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UK lawyers feel ripples of Chinese sanctions on Essex Court Chambers

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When Beijing imposed sanctions on Essex Court Chambers, from where a group of prominent barristers practise, it was not only striking at the heart of the British legal establishment. It was also chalking up a victory in its battle to pressure international business to mute criticism of its domestic affairs, particularly its policy towards the Uyghurs of Xinjiang.

Lawyers say the sanctions could give China influence over who a firm chooses to assign to their international arbitrations. It could also make solicitors think twice about instructing Essex Court, which specialises in commercial and financial litigation, arbitration and public international law, for Asian work.

Analysts also warned it could lead to self-censorship in the UK legal industry, with firms and chambers wary of being associated with anyone who works for groups or individuals critical of China.

“That is what is so terrible — it has a chilling effect in relation to sets of chambers and law firms who will be very anxious about people speaking out in relation to China,” said Baroness Helena Kennedy, a prominent rights barrister on whom Beijing imposed sanctions at the same time as Essex Court.

China announced sanctions on a number of UK MPs, academics and individuals alongside Essex Court at the end of last month, accusing them of “gross interference” for their comments about Xinjiang, where more than 1m Uyghurs and other Muslims have been interned since 2017.

The move freezes China-based assets of those targeted, and bans those named and their family members from entering China, including Macau and Hong Kong, and from doing business with Chinese individuals or entities.

China has not specified whether all barristers at Essex Court will be affected, nor why the chambers was targeted. But four of the chambers’ barristers previously provided a legal opinion for non-profit clients implicating China in genocide in Xinjiang.

China denies it has conducted genocide and instead says it is providing “vocational education” in a region where it said it has faced terrorism threats.

Soon after the sanctions were announced, Essex Court removed a news item about the opinion from its website and released a statement which sought to distance the majority of its members from the advice. “No other member of Essex Court Chambers was involved in or responsible for the advice,” the chambers said.

Chinese state media welcomed the response. “Barristers in retreat on lies over Uygurs,” read one headline from the China Daily newspaper.

China is pressuring global businesses for boycotting cotton produced in Xinjiang because of rights concerns, including H&M and Nike. But few expected such tactics to be applied to the British legal establishment.

“It’s so overt it takes your breath away,” the head of an international law firm in Hong Kong said of the sanctions on Essex Court. “This is the long arm of a government interfering in another country.”

Essex Court Chambers in Holborn, London, houses a group of prominent lawyers, some involved in rights work © Google

“Today, it is the members of Essex Court Chambers who are sanctioned,” Guy Sandhurst QC, a former chair of the Bar of England and Wales, wrote on the website of the Society of Conservative Lawyers. “But tomorrow it might be Clifford Chance, Freshfields or some other major city law firm or chambers of barristers which wittingly or otherwise offends the Chinese state.”

Alan Bates, a British barrister, said lawyers may be more wary now of providing legal assistance to organisations critical of China, and would be cognisant of harming their colleagues’ work with their words. “People might be willing to bear that cost to themselves [but] when the cost falls on the colleagues they might rethink that,” he said.

One barrister at a rival UK chambers said they had already been told not to speak publicly about the issue while Essex Court is deciding how to respond. “I deplore it,” he said. “I don’t think you deal with bullying by caving in.”

Few chambers have posted statements in support of the chambers. An individual inside Essex Court told the Financial Times they suspected other chambers did not want to “throw themselves into the firing line” but warned they might not be immune.

“Essex Court is the first set of chambers to be made subject to these sanctions . . . but it may well not be the last,” the person said. 

Derek Sweeting, chair of the UK Bar Council, has described China’s move as “an attack on the rule of law”.

Before the sanctions, Essex Court had more than 90 barristers, including a Singapore branch, and 44 Queen’s Counsel. But within two days of the sanctions announcement, Jern-Fei Ng QC, an international arbitrator with experience in Asia, left the chambers and joined 7 Bedford Row. The move was seen as unusual because the chambers is not as well known for commercial arbitration as his former base.

Following this, Essex Court’s Singapore branch, which included Toby Landau QC and former Singapore attorney-general VK Rajah, disbanded entirely and said its members would apply to form a new chambers. Landau is also expected to leave the London chambers, according to a person familiar with the matter. He did not respond to a request for comment.

The barrister at the rival chambers said there was concern the sanctions would not only affect Hong Kong and Singapore arbitration work involving Chinese companies but also Caribbean legal work because the ultimate beneficial owners of some of the companies involved were Hong Kong businesspeople.

Matthew Gearing, the recently departed chair of the Hong Kong International Arbitration Centre, was expected to join Essex Court Chambers, but told the Financial Times last week he was “monitoring the situation”.

