Defying Trump, U.S. Senate advances measure critical of easing Russia sanctions

January 15, 2019

By Patricia Zengerle

WASHINGTON (Reuters) – The U.S. Senate voted on Tuesday to move ahead with a resolution disapproving of a Trump administration plan to ease sanctions on Russian companies tied to Russian oligarch Oleg Deripaska, clearing the way for debate and a vote on the plan.

The vote marked a rare break from President Donald Trump. Eleven of Trump’s fellow Republicans joined Democrats to vote 57-42 in favor of a motion to proceed to the resolution of disapproval.

Republicans hold a slim 53-47 seat majority in the 100-member Senate.

The Senate vote came shortly after Treasury Secretary Steven Mnuchin came to the Capitol to urge Republicans to oppose the Democratic-backed resolution of disapproval. But several said they wanted more time to consider the move to ease sanctions on Russia before making a final decision on its fate.

The Treasury Department said in December it would lift sanctions imposed in April on the core businesses of Deripaska, including aluminum giant Rusal <0486.HK>, its parent, En+, and power firm EuroSibEnergo, watering down the toughest penalties imposed on Russian entities since Moscow’s 2014 annexation of Crimea. Deripaska himself would remain subject to U.S. sanctions.

To take effect and block the plan to lift the sanctions, the resolution of disapproval would need to pass the Republican-led Senate as well as the House of Representatives, where Democrats hold a majority of seats. It would also have to survive a potential veto by Trump.

Representative Steny Hoyer, the No. 2 Democrat in the House, introduced a similar resolution of disapproval in that chamber on Tuesday.

(Reporting by Patricia Zengerle; Additional reporting by Ginger Gibson, Amanda Becker and Lisa Lambert in Washington and Polina Devitt in Moscow; Editing by Paul Simao and Peter Cooney)

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U.S. tax agency to bring 46,000 furloughed workers back

January 15, 2019

By David Morgan

WASHINGTON (Reuters) – The U.S. Internal Revenue Service said on Tuesday it intends to bring back more than 46,000 workers furloughed by the partial shutdown of the federal government to process annual tax returns and refunds and other tasks.

The federal tax agency, part of the Treasury Department, said in a shutdown contingency plan that the employees, about 57 percent of its 80,000-member workforce, would be designated “excepted or exempt” from the shutdown.

The 2019 tax filing season is set to begin on Jan. 28, with Americans having until April 15 to file their obligatory annual tax returns. Furloughed IRS employees returning to work will not be paid until government agencies reopen.

The shutdown, which began with President Donald Trump’s demand for $5.7 billion in funding for a wall along the U.S.-Mexico border, is now in its 25th day.

Trump and Democrats in Congress show no signs of budging, raising the prospects of a lengthy impasse that could leave the president and his Republican allies in Congress vulnerable to public criticism, especially if annual taxpayers’ refunds – which many people rely on financially – are delayed.

The 132-page IRS contingency plan sets out a legal rationale for handling returns and refunds during a shutdown, saying those operations are similar to Social Security payments that are unaffected by the disruption.

But the agency will not perform audits and other key functions until Trump and Congress agree on funding to reopen the one-quarter of the government affected by the shutdown, according to the document.

The administration’s plan is already the target of a lawsuit by the National Treasury Employees Union (NTEU), which claims the plan is illegal because it obligates funds that have not been appropriated by Congress.

Democrats in the House of Representatives are also considering hearings on the shutdown’s impact on the IRS, including the agency’s ability to deliver tax refunds on time.

“There is no doubt the IRS needs to get ready for the 2019 filing season that starts Jan. 28, and IRS employees want to work,” NTEU National President Tony Reardon said in a statement.

“But the hard, cold reality is that they’ve already missed a paycheck and soon they’ll be asked to work for free for as long as the shutdown lasts.”

(Reporting by David Morgan; Editing by Bill Rigby)

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Ralph Winter office to invest $300 million in Medici U.S. shared housing

January 15, 2019

By Herbert Lash

NEW YORK (Reuters) – Medici Living Group said on Tuesday the family office of German real estate investor Ralph Winter has agreed to invest $300 million over three years to develop 1,300 U.S. units of Medici’s Quarters brand of shared housing for young professionals.

