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Mexican president’s family faces calls for investigation into Miami apartment

Oppositions parties and Mexican media alleged cronyism after Guardian report revealed property arrangement between Pea Nietos wife and Ricardo Pierdant

Political and civil society leaders in Mexico are calling for an investigation into the first familys use of a luxury apartment in Miami, which has raised the spectre of a fresh conflict-of-interest scandal.

Opposition parties demanded that authorities investigate the property arrangement between a Miami-based Mexican businessman and Anglica Rivera, the wife of President Enrique Pea Nieto.

Mexican newspapers and social media have led an outcry, alleging cronyism, since the Guardian reported the arrangement on Tuesday.

The revelation has prompted fresh scrutiny of the embattled presidents ethics following an earlier scandal over his familys purchase of a Mexico City mansion, known as the Casa Blanca, from a government contractor.

Suspicion in the latest case focuses on why the businessman, Ricardo Pierdant, let the first lady use the $2.05m Miami apartment and also why one of his companies paid close to $30,000 in property taxes on her behalf for a neighbouring apartment which she owns.

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The two main opposition parties have asked for an investigation into the Miami apartments, which are in Ocean Tower One in Key Biscayne. Photograph: Handout

Pierdant is a close friend of the first family and his company, Grupo Pierdant, was expected to bid for lucrative contracts to run Mexicos ports.

The first lady cannot receive lucrative favours without authorisation from the federal executives legal counsel, an oversight agency, wrote Salvador Camerana, a columnist, in El Financeiro. The president of the republic cannot accept that his friends extend favours worth thousands of dollars to him, his wife, their children or to their collaborators.

Eduardo Bohrquez, head of the advocacy group Transparency Internationals Mexico chapter, told the Wall Street Journal that the first couple faced renewed scrutiny. It reignites the discussion over the links that the president and his wife have with businessmen, particularly the type of relation that they could have with someone who pays your property taxes.

The two main opposition parties, the National Action party (PAN) and Party of the Democratic Revolution (PRD) have asked for an investigation into the Miami apartments, which are in Ocean Tower One, a gated community with a pool, tennis courts and white glove concierge in Key Biscayne, an affluent enclave in Miami-Dade County.

Such an investigation would probably be the responsibility of federal auditors and the comptrollers office.

In a statement, Eduardo Snchez, the presidents spokesman, said that the first lady used Pierdants apartment only on rare occasions and that there was no conflict of interest because the businessman had no federal government contracts and was not participating in current bids.

The spokesman declined to say why Pierdants company, Biscayne Ocean Holdings, paid taxes in 2014 on the first ladys apartment, unit 404, which is directly beneath his own unit 304.

In a statement the spokesman also questioned the Guardians veracity and claimed the newspaper had apologised several years before over a separate story about the president. The Guardian has not apologised for its reporting.

Pierdant, the co-founder of DecoBikes, a bicycle-sharing program in Miami and San Diego, has declined to speak to the Guardian, but a Mexican news website quoted him saying the first lady, a former telenovela star, asked him to handle the property tax and reimbursed him.

At the time Pierdant bought the Key Biscayne apartment in 2009 he was overdue on mortgage payments for another Coral Gables property, according to court documents seen by the Wall Street Journal. Asked by Univision how he could afford to pay one apartment in cash while owing money on another property, Pierdant was quoted as saying: I had the money available.

The outcry over the first familys property dealings in Miami comes at a delicate time for Pea Nieto, who is battling a sluggish economy and rampant crime. A poll taken before the current row showed his approval ratings dropping to 23%, his worst showing since taking office in 2012. The newspaper Reforma said it was the lowest approval rating for a president since it began publishing similar polls in 1995, just after a huge currency devaluation.

The Miami property arrangements have fuelled unease because they echo aspects of the first ladys purchase of a $7m mansion in Mexico City from another businessman with government contracts the so-called Casa Blanca (White House) scandal.

It landed like a bombshell in 2014, wrecking Pea Nietos reformist credentials and reviving longstanding concerns about corruption in the ruling Institutional Revolutionary party (PRI).

The first lady later returned the property and last month Pea Nieto apologized, saying the scandal had dented faith in the presidency and government. For this reason, with all humility I ask your forgiveness.

The president made the apology as he signed into law an anti-corruption system that his PRI party hopes will boost its credibility in the run-up to the 2018 presidential election.

Read more: https://www.theguardian.com/world/2016/aug/12/mexico-president-pena-nieto-wife-miami-apartment


Vancouver slaps 15% tax on foreign house buyers in effort to cool market

Canadian authorities have taken action to tackle the affordability crisis in British Columbias biggest city where a detached home now costs C$1.56m

Foreigners looking to purchase a home in Vancouver now face an additional tax of 15%, as Canadian authorities seek to temper a heated housing market that ranks as one of the worlds least affordable.

The tax, which came into effect on Tuesday, will be levied on all home buyers in metro Vancouver who are not Canadian citizens or permanent residents. The measure will also apply to corporations that are not registered in Canada or which are controlled by foreigners.

Announcing the measure, the provincial government of British Columbia said the tax was intended to help cool the citys red-hot property market, where demand from foreign investors many of them from China has helped push the cost of a detached home to C$1.56m ($1.2m) in June, a 39% jump from a year earlier.

There is evidence now that suggests that very wealthy foreign buyers have raised the price, the overall price of housing for people in British Columbia, Christy Clark, the provinces premier, told reporters recently.

Figures collected by the province during a five-week period this summer showed that foreign nationals invested more than C$1bn amounting to about 8% of sales in real estate in the province, with the bulk of the money heading to Vancouver and the surrounding region.

Clark has long resisted calls to intervene in the real estate and construction industries, which in 2014 accounted for 25% of the provinces GDP.

In a city where the median household income in 2014 stood at about C$76,000 a year, the proportion of detached million-dollar homes now sits at 91%. If we are going to put British Columbians first, and that is what we are intending to do, we need to make sure we do everything we can to try and keep housing affordable, said Clark, who leads the provinces Liberal government.

Ultimately, the goal is to affect the demand by making sure its maybe a little tougher for foreign buyers to find their way into our market.

Money collected from the tax will be put towards housing initiatives for renters, low-income residents and first-time buyers, amid record numbers of homeless in the city.

The measure, which echoes the taxes imposed on foreign buyers in Hong Kong and Singapore, was met with mixed reviews. Gregor Robertson, the mayor of Vancouver, welcomed the initiative. Its too early to judge whether or not [the tax] will have a significant impact, but its good to see, he told reporters. Last month the city of Vancouver was given the go-ahead to impose a new tax on empty homes.

