YCLOAK

A key part of House Republicans’ plan to overhaul the way corporations pay taxes is on life support, leaving lawmakers scrambling to save one of President Donald Trump’s biggest priorities and increasing the chances the GOP will simply pass a tax cut instead of overhauling the tax code.

A proposed tax on imports is central to the GOP plan to lower the overall corporate tax rate. It would generate about $1 trillion over the next decade to finance the lower rates without adding to the deficit. It would also provide strong incentives for U.S.-based companies to keep their operations in the United States and perhaps persuade companies to move overseas operations to the U.S.

But the tax faces strong opposition from retailers, automakers and the oil industry, and a growing number of congressional Republicans have come out against it. They worry that it will increase the cost of imports, raising consumer prices.

Import tax

Majority Leader Mitch McConnell, R-Ky., says there probably aren’t enough votes to pass the import tax in the Senate — not a single Republican senator has publicly endorsed it. And a powerful group of House conservatives says it’s time to dump the idea.

“The sooner we acknowledge that and get on with a plan that actually works and actually can build consensus, the better off we will be,” said Rep. Mark Meadows, R-N.C., chairman of the conservative Freedom Caucus.

Even one of the biggest backers of the new tax says he is open to other ideas.

Rep. Kevin Brady, R-Texas, has pushed the tax as chairman of the powerful House Ways and Means Committee. He still says it’s the best way to promote economic growth and domestic jobs, but he has softened his stance on alternatives.

“I’m still confident that we’re going to stay at the table until we solve that problem, which is how do we stop U.S. jobs from continuing to leave the United States,” Brady said. “We’re going to remain open to the best ideas on how we do that.”

On Tuesday, Brady proposed gradually phasing in the tax over five years to give corporations time to adjust.

It wasn’t received well by opponents.

“Forcing consumers to pay more so that some profitable companies can operate tax-free is no better of an idea in five years than it is today,” said Brian Dodge of the Retail Industry Leaders Association.

What next?

But if the import tax is dead, then what?

“I would never declare anything dead until there was a fully formed alternative,” said Rohit Kumar, a former tax counsel to McConnell who now heads PwC’s Washington tax office. “I think that’s one of the big challenges that Republicans are struggling with right now.”

Thirty-one years after the last tax overhaul, there is widespread agreement that the current system is too complicated and picks winners and losers, compelling companies to make decisions based on tax implications instead of sound business reasons.

The goal — for now — is to simplify the tax code and make it more efficient in a way that does not add to the federal government’s mounting debt. That means some would pay more and some would pay less, a heavy political lift among politicians who have deep political and practical disagreements.

Lawmakers also are trying to overhaul taxes on individuals, which raises another set of big challenges.

“It’s easier to get a coalition to cut taxes,” said Mark Mazur, a former Treasury official under President Barack Obama. “And if the conversation is, `how long do they last and how deep are the tax cuts,’ each party knows how to do that conversation. It’s not like you’re asking for a huge lift.”

The new import tax, which is called a border adjustment tax, would radically change the way corporations are taxed. Under current law, corporations pay a top tax rate of 35 percent on their profits. But the tax code is filled with so many exemptions, deductions and credits that most corporations pay a much lower rate.

Proposal

Under the proposed system, American companies that produce and sell their products in the U.S. would pay a new 20 percent tax on the profits from these sales. However, if a company exports a product, the profits from that sale would not be taxed by the U.S.

Foreign companies that import goods to the U.S. would also have to pay the tax, and they would not be able to deduct the cost of the imported good as a business expense.

Republicans in Congress and at the White House have been meeting behind closed doors for weeks to come up with viable alternatives. Democrats have been largely excluded from the talks, leaving Republicans with little room for error.

“I still think that Republicans, out of pure political necessity, if nothing else, are likely to find a way to get some sort of tax bill to the president’s desk for his signature,” Kumar said.

Whether it’s genuine tax reform or simply a tax cut “is still very much in question right now,” he added.
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U.S. farm groups criticized President Donald Trump’s decision to retreat from his predecessor’s opening toward Cuba, saying it could derail huge increases in farm exports that totaled $221 million last year.

A trade delegation from Minnesota, one of the largest U.S. agriculture states, vowed to carry on with its planned visit to Cuba next week. 

“We’re going to continue to beat the drum and let them (the Trump administration) know that trade is good for agriculture,” said Kevin Paap, a farmer in the delegation.

Trump signed a presidential directive Friday rolling back parts of former President Barack Obama’s opening to the Communist-ruled country after a 2014 diplomatic breakthrough between the two former Cold War foes.

Farm groups saw the move as a step backward in what had been an improving trade relationship between the two countries, which are 90 miles (145 kms) apart, even though agriculture is not directly targeted.

U.S. law exempts food from a decades-old embargo on U.S. trade with Cuba, but cumbersome rules on how transactions were executed have made deals difficult and costly.

