The Wall Street Journal - 30.07.2019

THE WALL STREET JOURNAL. ***** Tuesday, July 30, 2019 |A

on the sensitive information

that financial companies keep

on their customers.

The Capital One breach

could prove to be damaging if

criminals use the stolen in-

formation to apply for credit

in the names of the most

creditworthy or affluent peo-

ple. Unlike most large U.S.

card issuers, Capital One cus-

tomers also include many

subprime consumers.

“While I am grateful that

the perpetrator has been

caught, I am deeply sorry for

what has happened,” said

Richard D. Fairbank, the

bank’s chairman and chief ex-

ecutive. “I sincerely apologize

for the understandable worry

this incident must be causing

those affected and I am com-

mitted to making it right.”

Although the bank said it

is unlikely the stolen infor-

mation was disseminated or

used for fraud, the criminal

complaint alleges Ms. Thomp-

son intended for the data to

be distributed online. The

bank said that its investiga-

tion continues and that the

incident is expected to cost

approximately $100 million to

$150 million.

Ms. Thompson, who is

charged with one count of

computer fraud and abuse, al-

legedly accessed the bank’s

data through a misconfigured

firewall.

A lawyer for Ms. Thomp-

son, who appeared in Seattle

federal court for an initial

hearing, didn’t immediately

respond to a request for com-

ment.

Under the username “er-

ratic,” Ms. Thompson boasted

online about her alleged theft

of the data, which allowed

law enforcement to quickly

identify her, according to

prosecutors.

The breach occurred in

late March, the bank said.

This month, an ethical

hacker—a person who hacks

into a network to test its se-

curity—emailed Capital One

about the leak of its data, and

the bank alerted law enforce-

ment July 19.

Among large banks, Capital

One has been an enthusiastic

adopter of the cloud for data

storage. In its April earnings

call, Mr. Fairbank talked

about the bank’s technology

transformation over the past

25 years. “What we’re doing

at Capital One is building a

technology company that

does banking, instead of a

bank that just uses technol-

ogy,” he said.

The bank has also been

public in its embrace of Ama-

zon Web Services. It has

closed data centers and

shifted those activities to

Amazon, a process it expects

to complete fully in 2020.

The bank’s executives have

been featured speakers at

Amazon conferences and said

that the firm’s use of the

cloud has helped the bank

handle spikes in computing-

power needs, such as credit-

card purchases on Black Fri-

day, and roll out products

faster to customers.

Banks have moved cau-

tiously to the cloud, partly

because of security concerns

and the need to keep certain

customer and transaction

data walled off.

Older mainframe systems,

often patched together as a

result of bank mergers, can

make such a move a major

undertaking.

House job dealing with Middle

East policy even as he lobbied

for the Saudi nuclear plan, the

report said.

“The Trump administration

has virtually obliterated the

lines normally separating gov-

ernment policymaking from

corporate and foreign inter-

ests,” the report prepared for

committee Chairman Elijah

Cummings (D., Md.), says. “The

documents show the adminis-

tration’s willingness to let pri-

vate parties with close ties to

the President wield outsized

influence over U.S. policy to-

ward Saudi Arabia.”

In another approach to Ri-

yadh, IP3 executives traveled to

Saudi Arabia in December

2016, the month after Mr.

Trump was elected, to solicit a

$120 million investment in

their firm from then-Saudi

Deputy Crown Prince Moham-

med bin Salman, according to a

slide presentation committee

investigators obtained. It isn’t

known whether they succeeded

in meeting Prince Mohammed,

who is now the country’s de

facto leader.

The Saudi investment in the

Westinghouse bid and in IP

doesn’t appear to have ever

been consummated. The effort

by Mr. Barrack’s company, then

known as Colony NorthStar,

and IP3 to purchase Westing-

house with the help of two fi-

nancial firms, Apollo Global

Management and Blackstone

Group, ultimately failed.