The initiative, which Medici Living said will make Quarters one of the top U.S. shared-living operators, is the largest single investment in U.S. “co-living,” the Berlin-based company said in a statement.

Co-living has gained acceptance as young people who have been priced out of housing markets in major cities drive demand for tiny apartments that are grouped around shared dining areas, lounges, workspaces, laundry rooms and gyms.

Brokerage Cushman & Wakefield identified co-living, along with coworking and “co-everything”, as its top trend to watch in commercial real estate in 2019, after U.S. recession indicators.

Corestate Capital Holding SA <CCAG.DE>, a company Winter founded, agreed in December to invest 1 billion euro ($1.14 billion) to add 6,000 rooms over the next three to five years to Medici Living’s European portfolio.

Quarters already operates two sites in New York and one in Chicago. With the money from Winter’s 5W family office investment vehicle, Medici Living will soon announce deals in three other U.S. cities, German entrepreneur Gunther Schmidt, who founded Medici Living in 2012, told Reuters.

He did not name the cities but said Medici Living plans to expand to Seattle, San Francisco, Los Angeles and San Diego on the West Coast; Washington, Philadelphia and Boston on the East Coast, and Austin, Texas and Denver.

Quarters previously signed 10-year leases with two five-year options but now will offer developers a way to exit their projects as many of the buyers of those assets are not familiar with shared housing, he said.

“As co-living is rather new, for them it’s an unknown to take us in as a tenant,” said Schmidt, who co-founded feedback management company eKomi a decade ago when he was 24.

“We broadened the pool of developers who can work with us because they’re not limited by who needs an exit,” he said.

Sites typically will have 100 to 300 rooms, while New York will be larger at 500 rooms or more, he said.

The New York City government launched ShareNYC in November, which aims to expand affordable housing and set the standard for shared living.

(Reporting by Herbert Lash; Editing by Sonya Hepinstall)

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Snap CFO Stone to resign less than a year into role

January 15, 2019

By Sheila Dang and Sonam Rai

(Reuters) – Chief Financial Officer Tim Stone will be leaving Snap Inc <SNAP.N> less than a year after taking the job, the company said on Tuesday, the latest in a string of executive departures from Snap over the past year.

Stone’s departure is not related to any disagreements with the company, which owns popular photo messaging app Snapchat, Snap said in a filing https://bit.ly/2McCRIt.

Former Chief Strategy Officer Imran Khan and Vice President of content Nick Bell left the company in September and November, respectively.

Snap also said in the filing it expects to report fourth quarter revenue and adjusted earnings before interest, taxes, depreciation and amortization at the top end of its guidance.

(Reporting by Sonam Rai in Bengaluru; Editing by Sriraj Kalluvila and Sonya Hepinstall)

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U.S. acting AG Whitaker to testify before House panel on February 8

January 15, 2019

WASHINGTON (Reuters) – U.S. Acting Attorney General Matthew Whitaker, whose unorthodox appointment by President Donald Trump has raised concerns among Democrats about the future of the U.S.-Russia probe, will testify before the House Judiciary Committee on Feb. 8, the panel said on Tuesday.

In one of the first oversight appearances by a Trump administration official in the new Democratic-controlled House of Representatives, Whitaker is due to testify on a range of topics including U.S. Special Counsel Robert Mueller’s investigation of alleged Russian meddling in the 2016 presidential election.

“If you plan to invoke executive privilege in an attempt to avoid answering any particular question, I ask that you consult with the White House well in advance of the hearing,” House Judiciary Committee Chairman Jerrold Nadler said in a Jan. 15 letter to Whitaker released by the panel.  

A Trump loyalist, Whitaker was appointed by Trump to replace ousted Attorney General Jeff Sessions without Senate confirmation. Democrats say the appointment violated the U.S. Constitution and view the move as a possible ploy by the White House to undermine Mueller’s efforts to determine whether Trump campaign members colluded with Russia.

Trump denies any collusion and has repeatedly condemned the Mueller investigation as a “witch hunt.” Russia also denies any interference in the U.S. election.

The Democratic-led House Judiciary Committee did not issue a subpoena to compel Whitaker’s testimony, according to aides. But the panel’s chairman, Jerrold Nadler, threatened to do so earlier this month if it became necessary.

Whitaker had agreed to testify before the committee in January. But Nadler said last week that the Department of Justice was citing the partial government shutdown as a reason to delay Whitaker’s appearance until Feb. 12 or Feb. 13.

