Financial Times Europe - 31.07.2019

(Axel Boer) #1
4 ★ FINANCIAL TIMES Wednesday31 July 2019

INTERNATIONAL


N A J M E H B OZO R G M E H R —TEHRAN

Mohammad Ali Najafi, a former mayor
ofTehran,onceseenasapotentialpresi-
dential candidate, has become the first
ex-Iranian official to be sentenced to
death after being found guilty of mur-
deringhiswife.
In a case that has shocked Iran, the
country’s judiciaryyesterday convicted
Najafi, 67, for shootinghis second wife,
Mitra Ostad, in the bathroom of their
homeinMay.
His conviction is another blow to
reformist politicians in Iran, who
hadseentheformerministerasapoten-
tial standard-bearer in a presidential

election due in 2021. Reformists have
already been undermined by the unrav-
elling of a nuclear deal Iran signed with
world powers in 2015, which most of
themsupported.
Najafi, who initially alleged that his
wife was spying on him for the intelli-
gence services,confessed to killing her
but said he fired the pistol by accident
andhadonlymeanttointimidateher.
Long before serving as mayor of
Tehran,he was education minister and
vice-president for planning and budget
and became known as one of Iran’s most
talentedtechnocrats.
“The court has found him guilty of
murder,” a judiciary spokesman ann-
ouncedyesterday. “Capital punishment
will be enforced upon the request of the
familyofthevictim.”
Amnesty International says Iran is
second only to China in the number of

people it executes, carrying out the
death sentence on at least 253 in 2018.
Everyone subject to capital punishment
iskilledbyhanging.
Reformist politicians hope Najafi can
escape the death sentence if he success-

fully appeals against the verdict or ifhis
late wife’s family accepts blood money,
which is allowed under Iran’s penal
code.
“The Islamic republic has never
hangeditsofficialsandwillnotestablish
such a precedence,” said a reform-
minded analyst. “Even hardliners do

not want Mr Najafi to be killed. They
just did not want him to run for presi-
dent, which would not happen now. No
needtoexecutehim.”
Reformist politicians supported the
decision of President Hassan Rouhani, a
political moderate, to sign the nuclear
deal. But the Trump administration’s
move to abandon it last year has left the
accord on the brink of collapse and
resulted in punishing economic sanc-
tionsbeingreimposedonIran.
Eager to capitalise on the crisis, hard-
liners are hopeful they can win parlia-
mentaryelectionsinFebruary2020and
thenextpresidentialpollin2021.
The killing inspired a swirl of conspir-
acy theories about how one of the coun-
try’s most respected officials could have
beenimplicatedinsuchacase.
Iranian social media has been awash
with unsubstantiated suggestions that

Najafi’s second marriage was a honey
trapsetbyhisopponentstopreventhim
fromrunningforpresident.
Najafi, who has appeared in court in
prison clothing and occasionally in
handcuffs, alleges thathis wife had
threatened to disclose his secrets to the
mediaandgooutwithothermen.
His wife’s brother, who is acting as her
family’s spokesman, told Iranian media
he would not pardon Najafi because of
unfair allegations being levelled against
his sister on social media and accusa-
tionsthatthefamilyisbeinggreedyover
bloodmoney.
The brother has said there is a “1 per
centchance”ofthefamilypardoningMr
Najafiandacceptingbloodmoney.
He said any cash could be used toset
up charitable bodies to help female
breadwinners, as his sister was a single
parentbeforeshemarried.

DA N I E L S H A N E— HONG KONG

HongKong’shotpropertymarket—o ne
of the world’s most expensive for prime
officespace—i sstartingtobuckleunder
the strain of China’s economic slow-
down and global trade ructions ed byl
lower demand from mainland Chinese
companies.
After spending much of the past dec-
ade ramping up their presence, many
mainland entities are rethinking their
expansion plans in the city, leading to
weaker office rents and prices, property
agentssaid.
Data released last week from Colliers,
a commercial roperty agent,p show that
gross take-up, or new leases, to main-
land Chinese companies fell almost 40
per cent in the first half of 2019 com-
pared with the same period last year.
Average office rents in the city are likely
to fall in 2019 for the first time in six
years, by 1.3 per cent, and strata-sale
officepricesby5percent,Collierssaid.
The presence of mainland companies
in Central — Hong Kong’s main business
district — has fallen significantly since
they peaked at 50 per cent of all availa-
ble office space in 2017, according to fig-
ures from JLL, another commercial
property agent, released earlier this
month.
“Fewer Chinese companies are com-
ing to set up operations in Hong Kong,
and that is dampening demand,” said
Peter Churchouse, the managing direc-
tor ofPortwood Capital, an investment
company.
A seniorHong Kong government offi-
cial warnedat the weekend that the
mass demonstrations of the past two
months had taken their toll on the terri-
tory’s economy. Thefinancial hub was
hitonSundaybyathirdconsecutiveday
of protests as police fired tear gas at
demonstrators near Beijing’s main rep-
resentativeofficeinthecity.
“Many retail and catering operators
have said that their recent business
volume has dropped sharply,” Paul
Chan, Hong Kong’s finance secretary,
wrote in a blog post on Sunday, adding
that the protests had caused damage