Since Obama’s detente, substantial headway has been made with shipments of U.S. corn and soybeans to Cuba soaring 420 percent in 2016 from a year earlier to 268,360 tons, U.S. Department of Agriculture data shows.

Through the first four months of 2017, total shipments of U.S. grain and soy were 142,860 ton, up from 49,090 tons during the same period of 2016.

While the quantities are dwarfed by total U.S. exports — nearly 56 million ton of corn alone last year — the added volumes were welcome as farmers face a fourth year of languishing grain prices and crimped incomes.

“At a time when the farm economy is struggling, we ask our leaders in Washington not to close doors on market opportunities for American agriculture,” Wesley Spurlock, president of the National Corn Growers Association, said in a statement.

The group sees an opportunity for $125 million more a year in trade to Cuba.

Trump’s move could cut off near-term sales and stymie economic development that would drive longer-term demand growth, said Tom Sleight, president of the U.S. Grains Council, a grain trade development organization, in a statement.

“Neither of those outcomes is favorable for the U.S. ag sector or the Cuban people,” he added.

Paap said the United States should be doing more to encourage exports.

“It’s frustrating because we’ve made some advances and built those relationships,” he said. 
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The key to success for ride-hailing providers like Uber is keeping drivers happy so they run their app, ensuring that enough cars respond to passenger demand.

Estonia upstart Taxify is hoping to win over drivers and take on Uber Technologies Inc., the industry leader, by offering a larger share of the profit.

Upstarts across the world, such as Lyft Inc. and Ola, are trying to catch Uber in the on-demand car-ride market by securing brand loyalty.

But Uber has gathered critical mass and reached a valuation of more than $60 billion in eight years, despite a lack of profits. It has kept rivals at bay, partly by offering incentives to drivers to stay online.

Taxify hopes to lure drivers

Taxify, a minnow compared with Uber, cannot afford these perks but believes that by taking a smaller share of fares, 15-20 percent compared with Uber’s 20-25 percent, it can steal market share from its San Francisco-based rival.

It also hopes that allowing drivers to take cash as well as credit card fares will also help it attract more passengers.

“Taxify’s biggest advantage is the focus on good service by treating the drivers and riders better than other platforms. This means having higher pay for drivers, thanks to lower fees,” Chief Executive Markus Villig told Reuters at Taxify’s headquarters in Estonia.

An Uber spokeswoman declined to comment but the company has said it had fare revenue of around $20 billion last year. Villig said Taxify generated fares worth “tens of millions of euros” each month. Taxify runs in just 25 cities in Europe and Africa, while Uber operates in nearly 600 cities worldwide.

Its basic business model is identical — both connect passengers with self-employed drivers. Many incumbent cab companies in Europe have developed apps to operate in a similar manner but most have focused on their domestic markets.

Markets not Uber dominated

But Taxify is unusual in launching in about 18 countries, mainly smaller markets in Eastern Europe and Africa, where Uber is absent or not yet dominant.

Uber usually takes market share by giving drivers money to sign on to its app, paying them even if they are not driving passengers. Then, as it becomes more popular with passengers, it withdraws the inducements. Analysts say Uber aims to build a customer franchise and stable of drivers to dominate the market.

“The way I see it, Taxify is cheaper than Uber,” said Tumelo Malatjie, 33, a former truck driver for a logistics firm turned full-time Taxify driver in Johannesburg. “Taxify takes 15 percent and Uber about 25 percent or 30 percent,” said Malatjie, who nonetheless is on a waiting list to become an Uber driver.

Taxify has avoided expensive head-to-head battles with its much larger rival but its model will soon be tested as Villig plans to launch in London, Uber’s biggest European market in the coming months.

“We are coming in as a second wave,” Villig said.

Small but growing

Founded 3½ years ago, Taxify has 140 staff worldwide, a third of whom are based in Estonia. It says it has 2.5 million active passengers in 18 countries. Uber says it has more than 12,000 people across the world and millions of passengers in 70 countries.

In Africa, Villig said Taxify has hired away 20 former Uber executives, helping its expansion in cities like Lagos, Cairo and Johannesburg.

The start-up has raised 2 million euros in outside financing from local venture capitalists. Like Uber, it is losing money, although it was “close to profitability for the past six months,” Villig said.

Uber reported in late May that its net loss, excluding employee stock options and other items, narrowed in the first quarter to $708 million, from $991 million in the fourth quarter.

Same challenges

Taxify and Uber face many of the same regulatory and commercial challenges.

Uber was dealt a major setback to its European ambitions in May when the lead advocate for Europe’s highest court said it should be regulated like a transport company rather than an online electronic intermediary.

Taxify could face the same legal treatment, which would make it more susceptible to new regulations being introduced by a growing number of European cities.

