At the 41st session of the held this week at the UN in Geneva, the judicial miscarriage of the Kokorev case by the Spanish authorities was publicly raised by an NGO, writes Human Rights Without Frontiers Director Willy Fautré.
In September 2015, three members of the Kokorev family were arrested in Central America and extradited to Spain on the basis of an international arrest warrant. The order was related to a vaguely worded suspicion of money laundering allegedly committed in Western Africa more than ten years earlier.
Vladimir Kokorev, his wife, both in their sixties and in bad health, as well as their 33-year old son agreed to their extradition to Spain, where they expected their case to be dismissed, or, at least, that they would be released on bail. Instead, they were first imprisoned in Madrid and then transferred to a detention centre in Las Palmas where they spent over two years in pre-trial detention.
Despite their right to the presumption of innocence, they were subjected to a harsh and controversial system in Spain requiring special surveillance of dangerous detainees and named “Ficheros de Internos de Especial Seguimiento” (FIES). To make matters worse, the Kokorevs were registered in the FIES-5 upper category. This category is for high-risk inmates classified in accordance with their specific criminological profile such as sex offenders, Islamic terrorists, war criminals, etc. The Kokorevs did not match such characteristics; in fact, none of them had a criminal record and none of them had never used or incited violence.
Over the last fifteen years, the European Parliament and the Council of Europe, in particular the Committee for the Prevention of Torture (CPT), have expressed serious concerns and issued several warnings about the FIES system.
Earlier this year, the Brussels-based NGO Human Rights Without Frontiers interviewed the Kokorevs in Las Palmas about their detention conditions. According to the family, they were treated worse than convicted criminals.
After their arrest, the proceedings remained secret for eighteen months. During this time, their counsel was denied access to the investigation files and was not given basic information on the reasons for their arrest, including a description of the offence and of the evidence against them.
They were treated as a single entity, the “Kokorev family”, no distinction being made between the three of them, thus suggesting the presumption of guilt by association.
Their defence counsel was unsuccessful in obtaining their release on bail. Their personal circumstances were not taken into consideration by the authorities: Vladimir Kokorev’s health seriously deteriorated, requiring him to undergo heart surgery, and his son was an expectant father who missed the birth of his child while in pre-trial detention.
Even after substantial time behind bars and despite the Spanish authorities’ knowledge that a trial would not be possible for many years (certainly not within the maximum term for pretrial detention under Spanish law), the family’s incarceration continued.
Vladimir Kokorev was not allowed to be housed with his son. When he inquired about the reason why, he was told it was because they were under active investigation. However, many other inmates also under active investigation were housed together.
Kokorev’s wife reported that she felt disoriented from being moved to a different cell every five to nine weeks, a security measure prescribed under the FIES-5 status to which in her module only she was being subjected.
On 1 August 2017, after more than 13 years of investigation by the Spanish authorities, Judge Ana Isabel de Vega Serrano tried to extend the pre-trial detention of the Kokorevs for two further years, claiming that she still had to “determine the facts and identify the persons responsible”.
In the meantime, a number of members of the European Parliament held a round table on the Kokorev issue in Brussels and publicly denounced serious violations of human rights by the Spanish judiciary in the case of Vladimir Kokorev and his family. This event facilitated the work of their lawyer in Las Palmas who, again, requested their release. Within a few months, the three were freed, one at a time, but their freedom of movement was limited to the island and remains so.
It is unlikely that a trial will be held within the next five years, almost 10 years after the arrest of the family and more than 20 years after the start of the investigation. In the meantime, the Courts in Las Palmas have declined to examine allegations supported by forensic reports of mishandling and fabrication of evidence by the police until a trial eventually takes place.
Has the shine worn off activist investment?
