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Business

Economy Faces a Coronavirus Challenge as Markets Swoon


WASHINGTON — As an uptick in the number of coronavirus infections outside China sent markets swooning on Monday, attention quickly turned to how the Federal Reserve and the United States government would assess — and even address — the economic fallout.

The Fed cut interest rates three times in 2019 to insulate the economy against uncertainty stemming from President Trump’s trade war and slowing global growth. Central bank officials have been clear that they expect to leave interest rates unchanged now unless inflation jumps — potentially causing them to lift rates — or risks upend their outlook for stable growth, prompting them to cut.

The question now is whether the new coronavirus represents such a threat. Fed officials have been unwilling to declare it a reason to move yet. But even as they strike a wait-and-see pose, markets are increasingly betting that global economic and market fallout from the disease will push the central bank to lower borrowing costs.

Markets on Monday had priced in a 75 percent chance of a rate cut as of the Fed’s June meeting, based on a CME Group tracker. The chance of a move that soon was priced at less than 50 percent a week ago.

The outbreaks in Italy and South Korea suggest that the virus “may be on the brink of morphing into a global pandemic,” Krishna Guha at Evercore ISI wrote in a note to clients, announcing that he and his colleagues had raised their estimate of the probability of a Fed rate cut this year to 45 percent.

That “would likely have persistent impacts on global demand as well as lengthy effects on supply chains and trade” and “may well call for a monetary policy response,” the note said.

The Fed may have limited ability to counteract any global economic fallout from the coronavirus, since its tools work to stoke demand — if factories are not producing goods and supply chains are disrupted by quarantines, cutting rates to make borrowing cheaper may do little to help.

  • Updated Feb. 10, 2020

    • What is a Coronavirus?
      It is a novel virus named for the crown-like spikes that protrude from its surface. The coronavirus can infect both animals and people, and can cause a range of respiratory illnesses from the common cold to more dangerous conditions like Severe Acute Respiratory Syndrome, or SARS.
    • How contagious is the virus?
      According to preliminary research, it seems moderately infectious, similar to SARS, and is possibly transmitted through the air. Scientists have estimated that each infected person could spread it to somewhere between 1.5 and 3.5 people without effective containment measures.
    • How worried should I be?
      While the virus is a serious public health concern, the risk to most people outside China remains very low, and seasonal flu is a more immediate threat.
    • Who is working to contain the virus?
      World Health Organization officials have praised China’s aggressive response to the virus by closing transportation, schools and markets. This week, a team of experts from the W.H.O. arrived in Beijing to offer assistance.
    • What if I’m traveling?
      The United States and Australia are temporarily denying entry to noncitizens who recently traveled to China and several airlines have canceled flights.
    • How do I keep myself and others safe?
      Washing your hands frequently is the most important thing you can do, along with staying at home when you’re sick.

“It’s hard to try to figure out how to be pre-emptive in a set of issues that have to do with health issues, but which then may go into supply chains,” Roger Ferguson, a former Fed vice chairman who is now the chief executive at TIAA, told reporters in Washington on Monday. “This one feels to me like one to watch, see and then decide if your tool is the right tool.”

Fed officials have also been cautious in characterizing the coronavirus as a game-changing threat because it is unclear how fast and how far it might spread.

“Coronavirus is a big risk. We have to see how that plays out,” Loretta Mester, the president of the Federal Reserve Bank of Cleveland, said on Monday, adding that she does not favor a rate cut at this point.

For now, she and her colleagues are monitoring data on infections, talking to business contacts on the ground and thinking through scenarios in which the virus might affect the U.S. economy.

“You have to be forward-looking,” Ms. Mester told reporters. “But you need to have some kind of evidence that, if you’ve changed your outlook, why have you changed your outlook.”

Huge uncertainties surround the virus’s trajectory. Goldman Sachs economists expect the spread to slow sharply by the end of March and anticipate that supply chain disruptions will be “negligible” if things return to normal quickly. But they wrote in a note on Sunday that things could play out very differently if infections do not slow.

