Business

Western Banks Help Fund Blacklisted Oligarch’s Charity

Published

1 year ago

August 27, 2023

Western Banks Help Fund Blacklisted Oligarch’s Charity

A powerful Russian businessman who has been under financial sanctions for nearly a decade has nevertheless used American and European banks to raise money for orphanages in a region that is at the heart of the Kremlin’s program of deporting Ukrainian children to Russia, records show.

The businessman, Konstantin Malofeyev, is among Russia’s most prominent conservative voices and a champion of the resettlement efforts, which prosecutors at The Hague have labeled a war crime. He calls for a return of the Russian Empire, and has repeatedly denied the existence of a Ukrainian identity.

Mr. Malofeyev has been cut off from most Western financial systems since 2014, when the Treasury Department and other international regulators accused him of financing Russian proxy forces inside Ukraine. He has denied that.

Mr. Malofeyev, though, has continued to use his charity, the St. Basil the Great Foundation, to raise money for orphanages in the Russian-occupied Donbas and Zaporizhzhia regions. In an interview, Mr. Malofeyev said he did not know whether those orphanages hosted Ukrainian children who had been forcibly relocated, but said the resettlement effort had been unfairly demonized.

“Small children, deported by Russians from their families?” he said, comparing it to the fairy tale “Cinderella.” “All of this is fake.”

The New York Times has seen records confirming a recent transfer of American dollars to the charity’s account in the Moscow branch of OTP Bank, a Hungarian bank.

The exact path those dollars took is unclear. OTP said it would not discuss its customers, citing confidentiality policies, but said it was “an ethical and law-abiding institution following the principle of zero-tolerance in respect of any kind of crimes.”

The charity’s website says that international donations are routed through Bank of America and Deutsche Bank. But spokesmen for both companies said that neither currently do business with OTP’s branch in Moscow.

The St. Basil the Great Foundation itself has not been blacklisted by American or European authorities. But under the Treasury Department’s “50 percent rule,” sanctions against Mr. Malofeyev would extend automatically to any entity in which he is a majority owner. The European Union has similar rules for organizations in which blacklisted people have “decisive influence.”

Mr. Malofeyev founded the foundation in 2007, and is the chairman of its board. He is listed as its chief executive officer in the official Russian legal registry.

It is not clear whether Treasury Department rules would cover Mr. Malofeyev’s foundation. His ability to move money using Western banks, is an example of how sanctions — the West’s go-to punishment against Russia — rely largely on enforcement by banks, and can be a matter of interpretation.

Spokesmen for Bank of America and Deutsche Bank said the banks followed all sanctions rules. The Treasury Department declined to comment. European regulators did not comment, but said it was up to national governments to enforce the sanctions.

Russia illegally annexed parts of Ukraine last year, and Mr. Malofeyev repeated the Kremlin’s claim that all children from that region “belong” to Russia.

Since Russia’s full-scale invasion of Ukraine, children in these areas have themselves become a battleground. Some children have described a wrenching process of coercion, deception and force as they were moved to Russia, placed in state institutions or foster homes and subjected to re-education. Following these reports, the International Criminal Court issued an arrest warrant in March for President Vladimir V. Putin and Maria Lvova-Belova, the official leading the relocation effort.

Mr. Putin publicly thanked Mr. Malofeyev in February for helping “the children of the Donbas.” And Ms. Lvova-Belova mentioned him at the same event when discussing businessmen who have supported her efforts.

Mr. Malofeyev’s foundation has, since 2014, helped transport children from Russian-occupied areas to Moscow hospitals. Ukraine blacklisted the charity in 2015 and has renewed that designation five times, most recently in 2021.

In January, the foundation and Ms. Lvova-Belova announced a project called “Happy Childhood” to raise money for “children and families with children” in “new regions of Russia,” according to the official news release. In less than a month, it raised about $265,000. In February, she and Mr. Malofeyev toured the occupied territories together, meeting with self-appointed heads of regions.

Mr. Malofeyev was livid at the news coverage of the warrants.

“This story is absolutely immoral,” Mr. Malofeyev told The Times earlier this year. “If they were accused of, for example, that the children became ill, that the children were suffering, then it would be possible to talk about it. But the children are fine. The children have found their families.”

According to an official news release, about 450 children and young adults are in the care of orphanages financed by Mr. Malofeyev’s foundation. He said the charity also supported Russian families in the Donbas region that have recently adopted children.

“There are families with multiple kids, that have adopted kids who are not theirs,” he told The Times.

“The St. Basil the Great Foundation is a back door for Malofeyev and Russia to continue a foreign influence operation,” said Jelle Postma, a former Dutch intelligence officer who now leads Justice for Prosperity, a research institution focused on foreign interference.