Others pointed to the loopholes that could allow foreigners to get around paying the tax by measures such as having Canadian friends or relatives purchase homes for them. The tax depends on buyers self-reporting their nationality, threatening jail time and steep fines of up to C$200,000 plus the unpaid tax for those who attempt to avoid the tax.

Still, those intent on ducking the tax will find a way around it, said David Eby, a New Democrat member of the provincial legislature. We have a wild west real estate market where there is really very little auditing or policing of it, whether its around money laundering or tax avoidance or any of these issues, so this tax is going to be subject to all of those weaknesses.

He worried the tax would make it more difficult for companies in the city to recruit and retain highly skilled workers, as it also applies to foreigners who are in the city on work permits and who pay taxes. Theres a lot of bycatch it catches a lot of people that it shouldnt, he said, citing researchers recruited by the citys universities or specialised workers needed for the citys tech industry as examples.

The effect of the tax will probably be evident within a few months, said Tom Davidoff, a professor at the University of British Columbia. This could possibly have significant impact but we just dont know how big it will be because we do not know what the foreign buyer will do.

Some could look to homes in other parts of the province or in Toronto, where the average cost of a home stands at C$746,000, a 17% increase from one year earlier. Last week, the Ontario government said it was closely watching the implementation of the new tax in Vancouver as a potential means of increasing affordability.

Davidoffs best guess is that the new tax in Vancouver would drop home prices by 10%. Some foreign buyers may find a way to get around the tax, he said. And some people will just pay the 15%. Theyre rich and theyll do it.

Read more: https://www.theguardian.com/world/2016/aug/02/vancouver-real-estate-foreign-house-buyers-tax


Clinton blames Russia for DNC hack as Trump seems to back annex of Crimea

Democratic nominee accuses Trump of troubling willingness to support Putin while Republican rejects claims of link and people of Crimea would rather be with Russia

Hillary Clinton has once again blamed Russian intelligence services for hacking the Democratic National Committee (DNC) computer system and accused Donald Trump of supporting the Russian president, Vladimir Putin.

As she did so, Trump denied having ties to Putin and Russia and appeared to voice his approval of Russias annexation of Crimea from Ukraine.

In her first national interview since clinching the Democratic nomination, Clinton spoke to Fox News Sunday. The interview was taped in Pennsylvania on Saturday morning, before Trump criticized Khizr Khan, the father of a dead soldier, who spoke at the Democratic national convention.

Clinton answered tough questions on Benghazi, her emails and her campaign and policies, and focused her own attack on her opponents alleged links to Russia and Putin.

We know that Russian intelligence services hacked into the DNC, Clinton said, in her first interview with Fox in more than five years. And we know that they arranged for a lot of those emails to be released and we know that Donald Trump has shown a very troubling willingness to back up Putin, to support Putin.

Asked if she believed Putin wanted Trump to win the presidency, Clinton said she would not make that conclusion. But I think laying out the facts raises serious issues about Russian interference in our elections, in our democracy, she said.

The US would not tolerate that from any other country, Clinton said, adding: For Trump to both encourage that and to praise Putin despite what appears to be a deliberate effort to try to affect the election, I think, raises national security issues.

The hack of the DNC computers has also affected the Clinton campaign and the Democratic Congressional Campaign Committee. For about five days, a hacker accessed an analytics data program maintained by the DNC that was used by the Clinton campaign to conduct voter analysis, said an aide familiar with the matter.

According to an outside cybersecurity expert for the Clinton campaign, the campaign is confident the hack could not result in access to internal emails, voicemails or other internal communications and documents.

The hack led to the resignation of the DNC chair, Debbie Wasserman Schultz, on the eve of the partys convention, inspiring protests over leaked emails that showed top DNC staffers had discussed ways to undermine Clintons primary opponent, Bernie Sanders.

The FBI is investigating and federal sources have indicated that Russian intelligence sources may be to blame. On Wednesday, Trump appealed to Russia to find 30,000 missing emails from the private server used by Clinton when she was secretary of state. He later said he had been being sarcastic.

The billionaires campaign has rejected all claims of links to Russia and Putin. On Sunday an interview with Trump, also recorded on Saturday, was broadcast on ABCs This Week. He repeated: I have no relationship with Putin. I have no relationship with Putin.

Asked about a comment from 2013 in which he said I do have a relationship with Putin, Trump said: Just so you understand, he said very nice things about me. But I have no relationship with him. He added: I dont think Ive ever met him. I never met him. I dont think Ive ever met him.

Trump was asked about his recent comments disparaging Nato allies, the softening of the Republican platform on Russia and Ukraine and his equivocations on Russias annexation of Crimea, the subject of US sanctions and United Nations disapproval.

Hes [Putins] not going into Ukraine, OK, just so you understand, he said. Hes not going to go into Ukraine, all right?

Reminded that in fact Russia annexed Crimea from Ukraine in 2014, Trump said: But you know, the people of Crimea, from what Ive heard, would rather be with Russia than where they were. And you have to look at that, also just so you understand, that was done under Obamas administration.

And as far as the Ukraine is concerned, its a mess. And thats under Obamas administration with his strong ties to Nato. So with all of these strong ties to Nato, Ukraine is a mess. Crimea has been taken. Dont blame Donald Trump for that.

In a statement issued later on Sunday, the Clinton policy adviser Jake Sullivan said: What is he talking about? Russia is already in Ukraine. Does he not know that? What else doesnt he know? While Trump hasnt mastered basic facts about the world, he has mastered Putins talking points on Crimea.

Asked about the removal from the GOP platform a call for supply of lethal weapons to Ukraine for defense purposes, Trump said: I wasnt involved in that. Honestly, I was not involved.

Host George Stephanopoulos said: Your people were.

Trump said: Yeah. I was not involved in that. Id like to Id have to take a look at it. But I was not involved in it They softened it, I heard. But I was not involved.

One of Trumps people, campaign chair Paul Manafort, previously worked for Viktor Yanukovych, the former president of Ukraine and a Putin ally who now lives in exile in Russia. Appearing on NBCs Meet the Press, he said he had no influence on the platform committee and the change absolutely did not come from the Trump campaign.

On ABC, Trump also said: If our country got along with Russia, that would be a great thing. When Putin goes out and tells everybody, and you talk about relationship, but he says, Donald Trump is gonna win. And Donald Trump is a genius. And then I have people saying, You should disavow. I said, Im gonna disavow that?

But when Putin says good things, and when we have a possibility of having a good relationship with Russia I think thats good.

Read more: https://www.theguardian.com/us-news/2016/jul/31/clinton-blaming-russia-emails-dnc-hack


Tim Kaine greets crowd in Spanish as Clinton introduces VP pick in Miami

Virginia senator welcomes everyone in our country with bilingual address as Clinton and running mate take aim at Donald Trump and Mike Pence

Tim Kaine, Hillary Clintons newly minted running mate, had barely taken his place at the podium in Miami when he started speaking Spanish.