Risks are “heavily skewed to the downside should Chinese activity continue to be depressed for longer,” they wrote. “The impact might also become much larger if the coronavirus outbreak spreads quickly and slows down activity in other countries, disrupting supply chains further.”

Even without a big supply chain hit, Goldman Sachs’s trackers indicate that Chinese travel and economic activity are picking up more slowly than the analysts had initially expected. They now expect first-quarter gross domestic product growth in the United States to slump to 1.2 percent on an annualized basis before rebounding to 2.7 percent in the second quarter.

That temporary hit will come as tourism spending in the United States from Chinese visitors falls by two-thirds, and as Chinese demand for American exports slumps.

The real issue for the Fed, and for other economic policymakers, is the possibility that the virus might not prove short-lived.

“The question for us really is: What will be the effects on the U.S. economy? Will they be persistent? Will they be material?” Jerome H. Powell, the Fed chair, told lawmakers while testifying before a congressional committee this month.

Some officials have been relatively unconcerned about the chances of lasting fallout. James Bullard, the president of the Federal Reserve Bank of St. Louis, said in a CNBC interview on Friday that “there’s a high probability that the coronavirus will blow over.” He added that “there’s a low probability that this could get much worse” and that market pricing can reflect that.

Those comments came before reports later on Friday and over the weekend showed coronavirus cases climbing outside China. The virus has now infected more than 79,000 people in China and 32 other countries.

Fed officials are not alone in avoiding big declarations: Administration leaders and other economic officials have also approached the virus’s implications cautiously.

The coronavirus is “something we’re tracking carefully,” Phillip Swagel, the director of the Congressional Budget Office, said Monday morning at an event in Washington, but said he did not have much else to add on the topic.

Tomas Philipson, the acting chairman of the White House Council of Economic Advisers, said at the National Association for Business Economists conference in Washington that the Chinese shutdowns would have some economic effect in the United States but that it is too early to tell how significant that would be.

“We don’t know yet. We’re sort of taking a wait-and-see approach,” he said, also noting that the scale of seasonal influenza is much more significant and that “in terms of the public health impact on the economy, I think that’s been exaggerated.”

The virus was a big topic of discussion at the Group of 20 finance ministers meeting in Riyadh over the weekend, where Treasury Secretary Steven Mnuchin also advocated a wait-and-see approach.

“It’s tough to have strong predictions on the economic issues without being able to predict the health outcome,” he said during an interview with CNBC on Sunday. “So I think we need another three or four weeks to see how the virus reacts until we really have good statistical data.”

Alan Rappeport contributed reporting from Riyadh, Saudi Arabia.



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Europe World

Julian Assange Faces Hearing on Extradition to the U.S.


LONDON — The United States government began laying out its extradition case against Julian Assange, the WikiLeaks founder, in court on Monday by arguing that he had put lives at risk and was no better than an “ordinary” criminal.

“Reporting or journalism is not an excuse for criminal activities or a license to break ordinary criminal laws,” James Lewis, a lawyer representing the U.S. government, told the court.

Mr. Assange is wanted by the American authorities on charges of conspiring to hack into a Pentagon computer network, and he could face as many as 175 years in prison if found guilty on all charges.

His lawyers will begin presenting their defense later in the week.

Mr. Assange’s appearance in Woolwich Crown Court was the latest twist in a saga that stretches back to 2010, when he began publishing secret American military and diplomatic documents that were provided by the former Army intelligence analyst Chelsea Manning, who was convicted at a court-martial in 2013 of leaking the documents.

From the outset, Mr. Assange’s case has raised profound First Amendment issues.

That in part explains why Mr. Assange was not prosecuted under the Espionage Act for publishing U.S. government secrets. Instead, prosecutors have charged him with conspiring to commit unlawful computer intrusion for what they say were his efforts to help Ms. Manning break into a classified military network under another user’s identity. The subsequent disclosures included a classified military video showing a 2007 attack by Apache helicopters in Baghdad that killed a dozen people, including two employees of the Reuters news agency.