A few recent cases suggest that the tide may finally be turning on activist investment, which until recently seemed as if it was becoming an entrenched part of the business world. Although the value of activist investor-held assets may have been climbing in recent years (in the UK, this figure grew 43% between 2017 and 2019 to reach $5.8 billion), the number of campaigns fell by 30% in the year leading up to September 2020. Of course, that drop-off can partly be explained by the fallout from the ongoing coronavirus pandemic, but the fact that more and more plays appear to be falling on deaf ears could signal a bleaker long-term outlook for activist agitators going forwards.
The latest case in point comes from England, where wealth management fund St James’s Place (SJP) were the subject of an attempted activist intervention on the part of PrimeStone Capital last month. After purchasing a 1.2% stake in the company, the fund sent an open letter to the SJP board of directors challenging their recent track record and calling for targeted improvements. However, the lack of incision or originality in the PrimeStone manifesto meant that it was brushed off with relative ease by SJP, with little impact being felt on its share price. The underwhelming nature and outcome of the campaign is indicative of a growing trend in recent years – and one that could be set to become more pronounced in a post-Covid-19 society.
PrimeStone unable to inspire
The PrimeStone play took the traditional form favoured by activist investors; after acquiring a minority stake in SJP, the fund tried to flex its muscles by highlighting the perceived shortcomings of the current board in an 11-page missive. Among other issues, the letter identified the company’s bloated corporate structure (over 120 head of department on the payroll), flagging Asian interests and tumbling share price (stocks have fallen 7% since 2016). They also identified a “high-cost culture” in SJP’s backroom and made unfavorable comparisons with other prosperous platform businesses like AJ Bell and Integrafin.
While some of the criticisms had elements of validity, none of them were especially novel—and they didn’t paint a complete picture. In fact, several third parties have come to the defence of SJP’s board, pointing out that equating the company’s downturn with the rise of interests such as AJ Bell is unfair and overly simplistic, and that when set against more reasonable touchstones such as Brewin Dolphin or Rathbones, SJP holds its own remarkably well.
PrimeStone’s admonishments over SJP’s high spending may hold some water, but they fail to recognize that much of that outlay was unavoidable, since the firm was forced to comply with regulatory changes and succumb to revenue headwinds beyond its control. Its impressive performance against its competitors confirms that the company has been dealing with sector-wide issues exacerbated by the pandemic, something which PrimeStone singularly failed to fully acknowledge or address.
Momentous vote imminent for URW
It’s a similar story across the Channel, where French billionaire Xavier Niel & businessman Léon Bressler have collected a 5% stake in international shopping mall operator Unibail-Rodamco-Westfield (URW) and are adopting Anglo-Saxon activist investor tactics to try and secure URW board seats for themselves and push URW into a risky strategy to drive up its share price in the short term.
It’s clear that, like most companies in the retail sector, URW needs a fresh strategy to help weather the pandemic-induced recession, particularly given its relatively high level of debt (more than €27 billion). To that end, URW’s board of directors are hopeful of launching project RESET, which targets a capital raise of €3.5 billion in order to maintain the company’s good investment-grade credit rating and ensure continued access to all important credit markets, while gradually deleveraging the shopping mall business.
Niel and Bressler, however, want to forego the €3.5bn capital increase in favour of selling off the firm’s US portfolio—a collection of prestigious shopping centres which have by and large proven resistant to the changing retail environment—to pay down debt. The activist investors’ plan is being opposed by a number of third party advisory firms such as Proxinvest and Glass Lewis, with the latter calling it “an excessively risky gambit”. Given that credit rating agency Moody’s have predicted an 18-month slump in rental income that is likely to hit shopping centres – and have even gone as far as to warn that failure to implement the capital raise underpinning RESET could result in a downgrading of URW’s rating – it seems likely that Niel and Bressler’s ambitions will be rebuffed at the November 10th shareholder meeting, in the same way that PrimeStone’s have been.