Similarly, bans on ride-sharing in cities such as Brno in the Czech Republic, apply to Taxify as much as Uber.

Uber has faced complaints from its drivers in London, France and the United States who were unhappy about compensation.

But Taxify has also had protests from drivers in Estonia unhappy at how the company had slashed fare rates. Villig declined to comment.

While analysts do not expect Uber to be dethroned by Taxify anytime soon, the Estonian company’s lower commission model may put pressure on Uber’s margins in countries where it is seeking to cut fares or increase its share of fares.
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Colombia on Friday reached a deal with public school teachers to end a 37-day strike that has kept millions of children out of classes, amid criticism the government has failed to keep its promise to improve public education after a peace deal with Marxist rebels.

Union members participating in the nationwide walkout held near-daily marches, often blocking busy roads in the capital Bogota to demand more funding for school maintenance, supplies, student meals and salaries.

President Juan Manuel Santos says he is focused on combating inequality and improving education now that a peace deal with the Revolutionary Armed Forces of Colombia (FARC), an end of more than 52 years of war, is under way.

But educators said improvements are nowhere to be seen and their salaries, some as low as 1.8 million pesos per month (about $610), are not adequate compensation for work that requires extensive and expensive higher education.

 

“The government’s priority was always to reach an agreement that recognizes the work of teachers and the indispensable role of education in the development of the country and, at the same time, be responsible with public finances,” Education Minister Yaneth Ghia told reporters.

The deal, among other things, will improve salaries through progressive bonus payments and allow bigger union involvement in how money is spent on education, she said.

The powerful Colombian Federation of Education Workers (Fecode) union, which represents more than 350,000 teachers, agreed to the deal after meeting with Finance Minister Mauricio Cardenas.

“The president said the money that went to the war would go to education but now there’s no FARC, no guns and we don’t see the funds,” said high school teacher Jose Escobar, 36, earlier on Friday during a protest in Bogota’s main square.

Places at his school, Colegio German Arciniegas in Bogota’s poor Bosa neighborhood, are in such high demand that it has been impossible to implement the government’s goal of full-day classes, Escobar said. Instead, 4,800 students in grades nine through 11 attend half-day, or six hours.

Friday’s deal will push toward the aim of full-day study.

Santos has weathered a wave of strikes in recent weeks, reaching agreements to halt protests in the port city Buenaventura and a strike by public workers.

“If the government truly is working for peace, they need to start here,” said Adriana Tunjo, a fifth-grade teacher in southern Bogota, who like other protesters decried problems which included electricity outages and sporadic provision of meals.
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McDonald’s Corp ended its 41-year-old sponsorship of the Olympic Games three years early, the International Olympic Committee said Friday, reflecting the U.S. fast-food giant’s focus on its core business as well as rising Olympics sponsorship costs and declining TV ratings.

McDonald’s deal would have run through the Tokyo Olympics in 2020, and bowing out will likely to save it hundreds of million of dollars if it had continued into the next four-year Olympics cycle and beyond.

McDonald’s has been trying to hold down costs as it invests in improving food quality, restaurant service and online ordering to woo back U.S. diners. Intense competition has gnawed away at sales.

“We are reconsidering all aspects of our business and have made this decision in cooperation with the IOC to focus on different priorities,” said McDonald’s Global Chief Marketing Officer Silvia Lagnado.

Sponsor since 1976

The company, first involved with the games in 1968 and a sponsor since 1976, was the Olympics’ food retail sponsor. Despite pulling out with immediate effect, McDonald’s will continue at next year’s Pyeongchang winter Olympics as a domestic sponsor.

The company’s move may also reflect a rising view among consumer brands that exclusive Olympics sponsorship deals do not offer the marketing impact they once did. Some companies find it is much cheaper to work directly with athletes or specific countries than the IOC.

Moreover, in a trend that began after the Beijing games in 2008, shrinking television audiences for the games could be diminishing the value of sponsors’ ads. With the Rio de Janeiro games in 2016, many viewers turned to social media alternatives like Twitter and Facebook.

In the United States, Comcast’s NBCUniversal said it had attracted 8.6 percent fewer eyeballs for Rio than it did for London in 2012.

$1 billion every four years

The fast food chain has been part of the IOC’s top sponsors program that contributes more than $1 billion in each four-year cycle for the games.

While terms of Olympic sponsorship are not disclosed, a source who negotiated previous IOC sponsorship deals said that top global sponsors like McDonald’s spend about $25 million a year or about $100 million for a four-year period that includes a summer and winter games.

Reuters previously reported that the IOC had wanted to roughly double fees to $200 million per four-year period starting in 2021.

While it is unusual for an Olympic sponsor to leave early, sponsors change regularly within the IOC’s top program. The most recent addition was China’s Alibaba Group Holding Ltd., which signed a deal in January for a partnership through 2028.