Mr. Lewis, the lawyer for the U.S. government, told the court on Monday that the charges against Mr. Assange were not connected to the publication of materials demonstrating wrongdoing by American military forces or “embarrassing” officials, but for “publishing specific classified documents that contained unredacted names of innocent people who risked their safety and freedom to aid the United States and its allies.”

“These are ordinary criminal charges and any person, journalist or source who hacks or attempts to gain unauthorized access to a secure system or aids and abets others to do so is guilty of computer misuse,” he said.

To his defenders, dozens of whom gathered outside the courtroom in a show of support, Mr. Assange, 48, is the victim of a politically driven prosecution.

Mr. Assange has largely receded from public view after he was dragged out of the Ecuadorean Embassy in London in April. He had found refuge in the embassy for seven years to avoid extradition to Sweden over rape allegations. He denied those charges, and the case has since been dropped.

His strange existence at the embassy, where he lived with his cat in a small corner room, helped him become perhaps the world’s most famous self-proclaimed political refugee.

He continued to run his internet group, hold news conferences and wave to admirers from an embassy balcony. But with the departure in 2017 of Ecuador’s leftist president, Rafael Correa, who had granted him asylum, Mr. Assange’s days in the embassy were numbered.

By the time the Metropolitan Police in London dragged him from the embassy in April, he looked haggard and disheveled.

For the last year, he has been held at Belmarsh Prison, which is next to the courtroom where his extradition case will be heard over the next month.

Mr. Assange’s lawyers, in pretrial motions, suggested that they would cast the prosecution as politically motivated and argue that their client was simply acting as a journalist and publisher.

Mark Summers, one of Mr. Assange’s lawyers, has said that prosecuting his client could have a chilling effect on press freedom.

“This is part of an avowed war on whistle-blowers to include investigative journalists and publishers,” Mr. Summers told the court last year.

Mr. Assange’s legal team has also sought to tie their client to President Trump, telling the court that former Representative Dana Rohrabacher of California, an ally of the president, had offered a pardon to Mr. Assange on Mr. Trump’s behalf if the WikiLeaks founder were to say that Russia had nothing to do with the 2016 hacking of the Democratic National Committee.

The White House press secretary, Stephanie Grisham, has called the suggestion of a pardon offer “a complete fabrication and a total lie.”



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Economy

Judy Shelton, Trump’s Fed Nominee, Faces Bipartisan Skepticism


“They asked substantive, tough questions,” Sam Bell, the founder of Employ America, said of the Republican senators. Mr. Bell’s group has been pushing for Fed nominees who are focused on lifting employment and has vocally opposed Ms. Shelton.

“The aura, after the hearing, is that there’s serious bipartisan skepticism,” he said.

Democrats showed their discomfort with Ms. Shelton, particularly her close ties to Mr. Trump, and pressed her repeatedly on whether she would operate independently of the White House. They quizzed her on whether she felt the president’s frequent attacks on Jerome H. Powell, the chairman of the Federal Reserve, were appropriate.

“Frankly, no one tells me what to do,” Ms. Shelton said at one point. “I don’t think it’s the job of the Federal Reserve to accommodate political agendas” and “the Fed operates independently, as it should.”

But she indicated that she did not have a problem with Mr. Trump’s criticisms of Mr. Powell. The president regularly blasts the Fed chair on Twitter and in public remarks, faulting him for not doing more to lift the economy and pushing him to cut interest rates more aggressively.

“I do believe that every American, every member of Congress” and “our president” have the right to criticize the Fed, she said, adding later that “in some ways, it’s refreshing that it is out in the open.”

Ms. Shelton’s nomination has raised concerns among economists and former central bankers, who worry that her changing policy views — she used to support higher interest rates, but flipped to support lower rates around the time Mr. Trump took office — suggest that she would operate with an eye on the White House.

Heightening that concern is the possibility that Ms. Shelton is viewed as a possible successor to Mr. Powell, Mr. Trump’s first pick for the chair job, should the president win a second term and opt to replace him.