In January 2018, Brookfield

Business Partners announced it

had acquired Westinghouse

from Japanese conglomerate

Toshiba Corp. for $4.6 billion,

and in March of that year, a

U.S. bankruptcy judge ap-

proved the deal.

A spokesman for Mr. Bar-

rack said he had been cooper-

ating with the committee and

has provided documents it re-

quested.

“Mr. Barrack’s engagement

So far, the British govern-

ment has rejected demands

from the Scottish National

Party to hold another vote on

whether Scotland should quit

the U.K. In 2014, Scotland

voted to remain part of the

U.K. during a referendum.

In Northern Ireland, the sit-

uation is particularly sensitive.

A key objective for both the

U.K. and the EU is avoiding

checks on the border between

Northern Ireland, which is in

the U.K., and the Republic of

Ireland, which is in the EU.

Negotiators included a pro-

vision in the divorce deal to

ensure that Britain remains in

a customs union with the EU

until such a trade deal can be

signed to keep goods flowing

seamlessly across that border.

Mr. Johnson says that pro-

vision, known as the Irish

backstop, is unacceptable be-

cause the U.K. couldn’t unilat-

erally extricate itself from the

arrangement.

“It’s dead, it’s got to go,”

the prime minister said on

Monday.

with abruptly leaving the EU if

the strategy fails is unknown.

Since becoming Britain’s

leader last week, Mr. Johnson

has been true to his word.

“The withdrawal agreement

is dead, it has got to go, but

there is scope to do a new

deal,” Mr. Johnson said during

a trip to Scotland on Monday.

Earlier in the day, his

spokeswoman laid out the

prime minister’s decision to

refuse meetings unless EU

leaders change their negotiat-

ing stance. The “U.K. will be

leaving the EU on October 31st

come what may,” she said.

Mr. Johnson’s government

is preparing an ad campaign

to urge businesses to prepare

for the prospect of a sudden

end to over four decades of

seamless trading with the EU.

A specially created commit-

tee of senior ministers to en-

sure the government is ready

for a no-deal Brexit held its

first meeting on Monday. Offi-

cials said the government will

furnish new funds to ensure

the country is ready.

For Mr. Johnson the gamble

is a big one. The Confedera-

tion of British Business Mon-

day warned that neither the

U.K. nor the EU is prepared for

no deal. Nor is it clear that the

EU will offer improved terms:

the ruling Conservative Party

doesn’t have a majority in Par-

liament, so the EU is wary to

hand concessions to Mr. John-

son only to see Parliament

again reject a withdrawal deal.

EU leaders have repeatedly

ruled out reopening talks on

the separation agreement.

Mr. Johnson could also face

a parliamentary rebellion.

Britain’s parliament could vote

to bloc a no-deal exit, as it has

done in the past, or Conserva-

tive lawmakers could vote to

collapse their own govern-

ment. That raises the prospect

of a sudden election.

The prime minister is also

embroiled in dealing with an-

other union: the United King-

dom. Mr. Johnson is visiting

Wales, Scotland and Northern

Ireland, to reassure voters

that an abrupt Brexit won’t

damage the bonds that hold

them together.

Scottish voters overwhelm-

ingly rejected Britain’s depar-

ture from the EU during the

2016 referendum. The Scottish

National Party is using Brexit

as a pretext for holding a sec-

ond independence referendum.

Northern Ireland, mean-

while, could bear the brunt of

the economic disruption if the

U.K. quits the bloc without a

divorce deal. That could po-

tentially fuel a longer-term

shift toward reunification with

the Republic of Ireland, ana-

lysts say. Mr. Johnson said

Monday that the U.K. would

benefit from sticking together.

For Mr. Johnson, Scotland

represents an electoral prob-

lem. The ruling Conservative

Party has 13 seats there. How-

ever, if Mr. Johnson pushes

ahead with a no-deal depar-

ture from the EU, those seats

could quickly evaporate. The

leader of the Scottish Conser-

vatives Ruth Davidson on Sun-

day warned that she couldn’t

back his Brexit stance.

