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First sentence handed down in Mueller probe

April 4, 2018 by  
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A London-based lawyer was ordered to serve 30 days in prison after a federal judge Tuesday handed down the first sentence in special counsel Robert S. Mueller III’s investigation of Russian interference in the 2016 U.S. presidential election.

Alex van der Zwaan, 33, a son-in-law of a prominent Russian-based banker, pleaded guilty Feb. 20 to lying to the FBI about his contacts in September and October of 2016 with a business associate of onetime Trump campaign chairman Paul Manafort and with Manafort’s deputy, former Trump aide Rick Gates. Prosecutors said van der Zwaan also destroyed emails the special counsel had requested.

“What I did was wrong,” van der Zwaan said in court Tuesday. “I apologize to the court for my conduct. I apologize to my wife and to my family for the pain I have caused.” While van der Zwaan is not a central figure in the investigation, filings in his case illustrated Mueller’s continuing interest in Manafort and Gates’s actions through Donald Trump’s presidential campaign.

According to prosecutors, van der Zwaan, who is a Dutch citizen, said he had been told by Gates that the Manafort associate had been an officer with the Russian military intelligence service. Van der Zwaan turned over secret recordings to Mueller’s investigators that he had made of his conversations with Gates, the associate and a senior partner at his law firm.

Van der Zwaan was a lawyer in the London office of Skadden, Arps, Slate, Meagher Flom from 2007 to 2017, when the firm worked with Manafort during a decade when he served as a political consultant in Ukraine.

Lawyer Alex van der Zwaan arriving at the federal courthouse in Washington in February. (Bill O’Leary/The Washington Post)

Manafort, 68, has pleaded not guilty to charges of conspiracy, money laundering and tax and bank fraud related to his lobbying work for a pro-Russian political party in Ukraine and former Ukrainian president Viktor Yanukovych. He has asked a judge to toss out charges, saying prosecutors are pursuing conduct that predate his work for Trump.

Gates, 45, who was deputy campaign manager for Trump and worked with Manafort in Ukraine, pleaded guilty Feb. 23 to conspiracy and lying to the FBI in a cooperation deal with Mueller’s probe.

Van der Zwaan admitted lying and withholding documents about information prosecutors said was “pertinent” to their investigation — that he had been in direct contact in September and October of 2016 with Gates and with the Manafort associate, identified in court documents as “Person A,” an individual who “has ties to a Russian intelligence service and had such ties in 2016.”

The defendant also admitted that Gates had informed him that Person A was a former officer of the Russian military intelligence service known as the GRU, prosecutors said.

Prosecutors charged that when van der Zwaan was initially interviewed by the FBI on Nov. 3, he falsely told investigators that he last communicated with Gates in mid-August 2016 through an innocuous text message.

Prosecutors made the allegation without naming the Manafort associate but described his role with Manafort in detail. The description matches Konstantin Kilimnik, the Russian manager of Manafort’s lobbying office in the Ukrainian capital, Kiev.

Kilimnik ran Manafort’s office in Kiev during the 10 years he did consulting work there, The Washington Post reported in 2017. Kilimnik worked as a liaison to the Russian aluminum magnate Oleg Deripaska, with whom Manafort had done business. Emails previously described to The Post show Manafort asked Kilimnik during the campaign to offer Deripaska “private briefings” about Trump’s effort.

A Deripaska spokeswoman has said the billionaire, a close ally of Russian President Vladimir Putin, was not offered and did not receive briefings.

Kilimnik has previously denied intelligence ties, telling The Post in a statement in June that he has “no relation to the Russian or any other intelligence service.”

A spokesman for Manafort, who is under a court gag order, has previously declined to comment about the van der Zwaan filings.

Van der Zwaan faced a recommended sentence ranging from zero to six months in prison and asked for no prison time for one count of lying to investigators, a felony.

Van der Zwaan is married to the daughter of billionaire German Khan, who owns the Alfa Group, Russia’s largest financial and industrial investment group.

Van der Zwaan attorney William Schwartz said his client’s family connections should not be a reason to penalize him and argued he deserved consideration for the loss of his career, for the suffering of his wife, who is expecting the couple’s first child in August in a difficult pregnancy, and for turning over recorded conversations and other evidence of his guilt.

“It is unusual conduct to make a false statement and then immediately provide proof of a false statement,” Schwartz said. He said that if it were another defendant, those tapes “could have found their way to the bottom of the Thames,” the river in London.

U.S. District Judge Amy Berman Jackson acknowledged van der Zwaan’s character and willingness to turn over evidence of his crimes but said that given his means, allowing him to “pay a fine at the door and walk away would not send a message of deterrence. It would do the opposite.”

“It is a message that needs to be sent, particularly because you are an attorney,” Jackson said.

Jackson said that she did not know whether van der Zwaan was motivated to join Manafort and Gates for excitement, for the money or because he was engaged in a deeper “coverup,” but that in lying “he put his own interests ahead of the interests of justice” in an investigation of national and international importance into whether the U.S. democratic process was corrupted.

Prosecutors said that van der Zwaan concealed that Gates directed him in September 2016 to contact Person A. Van der Zwaan recorded his conversations with each of them, as well as a separate conversation he had with Gregory Craig, a Skadden senior partner overseeing work involving Manafort.