Bienvenidos a todos en nuestro pais, porque somos Americanos todos, the senator from Virginia said. It translated to: Welcome to everyone in our country, because we are all Americans.

Of Clinton, he said: Were going to be compaeros de alma [soulmates] in this great lucha [fight] ahead.

A crowd of thousands had queued for hours under the sweltering sun, lines snaking around the campus of Florida International University. They erupted into cheers.

Not long after, Kaine asked those who were naturalized US citizens to raise their hands. A sizable chunk of the audience obliged in a county that is home to a majority Hispanic population.

Thank you for choosing us, Kaine said, to another rousing reception.

Such moments captured dramatically a tale of two elections: Clinton and Kaine embracing the changing demographics of America, Donald Trump surging to the Republican nomination on a staunch anti-immigration platform and a pledge to build a wall on the US-Mexico border.

In Miami, one voter, Michael Paul Massaria, turned to his wife and remarked: Were not hearing all that doom and gloom like we did at the Republican convention in Cleveland.

On multiple occasions, Kaine was interrupted with chants of USA! USA! the sort of patriotism often on display at Republican events where time is dedicated to the projection of American strength.

But the supporters who packed into this basketball stadium were celebrating a different vision, one in which America is defined by its diversity and multiculturalism.

Weve got this beautiful country that should be a country of welcome, a country of inclusion, Kaine said.

He later vowed to advance comprehensive immigration reform with a pathway to citizenship for the roughly 11 million undocumented immigrants living in the US, in the first 100 days of a Clinton presidency. Such promises could be seen as wishful thinking, as Barack Obama has learned during his time in the White House. But Massaria, from nearby Davie, was quick to observe the benefit.

Kaines fluency in Spanish, he said, will help down the line with bringing in the Latino vote, especially here in south Florida.

Attendees like Anna Alvarez, a 67-year-old naturalized citizen who moved to Miami 43 years ago, were a testament to the potential appeal of a vice-presidential candidate campaigning for the first time in English and Spanish.

He will get in his pocket the millions and millions of Hispanics that Trump lost, she said.

Alvarez had never seen Kaine before, a fact the senator invoked with the self-deprecating declaration: Let me be honest: for many of you this is the first time youve heard my name.

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A woman wearing a US flag hijab applauds in the crowd in Miami. Photograph: Scott Audette/Reuters

Alvarez said: Im one of the ones that didnt know his name, but he was incredible. Hes down to earth, I liked his background and his experience. I really like the way he was very proud of his wife.

Trump, she said, reminded her of the Cuban regime she fled from more than four decades ago.

I had the experience of [Fidel] Castro, she said, and Trump is a reminder of the dictators in the world. I am totally against anything that has to do with Trump.

Clinton, who sat beaming behind Kaine throughout his remarks, said in her introduction that America was united behind the the confidence, the optimism that we are stronger together.

Im so thrilled to announce that my running mate doesnt just share those values, he lives them, she said. Tim Kaine is everything Donald Trump and [his vice-presidentil pick] Mike Pence are not. Hes qualified to step into this job and lead on day one. And he is a progressive who likes to get things done.

Clinton announced late on Friday that she had picked Kaine, a senator from Virginia, following an extensive vetting process that lasted more than two months. Her choice followed a calculation that the working-class, swing-state senator could bolster her appeal not just among Latinos but also moderates and independents.

A faction of progressives are less enthusiastic about Kaines centrist record, particularly his approach to the regulation of Wall Street and his support for the Trans-Pacific Partnership trade deal. Clintons former rival, the Vermont senator Bernie Sanders, did not immediately respond to the news. Clinton will formally accept the Democratic nomination for president this week, at the partys national convention in Philadelphia.

In Miami, Clinton touted Kaine as a pragmatic progressive.

When I say hes a progressive who likes to get things done, I mean it. Hes not afraid to take on special interests, Clinton said, adding that Kaine cares more about making a difference than making headlines.

And make no mistake. Behind that smile Tim also has a backbone of steel. Just ask the NRA.

Kaine was governor during the 2007 Virginia Tech shooting, in which 32 students and faculty members were killed. The senator made reference to the tragedy on Saturday, pausing for a moment as he grew emotional.

It was the worst day of my life, he said.

Kaine recounted how he battled the National Rifle Association in his push for stricter gun laws, which eventually led to an executive order to bar firearm sales to individuals legally declared mentally ill or dangerous. Gun control has emerged as a prominent issue in the 2016 election. Kaine pledged: We will not rest until we get universal background checks.

It was one of his biggest applause lines.

Kaine also wasted little time going after Trump, invoking the real estate moguls recent comments that the US should not immediately come to the assistance of Nato allies unless they had fulfilled their obligations in return.

This drives home the stakes of this election, Kaine said, noting that his son was a US Marine who would deploy next week to Europe to uphold Americas commitment to our Nato allies. He added: Hillary Clinton is the direct opposite of Donald Trump. She doesnt trash our allies she respects them.

Trump last week chose Pence, the Indiana governor, as his vice-presidential candidate. A popular figure among evangelical conservatives and known, like Kaine, for his polite demeanor, Pence has nonetheless shed the nice-guy image in his new role as attack dog for Trump, echoing the real estate moguls message that Clinton is corrupt and disqualified from the presidency.

Trump sought to brand Kaine as beholden to special interests, tweeting early on Saturday that Clinton had in effect rejected the will of progressives and Sanders backers.

Tim Kaine is, and always has been, owned by the banks, he said. Bernie supporters are outraged, was their last choice. Bernie fought for nothing!

Later, Trump added: Just saw Crooked Hillary and Tim Kaine together. Isis and our other enemies are drooling. They dont look presidential to me!

Read more: https://www.theguardian.com/us-news/2016/jul/23/hillary-clinton-tim-kaine-vp-vice-president


US officials target $1bn of assets as part of fraud investigation into 1MDB fund

Justice department traces money from Malaysian economic development fund to real estate in Beverly Hills, $200m in artwork and The Wolf of Wall Street

The US justice department has moved to seize more than $1bn of assets allegedly acquired using funds misappropriated from the Malaysian economic development fund 1MDB, according to court papers filed on Wednesday.

The news follows a months-long international FBI probe, as well as five separate investigations around the world, and mark a step up in the investigation into up to $6bn that was allegedly skimmed from the sovereign fund and allegedly used to support the lavish lifestyles of several men connected to the Malaysian prime minister, Najib Razak.

The US attorney general, Loretta Lynch, said the funds defrauded from the Malaysian people were used to pay for luxury real estate in the US and Europe, gambling expenses in Las Vegas casinos, a London interior designer, more than $200m in artwork by artists including Van Gogh and Monet, and the production of films including the Oscar-nominated The Wolf of Wall Street.