The Whitaker hearing is set to begin on Feb. 8 at 9:30 a.m. EST (1430 GMT), regardless of whether the government shutdown continues, an aide said.

It was not clear how much longer Whitaker will head the Justice Department. William Barr, who served as attorney general under former President H.W. Bush, has been nominated for the job by Trump. Senate confirmation hearings for Barr began this week.

(Reporting by David Morgan; Editing by Phil Berlowitz)

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‘El Chapo’ paid former Mexican president $100 million bribe: trial witness

January 15, 2019

By Brendan Pierson

(Reuters) – Accused Mexican drug lord Joaquin “El Chapo” Guzman once paid a $100 million bribe to former Mexican President Enrique Pena Nieto, a former associate testified on Tuesday that he previously told U.S. authorities.

Alex Cifuentes, who has described himself as Guzman’s onetime “right-hand man,” discussed the alleged bribe under cross-examination by one of Guzman’s lawyers in Brooklyn federal court. Asked if he told authorities in 2016 that Guzman arranged the bribe, he answered, “That’s right.”

Pena Nieto denied taking bribes from Guzman when the allegation first surfaced in November.

Reuters could not immediately reach Pena Nieto for comment. His former spokesman and other former officials did not immediately respond to messages requesting comment.

Pena Nieto was president of Mexico from December 2012 until November 2018. He previously served as governor of the state that includes Mexico City.

Guzman, 61, has been on trial since November. He was extradited to the United States in 2017 to face charges of trafficking cocaine, heroin and other drugs into the country as leader of the Sinaloa Cartel.

Colombian-born Cifuentes is one of about a dozen witnesses who have so far testified against Guzman after striking deals with U.S. prosecutors, in a trial that has provided a window into the secretive world of the Sinaloa Cartel, one of the world’s most powerful drug trafficking organization.

Other witnesses at the trial have also made accusations of high-level corruption.

Jesus Zambada, another cartel member, testified in November he paid a multimillion dollar bribe to an aide of current Mexican President Andres Manuel Lopez Obrador in 2005. The aide, Genaro Garcia Luna, denied the accusations to Reuters at the time, calling them “defamation.”

Cifuentes earlier on Tuesday had also testified that Guzman asked an associate to pay a $10 million bribe to a general. The witness said the bribe was never paid and Guzman subsequently ordered the associate killed, though the hit was never carried out.

(Reporting by Brendan Pierson in New York and David Graham in Mexico City; Editing by Tom Brown and Lisa Shumaker)

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U.S. Secretary of State Pompeo says to visit Kuwait ‘in coming days’: KUNA

January 15, 2019

RIYADH (Reuters) – U.S. Secretary of State Mike Pompeo called his Kuwaiti counterpart to confirm he would visit the Gulf Arab country “in the coming days”, state news agency KUNA said on Wednesday, after cutting short a Middle East tour due to a death in the family.

Pompeo visited several Arab capitals earlier this week, including Egypt, Saudi Arabia and Qatar, in part to reassure allies after President Donald Trump announced he would start withdrawing U.S. troops from Syria.

(Reporting by Nayera Abdallah, writing by Stephen Kalin; Editing by Gareth Jones)

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Nearly 4 in 10 have firsthand experience with U.S. shutdown: poll

January 15, 2019

By Chris Kahn

NEW YORK (Reuters) – Nearly four in 10 adults in the United States say they are either personally affected by the partial U.S. government shutdown or they know someone who is, according to a Reuters/Ipsos public opinion poll released on Tuesday.

The Jan. 8-14 poll showed that the shutdown, now the longest in U.S. history, has affected a much larger chunk of the public than the 800,000 federal workers who were either furloughed or asked to work without pay.

Graphic: https://tmsnrt.rs/2QRH2tZ

The online poll focused on how the public perceives the shutdown, asking more than 2,000 respondents what kind of firsthand experience, if any, they have had with the government closures.

It asked whether their family had lost any income, expected to lose income or relied on any government services that had been shut down. The poll also asked if respondents “personally know someone” who had lost income, expected to lose income, or relied on government services that are now closed.

Altogether, 38 percent said they met at least one of those conditions. Another 37 percent said they have not been affected by the shutdown, and 25 percent said they do not know.