Van der Zwaan also deleted emails rather than turning them over to authorities, including one from Person A directing him to communicate using encrypted applications, and others showing he explored leaving the law firm to work directly for Gates and Manafort around 2012 and 2013.

The subject of the recorded phone call, prosecutors said, was a 2012 report prepared by van der Zwaan’s law firm about the jailing of former Ukrainian prime minister Yulia Tymoshenko. Yanukovych had imprisoned Tymoshenko, a political rival, after a gas-supply controversy in 2009 involving Russia.

The Skadden report has been controversial in Ukraine in part because its findings seemed to contradict the international community’s conclusion that Tymoshenko had been unjustly jailed.

In addition, the Ukrainian government claimed to have paid only $12,000 for the report, an amount that put it just below the limit that would have required competitive bidding for the project under Ukrainian law.

Prosecutors have alleged that Manafort and Gates used an offshore account to secretly pay $4 million for the report.

Read more:

Justice official authorized Mueller to investigate whether Trump campaign chair colluded with Russia

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US-China trade: Beijing condemns US tariffs list

April 4, 2018 by  
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Motorcycles made in China are among the imports that would be hit with a tax

Beijing is to place 25% trade tariffs on a list of 106 US goods, including soybeans, cars, and orange juice.

The retaliatory action comes after the US published a list of about 1,300 Chinese products it plans to hit with a 25% tariff.

The White House said the proposed imports tariff was a response to unfair Chinese practices to do with intellectual property rights.

The US tax targets items like medical products, televisions and motorcycles.

In response, the Chinese finance ministry said it would put 25% tariffs on US chemicals, some types of aircraft and corn products.

The products targeted by the tariffs were worth $50bn (£35.5bn) in 2017, according to a separate statement from the Chinese commerce ministry.

Extra tariffs will also be placed on products such as whiskey, cigars and tobacco, some types of beef, lubricants, and propane and other plastic products, the finance ministry said.

US orange juice, certain sorghum products, cotton, some types of wheat, as well as trucks, some SUVs and certain electric vehicles, will also be subject to the new duties, the ministry added.

‘In nobody’s interest’

Beijing said it “strongly condemns and firmly opposes” the tariffs.

“Such unilateralistic and protectionist action has gravely violated fundamental principles and values of the WTO [World Trade Organisation],” the Chinese embassy in Washington said in a statement on Wednesday.

China said the US action did not serve either country’s interests and “even less the interest of the global economy”.

“As the Chinese saying goes, it is only polite to reciprocate,” the statement added.

“The Chinese side will resort to the WTO dispute settlement mechanism and take corresponding measures of equal scale and strength against US products in accordance with Chinese law.”

Trade war fears

Economists had previously warned the Trump administration’s move to slap China with the tariffs could prompt Beijing to retaliate and lead to higher prices for American consumers.

The release of the list comes just after China hit $3bn worth of US products with tariffs in response to steel and aluminium tariffs the US has imposed.

The products on the list the US published on Tuesday represent imports worth about $50bn annually.

$462.6bn

The value of of goods bought by the US from China in 2016.

  • 18.2% of all China’s exports go to the United States

  • $129bn worth of China-made electrical machinery bought by US

  • 59.2% growth in Chinese services imported by US between 2006 2016

  • $347bn US goods trade deficit with China

The office of the US Trade Representative, which handles trade negotiations, said the amount was “appropriate both in light of the estimated harm to the US economy and to obtain elimination of China’s harmful acts, policies and practices”.

A final list will be determined after a public comment period and review, expected to last about two months.

The plans for tariffs are the result of an investigation that US President Donald Trump ordered last year into China’s intellectual property practices.

Last month, he said the probe found evidence of problems, such as practices that pressure US companies to share technology with Chinese firms and ordered a list of products drawn up for tariffs.

Hopes for a resolution

When announcing its intentions to retaliate against the US tariffs on Wednesday, the Chinese embassy in Washington said it hoped the US would “with sense and long-term picture in mind, refrain from going down the wrong path”.

US business groups have also urged the two sides to try to resolve the issues through talks, expressing concern that threatening tariffs could lead to a dispute that hurts the US economy.

The US Chamber of Commerce said: “The administration is rightly focused on restoring equity and fairness in our trade relationship with China. However, imposing taxes on products used daily by American consumers and job creators is not the way to achieve those ends.”

China’s economy has become less dependent on exports in recent years, which is likely to blunt the effect of the tariffs, according to analysts for SP Global Ratings.

The US was the destination for about 18.2% of Chinese goods in 2016 according to the US trade department.

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Economists have warned the Trump administration’s move to slap China with the tariffs could prompt Beijing to retaliate

The list includes parts of communication satellites, semiconductors, aviation equipment and brewery machinery, as well as more niche products such as bakery ovens and rocket launchers.

Joseph Brusuelas, chief economist at RSM US, said he did not think the Chinese would take the list seriously, pointing to low-demand items like monitors with video cassette recorders.

Instead, he said the main outcome was likely to be higher prices for American manufacturers – and, eventually, consumers.

That may not be enough to persuade the Trump administration to opt for a different strategy, he added.

“At this point, if the Trump administration does not follow through on this they’re going to lose face and credibility,” he said.

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