Unfortunately and tragically, a number of corrupt officials treated this public trust as a personal bank account, Lynch said at a news conference in Washington.

The seizures targeted by investigators include property, art drawings and a Claude Monet painting, a private jet and other assets purchased with money allegedly misappropriated from the fund.

The civil action and asset seizures represent the largest single action ever brought by the justice departments kleptocracy asset initiative, Lynch said.

The operation is being led by the initiative, which was set up in 2010, and will demonstrate Washingtons determination to curb the movement of illegal funds.

The Department of Justice will not allow the American financial system to be used as a conduit for corruption, Lynch said.

With this action, we are seeking to forfeit and recover funds that were intended to grow the Malaysian economy and support the Malaysian people. Instead, they were stolen, laundered through American financial institutions and used to enrich a few officials and their associates. Corrupt officials around the world should make no mistake that we will be relentless in our efforts to deny them the proceeds of their crimes.

The complaint, filed in California, alleges that funds diverted from 1MDB were used for the personal benefit of public officials and their relatives and associates.

The US attorney Eileen Decker said the case marked the justice departments determination to send a message that we will not allow the United States to become a playground for the corrupt, a platform for money laundering or a place to hide and invest stolen riches.

Among the assets the government is seeking are royalties from The Wolf of Wall Street, homes in Beverly Hills, a penthouse in the Time Warner building in Manhattan and a Vincent van Gogh drawing, according to the filing. They total more than $1bn, the justice department said in a statement.

Additionally, prosecutors in at least four countries Singapore, Switzerland, Luxembourg and the US are looking into money flows from the investment vehicle, formally called 1Malaysia Development Berhad, which was established for national development.

Among the questions asked by investigators is whether politically connected individuals in Kuala Lumpur benefited financially from the fund, whose advisory board was headed by Razak, the Malaysian prime minister.

The actions could also affect the USs relationship with Malaysia, as the investigations named figures including Riza Aziz, a film producer and stepson of the prime minister; Low Taek Jho often called Jho Low a young, high profile Malaysian financier; and Khadem al-Qubaisi, a former Abu Dhabi managing director of a sovereign-wealth fund.

Aziz runs the Hollywood production company Red Granite Pictures, which funded and produced the 2013 Leonardo DiCaprio hit The Wolf of Wall Street. In a letter to the Guardian earlier this year, the company denied there was anything improper in its dealings.

Liquidation begins

Figures allegedly connected to the 1MDB case have started liquidating assets. In February, Jho Low, 34, auctioned off artworks by Claude Monet, Pablo Picasso and Jean-Michel Basquiat at Sothebys, picking up steep losses on two of the pieces that were purchased from the auctioneer in 2013 and 2014.

All three works had been pledged as part of the collateral for a loan of about $100m from Sothebys Financial Services, Bloomberg reported.

Low, who has told newspapers that he provided informal consulting to 1MDB, has claimed he didnt break any laws and wasnt being investigated.

Over the past year, Low has kept a low profile a contrast to the heady days when he was known for throwing lavish parties with Paris Hilton and appearing on the red carpet with the singer Alicia Keys. Low is also reported to own stakes in hotels and a music publishing business.

Asset seizures will be the fruit of at least six global investigations into 1MDB. Investigators believe that as much as $6bn of the $13bn of debt raised by the fund went missing.

The 1MDB affair has stretched from Malaysia to Singapore, Abu Dhabi, Switzerland, the Caribbean, Hong Kong and the US. The suspected fraud occurred in three phases in which money was laundered through bank accounts in Singapore, Switzerland, Luxembourg and the US, the government said in the court filing.

In 2009, after 1MDB was set up to pursue development projects, officials of 1MDB and others, under the pretense of investing in a joint venture between 1MDB and a Saudi oil company, transferred more than $1bn to a Swiss bank account.
In 2012, 1MDB officials and others diverted proceeds raised through two separate bond offerings arranged by Goldman Sachs Group Inc, according to the justice department.

More than 40% of the proceeds, or $1.4bn, were transferred to a Swiss bank account belonging to a British Virgin Islands entity. More than $1bn was diverted from another bond offering arranged by Goldman Sachs in 2013.

Earlier this year, the companys south-east Asia chairman, Tim Leissner, took a leave of absence after questions were raised about the fund, and an unauthorized letter of reference to another bank on behalf of Jho Low that implied he had vetted Low and done business with him directly.

The Journal reported seeing bank transfer documents showing that hundreds of millions of dollars were diverted into the prime ministers own bank accounts in Malaysia ahead of key elections.

Razaks family has been entangled in various alleged links to 1MDB funds, alongside a separate donation scandal that has caused more than a year of political tension in Malaysia.

Razak and Malaysias attorney general have said the money in his bank accounts was a gift from the Saudi royal family and most was later returned. The 1MDB fund denies wrongdoing and says it is ready to cooperate with any investigation.

Critical questions still unanswered

How 1MDB funds reached the US has yet to be clarified. Investigators are looking into an Abu Dhabi business partner of 1MDB who may have moved the money through a British Virgin Islands company, which then sent it to a company owned and controlled by Aziz.

Aziz allegedly used some of the money to buy properties that are named in the US criminal complaint and may imminently be subject to seizure. They include a 7,700 sq ft, $33.5m duplex in the Park Laurel condominium tower overlooking New Yorks Central Park and an 11,000 sq ft walled mansion in Beverly Hills.

There has never been anything inappropriate about any of Red Granite Pictures or Riza Azizs business activities, a spokesman for Azizs film company told the Journal. What they have done and will continue to do is develop and produce successful and acclaimed movies that have generated more than $825m in worldwide box-office revenues.

Meanwhile, 1MDB has said it has never invested in or transferred funds to Red Granite Pictures, whether directly or via intermediaries. Any statement to the contrary is false.

Still, for a time, the young Malaysian investors lived large. Three months after shooting on The Wolf of Wall Street began, Red Granite gave a birthday gift to DiCaprio: the Oscar statuette given to Marlon Brando for best actor in On the Waterfront, which cost about $600,000.

On New Years Eve 2012, revellers celebrated the arrival of 2013 in Australia and then flew to Las Vegas on a rented jetliner in time to celebrate it again. The party was reported to have included the two Malaysians, Aziz and Low, DiCaprio and his Wolf of Wall Street co-star Jonah Hill, and the actor and singer Jamie Foxx.

Six months after the movies release, DiCaprio, Aziz and Low attended the World Cup in Brazil and spent time on a Saudi-owned, 482ft yacht.

The alleged scandal came to public notice last year, when the Sarawak Report, a UK-based site run by a former BBC journalist, published a series of what it said were internal emails between 1MDB and the Saudi energy company PetroSaudi.