to Hong Kong’s international image.
TheUS-China trade war, in which the
countries have raised tariffs on billions
of dollars of each other’s goods, has also
had a significant effect. Hong Kong, a
hub for east-west trade, has been buf-
feted by the tension with economic
growth slowing markedly from 1.2 per
cent year on year in the fourth quarter
last year to 0.6 per cent in the first quar-
ter. “Increasing trade tensions and a
slowing Chinese economy are leading
many companies to put Hong Kong
expansion plans on hold,” saidJohn Siu,
the managing director ofCushman &
Wakefield Hong Kong, commerciala
propertybroker.
Chinese government policy is also
affecting demand from mainland com-
panies,analystssay,pointingtoBeijing’s
new measures to controlcapital out-
flows. “The dramatic slowdown in Hong
Kong office demand from Chinese firms
is due to a number of simultaneous con-

ditions, almost forming a perfect
storm,” saidBrock Silvers, head ofKaiy-
uan Capital, pointing to China’s sluggish
economy where growth in the second
quarter fell to 6.2 per cent year on year,
itslowestinalmostthreedecades.
The chill is also being felt in the city’s
retail property sector. Leases in the
Causeway Bay shopping district have
long rivalled those in New York’sFifth
Avenue sthepriciestintheworld.a
Data from Savills, a property com-
pany, also released this month, show
that retail rents in Causeway Bay and
Central fell 1.1 per cent and 3.8 per cent
year on year espectivelyr n the secondi
quarter. Retail sales in Hong Kong have
alsoslipped his year as mainland shop-t
pers curb spending amid sluggish eco-
nomicconditions.
A political crisis in Hong Kong, its
worst in decades, could also be affecting
sentiment in the city’s property market,
analysts said. Protesters haveheld a

series of mass demonstrations since
June, initially against a bill that would
allow criminal suspects to be extradited
to mainland China,leading to clashes
betweendemonstratorsandpolice.
In June, Goldin Financial, a Hong
Kong developer, withdrew a HK$11.1bn
($1.42bn) bid for a large commercial
plot in theKowloon district, citing
“social contradiction and economic
instability”. Another large tract of land
in thearea sold at asteep discount ni
July,LandsDepartmentrecordsshow.
Analysts say it is too early to tellwhat
the unrestcould meanfor the city’s rep-
utation as a regional centre for business
and finance. Nicholas Spiro, partner at
Lauressa Advisory, a property consul-
tancy, said Hong Kong was stillAsia’s
premierfinancialhub.
“Thingswouldhavetogetreallyoutof
hand politically for this to change,” he
said.
Editorial Comment age 8p

M A R K VA N D E V E L D E— SAN FRANCISCO
D E M E T R I S E VA STO P U LO— WASHINGTON

A close friend of Donald Trump collab-
orated with the Wall Street groups
Apollo nda Blackstone n a plan to useo
Middle Eastern money to buy the
nuclear reactor makerWestinghouse,
according to an investigation by con-
gressional Democrats.