The next three Olympics take place in Asia, and this could turn off U.S. sponsors trying to reach a U.S. audience. The U.S. Olympic Committee also has lost recent sponsors such as AT&T and Citigroup ahead of the 2018 winter games in South Korea.

The IOC said it was not planning a direct replacement for McDonald’s, but it is expected to announce a new global deal with Intel next week, according a source familiar with the matter.

Intel did not immediately respond to a request for comment.
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President Donald Trump’s Washington hotel saw almost $20 million in revenue during its first few months of operation, a period that coincided with his election and inauguration as the 45th president. His Mar-a-Lago resort in Florida, which he’s visited seven times as president, pulled in millions of dollars more than it had previously.

 

The new details were included in a financial disclosure that Trump voluntarily submitted Friday to the Office of Government Ethics, the first snapshot of the Trump Organization’s finances since its longtime leader became president.

 

Liabilities listed

The disclosure forms also listed his personal liabilities of at least $315.6 million to German, U.S. and other lenders as of mid-2017, according to a federal financial disclosure form released late Friday by the U.S. Office of Government Ethics.

Trump reported income of at least $594 million for 2016 and early 2017 and assets worth at least $1.4 billion.

The 98-page disclosure document posted on the ethics office’s website showed liabilities for Trump of at least $130 million to Deutsche Bank Trust Company Americas, a unit of German-based Deutsche Bank AG.

For example, Trump disclosed a liability to Deutsche exceeding $50 million for the Old Post Office, a landmark historic property in downtown Washington that he recently redeveloped into a hotel near the White House.

Trump reported liabilities of at least $110 million to Ladder Capital, a commercial real estate lender with offices in New York, Los Angeles and Boca Raton, Florida.

The largest component of Trump’s income was $115.9 million listed as golf-resort related revenues from Trump National Doral in Miami. His assets probably exceeded $1.4 billion because the disclosure form provided ranges of values.

Disclosures’ importance

When he took office in January, Trump turned over the reins of his global real estate, property management and marketing empire to his two adult sons and a senior executive. But Trump did not divest, instead placing his enormous portfolio of financial assets in a trust controlled by the executive and Donald Trump Jr. He can take back control of the trust at any time, and he’s free to withdraw cash from it as he pleases.

 

Trump’s financial disclosures have added importance because he isn’t following the long tradition of presidential candidates and office-holders making public their tax returns. Those returns provide more precise financial information than the disclosure forms that have broad ranges for income, assets and debts.

 

The latest report shows Trump resigned from more than 500 positions, stepping down from many on the day before his inauguration. His liabilities were about the same as in the previous report.

Income listed

 

Some of Trump’s ventures appear to be making more money than they had a year earlier.

 

His book The Art of the Deal is having a comeback of its own. Royalties from the 1987 autobiography ranged between $100,000 and $1 million, according to the new report. The 2016 report listed royalties as being between $50,000 and $100,000, and the 2015 report put them at $15,000 to $50,000.

 

Trump’s management fees from Indonesian companies tied to two planned resorts there more than doubled. The latest disclosure puts the fees at $380,000, up from $167,000 he reported in 2016. Trump is partnering with a billionaire Indonesian, Hary Tanoesoedibjo, on the two ventures. One is planned for the tourist island of Bali, the other near Jakarta.

 

Mar-a-Lago, where Trump played host to several foreign dignitaries during his seven weekends there this winter, has improved its finances. Trump listed the resort’s income as about $37 million, up from about $30 million it had taken in before his 2016 financial report.

 

His golf club in Bedminster, New Jersey, on the other hand, produced almost $20 million in revenue, about what it had during the previous reporting period. Trump recently began decamping to that property some weekends.

 

The documentation of revenue from each of those properties doesn’t account for expenses, meaning those figures are not pure profit.

 

The Trump International Hotel, housed in the Old Post Office building, has seen a burst of activity since opening its doors last fall. In addition to serving as a hub during inauguration festivities, it has hosted numerous events for foreign diplomatic and business interests.

 

The hotel is cited in three separate lawsuits arguing that Trump is violating the Constitution’s “emoluments” clause, a ban on foreign gifts and payments. Trump and the Justice Department have called those claims baseless.

Reuters contributed to this report.
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Nationwide strikes left commuters and tourists stranded across Italy on Friday, as transport unions called for better job conditions for workers and protested against privatization.

Underground and overground trains, airplanes and buses were cancelled in a series of strikes over a 24-hour period starting on Thursday evening.

Transport Minister Graziano Delrio said he had tried to negotiate with union leaders, but “sadly, it will be a black Friday.”

People seeking shade from the summer sun at bus stops around Rome’s Termini train station, the city’s main transport hub, said it was unfair that the country’s powerful labour unions still resorted to striking.