Long-term growth over short-term gains
Elsewhere, Twitter CEO Jack Dorsey appears to have also overcome an attempt by high-profile activist investor Elliott Management to oust him from his role. Although a recent committee meeting did cede to some of Elliott’s demands, such as reducing board terms from three years to one, it chose to declare its allegiance to a chief executive who had overseen total shareholder returns of 19% prior to Elliott’s involvement with the social media behemoth earlier this year.
Alongside the atypically uninspiring campaigns conducted elsewhere in the market, and the retrogression of the sector as a whole, could it be that activist investors are losing their clout? For a long time, they have drawn attention to their ventures through flashy antics and bold prognoses, but it seems that companies and shareholders alike are catching on to the fact that behind their bluster, their approaches often contain fatal flaws. Namely, a focus on short-term inflation of the share price to the detriment of long-term stability is being exposed as the irresponsible gamble that it is – and in a shaky post-Covid economy, judicious prudence is likely to be prized above immediate profit with increasing regularity.
Russia has launched a propaganda campaign to smear the coronavirus vaccine being developed by Oxford University scientists
The Kremlin is accused of spreading fear about the serum, claiming it will turn people into monkeys. The Russians base the suggestion on the fact the vaccine is using a chimpanzee virus. The Russians have disseminated pictures and memes of Prime Minister Boris Johnson looking like “a yeti”. It’s captioned: “I like my bigfoot vaccine”.
And other shows a “monkey” scientist holding a syringe and working on the treatment.
The monkey is wearing an AstraZeneca lab coat.
The pharmaceutical giant is at the forefront of developing a vaccine.
Last month the London Globe and the EU Reporter carried stories about the Russian campaign.
Both publications have since removed two articles from their online sites.
Publisher Colin Stevens said:
“We were given the story by a freelance journalist in Brussels.
“However, after an investigation by The Times we now know the story has no basis.
“When I heard the stories were false, they were taken down straightaway.
“Sadly, we have been the unwilling victims of a Russian campaign to discredit the excellent work being done by Oxford University scientists.
“Even the very best get caught out now and again. Indeed even the Times was fooled into publishing the fake "Hitler Diaries" some years ago.”
AstraZeneca's chief executive Pascal Soriot condemned attempts to undermine their work.
He said: “Scientists at AstraZeneca and at many other companies and institutions around the world are working tirelessly to develop a vaccine and therapeutic treatments to defeat this virus.
“But it is independent experts and regulatory agencies across the world that ultimately decide if a vaccine is safe and effective before it is approved for use.
“Misinformation is a clear risk to public health.
“This is especially true during the current pandemic which continues to claim tens of thousands of lives, significantly disrupt the way we live and damage the economy.”
Professor Pollard, who is professor of Paediatric Infection and Immunity at the University of Oxford, told BBC Radio Four's Today programme:
“The type vaccine we have is very very similar to a number of other vaccines, including the Russian vaccine, all of which use the common cold virus from humans or from chimpanzees.
“To our bodies, the viruses look the same.
“We don't actually have any chimpanzees involved at all in the process of making the vaccine, because it is all about the virus, rather than animals it might more commonly
Meanwhile, Doctor Hilary Jones told Good Morning Britain the attempts at disinformation were “utterly ridiculous and shameful”.
“Oxford have a fantastic reputation; they are doing this thoroughly and are looking at thousands of people from all different groups and ages.
“They are doing this safely and effectively and for the Russians to try to besmirch what they are trying to do because parts of the vaccine comes from chimpanzee material is utterly ridiculous and shameful.
“I would put my money on Oxford every time.”
A Russian Embassy spokesman in London said: “The suggestion that the Russian state may conduct any kind of propaganda against the AstraZeneca vaccine is itself an example of disinformation.
“It is obviously aimed at discrediting Russia's efforts in combating the pandemic, including the good co-operation we have established with the UK in this field.”
Could the digital Renminbi address China’s vulnerability to the global financial system?