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Americas World

Celebrated Abroad, Juan Guaidó Faces Critical Test in Venezuela


BOGOTÁ, Colombia — When the leader of Venezuela’s opposition landed in Caracas this week following a world tour meant to drum up support for regime change, his country’s authoritarian ruler handed him neither an arrest, which would have galvanized supporters, nor the chance for a hero’s welcome at the airport.

Instead, President Nicolás Maduro appeared to greet his rival, Juan Guaidó, with the same policy of slow strangulation that has drained the opposition of much of its momentum over the past year, cracking down on his movement enough to wear down its members, but without going so far as to spur the world to action.

Moments before Mr. Guaidó arrived, Mr. Maduro’s supporters attacked journalists who were there to cover his arrival, punching them and dragging at least one woman by the hair. Once Mr. Guaidó landed, government backers chased him out of the airport, cutting off any plans he had to make a speech, and then attacked his car with traffic cones and at least one metal pole.

And as Mr. Guaidó slipped through, authorities arrested his uncle, accusing him, without presenting evidence, of bringing explosives into the country.

Hours later, Mr. Guaidó stood with a few hundred supporters in a plaza in an opposition stronghold in eastern Caracas and declared victory.

“I defied the dictatorship and I entered the country,” he said. “Venezuela is going to be democratic and free.”

Mr. Guaidó also said he would be announcing the creation of a “Venezuela Fund,” a multilateral program meant to help the country recover from its long and devastating economic crisis.

[Update: The U.S. has imposed sanctions on the Russian oil company supporting Venezuela’s leader.]

But he offered no other plan to remove Mr. Maduro. That, along with his chaotic arrival and the growing frustration among his base caused by the glacial pace of change, spoke eloquently about the challenges Mr. Guaidó is facing at home.

On Tuesday, as Mr. Guaidó arrived in Venezuela’s capital, Caracas, Mr. Maduro’s most powerful ally, Diosdado Cabello, mocked the size of the crowd that had come to receive him at the airport and belittled his movement.

Mr. Guaidó issued a direct challenge to Mr. Maduro a year ago, when he pointed to irregularities in Mr. Maduro’s re-election and claimed to be the country’s interim president, earning the support of millions of Venezuelans and dozens of foreign governments, including the United States.

Since then, despite the United State’s use of crippling sanctions to hurt the country’s economy and try to force the ouster of Mr. Maduro, Mr. Guaidó has not managed to seize power and call new presidential elections — his stated goals.

On Jan. 19, he left the country to shore up greater support abroad, defying a travel ban imposed by Mr. Maduro’s government. On his trip, he made headlines when he sat down with President Trump and was given a prominent place at the state of the union address. There, Mr. Trump championed the opposition leader’s efforts.

Mr. Guaidó also met with Angela Merkel of Germany and Emmanuel Macron of France, and was welcomed by thousands of Venezuelans and Venezuelan-Americans in Florida.

Mr. Trump’s national security adviser, Robert C. O’Brien, signaled that substantive action could be on the way, including sanctions on Russia’s state-owned oil company, Rosneft.

Oil buoys the Venezuela economy, and Rosneft has been the country’s main shipper of crude.

Internationally, Mr. Guaidó looked strong.

But at home, nothing had changed, and Mr. Maduro remained firmly in control of the country, playing what appears to be a long game of attrition.

Mr. Guaidó is also barreling toward a crisis point that poses a critical threat to the opposition, and to his claim to being the country’s interim president.

The National Assembly, the legislature, is the last major political body in the country that the opposition claims to control. But 2020 is an election year for the assembly, and Mr. Maduro’s opponents are divided over whether to participate.

If the opposition does take part, they risk legitimizing a potentially rigged election. If they don’t, they risk handing control to Mr. Maduro.

Mr. Guaidó, so far, has not declared a position.

Phil Gunson, a Caracas-based analyst for the International Crisis Group, said no matter what the opposition decides, Mr. Maduro is likely to take over the assembly this year.

But if Mr. Guaidó does not make a decision — and soon — he risks irrelevancy.

“There can be no more beating around the bush,” Mr. Gunson said. “He has to be a leader.”