“I’ve waited for buses from three different lines for two hours and not even one has passed,” said Rome resident Franco Marini. “I find this way of protesting uncivil, in the 21st century there should be other ways to resolve labor issues.”

Italy is due to spin off parts of the state railway company under a delayed privatization plan to cut its huge public debt.

It is also looking for a buyer for struggling airline Alitalia, which was put under state management in May after making losses for years.

“The doctrine of privatization has gradually, dangerously spread through this sector, creating economic instability, unemployment, fewer services, and worrying reductions in safety, and sending salaries and workers’ rights and protections into free fall,” the SGB union said in a statement.

One of the special commissioners brought in to help salvage Alitalia said the strikes were “irresponsible” and “a gift to competitors”, adding the airline would try to cancel no more than 160 of 620 flights scheduled during the walk out.
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Greek stocks rallied to two-year highs Friday after the government struck a deal with European creditors that means the country won’t face another brush with bankruptcy anytime soon.

However, for austerity-weary Greeks, the deal does little to lift the pall from years of belt-tightening.

After months of haggling that raised fears of another escalation in Greece’s nearly eight-year debt crisis, the 19-country eurozone agreed late Thursday to release a further 8.5 billion euros ($9.5 billion) from its current, third bailout after the Greek government delivered on an array of reforms. Getting the money was becoming increasingly urgent because Greece has a big debt repayment hump next month.

Extending repayments

With an eye to the longer term, the eurozone creditors also made clear they are ready to ease the burden of Greece’s debt repayments when its bailout program ends next year, possibly by extending repayments by up to 15 years. The International Monetary Fund may also get involved financially, with up to $2 billion, but only if and when it sees the specifics of the debt relief and agrees it can make Greece’s debt bearable.

“I think that’s really the best agreement we’ve had for quite a while,” said Pierre Moscovici, the top economy official for the European Union, the 28-country bloc that includes the 19 states using the euro.

Even though some details remain sketchy, investors breathed a sigh of relief if just on the mere fact that a deal wasn’t postponed, as has occurred so many times previously. The main Athens stock index hit a two-year high, later closing up 0.8 percent on the day. The yields on both the two-year and 10-year Greek bonds fell, reflecting diminished investor fears of the chances of bankruptcy.

“While the deal might have proved the usual exercise in issue avoidance, the fact is that it’s now unlikely that a fresh crisis will emerge in Greece in July,” said Simon Derrick, chief markets strategist at BNY Mellon.

Greece’s left-led coalition government sought to present the deal as favorably as possible, even though the precise nature of the debt relief has to still be ironed out.

“We had a decisive step yesterday,” Prime Minister Alexis Tsipras told the country’s president. “A decisive step for the country’s exit from the long-running crisis.”

Government spokesman Dimitris Tzanakopoulos said Greece’s European creditors had accepted “nearly all the points that the Greek side was asking for.”

The spokesman highlighted the creditors’ acceptance of a long-standing Greek demand that debt repayments be linked to economic growth, meaning that repayments could be postponed if the economy entered recession.

Less optimism

Outside the government, the view was less rosy.

Dozens of protesting hospital workers held a rally outside the finance ministry building in central Athens, building a fake wall outside the entrance topped with a banner reading “They have made us drown in debt.”

Pictures pinned to the fake wall depicted Tsipras, with a tie pinned to his neck. Tsipras doesn’t wear a tie, and had once joked that the only time he would do so would be on the day Greece won debt relief.

 

Tsipras, elected in 2015 on promises to repeal bailout-related budget cuts, has lost popularity after implementing further austerity measures in return for the bailout money and a promise on debt relief.

As part of Thursday’s deal, the government committed to deliver primary budget surpluses — that is, a surplus excluding the cost of servicing debt — worth 3.5 percent of Greece’s annual gross domestic product until 2022, and 2 percent thereafter each year until 2060. That is a big commitment for Greece, but seems to have been agreed on in principle to show Greece’s debt can be sustained with help from creditors.

Despite years of spending cuts and tax increases since Greece was first bailed out in 2010, the public sector debt burden stands at about 320 billion euros, or 180 percent of GDP. That’s largely because the economy has contracted by around a quarter, meaning a worsening in the relative debt load even though the budget has improved.

An outright cut in Greece’s debt is not allowed under euro rules, but the length of time the country has in paying back its debts can be extended, and the interest rates can be cut. More comprehensive details should emerge in the coming months.
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From the president of Mozambique to the US Secretary of Commerce, greater US economic engagement in Africa is the dominant theme at this year’s business summit organized by the Corporate Council on Africa. VOA Correspondent Mariama Diallo was there and reports.
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U.S. authorities moved on Thursday to seize a Picasso painting given to American movie star Leonardo DiCaprio and the rights to two Hollywood comedies, as they filed complaints to recover about $540 million they say was stolen from the 1Malaysia Development Berhad sovereign wealth fund.