Mr. Postma wired money in dollars to the foundation to test the donation system and shared the documentation with The Times.

Last year, the Justice Department indicted Mr. Malofeyev on charges of attempting to evade sanctions. It was the first criminal case brought by the Biden administration’s multiagency task force set up to target illicit Russian money.

Earlier this year, the Justice Department announced that it would use $5.3 million that it had seized from Mr. Malofeyev to help rebuild Ukraine.

“While this represents the United States’ first transfer of forfeited Russian funds for the rebuilding of Ukraine, it will not be the last,” Attorney General Merrick B. Garland said in a statement.

Business

Cleveland-Cliffs Signals a Possible New Bid for U.S. Steel

Published

4 hours ago

January 14, 2025

Press Room

Cleveland-Cliffs Signals a Possible New Bid for U.S. Steel

A possible new takeover bid for U.S. Steel emerged on Monday, teeing up more turmoil over the once-dominant company’s future after President Biden’s decision to block its acquisition by a Japanese company.

Lourenco Goncalves, the chief executive of an American competitor, Cleveland-Cliffs, said his company had “an All-American solution to save the United States Steel Corporation,” stressing that acquiring U.S. Steel was a matter of “when,” not “if.” But he offered no details of the bidding plans.

The renewed expression of interest from Cleveland-Cliffs comes less than two weeks after Mr. Biden blocked a $14 billion takeover of U.S. Steel by Nippon Steel, arguing that the sale posed a threat to national security. Cleveland-Cliffs tried to buy U.S. Steel in 2023, an offer that was rejected in favor of Nippon’s higher bid.

CNBC reported on Monday morning that Cleveland-Cliffs would seek to take over U.S. Steel and sell off its subsidiary, Big River Steel, to Nucor, another American producer. But Mr. Goncalves, at a news conference later in the day, would not confirm any partnership with Nucor on a bid.

U.S. Steel and Nucor did not immediately respond to requests for comment.

Investors seemed pleased by the potential bid, sending shares of U.S. Steel up as much as 10 percent on Monday when CNBC reported the potential offer. Shares of U.S. Steel finished about 6 percent higher on Monday but are down 23 percent over the past year, including Monday’s spike.

But the fate of Nippon’s proposed takeover remains in limbo. U.S. Steel and Nippon sued the United States government last week in the hopes of reviving their merger, accusing Mr. Biden and other senior administration officials of corrupting the review process for political gain and blocking the deal under false pretenses.

The companies filed a separate lawsuit against Cleveland-Cliffs, Mr. Goncalves and David McCall, international president of the United Steelworkers union. They argue that Cleveland-Cliffs and the head of the union illegally colluded to undermine the Nippon deal, assertions that both defendants called “baseless.”

On Saturday, the companies said the Biden administration had delayed enforcement of its executive order blocking Nippon’s takeover until June, to give the courts time to review the lawsuit.

“The problem is, we can’t make anything happen until the current management and the current board of U.S. Steel make the decision to abandon the merger agreement with Nippon Steel,” Mr. Goncalves said at a news conference in Butler, Pa., on Monday.

Given this rancor, it is unclear how receptive U.S. Steel would be to a new bid by Cleveland-Cliffs. If U.S. Steel does not engage, one option would be for Cleveland-Cliffs to take an offer to shareholders.

U.S. Steel was once the world’s largest steel producer, but the company has fallen in global rankings in recent years. Concerns about its long-term future are rooted in a failure to quickly adopt alternatives to traditional mills that are more energy-efficient and cost-effective. Nippon, U.S. Steel has argued, is the only buyer that can make substantial investments in multiple steel mills and protect jobs.

The United Steelworkers, which represents 11,000 U.S. Steel employees, has voiced strong opposition to the proposed merger with Nippon. The powerful union has said the Japanese company engaged in illegal trade practices and dealt with the union in bad faith. Previously, the union expressed its preference for a merger with Cleveland-Cliffs, which is unionized.

A new bid by Cleveland-Cliffs, if it materializes, risks antitrust scrutiny from federal antitrust regulators, though regulators in the Trump administration are widely expected to take a less aggressive approach to merger enforcement than their Biden administration predecessors.

Business

Supreme Court denies oil industry plea to block climate lawsuits filed by California, other blue states

Published

5 hours ago

January 14, 2025

Press Room

Supreme Court denies oil industry plea to block climate lawsuits filed by California, other blue states

WASHINGTON — The Supreme Court dealt a major setback to the oil industry Monday, refusing to block lawsuits from California and other blue states that seek billions of dollars in damages for the effects of climate change.