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Business DealBook

Barclays C.E.O. Faces U.K. Inquiry on Jeffrey Epstein Ties


British banking regulators want to know if the chief executive of Barclays has been honest about his relationship with Jeffrey Epstein.

Barclays said on Thursday that regulators were investigating how its chief executive, James E. Staley, had described to bank officials his ties with Mr. Epstein, the financier who killed himself in August after facing new allegations of sex trafficking of underage girls.

Mr. Staley, one of a handful of prominent Wall Street financiers who have been linked to Mr. Epstein, said he had been fully forthcoming about their relationship, which he said had ended before he arrived at the bank five years ago.

“I feel very comfortable, going back to 2015, I have been transparent and open with the bank,” he said on a conference call with analysts on Thursday. Mr. Staley did not respond to messages seeking comment.

The bank’s announcement of an investigation by regulators including the Financial Conduct Authority, the main overseer of banks in Britain, was another black eye for Mr. Staley, who is the latest Barclays chief to have regulatory troubles. John S. Varley faced regulatory and legal charges over capital infusions from the Persian Gulf nation of Qatar, and Robert E. Diamond Jr. was caught up in the LIBOR-rigging scandal.

Even as Mr. Staley has cut costs and bolstered the company’s commitment to investment banking, his tenure has been marked by a series of questions over his judgment. The bank and Mr. Staley were both fined by regulators over a whistle-blower scandal, and other stumbles have prompted some shareholders to demand his resignation.

In a statement, Barclays said it believed that “Mr. Staley has been sufficiently transparent with the company as regards the nature and extent of his relationship with Mr. Epstein.” Mr. Staley, the bank said, retained the full confidence of its board.

The inquiry began sometime last year when the Financial Conduct Authority contacted Barclays with questions about Mr. Staley’s relationship with Mr. Epstein, according to the bank’s annual report, which was published Thursday.

Barclays responded to the regulator’s questions, but some element of that response raised questions within the agency, according to a bank official who spoke on the condition of anonymity. A more formal investigation then began in December.

Thursday’s announcement undercut a positive earnings report from the bank. Total income for 2019 rose 2 percent, and profit after taxes rose 30 percent for the year. Barclay’s shares ended the day down 1.7 percent.

Image
Credit…New York State Sex Offender Registry, via Associated Press

Mr. Epstein portrayed himself as indispensable to corporate executives and built up a small but powerful finance network, which Mr. Staley remained a part of even after Mr. Epstein’s 2008 guilty plea to a charge of soliciting prostitution from a teenage girl. The men had known each other since at least 1999, when the future Barclays chief was running the private banking business of JPMorgan and using Mr. Epstein to connect with potential clients.

The relationship was close enough that Mr. Staley visited Mr. Epstein about 10 years ago, while he was serving time in Florida for soliciting prostitution from a minor. The visit occurred at Mr. Epstein’s Palm Beach office, where he was allowed to serve part of his 13-month sentence. They were still close enough in April 2015 for Mr. Staley and his wife, Debora, to sail their boat to Little St. James, Mr. Epstein’s private island. Mr. Staley was named chief executive of Barclays that December.

Among others, Mr. Epstein connected Mr. Staley with Glenn Dubin, who ran Highbridge Capital Management, a hedge fund in which JPMorgan bought a majority stake in 2004. The deal elevated the asset management division that Mr. Staley ran at JPMorgan into a major player in the hedge-fund world. (Mr. Dubin, who married a former girlfriend of Mr. Epstein’s, Eva Andersson, left JPMorgan in 2013. He left his most recent venture, the hedge fund Engineers Gate, last month, saying he wanted to focus on his family office.)

Mr. Epstein invoked his relationship with Mr. Staley as part of his own business maneuvers. He listed Mr. Staley and JPMorgan as references when he applied for a license to set up a bank, Southern Country International, in the Virgin Islands in 2013. Mr. Staley’s spokesman said he was unaware of this at the time.