The U.S. Justice Department filing was the latest legal action tied to alleged money laundering at the fund set up by Malaysian Prime Minister Najib Razak in 2009 to promote economic development. In the complaints, the department alleges more than $4.5 billion was taken from 1MDB by high-level fund officials and their associates.

“This money financed the lavish lifestyles of the alleged co-conspirators at the expense and detriment of the Malaysian people,” Kenneth Blanco, acting assistant attorney general, said in a statement. 1MDB could not be immediately reached for comment.

Najib has denied taking money from 1MDB or any other entity for personal gain, after it was reported that investigators traced nearly $700 million to bank accounts that were allegedly in his name.

The assets U.S. authorities are seeking to seize include the rights to Dumb and Dumber To, a 2014 comedy starring Jim Carrey, they allege was financed with tens of millions of dollars stolen from 1MDB, and the 2015 film Daddy’s Home, starring Will Ferrell. Last year, U.S. authorities moved to seize rights to the 2013 film The Wolf of Wall Street, which starred DiCaprio.

The three films were produced by Red Granite, a company founded by Najib’s stepson Riza Aziz. Red Granite said in a statement it was in discussions with the Justice Department “aimed at resolving these civil cases and is fully cooperating.”

U.S. authorities accuse Jho Low, a Malaysian financier, of laundering more than $400 million stolen from the fund through an account in the United States, where he and his friends used the money to pay for lavish parties, gambling and yachts.

Despite the civil allegations, U.S. authorities have not charged Low with any crime.

Low did not immediately respond to a request for comment sent to his Hong Kong-based company Jynwel Capital.

Artwork, Oscar for DiCaprio

Authorities said that in 2014 Low used $3.2 million diverted from a 1MDB bond sale to buy a Picasso painting for DiCaprio.

“Dear Leonardo DiCaprio, Happy belated Birthday! This gift is for you,” a friend of Low’s wrote in a note.

Low also used $9.2 million diverted from 1MDB bond sales to buy a collage made by the New York artist Jean-Michel Basquiat which was also given to DiCaprio. DiCaprio and Low signed a note in March 2014 absolving the star of “any liability whatsoever resulting directly or indirectly from these art-work,” according to the filings.

A spokesman for DiCaprio said in an emailed statement on Thursday the actor last July “initiated the return” of gifts he had received from financiers connected to the 1MDB case. The spokesman said DiCaprio also returned an Oscar won by actor Marlon Brando which was given to DiCaprio by Red Granite “to thank him for his work on The Wolf of Wall Street,” the statement said.

DiCaprio’s spokesman said the star accepted the gifts to raise funds in an auction for his environmental foundation.

Complaints against 1MDB

Fraud allegations against 1MDB go back to 2009, the Justice Department said, and the fund is subject to money laundering investigations in at least six countries, including Switzerland and Singapore.

The complaints allege that officials at 1MDB, their relatives and other associates allegedly laundered the funds using complex transactions and shell companies with bank accounts located in the United States and abroad.

That allowed the origin, source and ownership of the funds to be hidden and ultimately passed through U.S. financial institutions, with the money being used to buy and invest in assets in the United States and overseas, according to the complaints.
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The White House lacks a unified plan to increase the government’s borrowing cap as a likely September deadline is drawing near, said Mick Mulvaney, director of the Office of Management and Budget.

A failure by Congress to raise the debt ceiling could send dangerous shock waves through the global economy. The federal government could be at risk of defaulting on obligations such as interest payments on bonds as well as temporarily halting benefit programs.

The White House budget director suggested in an interview Thursday with reporters that neither the Trump administration nor Capitol Hill lawmakers had set their terms for an agreement.

“It’s fair to say we haven’t settled on a final way to address the debt ceiling any more than the Hill has,” Mulvaney said.

The former South Carolina congressman added that none of this was necessarily “unusual.”

Possible extension

Under the current borrowing restrictions, the government has already been taking extraordinary measures and will likely be unable to pay its bills at some point in September. But Congress still has a recess scheduled in August that could create time pressures. Private analysts say the debt ceiling deadline could be extended into October.

Mulvaney said he would like to see the debt ceiling raised in July.

But Trump administration officials still have yet to resolve internal differences on the best strategy to increase the legal cap on government debt, which already exceeds $19.8 trillion.

Mulvaney suggested he would like to have any increase in the borrowing authority be attached to other spending changes, a move that could attract Republican support but alienate Senate Democrats. President Donald Trump’s budget proposal seeks to beef up spending on the military and border security while cutting many social programs.

Treasury Secretary Steve Mnuchin has indicated he would like a “clean” bill to raise the debt ceiling, so it would not have to be tied to any spending changes, but Capitol Hill conservatives are resisting the idea.