The emails, the Sarawak Report said, showed that $700m involved in a deal between 1MDB and PetroSaudi was sent to a bank account belonging to a company controlled by Low.

The Guardian has been unable to contact Low regarding the allegations against him. He has consistently denied any wrongdoing, with his lawyers calling allegations that he benefited from the fund false, materially misleading and categorically denied.

Read more: https://www.theguardian.com/world/2016/jul/20/us-justice-department-1mdb-fund-seizure-fraud-investigation


Paris haute couture leaps into the 21st century

Vetements revolutionary show, held in a department store, saw weird and wonderful display from alt-thinking label

Disruption is a vogue-ish word as overused in the modern fashion industry as iconic was in the last decade. But when evening wear at Paris haute couture fashion week means pink velour Juicy Couture palazzo pants worn with a promotional T-shirt for lager rather than ball gowns, then disruption is definitely happening.

The invitation to join the haute couture schedule extended to the alternative design collective Vetements, whose previous show featured Kanye West on the front row and repurposed Justin Bieber tour merchandise on the catwalk, is nothing short of revolutionary. Paris haute couture, which until now has maintained a defiantly pre-revolution Versailles image think organza and corsetry has taken a leap into the 21st century.

The Vetements show was held in the Galeries Lafayette department store. This is the haute couture equivalent of Alexander McQueen staging his 90s London Fashion Week shows in freezing, leaky warehouses. Department stores, where the clothes have price tags, are frankly dclass in the haute couture realm of the bespoke and unique.

The
The runway for the Vetements show in the Galeries Lafayette department store. Photograph: Ian Langsdon/EPA

The clothes were deliberately off-kilter. Trousers are cropped above boot level, as if the models have outgrown them, or shrunken eye-poppingly tight at the groin. Models dont look like models, or walk like them. They look pale, and awkward, and anxious.

There have been weird clothes at couture before Gallianos Dior was outre in its day but the difference with Vetements is that the alt-thinking permeates everything the label does. Status, and the value placed on craftmanship, are the bedrocks on which haute couture and its billionaire-class price tags are built. But Vetements have a mischievous, Warholian viewpoint which sees beauty in the everyday (the DHL logo, which they adopted as a signature) and venerates mass-produced brands such as Levis and Hanes.

Vetements is led by Guram and Demna Gvasalia, who moved with their family from civil war-torn Georgia to Dusseldorf as children, and are now based in Paris. With Demna now installed as designer at Balenciaga, they are an unlikely but formidable new power duo in Paris fashion. This show replaces the Vetements ready-to-wear show that would have taken place in October, meaning that the team had three months rather than six to produce that collection.

In direct opposition to the seamstress-in-an-atelier heritage of haute couture, Vetements tackled the challenge of this short lead time by collaborating with 18 best-in-class brands ranging from Italian tailoring house Brioni to Reebok. In this way Vetements, granted a golden ticket to couture, opened the doors to 18 other labels. Even the Vetements own-label tracksuit a holy item in the 2016 fashion world was poked fun at with a collaboration with Britney Spears favourite, Juicy Couture.

Meanwhile at Versace, the essential alchemy of the brand is a cocktail of mass sex appeal and high class. Before the show, Donatella Versace said of this haute couture collection that it reveals a womans power and her allure. The verb is telling, reminding us that strategic exposure is all part of the Versace gameplan. A combination of sex and status gives the Versace woman an air of bomb-proof, self-confidence that any consumer in her right mind would want a piece of.

The
The dresses at Versace were the most sumptuous of body-conscious gowns. Photograph: Patrick Kovarik/AFP/Getty Images

It is a much-emulated formula, which means that every Versace show is an important opportunity for Donatella to remind the world who owns this piece of aesthetic real estate. The Italian brand has a new British CEO in Jonathan Akeroyd, who joined less than a month ago from Alexander McQueen, but the aesthetic on the catwalk was pure Donatella. All the firepower of Atelier Versaces formidable army of tailors and embroiderers were laser-focused on creating the most sumptuous of body-conscious gowns. Think drapery that would become a classical goddess, with a thigh-high slit for good measure.

But Versace has to be about fashion as well as sex, because the younger consumers Versace needs to communicate with if it is to stay relevant are hardwired to demand constant newness. The messy buns and oversized hoop earrings were based on contemporary model-off-duty style rather than on traditional couture beauty tropes, while oversized evening coats worn dramatically falling off the shoulder reflected fashions new proportions.

Read more: https://www.theguardian.com/fashion/2016/jul/03/paris-haute-couture-leaps-into-the-21st-century


ExxonMobil under investigation over lucrative Nigerian oil deal

Exclusive: documents obtained by the Guardian show Nigerian agency looking into 2009 lease agreement for countrys Crown Jewels oil fields

ExxonMobils deal to secure the Crown Jewels of Nigerian oil reserves is under investigation by the west African countrys economic and financial crimes commission, according to documents obtained by the Guardian.

Exxon, the worlds largest oil company, secured the lucrative oil rights in 2009 by beating out Chinas fourth-largest oil producer for access, despite apparently underbidding its rival bid by $2.25bn.

A letter provided to the Guardian addressed to an Exxon subsidiary from Nigerias federal ministry of petroleum resources shows the accepting of a 2009 bid of $1.5bn for a 20-year lease on the Oso, Ekpe, Edop and Ubit oil fields, which produce about 580,000 barrels a day between them close to a third of Nigerias crude oil production of about 1.8bn barrels a day, according to Opec.

Local Exxon rival Sunrise Power & Transmission, at the time a consortium of Nigerian and Chinese interests that included the Chinese National Offshore Oil Corporation (CNOOC), bid $3.75bn for the same rights, according to a letter from Sunrise to the Nigerian president.

The deal was reported to the Nigerian authorities by Lanre Suraju, a Nigerian anti-corruption activist and chairman of the Civil Society Network Against Corruption. Suraju said he was passed documents related to the deal by a concerned citizen after his June 2015 petition to investigate the bid was made public. Suraju was the recipient of a letter dated 17 August 2015 in which the authorities confirm they are investigating the deal.

lanre suraju letter
The letter to activist Lanre Suraju confirming the investigation of Exxons deal.

The documents were given to the Guardian by international watchdog group Global Witness, which said it had confirmed the investigation with the Economic and Financial Crimes Commission (EFCC). The EFCC told the Guardian it could not comment on the existence of an investigation, though Suraju said that as of last week the EFCC has progressed impressively on the matter.

Revelations about the investigation come at a sensitive moment for the oil industry: the US Securities and Exchange Commission (SEC) is currently considering a rulemaking under the Dodd-Frank Wall Street Reform and Consumer Protection Act that would require energy companies to disclose the specific payments, down to the level of the individual project, that the firms make to foreign governments in order to secure lucrative mining and drilling rights.