There is already talk inside rival chambers of a poaching spree among the top sets. “This is a body blow to a very establishment set of chambers as a form of collective punishment,” one UK lawyer said.

“The problem for Essex Court is that they are so leveraged in the international market and a fair proportion of that work is Chinese,” a person at another chambers said. “They have been the market leaders of all the chambers in terms of building a practice in Asia, so the impact is potentially going to be big. The damage is done, the Singapore barristers have gone. There will be more casualties.”



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Analysis

Iranian TV action thriller delivers warning to Zarif

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It is hardly surprising that Mohammad Javad Zarif, Iran’s foreign minister and nuclear negotiator, is not a fan of Gando, a popular television drama that depicts an incompetent minister who scuppers nuclear talks with world powers by hiring dual nationals who turn out to be spies for MI6.

The series — made by an institute believed to be affiliated to the elite and hardline Revolutionary Guards — “is a lie from the beginning to the end” that “damages foreign policy more than me” by fuelling public mistrust, Zarif said.

By focusing on the nuclear talks, the Guards’ motive goes beyond creating compelling drama, reformist analysts say. Iran is in discussion with western powers about reviving the nuclear deal, a key reformist achievement, and hardliners want to deter the popular foreign minister from declaring his interest in the presidency in what is a crucial election year.

“I’ll be grateful to Gando-makers to let us continue our current job,” Zarif said this month, and commented that he would not run for the presidency.

The possibility of nuclear talks with the US and other powers has complicated an already fraught Iranian political scene ahead of the June election. Many reformists are pinning their hopes on Iran’s top diplomat to reinvigorate the nuclear deal and boost support at the ballot box. Hardliners might prefer to negotiate the deal themselves after the election. The polls are also seen as particularly crucial in case supreme leader Ayatollah Ali Khamenei, 81, dies during the next president’s term.

Pendar Akbari, left, and Ashkan Delavari, right, in a scene from ‘Gando’
Pendar Akbari, left, and Ashkan Delavari, right, in a scene from an episode of ‘Gando’. The series title refers to an Iranian crocodile able to distinguish its friends from its enemies © Bahar Asgari/Shahid Avini Cultural and Artistic Institute via AP

The purpose of Gando, which refers to an Iranian crocodile able to distinguish its friends from its enemies, “is to tell Zarif that should he dare to announce his candidacy, he will be destroyed immediately,” said one reformist analyst. “When the intelligence service of the Guards truly believes in the Gando plot lines, it means even if Zarif decides to defy such warnings, he will not be allowed to run.”

Centrist president Hassan Rouhani is due to step down this year after two terms and it is not yet clear who the presidential candidates will be. Politicians register as late as May and then have to be vetted by the Guardian Council, the hardline constitutional watchdog, which can disqualify nominees. Potential hardline candidates include Mohammad Bagher Ghalibaf, the parliament speaker and a former guards commander; Ebrahim Raisi, the judiciary chief; and Ali Larijani, a former speaker of parliament. On the reformist side, speculation has centred on Es’haq Jahangiri, first vice-president, Hassan Khomeini, a grandson of the founder of the Islamic republic, and Zarif.

A US-educated career diplomat widely respected in the west for his pragmatism, Zarif was instrumental in the historic deal in 2015, under which Iran curbed its nuclear activity in exchange for the lifting of sanctions. But Donald Trump abandoned the accord in 2018, imposed sanctions, including on Zarif, and said he would pursue a new accord to contain Iran’s regional and military policies. The US move emboldened hardliners, confirming to them the untrustworthiness of the US.

Zarif’s background in the US both as a university student and as Iran’s head of mission at the UN — during which he met US politicians including then senator Joe Biden — has long made him a source of suspicion for hardliners.

This wariness of both Zarif and the west is evident to viewers of Gando, as is the heroism of the Revolutionary Guards. Mohammad, the action hero protagonist, warns that western negotiators may sabotage refineries as part of nuclear talks. Mohammad works out of elaborate facilities akin to those in a James Bond film. The fictional foreign minister is advised by a media adviser, the main culprit, “to enter into direct talks with the US and accept the conditions of the leader of the global village”.

Vahid Rahbani in a scene from an episode of ‘Gando’
Vahid Rahbani in a scene from an episode of ‘Gando’. State TV abruptly stopped broadcasting the series that was less than halfway through its 30-episode run © Hassan Hendi/Shahid Avini Cultural and Artistic Institute via AP

The dramatic scenes reflect, in part, the worldview of some of Zarif’s critics. “Reformists, Mr Zarif and his lobby group in Washington [Iranian dual nationals] should be wiped out from Iran’s politics,” said an aide to a senior hardline politician who is a potential presidential candidate. “We have to get rid of this cancerous tumour once for good.”