“Secretary Mnuchin believes it needs to be clean. I think the vast majority of the Republican conferences would not agree,” said Representative Mark Meadows R-N.C., chairman of the Freedom Caucus, a group of strongly conservative House Republicans.

Mulvaney said Mnuchin would ultimately be in charge of handling the debt ceiling push “once we do settle on our formal policy, if we do.”

A 2011 standoff between Republicans and the Obama administration over the debt ceiling led to tighter controls on spending. That standoff was not resolved until the 11th hour and prompted Standard & Poor’s to impose the first-ever downgrade to the country’s credit rating.

Talks with lawmakers

The administration is also engaged in talks with House and Senate Republican leaders about what kind of increase they could possibly pass. Mulvaney said the issue was not a source of division inside the White House or the Republican Party.

The discussions involve whether the House should increase the debt limit enough to last through the 2018 election or the president’s first term.

“It would be foolish of us to come up with a policy devoid of having talked to the Hill,” Mulvaney said.

Congress also faces pressure to pass a budget in September for next fiscal year, as well as to address administration priorities that include a tax code rewrite and the proposed repeal of former President Barack Obama’s 2010 health insurance law.

Failure to pass spending bills could cause a government shutdown and cause nonessential government agencies to close. Trump suggested on Twitter last month that he might welcome a shutdown to help shake up the government.

Mnuchin told the Senate Budget Committee this week that “at times there could be a good shutdown,” though he cautioned it’s not the administration’s “primary objective.”

With action on the budget front otherwise stalled, the House Appropriations Committee on Thursday approved the first of 12 spending bills, an $89 billion measure that contains generous increases for veterans programs and Pentagon construction projects.

But the White House and its GOP allies — much less opposition Democrats — haven’t come up with an overall plan for implementing Trump’s promises to increase the Pentagon budget and advance more than $500 billion worth of annual domestic agency spending bills.
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American tourists strolling the ample squares and narrow streets of colonial Havana may not know it, but from novelist Ernest Hemingway’s famed Floridita bar to Sloppy Joe’s eatery, they are probably patronizing businesses owned by Cuba’s military.

It is that lucrative line of business that President Donald Trump will target when he rolls out his new Cuba policy Friday in Miami, the heart of the country’s hard-line exile community, according to U.S. officials who have seen a draft presidential memorandum.

Trump will significantly restrict U.S. companies from doing business with some military-linked enterprises, the officials said.

“Any ban on using military-owned tourism facilities would make it very difficult to bring groups larger than seven people, because for logistical reasons you need to work with the government,” said Collin Laverty, president of Cuba Educational Travel.

The number of Americans traveling to Cuba, mostly in large groups because of U.S. regulations, has nearly tripled in recent years and was expected to reach around 400,000 in 2017, according to U.S. travel agencies.

Trump’s expected limits on U.S. business deals will target the Armed Forces Business Enterprises Group (GAESA), a conglomerate involved in all sectors of the economy that is led by General Luis Alberto Rodriguez, reportedly President Raul Castro’s son-in-law.

That is bad news for the pro-engagement U.S. politicians and hundreds of businesses that flocked to Cuba in the last few years in search of new opportunities.

Lone hotel deal

The only hotel deal struck to date may prove the last for now, at least in the capital. Starwood Hotels & Resorts Worldwide, which is owned by Marriott International, signed on to manage a Gaviota hotel in Havana under the Sheraton brand, which opened in 2016.

Gaviota is part of GAESA, and tourism development projects in Havana and other choice locations are almost exclusively in its hands.

U.S. Gulf Coast ports and the Port of Virginia, which have signed letters of intent to work with the new Mariel container terminal, will most likely have to look elsewhere for shipping partners because it is controlled by Almacenes Universales, another GAESA company.

The terminal feeds a surrounding Chinese-style development zone that allows investors 100 percent ownership and that was visited by dozens of U.S. business delegations beginning in 2015, though no deals were signed. It also is controlled by Almacenes Universales.

GAESA does not run Cuba’s airports, or its cruise ship terminals, meaning U.S. airlines and cruise operators might not be directly affected, but it does control the marinas.

All the state hotels, stores and eateries in colonial Old Havana are owned by Habaguanex, which was recently taken over from the city historian’s office by GAESA.

GAESA began modestly enough in the 1980s as an effort to bring modern management to the civilian sector mired in the ways of Soviet-style administration.

It has grown dramatically over the last decade since Raul Castro took over for his ailing and now deceased older brother, Fidel.

Today GAESA boasts dozens of companies that control 40 percent to 60 percent of the Caribbean island’s foreign exchange earnings, according to Cuban economists.

GAESA’s books, like those of other state-run companies, are not public.

Military’s self-interest

Some Cuba experts and diplomats believe the military is feathering its own nest and perhaps preparing to cash in if the government falls.

But others believe revenues flow to the cash-strapped state.