WORLD NEWS

LONDON—Prime Minister
Boris Johnson refuses to hold
face-to-face meetings with Eu-
ropean Union leaders unless
they agree to change key as-
pects to Britain’s divorce deal
with the bloc, something the
other 27 member states have
rejected, a stance that jolted
the British currency.
Mr. Johnson’s statement
was the opening salvo in what
is likely to be a tense few
months between the two sides
over the terms of Britain’s di-
vorce with the bloc, due to
take place on Oct. 31.
The prime minister’s posi-
tion—and the possibility it
could spark a chaotic split
with the EU along with a fresh
U.K. election—sent the pound
down 1.3% to its lowest level
against the euro since Septem-
ber 2017. His stance that no
deal was Britain’s default posi-
tion fed fears over the eco-
nomic hit the country faces if
it leaves the EU without a pact
to smooth the split.
Mr. Johnson was selected
by the ruling Conservative
Party as Britain’s new prime
minister last week on the ba-
sis that he could deliver
Brexit, a project that has al-
ready twice been delayed, and
blunt the insurgent British eu-
roskeptic Brexit Party, which
has capitalized on the Conser-
vative Party’s failure to deliver
a split with the EU.
At the heart of Mr. John-
son’s strategy is to talk up the
option of leaving the bloc with
no deal and prepare the coun-
try for such an abrupt break.
Mr. Johnson has said it is
the only way to ensure EU of-
ficials offer improved divorce
terms. Whether the British
leader would follow through

BYMAXCOLCHESTER

U.K. Leader Pushes Risky Brexit Gambit

Johnson ramps up

rhetoric on leaving EU

with no deal, sending

British pound reeling

Prime Minister Boris Johnson on Monday met with First Minister Nicola Sturgeon of Scotland, where he risks losing legislative support.

JANE BARLOW/PA WIRE/ASSOCIATED PRESS

Pollingsincethebeginningof

theyearshowsmorepeople

wantingano-dealBrexit.

IftheU.K.governmentcan't

passadealbythenext

deadline,itshould:

Source: Opinium poll of 2,002 participants,

most recent conducted June 19–21; margin of

error: +/- 3 pct. pts.

50

0

10

20

30

40

%

Feb. 2019 April June

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whattodo

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in investment and business de-

velopment throughout the Mid-

dle East for the purpose of bet-

ter aligned Middle East and

U.S. objectives are well known,

as are his more than four de-

cades of respected relation-

ships throughout the region,”

the spokesman said.

IP3, the Saudi Embassy, the

White House and Westing-

house didn’t respond to re-

quests for comment.

Backers dubbed the Saudi

nuclear plan a Marshall Plan

for the Middle East. They envi-

sioned it as a way to revive the

moribund U.S. civil nuclear in-

dustry, create closer U.S. ties to

Saudi Arabia and other Gulf

Arab states and keep out Rus-

sian and Chinese nuclear-en-

ergy competitors.

The plan’s proponents

pushed the Trump administra-

tion to transfer nuclear technol-

ogy to the Saudis without re-

quiring that Riyadh agree to

forgo enrichment or processing

of nuclear fuel, which could be

used to make nuclear weapons.

Such a requirement, aimed at

enabling civilian nuclear capac-

ity while attempting to preclude

military use, is known as a “gold

standard” of nonproliferation.

Congress must review any pro-

posed U.S. nuclear cooperation

agreement with another nation.

Mr. Cummings has been a

frequent critic of Mr. Trump

and his administration. In re-

cent days Mr. Trump has taken

to Twitter to attack Mr. Cum-

mings and his district in and

surrounding Baltimore.