Dominic Eagleton of Global Witness said his organization wants to support greater transparency in international oil deals and hopes the SEC rule passes as proposed. Its vital that the US introduces strong transparency rules to bring these deals into public view, enabling citizens in Nigeria and other oil-rich nations to hold their governments and companies to account for how the money is used, he said.

Exxon has argued to the SEC that the new rule disregards a court ruling against the regulator and the many comments, concerns, and good-faith proposals for alternative approaches put forward by industry.

An internal memo signed by executives of the nations state-run oil firm, the Nigerian National Petroleum Corporation (NNPC), shows Exxons local subsidiary Mobil Producing Nigeria (MPN) originally tried to acquire a 25-year license to receive billions of dollars of oil for just $75m, saying they had expected the price for the lease renewal to be millions not billions.

The three oil-mining leases, or OMLs, renewed in 2009 at the end of a 40-year lease, are for shallow-water offshore lots of oil-rich real estate labeled blocks 67, 68 and 70. Production at the properties is very high, according to reports. Assuming the leased properties generate that many barrels every day of the year at an average of $50 a barrel, the gross revenue from ExxonMobils 40% stake in the wells would come to $4.2bn annually. The properties also produce natural gas.

Mobil Producing Nigeria takes strong exception to these allegations, Lauren Kerr, the operations media relations manager for ExxonMobil, told the Guardian. Mobil Producing Nigeria fully complied with the requirements outlined by Nigerian law for the renewal of oil mining licenses 67, 68 and 70. Nigerian law, as prescribed under the Petroleum Act, outlines the processes and procedures for an oil mining license renewal in the country. Within this framework an agreement between the Nigerian government and MPN was reached and legally executed.

We have noted the same to Global Witness.

The company adheres to the highest standards of business conduct, and to imply so without evidence is grossly irresponsible.

Mobil Producing Nigeria memo

CNOOC said it would not comment on the specifics of the deal, though spokeswoman Irene Gao said the company had learned from the experience: In the future, the Company will attach more importance to the organic development of overseas assets and further optimize its overseas portfolio, Gao told the Guardian.

For the year ending 2015, ExxonMobil reported realizing $12.2bn from all of its Nigerian assets in sales and other operating revenue.

Just two months before the renewal, the Financial Times reported that Tanimu Yakubu, economic adviser to Nigerias former president Umaru YarAdua, had said that Chinese bidders are really offering multiples of what existing producers are pledging [for licences] we love to see this kind of competition.

But the leases stayed with Exxon to the consternation of Leno Adesanya, at the time the chairman of Sunrise Power & Transmission, a consortium of local and Chinese interests that included CNOOC.

In the case of ExxonMobils OML 67, 68 and 70, our consortium offered $3.75bn for 40% equity interest in oil reserves, Adesanya wrote to Nigerias current president, Muhammadu Buhari, last July according to one letter provided to the Guardian. The letter goes on to say that the company had offered $18.75bn for a 100% interest in the same properties under the original agreements, the wells are a joint venture in which 40% of the oil goes to Mobil Producing Nigeria, and the other 60% to Nigerias state oil company.

A letter from 31 August 2009, little more than two months before the acceptance of the lower bid, details the $18bn bid from Sunrise and seems to assert the Chinese firms ability to handle the daunting logistics of changing ownership from Exxon, though it does not directly refer to its competitor: It is important to emphasize that Sunrise, CNOOC and the other constituent members of the Consortium are not only capable of funding petroleum operations in the respective OMLs, but have the technical know-how to undertake and carry out petroleum operations as required by international petroleum oilfield practices.

Exxons current rights are based on a disputed November 2009 deal, the negotiation of which was the subject of an inquiry by Nigerias now former oil minister Diezani Alison-Madeuke, who said at the time she would recall the agreement since they had only been signed by a junior minister, Henry Odein Ajumogobia, and had never been countersigned by the senior oil minister, the late Rilwanu Lukman. A letter from Ajumogobia sets the price of the Exxon deal at $1.5bn, though it was widely reported as costing only $600m.

Alison-Madeuke, later the president of Opec, was arrested in London last October by Britains National Crime Agency as part of a corruption investigation. She was released on bail and did not appear before a magistrate in October, citing health concerns.

The documents appear to include pages one and three of an initial agreement from Ajumogobia confirming the renewal of the leases. Page two has been withheld; Suraju said he believes that it contains terms outlining the construction of a power plant, which the government presented as evidence that it had driven a hard bargain when pressed to investigate the deal for corruption.

Sunrise Power letter

Local news reports citing Nigerian officials value the power plant at $900m, which Suraju believes accounts for the difference between the $600m reported and the $1.5bn described in the letter to MPN from Ajumogobia.

The design contract for the power plant was awarded in 2009. In 2010, the NNPC announced groundbreaking on the project. An article published Tuesday described progress on the power plant, located at ExxonMobils Qua Iboe terminal in Akwa Ibom state, as slow.

One of the documents obtained by Suraju is a memo signed by officials of the national oil firm, the NNPC, describing the negotiations with Exxon. [T]hese blocks, particularly OMLs 67, 68 and 70 are the most prolific portfolio of hydrocarbon assets in offshore Niger-Delta, the governments representatives said. They are rightly referred to as the Crown Jewels.

Exxons lease on the blocks was set to expire in November 2009, and renegotiating that agreement was of paramount importance to the west African nation. [T]hese blocks represent the last remaining shallow-water resources of this magnitude in the Nigerian continental shelf and therefore lease renewal represents a unique opportunity for value capture for the Government, the reports authors wrote. Assuming a long-term minimum oil price of $50 a barrel (Brent crude was trading for just over $50 a barrel on Thursday), the government asked for $2.55bn.

Read more: https://www.theguardian.com/business/2016/jun/23/exxonmobil-nigeria-oil-fields-deal-investigation


Virginia Raggi faces five key tests if she becomes Rome mayor

Five Star Movement candidate will have to deal with several challenges if elected as Italian capitals first female mayor

Italians are heading to the polls on Sunday for local elections that will be closely watched in Rome, where the Eternal City is expected to elect its first female mayor.

The fight between Virginia Raggi, the mayoral candidate for the anti-establishment Five Star Movement, and the Democratic partys Roberto Giachetti pits a largely unknown quantity against a candidate representing the left-of-centre party of the prime minister, Matteo Renzi.

While local issues, from corruption to unreliable public transport, are likely to decide the race. the election of Raggi to one of the most high profile political posts in Italy would mark an important milestone for the countrys women. The 37-year-old lawyer enters the race having secured 36% of the vote in the first-round election on 5 June, while Giachetti won less than 25% in the crowded field.