A former British ambassador to Cuba, Paul Hare, who lectures at Boston University’s Pardee School of Global Studies, said the military was viewed as a guardian of the Revolution.

“Their function is to ensure that private Cubans and foreign investors do not undermine the principles of ‘socialism,’ ” he said.

The holding company controls virtually all of the thousands of stores, supermarkets and malls in the country that sell imported products ranging from food and beverages to clothing and appliances, and hundreds of gas stations and eateries.

That means when you enter a shop in Cuba to purchase a bottle of water, soda or beer, you probably are patronizing a military establishment.

If you want to rent a condominium or satellite TV service, you have to go through a GAESA company.

The holding company also controls two banks and all credit card and money transfer transactions through Fincimex. RAFIN, the conglomerate’s mini-hedge fund, owns shares in the telecommunications monopoly ETECSA.
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Foreign fishing in Indonesian waters has long been a concern for the government, for which it has recently taken a literally explosive approach: blowing up illicit fishing boats. But the country’s wildly popular Minister of Marine Affairs lobbied the United Nations last week to declare illegal, unreported and unregulated fishing (IUUF) an organized crime, signaling growing frustration and a new approach from Jakarta.

That said, even if the U.N. takes this step, Indonesia faces an uphill battle in protecting its fisheries. As the world’s largest archipelagic nation, it has somewhere between 15,000 and 17,000 islands and many kilometers of unsecured coastline. President Joko “Jokowi” Widodo created a task force to address illegal fishing in October 2015, which reports directly to him and gives the Navy, the National Police and the Maritime Security Agency wide jurisdiction to deter illegal fishing by any means necessary.

But the fleet and law enforcement personnel are still small given the scale of the problem, which costs Indonesia, by one estimate, $3 billion a year.

Surprisingly empowered task force

Task forces, or “Satgas” (satuan tugas in Bahasa Indonesia) are almost a punchline in Indonesian governance because they are created for a wide variety of issues and often with unclear mandates. But the fishing task force feels different, according to Mas Achmad Santosa, head of the IUUF Fisheries Task Force.

“This is the first time for Indonesians that the president has set up a task force and it actually works well,” Santosa told VOA. “Every element needed for enforcement is there: investigators [from the Ministry of Marine Affairs and Fishery, Marine Police, Coast Guard, and Navy], prosecutors under the attorney general’s office, and several experts from fields like money laundering and environmental law.”

There are about 60 dedicated members of this task force, but they work closely with the above institutions so their effective numbers are larger, Santosa said.

The task force only directly prosecutes cases with “elements of serious crime,” said Santosa, and they have prosecuted 42 such cases over the last year.

“But our fleet is far from sufficient, we must admit,” Santosa said. “Compared to our oceans, which are huge, the technology is limited.” They only have four patrol boats, for instance.

Since Jokowi took office in 2014, Indonesia has blown up over 300 illegal fishing boats, taking out 81 near Ambon over a single weekend last April. The eye-catching strategy has become something of a local tourist attraction. Its symbolic impact, though, could be larger.

“Blowing up boats is just one of our treatments. But we hope it creates a general deterrent effect,” Santosa said.

Charismatic leader

Indonesia’s Fisheries Minister Susi Pudjiastuti, known as “Bu Susi,” is a high school dropout turned entrepreneur with a knack for viral photo opportunities (smoking on a paddleboard, sleeping in an airport) and a no-nonsense style that has raised the profile of her relatively obscure ministry.

“It’s very important to have a strong leader, and she is a person of integrity who leads by example,” Santoso said.

Foreign fishing is concentrated in Maluku, Sumatra, and the Indian Ocean, according to the maritime ministry. Beyond that, there are also illicit Indonesian vessels that engage in what Santoso calls “unsustainable fishing that will destroy ecosystems.” So international cooperation is not a silver bullet;  the task force’s inroads on domestic fishing will be equally important, and somewhat harder to attack in such a spectacular manner.

Domestic agenda

The Peoples Coalition for Fishery Justice (KIARA) has urged the maritime ministry to revise regulations that they say hinder the development of the local fishing industry.

“Today the biggest challenge faced by coastal communities, especially fishermen, is the investment from and development through foreign capital,” KIARA secretary-general Susan Herawati Romica told VOA. For instance, she said, on the island of Gili Sunut, Lombok, there are 109 households who have been displaced by construction on a Singaporean beach resort to more dangerous cliffside areas.

“Today, 90 percent of Indonesian fishermen are traditional fishermen with vessels that average below 10 gross tons,” she said. “They rely heavily on marine and coastal areas, but they still face major challenges in accessing the coast.”

According to KIARA data, there have been at least 34 recent cases of mine reclamation or development that have displaced local communities. “To that end, we say, if the country wants to push fisheries to provide the maximum benefit to coastal communities, then access to the sea [for local communities] should be guaranteed by the state.”
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