said.

Energy lost 1.7 per cent on lower prices with crude oil dropping as Advantage Oil & Gas Ltd. shares were down six per cent.

The August crude contract was down US$4.02 at US$105.76 per barrel and the August natural gas contract was down US$1.07 at US$5.42 per mmBTU.

The Canadian dollar traded for 77.60 cents US compared with 77.65 cents US on Wednesday.

Shopify Inc. decreased 5.6 per cent to push technology lower while Laurentian Bank fell 2.5 per cent to lead a drop in the heavyweight financial sector.

Small is hoping for a better second half of the year after central banks conclude their aggressive interest rate hikes to tame soaring inflation.

“I don’t know if we’re going to make back enough to get us in the green for the year, but I’m hopeful that we’ll see a positive second half and we’ll make back some of the losses.”

This report by The Canadian Press was first published June 30, 2022.

Companies in this story: (TSX:AAV, TSX:WEED, TSX:LB, TSX:SHOP, TSX:GSPTSE, TSX:CADUSD=X)

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Environment

Supreme Court limits EPA in curbing power plant emissions

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WASHINGTON (AP) — In a blow to the fight against climate change, the Supreme Court on Thursday limited how the nation’s main anti-air pollution law can be used to reduce carbon dioxide emissions from power plants.

By a 6-3 vote, with conservatives in the majority, the court said that the Clean Air Act does not give the Environmental Protection Agency broad authority to regulate greenhouse gas emissions from power plants that contribute to global warming.

The court’s ruling could complicate the administration’s plans to combat climate change. Its proposal to regulate power plant emissions is expected by the end of the year.

President Joe Biden aims to cut the nation’s greenhouse gas emissions in half by the end of the decade and to have an emissions-free power sector by 2035. Power plants account for roughly 30% of carbon dioxide output.

The Associated Press

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july, 2022

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