But if Raggi wins she will face several challenges. Here are five of them:

1. A new image for the Five Star Movement

A Raggi win would not only be significant for women in Italian politics, it could also mark an important transition in the Five Star Movement, the party founded by the comedian Beppe Grillo.

Beppe
Beppe Grillo. Photograph: Giuseppe Cacace/AFP/Getty Images

While Grillos political views undoubtedly still rule the party he is vehemently anti-establishment, rails against political compromises, claims to be anti-corruption, and has praised the politics of Britains Ukip leader, Nigel Farage, for his anti-EU views a Raggi victory would test whether the M5S can move beyond its protest party status and actually govern.

So far, the partys record is poor in other cities, including Parma, with a number of M5S politicians facing corruption investigations. Raggis campaign has focused on local problems that vex everyday Romans.

She has vowed to create special bus lanes for buses and more cycle paths, the kind of practical promises that suggest she is not looking to make sweeping political statements.

However, if she is elected and is seen as doing a good job, Renzi, the former mayor of Florence, will undoubtedly be looking over his shoulder. Her sights could soon be set decidedly higher than the mayors office.

2. Taking on Mafia Capitale

Ignazio
Ignazio Marino. Photograph: Ettore Ferrari/EPA

Rome was never considered a capital of organised crime on the scale of Sicily, Naples or Reggio Calabria. But over the last two years, the Italian capital has been rocked by one public corruption scandal after another, known collectively as Mafia Capitale.

The former mayor, Ignazio Marino, resigned amid an investigation into his expenses and broader concerns that he was simply too incompetent to get to grips with the corruption that had ensnared nearly every public service.

The biggest test for Raggi, or any mayor, will be whether Mafia Capitale is a controllable problem or one that will simply consume any administration that attempts to fight it.

Voters have been attracted to Raggi for her straightforward message: she wants to create a Rome that is livable for Romans. It is a simple slogan, but one that could prove surprisingly difficult to deliver on.

3. Taking on the Vatican

Pope
Pope Francis in St Peters Square. Photograph: Angelo Carconi/EPA

Raggi has not only vowed to clean up Rome, both literally and figuratively, she has promised to take on the Catholic church.

In an interview with the Guardian, she said that, if elected, she would pursue claims worth 250m and 400m in allegedly unpaid taxes on the Vaticans real estate holdings and other assets.

The taxes had never been collected, she claimed, because past city administrations had been too afraid to take on the church.

While Pope Francis has publicly said shops on Vatican property ought to pay their taxes, any moves to take on the church will nevertheless likely be frowned upon inside the Vatican.

Francis was not shy about his apparent dislike of Marino. Within days of the pontiff criticising Marinos presence at a papal event in Philadelphia, the mayor was forced to resign (albeit for unrelated reasons). It was a keen reminder that any mayor or politician in Italy makes an enemy of the church at their peril.

4. Keeping the Olympics at bay

When Renzi made the audacious decision to throw Romes hat in the ring as a contender to host the 2024 Olympic Games, he said it showed Italy was capable of dreaming of big things.

You can lose, but whats unacceptable is to crouch up and give up on playing the game, he said in 2014, barely acknowledging the serious logistical and financial strains the Games would put on the ancient city.

Renzi
Renzi at the IOC HQ in Lausanne. Photograph: Pierre Albouy/Reuters

Raggi has said she opposed the bid because Rome was in a delicate moment. It was more important, she said, to think about everyday items instead of extraordinary ones.

In the final weeks of the mayoral campaign, the Olympics have become a litmus test of sorts. While Romes next mayor may not be in office in 2024, her or his support or opposition could be significant.

In that sense, a win for Raggi would send a clear message to Renzi: that the everyday problems of life in Rome cannot be neglected in pursuit of grandiose dreams.

5. Being a woman in Italian politics

This isnt always easy.

Read more: https://www.theguardian.com/world/2016/jun/19/virginia-raggi-faces-five-key-tests-if-rome-mayor-five-star-movement


Greece pushes fresh austerity drive through parliament

Alexis Tsipras gained approval by 152 of 153 of his deputies, despite many of them having previously rejected the proposals

The Greek parliament has approved a fresh round of austerity incorporating 1.8bn in tax increases and widely regarded as the most punitive yet amid hopes the move will lead to much-needed debt relief when eurozone finance ministers meet this week.

Alexis Tsipras, the prime minister, mustered the support of 152 of his 153 deputies on Sunday to vote through policies that many have previously rejected.

Addressing the 300-seat house during the heated three-day debate that preceded the ballot, Giorgos Dimaras, an MP in Tsiprass leftwing party, said he was appalled at being forced to support measures he had spent a lifetime opposing.

I am in mourning, he said. This is what can only be called wretchedness.

As parliamentarians had prepared to vote, large crowds of protestors took to the streets with Panaghiotis Lafazanis, a former minister who broke ranks with Syriza to form the Popular Unity party, taking the demonstration to the foot of the building itself where he unfurled a giant banner proclaiming: The memorandum will not pass.

The belt-tightening legislation, outlined in a 7,500-page omnibus bill, includes measures that range from the taxation of coffee and luxury goods to the creation of a new privatisation fund in charge of real estate assets for the next 99 years. Under the stewardship of EU officials, the body will oversee the sale of about 71,500 pieces of prime public property in what will amount to collateral for the 250bn in bailout loans Greece has received since 2010.

They are with the exception of the Acropolis selling everything under the sun, said Anna Asimakopoulou, the shadow minister for development and competitiveness. We are giving up everything.

The multi-bill, which also foresees VAT being raised from 23% to 24%, is part of a package of increases in tax and excise duties expected to yield an extra 1.8bn in revenue. Earlier this month, Tsiprass leftist-led coalition endorsed pension cuts that were similarly part of an array reforms amounting to 5.4 bn, or 3% of GDP.

At the behest of the EU and International Monetary Fund, the government has agreed to adopt tighter austerity in the form of an automatic fiscal brake referred to as the cutter in the Greek media if fiscal targets are missed.

Despite official claims that goals will be achieved, there is a high degree of scepticism as to whether this is feasible. The Greek economy has seen a depression-era contraction of more than 25% since the outbreak of the debt crisis in late 2009, and with high taxes likely to repulse investment, economic fundamentals are also unlikely to improve.

We are talking about indirect taxes, property taxes and income taxes all going up, Asimakopoulou said. Nobody will be able to pay them, targets will be missed, more austerity will be imposed and of course public rage will have to be vented. People will not only feel angry, they will feel conned.

The measures the ultimate U-turn for a government that once pledged to eradicate austerity are the latest in a set of prior actions Athens must take to complete an economic review that will unlock desperately needed bailout funds to avert default. The country has to meet 3.5bn in debt repayments this summer, starting with a 300m loan instalment to the IMF on 7 June money the country simply does not have.