The report by the US House of Repre-
sentatives oversight committee said
Tom Barrack,Colony Capital’s chief
executive, planned to use money from
SaudiArabiaandtheUnitedArabEmir-
ates to buy the company, while securing
“enough US ownership to bypass scru-
tiny” from an official body charged with
reviewingforeigninvestments.
The initiative is alleged to have fol-
lowedcontactsbetweenMrBarrackand
IP3 International, a consortium of
nuclear companies said to have sought a
relaxation of non-proliferation rules to
allow the export of nuclear technology
to Saudi Arabia, where Crown Prince
Mohammed bin Salman has vowed to
match any Iranian move to acquire a
nuclearbomb.
It was one of several apparent
attempts by Mr Barrack, a real estate
investor who served as chairman of Mr
Trump’s inaugural committee, to influ-
ence US policy in the Middle East in
ways that could have advanced hisbusi-
ness interests, including by seeking his
appointment to senior Trump adminis-
trationroles.
InatextmessagetotheUAEbusiness-
man Rashid al-Malik made public by
the House committee, Mr Barrack
appeared to ask for help fromMoham-
medbinZayedal-Nahyan,crownprince
of Abu Dhabi, in pressing his case with
MrTrump’sson-in-law,JaredKushner.
“MBZ should let Jared knows [sic]
when he speaks to him that he would be
happy to work with me as special
envoy,” the Colony chief wrote to Mr
Malik, who reportedly works for UAE
intelligence, according to the congres-
sionalreport.
In the end, Mr Barrack was not
appointed to a position in the Trump
administration. His spokesperson said
he had co-operated with the House
investigation, including by providing
documents.
He added that Mr Barrack had culti-
vated “respected relationships”
throughout the Middle East, and that
his “consistent attempts to bridge the
divide of tolerance and understanding
between these two great cultures is
etchedintheannalsoftime”.
The House committee drew on inter-
nal Colony emails to buttress its finding
that IP3 and Mr Barrack had partici-
pated in the failed Apollo-Blackstone
bid for Westinghouse. Lawmakers also
cited messages that Mr Barrack sent to
Blackstone co-founder Stephen
Schwarzman andhis Apollo counter-
partJoshua Harris, without detailing
anyreplies.
In a statement, Blackstone disputed
the House committee’s conclusion, stat-
ing it did not “partner or otherwise col-
laborate” with Colony on the bid. It
added: “Colony reached out to express
interestinpartneringonthedealandwe
declinedtheiroffertoparticipate.”
Apollo said it had partnered only with
Blackstone, and that it, too, had
declinedColony’srequesttotakepart.

JA M I E S M Y T H— SYDNEY

Australia’s government has ordered an
investigation into whether immigra-
tion authorities provided preferential
treatment to the country’s largest
casino operator by fast-tracking visa
applications from wealthy Chinese
gamblers.

It comes after reportsalleged that
Crown Resorts— an A$8bn ($5.5bn)
gaming companyfounded yb James
Packer, an Australian billionaire —
hired Asian travel operators with ties to
drug traffickers to attract wealthy Chi-
nesegamblerstoitscasinos.
An Asian crime syndicate allegedly
laundered money through the group’s
Melbourne casino, according to reports
by The Age, a Melbourne daily newspa-
per, andNine Entertainment’s televi-
sionnetwork,basedonleakedcompany
documents.
“It’s my view that there are sufficient
concerns raised at least to warrant fur-
ther investigations,” Christian Porter,
Australia’sattorney-general,toldparlia-
ment when he announced that the Aus-
tralian Commission for Law Enforce-

ment Integrity wouldlook into the
matter.
Thereferraltothecommission,which
investigates allegations of corruption in
law enforcement agencies,comes after
the department of home affairs, which
administers immigration, confirmed
that it had an agreement with Crown to

“facilitate quick visa processing of
short-stayvisas”.
The arrangementbegan in 2003 and
ended in 2016, according to he depart-t
ment, which added that there was no
reduced vetting in certain locations or
for certain applicants.The department
said it was one of a number of agree-
ments in place with large international
organisations but did not specify why
thedealwasterminatedin2016.
Crownrejected allegations of illegal-
ity made in parliament and in media

reports and said it would assist with the
commission’sinvestigation.“Webelieve
theseallegationsareill-informedandan
attempttosmearthecompany,”itsaid.
Australia last year assed legislationp
banning oreign interference in politicsf
with concerns about growing influence
bytheChineseCommunistparty.
The reports includeclaims that Ming
Chai, a cousin of Xi Jinping, the Chinese
president,was on board a private jet of
“high roller” gamblers that was
searched by Australian policein 2016.
MrChaihasnotrespondedtotheallega-
tions and the Financial Times could not
immediatelycontacthimforcomment.
Several opposition members of par-
liament called for aninvestigation into
reports that two Australian government
ministers obbiedofficialsfromAustral-l
ian Border Force o make it easier fort
Chinese gamblers to enteron private
jets.RexPatrick,aCentreAlliancesena-
tor, said an inquiry by the commission
was too narrow in scope andcould not
examineministerialresponsibility.
Crown shares closed down almost 2
per cent at A$12.03 yesterday, on top of
a3percentdeclineonMonday.