Until Thursday, Mr. Staley’s history with Mr. Epstein had not appeared to pose a serious threat to his leadership. (Indeed, their ties were known as of the middle of 2015, when Mr. Staley was merely a contender for the Barclays position.)

But Mr. Staley’s tenure has faced other bouts of turmoil.

In 2016, he tried to unmask a whistle-blower who had criticized one of his senior hires. That led to a fine of $15 million for Barclays from New York’s banking regulator, which said that it had uncovered “shortcomings in governance, controls and corporate culture” at the bank. British bank regulators also fined Mr. Staley about $1.5 million and required the bank to submit reports on parts of its whistle-blowing program.

Mr. Staley also upset a big client, Kohlberg Kravis Roberts, in 2016 after trying to help his brother-in-law’s business interests.

His conduct is now under scrutiny by the Financial Conduct Authority, whose responsibilities include assessing the “fitness and propriety” of senior executives at financial institutions. Among the qualities the regulator looks at, according to its website, is honesty, “including openness with self-disclosures, integrity and reputation.”

In August, Mr. Epstein killed himself while in a Manhattan jail, where he was being held awaiting trial on federal sex trafficking and conspiracy charges. He had been charged by Manhattan prosecutors in July with sexually exploiting dozens of women and girls in New York and Florida.

Those accusations involved actions up to 2005. A lawsuit filed last month by Denise N. George, the attorney general of the Virgin Islands, cited further evidence that Mr. Epstein had sexually abused and trafficked hundreds of young women and girls on his private Caribbean island, some as recently as 2018.

A judge in the Virgin Islands who is overseeing the administration of Mr. Epstein’s $635 million estate is considering a proposal to establish a compensation fund for his accusers. Ms. George is seeking to block that effort, contending the executors of the estate are conflicted because they were longtime business advisers to Mr. Epstein.

Carlos Tejada, Michael de la Merced, Kate Kelly and Matthew Goldstein contributed reporting.



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Business Energy & Environment

Tesla Faces a New S.E.C. Investigation


Tesla received a subpoena in December from the Securities and Exchange Commission asking the electric-car maker to turn over information about its financial data and contracts, the company said in a filing with the agency on Thursday.

In the filing, Tesla also said the S.E.C. had closed a separate investigation into projections and statements the company made in 2017 about production rates of its Model 3 sedan.

It said the scope covered by the December subpoena included “Tesla’s regular financing arrangements.”

The S.E.C. had previously investigated statements from Elon Musk, Tesla’s chief executive, about plans to take the company private. That investigation ended in 2018 with Tesla and Mr. Musk each paying a $20 million fine and Mr. Musk stepping down as chairman for three years.

The agency declined to comment, and Tesla did not respond to a request for comment.

Tesla also announced on Thursday that it planned to issue about $2 billion in new common stock, just two weeks after Mr. Musk told investors on a call that it “doesn’t make sense to raise money.”

“We’re actually spending money as quickly as we can spend it sensibly,” he said at the time.

Mr. Musk plans to buy up to $10 million of stock from the new offering, the company said. Larry Ellison, a Tesla board member, plans to buy up to $1 million.

Since Tesla announced its fourth-quarter earnings late last month, its share price has risen nearly 40 percent, giving it a market value of about $145 billion. The stock’s price has risen about 90 percent since the beginning of the year.

After opening lower on Thursday, Tesla shares ended the trading session with a gain of nearly 5 percent, at $804.



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Africa World

Ex-C.I.A. Asset, Now a Libyan Strongman, Faces Torture Accusations


When a rebellion rose against the Qaddafi government in 2011, prompting the intervention of the United States and NATO, Mr. Hifter returned to Libya, building up a powerful faction.

In 2014, with an interim government in place after Colonel Qaddafi’s death, Mr. Hifter and his forces launched a broad offensive in Benghazi, Libya, called Operation Dignity, aimed at routing out extremist Islamic militants. Mr. Hifter’s two sons, Khalid and Saddam, served as officers under him and led fighting in Benghazi.

During an offensive that October, two families got caught up in the violence.