WASHINGTON—Tom Bar-
rack, an equity investor and a
close ally of President Trump,
sought Saudi government
funding in a bid to buy U.S.
nuclear-reactor builder West-
inghouse, according to a
House report that discloses
new details of an effort to
transfer sensitive nuclear
technology to the kingdom.
The Wall Street Journal has
reported previously on the plan
to build and operate dozens of
nuclear plants in Saudi Arabia
and across the Middle East. Mr.
Barrack and a group of former
top military officers used ex-
tensive contacts within Mr.
Trump’s inner circle to advance
an initiative potentially worth
tens of billions of dollars, ac-
cording to documents obtained
by House investigators.
The new report by the
House Committee on Oversight
and Reform, based on 60,
newly obtained documents,
says that Mr. Barrack and the
group of ex-military officers,
whose company was known as
IP3, solicited Saudi funds even
as they lobbied for and ob-
tained Trump administration
support for their strategy.
The House report doesn’t
accuse the consortium of
breaking any laws. The report
says the nuclear plan’s backers
and top Trump administration
officials commingled private
business interests and U.S. na-
tional-security policy. Mr. Bar-
rack was seeking a top White

BYWARRENP.STROBEL

Trump Ally Sought Saudi Funds for Nuclear Deal

 Signs of hard line on Brexit

hit sterling.................................. B

FROM PAGE ONE

bank account numbers, as
well as some customers’
credit scores, payment histo-
ries and credit limits. It fol-
lows a breach in 2017 at
credit-reporting company
Equifax Inc., which exposed
the data of nearly 150 million
Americans and focused public
and congressional attention

Continued from Page One

Capital

One Suffers

Big Breach

Tom Barrack’s Westinghouse bid was examined in a House report.

PATRICK T. FALLON/BLOOMBERG NEWS

Bid to Block Arms

Sales to Riyadh Fails

WASHINGTON—A congres-

sional effort to block certain

arms sales to Saudi Arabia and

the United Arab Emirates fell

short on Monday after the Sen-

ate failed to override President

Trump’s veto of the measures.

The trio of arms resolu-

tions, which passed the Demo-

cratic-led House and GOP-con-

trolled Senate, was aimed at

stopping arms sales that the

Trump administration had ap-

proved under rarely used emer-

gency powers.

Bypassing the typical con-

gressional review process for

the sales further frustrated

lawmakers on Capitol Hill,

some of whom have for

months criticized the adminis-

tration’s continued strong sup-

port for the two countries.

At least five Republicans

joined every Democrat to back

overriding the president’s ve-

toes, coming up short of the

two-thirds majority necessary

to make the resolutions law.

Five Republicans voted with

Democrats on the first two

votes, while six supported

overriding the veto on the

third. The string of vetoes on

the three measures was just

the third time Mr. Trump has

used that authority against

legislation as president.

The killing of Jamal

Khashoggi, a U.S. resident and

columnist for the Washington

Post, at the hands of Saudi

agents in a consulate in Turkey

last year eroded support for

Saudi Arabia and the U.A.E. on

Capitol Hill. Civilian casualties

in the war in Yemen, where a

Saudi-led coalition is battling

Iran-backed Houthi rebels, had

already renewed scrutiny of

Washington’s relationship with

the two countries.

But the Trump administra-

tion has largely rebuffed criti-

cism from lawmakers and hu-

manitarian groups, standing by

Saudi Crown Prince Moham-

med bin Salman. The Central

Intelligence Agency concluded

last year that the prince likely

ordered Mr. Khashoggi’s death.

The administration and Re-

publicans who defend the arm

sales have maintained they are

necessary as Iran takes in-

creasingly aggressive actions in

the region. They have also cau-

tioned that the Gulf allies

could begin buying weapons

from rival powers if the U.S.

doesn’t provide them.

The resolutions blocking

the arms sales are just one of

many congressional efforts to

scale back American support

for Saudi Arabia. Lawmakers

are also attempting to block

any future arms sales to the

country, strip certain govern-

ment officials of U.S. visas and

sanction those responsible for

Mr. Khashoggi’s death.

—Andrew Duehren