Islamic republic


Former Tehran mayor sentenced to death


Potential presidential


candidate ordered to be
hanged for wife’s murder

‘Even hardliners do not


want Mr Najafi to be killed.
They just did not want

him to run for president’


Congressional inquiry


Trump friend


is linked to


nuclear deal


plan involving


Mideast cash


Property. lowdownS


Hong Kong sky-high rents start to drop


Demand for prime office space


weakens as Chinese companies


rethink plans in the territory


Causeway Bay:
leases in the
shopping
district are
falling in value.
Recent protests
have not helped
the city’s image
Chan Long Hei/SOPA
Images/LightRocket/
Getty Images

‘Fewer
Chinese

companies
are coming

... and
that is


dampening
demand ’

Australia


Fast visas for Chinese gamblers investigated


TO M W I L S O N
EAST AFRICA CORRESPONDENT

Police inTanzania ave arrested a jour-h
nalist in what appears the latest in a
series of attacks on freedoms in a coun-
try that had been seen as one of east
Africa’s strongest democracies.

Erick Kabendera, a freelance, was
detained on Monday at his home on the
outskirts of Dar es Salaam, the capital,
andisbeingheldforquestioning.
The arrest follows the disappearance
in 2017 of Azory Gwanda, a fellow jour-
nalist, and the detention, in often
opaque circumstances, of political and
business leaders since President John
Magufulicametopowerin2015.
Known as “the bulldozer”, Mr Magu-
fuli was elected on a promise to combat
corruption and mismanagement but
has increasingly sought to curb opposi-
tion politicians and the press, shutting
somenewsoutletsandjailingactivists.
he Committee to Protect JournalistsT
condemned Mr Kabendera’s arrest.
“The manner in which this journalist
wastaken,bymenclaimingtobepolice,
is very ominous and further evidence

that the press is not safe in President
John Magufuli's Tanzania,” said Muth-
oki Mumo, the group’s sub-Saharan
Africarepresentative.
assan Abas, government spokes-H
person,saidMrKabenderawasarrested
as part of a citizenship investigation and
notasaresultofhisjournalism.

Mr Kabendera’s colleagues rejected
the assertion that the journalist, a Tan-
zanian citizen, had done anything
wrong. “Erick’s detention over frivolous
charges on nationality are the usual
methodsusedbythestateonjournalists
and politicians whose work the govern-
ment becomes uncomfortable with,”
saidOrtonKiishweko,afellowreporter.
Under Mr Magufuli, Tanzania’s politi-
cal and security environment has
become increasingly unpredictable. In
2016, the government banned live tele-

vised parliamentary debates and then
outlawed political rallies when the main
opposition party called for a protest. At
leastfournewspapersandtworadiosta-
tions have been shut down. In
2017,Tundu Lissuan opposition MP,
was shot in a suspected assassination
attempt.
JeffreySmith,thefoundingdirectorof
Vanguard Africa, a non-profit group
that says it supports ethical leadership
in Africa, said the arrest should set off
alarm bells.“Over the past several
years, basic freedoms and human rights
have been violated with alarming fre-
quencyandimpunity,”hesaid.
The president has also picked fights
with big investors, not least mining
companies.Commercial disputes in
everything from gold to cashew nuts
have seen economic growth slow to
about 4 per cent, according to the IMF,
ananalysisdisputedbyTanzania.
There were “serious weaknesses” in
officialTanzanianstatisticsthatpointed
to growth of 7 per cent, the IMF said in
April in an unreleased report seen by
the Financial Times, the publication of
whichwasblockedbythegovernment.

East Africa


Tanzania police detain freelance journalist


Crown Resorts: the
gaming company
owned by James
Packer has denied
illegality over visas
for high rollers

‘The manner in which


this journalist was taken
is evidence that the press

is not safe in Tanzania’


1.3%
The amount by
which average
office rents in the
city are likely to
fall in 2019 for
the first time in
six years

$1.42bn
The value of a
withdrawn bid
for a large
commercial plot
in theKowloon
district

1.1%
The year-on-year
fall in retail rents
in Causeway Bay
in the second
quarter

JULY 31 2019 Section:World Time: 30/7/2019- 17:59 User:david.owen Page Name:WORLD3 USA, Part,Page,Edition:USA, 4, 1


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