In the lawsuit, the plaintiffs said that Mr. Hifter’s forces captured the Suyid family home. When the father, Adel Salam al-Suyid, and his son, Ibrahim, rushed home to rescue other family members, they were captured and kidnapped. The next day, their bodies were discovered bearing injuries that showed they were tortured.

Two days later, other forces under Mr. Hifter’s command attacked the Krshiny home, killing two family members. Six brothers from the family were taken prisoner, accused of being members of the Islamic State. Ibrahim al-Krshiny, already injured in the eye from the attack on the house, was stripped and then beaten about the head with pipes, cables and a broomstick, according to the lawsuit. Then, over the next seven and a half hours, he was subjected to electric shocks.

Mr. al-Krshiny was eventually released but lost an eye as a result of the abuse, according to his lawsuit. His brother Mustafa’s body was found days later, his hands tied behind his back and bullet holes in his head and chest. Another brother, Ali, was also shot to death, and three others were wounded.

“In October 2014, 10 men from these families were imprisoned, beaten, electrocuted or shot by Hifter’s forces,” said Kevin Carroll, a lawyer with Wiggin and Dana who represents the families. “These families will not receive due process in a country largely controlled by Hifter.”

The lawsuit accuses Mr. Hifter and his sons of using the Libyan National Army to wage “an indiscriminate war against the Libyan people,” torturing and killing hundreds without any judicial process.



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Economy

Laura Ashley owner in crisis talks with lender as retailer faces possible collapse



Laura Ashley’s Malaysian owner has entered talks with a key lender to seek a funding lifeline that would allow the struggling retailer to continue trading.

MUI Asia, which owns the majority of Laura Ashley’s shares, said it is “discussing arrangements” with American bank Wells Fargo. Shares in Laura Ashley crashed as much as 40 per cent in response to the news on Monday.

The homeware and clothing retailer said it would “need to consider all options” if new funding can’t be secured. 


Sales fell 11 per cent in the latter half of last year which Laura Ashley blamed on market headwinds and consumers holding off on big purchases. The company issued two profit warnings last year and announced in December 2018 that 40 of its 160 UK stores would close. 

MUI agreed a £20m lending facility with Wells Fargo in October but has to meet certain criteria on order to access all of the funds.

“Recent movements in the group’s stock and customer deposit levels have led to a reduction in the amount that the group can draw down under its working capital facility with Wells Fargo,” the company said. 

MUI chairman Andrew Khoo, who is the son of MUI Asia’s owner said trading conditions had been challenging.

“There is however a robust plan in place to turn the business around.

“The major shareholders have indicated their continued confidence in the business and are fully supportive of the management team and execution of the transformation plan.”

The latest news will cast further doubt on the retailer’s future as its struggles to deal with online competition, weak consumer demand and high fixed costs such as rent and business rates.

Fashion designer and businesswoman Laura Ashley co-founded the brand with her husband, Bernard Ashley, in 1953.

The first Laura Ashley store opened in South Kensington in 1968 and the brand’s quintessentially British style, with its long floral dresses and soft-coloured tones, went on to define the early 1970s hippie aesthetic.

Since then, Laura Ashley has expanded to selling homeware in its signature floral prints inspired by the English countryside.

But falling demand for its distinctive furniture and decorating products dragged the company a £14.3m in its last financial year. 

Mr Khoo has previously outlined plans to expand into the Chinese market.



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Europe World

Johnson Faces Scrutiny for Flooding Response After Storm Dennis


LONDON — Prime Minister Boris Johnson’s response to a storm that battered the country over the weekend, causing severe flooding in hundreds of towns and villages, prompted a backlash from critics inside and outside his party on Monday.

Mr. Johnson came under fire on Monday after his office said that he had no plans to visit any of the flooded areas after Storm Dennis. Flood warnings remained in place across the country, but Mr. Johnson had not called a meeting of the government’s emergencies committee, known as Cobra, to discuss the situation.

The storm dumped more than half a month’s worth of rainfall in one day in some areas. Rivers overflowed their banks, sending water several feet deep through streets, houses and businesses, forcing many people to leave their homes and cutting some communities off from relief efforts.