The international financial system is dominated by the US. Washington has often used its clout in the international financial system to further its economic and geopolitical interests through financial sanctions. As antagonism between the US and China moves beyond trade and technology, how the US-China rivalry will play out in the new stage of international finance is a matter of great concern to the world.
China has been working on a Central Bank Digital Currency (CBDC) since 2014, and is intensifying its efforts to internationalise the Renminbi.
On the surface it appears the CBDC will be for domestic use, but a CBDC will simplify cross border transactions. For a long time, the country has been dissatisfied with the U.S. Dollar’s (USD) ongoing role as the global reserve currency and is committed to extending its currency’s reach.
It even has an initiative to denominate international trade credit in Renminbi (RMB) rather than dollars. And the Belt and Road Initiative has seen China extend more than $1 trillion in foreign loans.
At a recent online global seminar organised by the Pangoal Institution China and the Centre for New Inclusive Asia Malaysia, experts from China, Russia, Europe and the US deliberated and disussed the issue.
He addressed China’s vulnerability to the global financial system, and said:
“This is a very interesting question as there are a lot of factors to consider. To begin, I think it might be helpful to define China’s vulnerabilities specifically. We are speaking about international finance here (it’s a very complex and politically charged system) and since the second world war, the space has been more or less dominated by the interests of the US. We see this in the global dominance that the US dollar has held for the last 70 years. We see that in the steps that Washington has taken to ensure that the dollar acts as the global reserve currency - particularly in industries like the global oil trade. Up until quite recently, it was probably difficult to even imagine a global financial system that was not directly supported by the US dollar.
By virtue of this global reliance, the American political machine was given significant power to wield in international finance. The best evidence of this can probably be found in the history of crippling economic sanctions that the US has enacted against specific states - the impacts of which can be devastating. In a nutshell, it’s an asymmetrical power dynamic wherein the US has carved out a significant negotiating advantage over other countries.
Put it this way: when the global economic system is built to fit the domestic currency of a specific state, it is easy to see how that state would be able to tailor certain policies and promote behaviours that would further their own geopolitical interests - this has been the American reality for the last few decades.
But things change. Technology advances, political relationships evolve, and international trade and money flows continue to expand and grow - now incorporating more people, countries and businesses than ever before. All of these factors (economic, political, technological, societal) work to shape the reality of the international order, and we are now at a place where a serious discussion about a replacement for the US dollar is warranted - that’s why I am excited to be here speaking about this issue today, it’s really time to have the conversation.
So, now that we have set the scene, let’s tackle the question: could the creation of a digital Renminbi address the vulnerability and asymmetry that China is dealing with in international finance? I really don’t think this is a simple yes or no answer here, in fact I think it is valuable to consider the question with a broad outlook on development over the next few years.
Starting with the short term, let’s put the question like this: will the digital renminbi have significant impact internationally immediately following launch. The answer here I think is no, and there are a few reasons for that. First of all, let’s consider the intention of the issuer, the Chinese central bank. Reports show that the initial focus of the DRMB project is domestic, the Chinese government is looking to challenge private sector digital payment methods like AliPay etc., and getting the broader population used to the idea of Central Bank-issued digital currencies powering the majority of economic transactions in the country. To put it simply, the scope of the first stage of the DRMB launch is too small and domestically focused to directly impact the international system - there just won’t be enough DRMB in circulation globally.
There is another point to consider in the short-term: voluntary acceptance. Even if stage one of the DRMB project did have an international focus and was committed to minting huge amounts of digital currency, international impact requires international use - meaning that other countries would have to voluntarily accept and support the project in the early stages. How likely is this to happen? Well it’s a bit of a mixed bag, we’ve seen a few agreements start to pop-up between China and some countries in Central Asia as well as South Korea and Russia, which outline future frameworks for DRMB acceptance and trade, however there isn’t too much in place yet. And that’s just it: before the DRMB can have international impact, there needs to be widespread international access and acceptance, and I don’t see that happening in the short-term.