Eager to avoid more drama before next months in/out EU referendum in the UK, general elections in Spain and regional polls in Germany, lenders have indicated they will disburse the loans at Tuesdays Eurogroup meeting. Berlin, which has provided the bulk of Greeces emergency aid, signalled the instalment could be as much as 11bn more than twice the original 5.4bn, according to the German financial daily Handelsblatt.

But creditors are still fiercely divided over the red-button issue of tackling Athens staggering 321bn mountain of debt. Although the EU and IMF now both concede the load is unsustainable, member states reject outright the prospect of a debt writedown for fear of losses on bailout loans. Euro finance ministers insist that if it is ever to recover, Greece has to achieve a primary budget surplus of 3.5%, excluding debt repayments. They have hinted that at most, they will agree to discuss debt relief when the countrys current – and third bailout programme expires in 2018.

The quarrel deepened last week when the Washington-based IMF, which has openly questioned Athens ability to achieve such a high surplus, proposed that Greece defer all debt repayments until 2040 and extend its repayment period with maturities that would run through 2080 on a capped interest rate of 1.5%. The standoff is expected to intensify on Tuesday.

Addressing parliament on Sunday, Tsipras insisted it was a huge achievement that Greece had finally succeeded in putting the debt issue on the table. Previous governments had done little more than kowtow to creditors without ever dealing with the source of Athens financial woes, he said.

No other party but the left could pass such measures, said Nikos Athanasiou, who has watched the crisis unfold from the kiosks he runs facing parliament in Syntagma square. If the right were in power Athens would be in flames.

Read more: https://www.theguardian.com/world/2016/may/22/greece-to-unveil-fresh-round-of-austerity-to-unlock-bailout-funds


Zimbabwes trillion-dollar note: from worthless paper to hot investment

The central bank of Zimbabwe issued $100,000,000,000,000 notes during the last days of hyperinflation in 2009, and they barely paid for a loaf of bread. But their value has shot up

Whats been one of the best-performing investments of the past seven years? Shares in Facebook? London property? Bitcoin? Up there with the best, believe it or not, are Zimbabwean 100 trillion dollar notes.

A trillion, by the way, is a million million. There are 12 zeros in a trillion. Add another two to reach the total on the Zimbabwean 100 trillion dollar bill, the note with the most zeroes of any legal tender in all recorded history. The bills circulated for a few months in 2009 at the zenith or, more precisely, the nadir of one of the most terrible instances of hyperinflation in history, before Harare finally abandoned the Zimbabwean dollar in favour of the South African rand, the US dollar and several other foreign currencies.

At one stage a hundred trillion dollar note would not even cover a bus fare. You needed a bale of notes just to buy a few household essentials. However, its thought that only a few million of them were ever printed.

I remember buying one on eBay. It is on the wall in my office. John Wolstencroft, a private investor, bought a batch of them to give away. I always found they were a good conversation starter, he says.

In 2010-11, Wolstencroft was living in New Zealand where he joined an investment club, made up mostly of locals and US expats. At the time, the great central banking experiment of quantitative easing and a 0% interest rate policy was making a lot of people nervous. He brought a handful of the Zimbabwean notes along to his first meeting to give out as a way of saying thank you for letting him join the club, but there were more people there than he was expecting.

I didnt have enough notes to go round, he says. People started offering me money for them. I tried to explain they were just a gift, but they just upped their offer. I realised then these notes were going to become a collectors item.

John
John (left) and Vishal Wolstencroft sell trillion dollar notes from the defunct Zimbabwean currency to collectors

Wolstencroft went away and bought several hundred more notes. The price had already risen since his first purchase; they were 1.50 each. He gave some out to members of the club, as promised, and kept the rest. When he returned to Britain he gave some to a financial company he works with. One of the independent financial advisers used to give the notes out to prospective clients to show why they should invest away from cash in a diverse range of assets, such as real estate, gold, stocks and shares, he says. Over the long term, cash loses its value.

Wolstencroft wasnt alone in seeing the potential of trillion dollar notes. The Wall Street Journal reported in 2011 that David Laties, owner of the Educational Coin Company in New York, had speculated about $150,000 (104,000) importing the notes from Zimbabwe, sensing they would become the best notes ever. Frank Templeton, a retired Wall Street equities trader, bought quintillions of Zimbabwe dollars (thats thousands of trillions) for between $1 and $2 each, via a broker from the Zimbabwe central bank. He would then sell them on for several times the price.

Vishal Wolstencroft, Johns 12-year-old son, noticed late last year that these same 100 trillion dollar notes were now changing hands on eBay for as much as 40 each. He talked his father into a joint venture. Vishal is responsible for the listing, photographs, posting, packing and advertising, while father John supplies the goods. Their profits are shared 50:50. Business is good. According to Vishal, its quite a step up from his previous venture selling old toys at a local market stall. Most 100 trillion dollar notes fetch close to 20-25 on eBay, but set against the 1.50 paid by Wolstencroft in 2011 it is a striking return. In percentage terms, it is close to 1,500%, compared with the miserable 5% rise in the FTSE 100 over the same period.

In an extraordinary irony, the 100trillion dollar note a symbol of financial mismanagement on a colossal scale has turned into one of the best-performing asset classes of recent years.

The disappearing currency

A
A Zimbabwean lady with a basketful of cash Photograph: Tsvangirayi Mukwazhi/AP

When the Zimbabwean dollar first came into existence in 1980 it had a similar value to the US dollar, writes Patrick Collinson. But by 2009, $1 was worth Z$2,621,984,228, 675,650,147,435,579,309,984,228. TheBank of England worries if inflation in the UK goes over 2% a year; in Zimbabwe it hit 79.6 billion per cent.

The countrys central bank could not even afford the paper on which to print its worthless trillion-dollar notes. President Mugabe issued edicts to ban price rises, of comedic value were it not for the devastation that hyperinflation wrought upon the people. The miserably low savings and incomes of the impoverished population were wiped out; shopkeepers would frequently double prices between the morning and afternoon, leaving workers pay almost valueless by the end of the day.

In 2009 the government scrapped the currency, leaving US dollars and South African rand as the main notes and coins in circulation. To this day, Zimbabwe still has no currency of its own, although the government last year offered to swap old deposit accounts into US dollars, giving savers $5 for each 175 quadrillion (175,000,000,000,000,000) Zimbabwean dollars.

In an extraordinary irony, Zimbabwe now suffers among the worlds worst deflation, currently at -2.3%.

Read more: https://www.theguardian.com/money/2016/may/14/zimbabwe-trillion-dollar-note-hyerinflation-investment


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