Without a comment or dissent, the justices turned down closely watched appeals from Sunoco, Shell and other energy producers.

In Sunoco vs. Honolulu, the oil industry urged the justices to intervene in these state cases and rule that because climate change is a global phenomenon, it is a matter for federal law only, not one suited to state-by-state claims.

“The stakes could not be higher,” they told the court.

But none of the justices said they wanted to hear their claim, at least not now.

The decision clears the way for more than two dozen suits filed by states and municipalities to move forward and try to prove their claim that the major oil producers knew of the potential damage of burning fossil fuels but chose to conceal it.

“Big Oil companies keep fighting a losing battle to avoid standing trial for their climate lies,” said Richard Wiles, president of the Center for Climate Integrity. “With this latest denial, the fossil fuel industry’s worst nightmare — having to face the overwhelming evidence of their decades of calculated climate deception — is closer than ever to becoming a reality.”

Two years ago, California Gov. Gavin Newsom and Atty. Gen. Rob Bonta filed a lawsuit in San Francisco County Superior Court against five of the largest oil and gas companies — Exxon Mobil, Shell, Chevron, ConocoPhillips and BP — and the American Petroleum Institute for what they described as a “decades-long campaign of deception” that created climate-related harms in California.

“For more than 50 years, Big Oil has been lying to us — covering up the fact that they’ve long known how dangerous the fossil fuels they produce are for our planet,” Newsom said in announcing the suit.

In recent days, California officials have blamed climate change for the devastating weather conditions that contributed to the deadly wildfires that destroyed thousands of homes and other structures, leading to what many experts expect to become the costliest natural disaster in U.S. history.

California’s suit followed the pattern set by similar claims from the cities of Baltimore, New York, Chicago and San Francisco as well as blue states including Massachusetts, Connecticut, Rhode Island, New Jersey and Minnesota.

These suits argue that the oil producers used deceptive marketing to hide the danger of burning fossil fuels. Under state law, companies can be held liable for failing to warn consumers of a known danger.

In June 2024, the court asked the Justice Department to weigh in on the issue. In December, lawyers for the Biden administration urged the court to stand aside for now because the suits are at an early stage.

Justice Samuel A. Alito Jr. said he took no part in the decision to deny the appeals, presumably because he owns stock in companies affected by the dispute.

The climate change lawsuits were patterned after the successful mass lawsuits filed by states and others against the tobacco industry over cigarettes and the pharmaceutical industry over opioids.

Cigarettes and opioids were sold legally, but the suits alleged that industry officials conspired to deceive the public and hide the true dangers of their highly profitable products.

Under state law, plaintiffs can seek damages for broad and open-ended claims such as a failure to warn of a danger, false advertising or creating a public nuisance. All three claims are cited in California’s lawsuit. Federal law, by contrast, is usually limited to damage claims that are authorized by Congress.

Had the Supreme Court agreed to hear the oil industry’s appeal in the Hawaii case, it “would have frozen the cases for a year or more and could have resulted in a death blow for all of them,” said Patrick Parenteau, an environmental law expert at the Vermont Law School.

Los Angeles lawyer Theodore J. Boutrous Jr., who represents Chevron, said the company “will continue to defend against meritless state law climate litigation, which clashes with basic constitutional principles, undermines sound energy policy.”

Meanwhile, Alabama and 20 red states urged the court to throw out these blue-state lawsuits. They said liberal states and their judges should not have the power to set the nation’s policy on the energy industry. The court has not ruled on that claim yet.

The case dismissed Monday began five years ago when the city and county of Honolulu sued Sunoco and 14 other major oil and gas producers, alleging a failure to warn and creating a nuisance.

The Hawaii Supreme Court last year rejected the industry’s motion and refused to dismiss the suit.

“Simply put, the plaintiffs say the issue is whether defendants misled the public about fossil fuels’ dangers and environmental impact. We agree …. This suit does not seek to regulate emissions and does not seek damages for interstate emissions,” the state court said in a unanimous opinion. “Rather, plaintiffs’ complaint clearly seeks to challenge the promotion and sale of fossil-fuel products without warning and abetted by a sophisticated disinformation campaign.”

Business

How the NFL Moved the Vikings-Rams Playoff Game Away From the L.A. Fires

Published

12 hours ago

January 13, 2025

Press Room

How the NFL Moved the Vikings-Rams Playoff Game Away From the L.A. Fires

Matthew Giachelli got the call he anticipated on Thursday morning: The N.F.L. was moving the Rams’ playoff game to Arizona because of the wildfires raging in Los Angeles, and the league needed 200 gallons of paint pronto.