Let’s move to a mid-term analysis. So imagine that phase 1 of the DRMB is complete and we have individuals and corporations in China accepting, transacting and trading it. What will phase 2 look like? I think we will start to see China expanding the scope of the DRMB project and incorporating it into their international development and infrastructure projects. If we consider the scope of the Belt and Road Initiative and China’s commitments and focus on development and investment across central Asia, Europe and parts of Africa, it is clear that there are many opportunities to promote and incentivize use of the DRMB internationally.
A great example to consider is the group of countries that make up the Silk Road area (about 70 countries). China is participating in infrastructure projects here, but it is also promoting increased trade in the area - and that means a lot of money moving cross-border. This is actually an area that my company LGR Crypto Bank is focused on - our goal is to make cross-border payments and trade finance transparent, fast and secure - and in an area with over 70 different currencies and incredibly disparate compliance requirements, this is not always an easy task.
Here is precisely where I think the DRMB could add a lot of value - in clearing up the confusion and opacity that comes with cross-border money movement and complex trade finance transactions. I believe that one way the DRMB will be marketed to China’s trade and development partners is a way to bring transparency and speed in complicated transactions and international transfers. These are real problems, especially in the multi-commodity trade business, and they can cause serious delays and business interruptions- If the Chinese government can prove that adoption of the DRMB will address these issues, then I think we will see real eagerness in the market.
At LGR Crypto Bank, we are already researching, modelling and designing our own money movement and trade finance platforms to work in harmony with digital currencies, particularly our own Silk Road Coin and the Digital Renminbi - we are ready to offer customers the best in class finance options as soon as they are made available.
When it comes to the international stage, I think that China will use its BRI as a proving ground for the DRMB in real-world commerce. By doing this, they will start to develop a network of DRMB acceptance across the Silk Road Countries and will be able to point to successful infrastructure projects as proof of the success of the Digital Renminbi. If this phase is carried out properly, I think it will create a very good foundation of DRMB acceptance that can be built on and expanded globally. The next step would likely be Europe - this is something of a natural extension of the Silk Road Area, and also ties in to the reality of increased trade between the EU and China. It’s important to note that if we consider all of the domestic economies that make up the Euro block together, it is the largest importer/exporter in the world- it would be an incredible opportunity for China to bring international attention to the DRMB and prove its capabilities in the West.
In the long-term, I do think that it is possible for the DRMB to gain high levels of international traction and achieve some level of global acceptance. Again, it will all depend on the success of the Chinese government in making the case for adoption throughout the earlier phases. The value propositions of central bank digital currencies are very clear (increased transaction speed, improved transparency, fewer middlemen, less delays, etc.), and China is certainly not the only one developing such an asset. Currently, however, China is a leader and if they can execute an expansion plan without too many issues along the way, this head-start could make it difficult for other state offerings to catch-up. Maybe not, though.
It could be that in the long-term, all states will have a sovereign digital currency - and this begs the question: in the age of digital currencies, is there still a need for a global reserve currency? I’m not sure. What would the value add be of a reserve currency when central bank digital currencies could be traded effortlessly with immediate settlement times? Maybe reserve currencies will simply become a relic of an outdated financial system.
Looking forward to the long-term, I can imagine 2 scenarios where the DRMB could alleviate China’s vulnerabilities in the international financial system:
- The DRMB becomes the new world reserve currency
- The notion of a world reserve currency becomes obsolete and the new economic order runs on state-backed digital currencies operating without a hierarchy.
Whatever happens, I do believe we are on the cusp of a major change in global finance. There is no doubt that digital currencies, specifically central bank digital currencies, will play a massive role in defining the new economic paradigm. I believe that China is making great moves in leading the pack on this, and I know that at LGR Crypto Bank we look forward to adopting the DRMB where we can to further optimize and expedite the money movement and trade finance solutions that we offer to our customers.
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