The shutdown began on Dec. 22 after Congress did not follow through on Republican President Donald Trump’s request for $5.7 billion to help build a new barrier along the U.S.-Mexico border.

Chances of funding the border wall became even more remote in January when Democrats, who are largely opposed to funding a wall, took control of the U.S. House of Representatives. Republicans continue to hold the Senate.

With the shutdown stretching into its 25th day on Tuesday, neither side appeared ready to give any ground. Trump invited a bipartisan group of lawmakers to discuss the budget over lunch, but the White House said Democrats declined to show up.

Numerous federal agencies have partially closed or asked contractors to stop working. Coast Guard personnel are working without pay, the National Park Service has stopped collecting trash, and the Smithsonian museums have closed their doors to the public.

The White House estimated the shutdown is costing the American economy 0.13 percentage point in growth every week.

When asked who deserved most of the blame for the shutdown, the poll found that 51 percent of the public said it was Trump. Another 34 percent blamed Democrats in Congress and 6 percent blamed Republicans in Congress.

The Reuters/Ipsos poll was conducted online in English throughout the United States. It gathered responses from 2,343 adults, including 1,016 Democrats, 787 Republicans, and 321 independents. It has a credibility interval, a measure of precision, of 2 percentage points.

Click here for the full poll results: https://tmsnrt.rs/2HeERBd

(Reporting by Chris KahnD; editing by Jonathan Oatis)

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Citi says chance of delay to Brexit now ‘very high’

January 15, 2019

LONDON (Reuters) – U.S. investment bank Citi <C.N> said on Tuesday there is now a “very high” chance that Brexit will be delayed past March 29, after lawmakers defeated Prime Minister Theresa May’s Brexit divorce deal by a crushing margin.

“After tonight’s emphatic rejection, small tweaks won’t get the deal over the line,” economists from Citi said.

“The probability of Article 50 extension is now very high, and the stock of Article 50 revocation is rising too,” they added, referring to the legal mechanism that triggered the exit process.

(Reporting by Andy Bruce; editing by Guy Faulconbridge)

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Ireland readies ‘mega’ no-deal Brexit legislation package

January 15, 2019

By Padraic Halpin

DUBLIN (Reuters) – Ireland will begin pushing through a “mega” package of legislation next month to deal with the fallout from a no-deal Brexit if there is still a prospect of Britain leaving the European Union without a divorce deal in March.

Ireland’s cabinet on Tuesday began to build upon the no-deal contingency plans it issued last month by seeking to reassure business of the availability of additional transport capacity and patients of the security of medicine supplies.

Its preparations will be underpinned by one single emergency Brexit bill incorporating 17 new laws that Deputy Prime Minister Simon Coveney will, if required, begin moving through parliament in the final week of February.

“We don’t want to have to do this of course, nobody wants a no-deal Brexit and everybody will work toward avoiding that but we also have to ensure that Ireland has done everything it can to protect itself and its citizens,” Coveney told a news conference.

To allow officials to make preparations, the government will prioritize just six new proposed laws in other areas in the first half of the year compared to the 49 pieces of legislation given priority during the same period last year.

As part of Tuesday’s plans, the Transport Ministry said sufficient capacity will be available for direct sailings from Ireland to continental EU ports as a potential alternative for the large amount of goods transited through the UK.

Should demand for further capacity arise, the shipping sector can respond quickly to meet it, it added.

However the department also said the scale of checks required in a no-deal Brexit would likely result in delays for goods moving through Irish ports, requiring measures to prevent congestion.

The plans again did not touch on the central issue for Ireland in the event of a no-deal Brexit: How it can defend the single market without imposing physical infrastructure on its border with the British province of Northern Ireland.

Transport Minister Shane Ross told the news conference he anticipated that there would be checks, but was interrupted by Coveney who said the best way to deal with the border issue was through the draft agreement struck by Brexit negotiators.

“There are a number of areas where we haven’t published contingency plans, not least because people are voting this evening on how to deal with this issue,” Coveney said, speaking before British lawmakers resoundingly defeated the deal.

“If Britain leaves without a deal, well then we obviously have to have difficult discussions with the European Commission and the UK in terms of how we protect the EU single market but we have deliberately not got into that detail because we have a way of dealing with this.”

(Reporting by Padraic Halpin; Editing by Janet Lawrence)

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