The game on Monday between the Rams and the Minnesota Vikings would now be held at State Farm Stadium outside Phoenix, and it had to look and feel as if it were being played in the Rams’ usual home, SoFi Stadium. That included painting the field with the team’s and league’s logos and colors. The hometown Cardinals, though, did not have some of the needed hues on hand, including the Rams’ blue and yellow.

Giachelli’s company, World Class Athletic Surfaces in tiny Leland, Miss., provides paint to most N.F.L. and top college teams. Within hours, he and his co-workers had loaded five-gallon buckets of nine custom paint colors, as well as stencils for the N.F.L. playoff logos, onto a truck that left Thursday afternoon on a 1,500-mile journey to Arizona.

“I definitely regret what’s going on in California, but I’m glad we could meet their needs,” said Giachelli, the vice president of production and distribution.

Getting the right paint was just one of hundreds of details that the league, the Rams, the Vikings, the host Arizona Cardinals and ASM Global, which operates State Farm Stadium, have juggled since the N.F.L. decided to move the wild-card round game.

The N.F.L. has canceled preseason games and postponed and moved regular-season games over the years because of hurricanes, snowstorms and other calamities. But it had not moved a winner-take-all playoff showdown since 1936, when the site of its championship game was changed from Boston to New York to drum up ticket sales.

A battalion of people — from the front-office workers to the training staffs to the thousands of game-day workers — have been mobilized on short notice. Each game, particularly in the playoffs, generates tens of millions of dollars for television networks, advertisers and stadium operators, and with the season coming down to its last few weeks, there was little margin for error.

“If it can be played, they play it, and in this case, it can be played in Glendale,” said Joe Buck, who will call the game for ESPN on Monday. “We’re in the playoffs now, and you’ve got all this pressure to get this first round finished before Kansas City and Detroit,” which had first-round byes, “get back in.”

A big reason the N.F.L. is the world’s most valuable league is scarcity. There are just 272 regular-season games and 13 playoff games, so each one is of critical importance to the 32 teams. (By contrast, there are about 400 Major League Baseball games every month during the season.) They are also critical to the owners of those teams and the league, as well as broadcast networks, sponsors and other companies that spend billions of dollars a year to attach their businesses and brands to the N.F.L.

It has not escaped notice that one of those businesses, State Farm, will have its name attached to Monday night’s broadcast less than a year after it announced that it would not renew 30,000 homeowner policies and 42,000 policies for commercial apartments in California. (The N.F.L. has donated $5 million to Los Angeles relief efforts.)

With so much riding on each contest, the N.F.L. does everything it can to play every game every year. When the league creates its season schedule each spring, it prepares contingency plans including an alternate site for each game. In 2022, when a massive snowstorm hit western New York, the Buffalo Bills played a home game at Ford Field in Detroit.

During the pandemic, outbreaks in locker rooms forced the league to postpone several games, though none were canceled. When pandemic conditions in Santa Clara County, Calif., deteriorated, the San Francisco 49ers moved to Arizona for a month, playing three home games in State Farm Stadium. Arizona was also a backstop in 2003 when the Chargers moved their home game against the Miami Dolphins because of fires in San Diego.

This time, the fires spread so quickly, the league decided to move the game five days before kickoff. Kevin Demoff, the president of the Rams, said the team had been in constant contact with officials in Los Angeles, who initially thought the game could be held at SoFi Stadium in Inglewood, which was unaffected by the fires.

But that changed midweek, when fires broke out close to the team’s training facility in Woodland Hills, forcing some players and staff to evacuate their homes and for one practice to be cut short. Demoff said he did not want the players and staff to be distracted, nor did he want city and county resources to be diverted for the game when they could be used to help others in need.

Moving the game is “just a recognition that there’s some things bigger than football and we owe this to our community to make sure that this game can be played safely and not be a distraction,” Demoff said Friday.

ESPN was on hold as well. Four of its production trucks were en route to Los Angeles from Pittsburgh when the league told the network on Wednesday night that the game could be moved to Glendale. The crews spent the night in Kingman, Ariz. On Thursday, the plan was to set up in both stadiums in case the league waited until Saturday to decide where to play. So the trucks continued on to Los Angeles while another set of trucks left for Glendale. When the N.F.L. said Thursday that the game had been moved, the first set of trucks, which had reached Ontario, Calif., turned around and arrived in Glendale with time to spare.

The Cardinals also helped out the Rams in ways beyond just lending their stadium. The team’s owner, Michael Bidwill, sent two team planes to Los Angeles to help the Rams get their entourage and equipment to Arizona.