Some areas were still recovering from heavy rains and strong winds brought by another storm just a week earlier.

Andy Page, chief meteorologist for the Met Office, Britain’s weather service, said that more rain was likely on Wednesday evening, with the possibility that it could be “prolonged and possibly heavy.”

“With the ground already saturated, there is a chance of further flooding,” he said in a statement, urging the public to keep an eye on flood warnings.

At least one person died as a result of the flooding over the weekend, and hundreds more have been displaced, the BBC reported.

Serious flooding is becoming a more frequent reality in Britain due to global warming, experts say.

Mohammad Heidarzadeh, the head of Brunel University’s coastal engineering and resilience lab, said that the country’s flood defense systems, which were developed decades ago, were “not fit to address the current climate situation, which is characterized by high frequency and high intensity climate events.”

Floods that were once seen every 15 to 20 years are now being seen every two to five years, he said.

“Given the major flooding in the past couple of weeks (and past few years) and changes in the frequency and intensity of weather incidents, it appears that our flood defense systems require improvement,” he said in an email.

Philip Davies, a Conservative lawmaker who represents the area of Shipley in northern England, found fault with the government’s response to increased flooding in recent years — a period when his own party has been in control. He told The Telegraph that the same people in his community whose homes flooded over the weekend were also affected by devastating flooding in December 2015.

“It’s not as if there hasn’t been enough time to do something,” he said. “What has been done to stop it happening again? Precious little.”

Keir Starmer, a Labour lawmaker who is a contender for leadership of the party, denounced Mr. Johnson’s decision not to visit communities affected by the flooding. In a post on Twitter, he urged the prime minister to “give communities the support they need.”

“This is an appalling decision,” Mr. Starmer wrote in another post. “The recent flooding is a stark reminder that the Government is not doing enough to get to grips with the climate crisis.”

George Eustice, the new environment minister, defended Mr. Johnson’s actions on Monday.

“I went up there yesterday on his behalf,” Mr. Eustice told Sky News. “He has been to these areas before, and I am sure he will be up there again.”

Mr. Johnson faced similar criticism in November when he said during a visit to an area of northern England with significant flooding that the situation did not rise to the level of a national emergency. After members of the public and opposition politicians denounced the statement, Mr. Johnson chaired a meeting with the government’s emergency committee.



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Economy

Judy Shelton, Trump’s Fed Nominee, Faces Bipartisan Skepticism


“They asked substantive, tough questions,” Sam Bell, the founder of Employ America, said of the Republican senators. Mr. Bell’s group has been pushing for Fed nominees who are focused on lifting employment and has vocally opposed Ms. Shelton.

“The aura, after the hearing, is that there’s serious bipartisan skepticism,” he said.

Democrats showed their discomfort with Ms. Shelton, particularly her close ties to Mr. Trump, and pressed her repeatedly on whether she would operate independently of the White House. They quizzed her on whether she felt the president’s frequent attacks on Jerome H. Powell, the chairman of the Federal Reserve, were appropriate.

“Frankly, no one tells me what to do,” Ms. Shelton said at one point. “I don’t think it’s the job of the Federal Reserve to accommodate political agendas” and “the Fed operates independently, as it should.”

But she indicated that she did not have a problem with Mr. Trump’s criticisms of Mr. Powell. The president regularly blasts the Fed chair on Twitter and in public remarks, faulting him for not doing more to lift the economy and pushing him to cut interest rates more aggressively.

“I do believe that every American, every member of Congress” and “our president” have the right to criticize the Fed, she said, adding later that “in some ways, it’s refreshing that it is out in the open.”

Ms. Shelton’s nomination has raised concerns among economists and former central bankers, who worry that her changing policy views — she used to support higher interest rates, but flipped to support lower rates around the time Mr. Trump took office — suggest that she would operate with an eye on the White House.

Heightening that concern is the possibility that Ms. Shelton is viewed as a possible successor to Mr. Powell, Mr. Trump’s first pick for the chair job, should the president win a second term and opt to replace him.



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