Gholamali Jafarzadeh, a former conservative member of parliament, said Zarif “is not a good statesman and should not run for president” while “reformists should know that their choices have no chance to be allowed to run”. 

This month, state TV abruptly stopped broadcasting the series that was less than halfway through its 30-episode run. Local media said broadcasts would resume when the presidential race was over. Iran’s centrist president Hassan Rouhani, whose signature achievement is the nuclear deal — alluded to the show on Wednesday and said “people’s money” should not be spent on “fabrication of the truth” and “distortion of facts”.

After three years of sanctions, many voters are disillusioned by the infighting and the prospect of real change, whatever the outcome of the election. “Whether Zarif or a figure more senior than him runs or not, I’m not going to vote,” said Hamid, a 40-year-old engineer. “Let the Guards win the election as they are the ones who are running the country anyway. Why shall I make a fool of myself?” 



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Rising inflation complicates Brazil’s Covid-19 crisis

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After seven months in lockdown, Michele Marques received some unwelcome news when she returned to work: while she was away the prices of almost all the products she uses as a hairdresser had soared.

“A box of gloves rose 200 per cent. Colouring products increased at least 100 per cent,” said the 37-year-old from São Paulo, underlining how costs were rising while her revenue had collapsed. “I had to raise the price of my services, too.”

It is a dynamic that is playing out across Brazil, adding an extra layer of complexity to the country’s coronavirus crisis, which has already claimed the lives of almost 350,000 individuals and pushed hospital services to the brink.

With much of Latin America’s largest economy being shuttered, inflation is surging to its highest level in years, fuelling a silent scourge of hunger among poorer citizens that has run in parallel to the Covid-19 pandemic.

“The high price of staple foods — rice and beans, for example — has led to the disappearance of these items from the table of millions of Brazilians,” said Ana Maria Segall, a researcher at the Brazilian Research Network on Food and Nutritional Sovereignty and Security. In the 12 months to the end of March, the price of rice increased 64 per cent and black beans 51 per cent.

“In Brazil currently food inflation has penalised the very poorest, preventing them from having adequate access to food and in many situations leading to hunger,” she said, adding that rising unemployment and the curtailment of social programmes were also contributing factors.

Volunteers hand out food in São Paulo © Alexandre Schneider/Getty Images

Less than half of Brazil’s population of 212m now has access to adequate food all the time, with 19m people, or 9 per cent of its inhabitants, facing hunger, according to a recent report by Segall’s group.

“I’m doing some odd jobs, but it’s not enough to keep us going,” said Jonathan, a 28-year-old who lost his job in the kitchen of a Chinese restaurant in São Paulo when the pandemic began. He said he now struggles to provide enough food for his three young children and pregnant wife.

On a 12-month basis, inflation in June is expected to surpass 8 per cent, far above earlier estimates. In the 12 months to March, food prices jumped 18.5 per cent, while the price of agricultural commodities in local currency surged 55 per cent and the cost of fuel increased almost 92 per cent.

Line chart of Percentage increase over past 12 months showing The price of rice in Brazil is soaring

The developments pose a fresh challenge to President Jair Bolsonaro, who is already under fire for his handling of the Covid-19 pandemic. Across Brazil’s biggest cities, graffiti has sprung up labelling the populist leader “Bolsocaro” — a portmanteau of his name and the Portuguese word for expensive.

The rising prices are also likely to provide useful ammunition to leftist former president Luiz Inácio Lula da Silva, who returned to the political fray last month and may challenge Bolsonaro in elections next year.

“Bolsonaro is to blame for the increase in food prices, he is to blame for everything. They have to remove this guy,” said Maria Izabel de Jesus, a retiree from São Paulo.

Armando Castelar, a researcher at the Brazilian Institute of Economics, said the government had underestimated inflation both in terms of the numbers and also “how much a concern it should be”.

He attributed the rising prices to the devaluation of the Brazilian currency, triggered in part by the stimulus packages passed by the US government — which helped to bolster the dollar and led to higher Treasury yields — and the brighter economic outlook outside Latin America.

“You have a situation where commodity prices are going up because the global economy is going to grow a lot this year. With the growth in the US, interest rates are going up and the dollar is strengthening. This puts a lot of pressure on the exchange rate in Brazil and emerging markets in general,” he said.

As the spectre of inflation loomed last month, the Brazilian central bank raised its key interest rate by 75 basis points, higher than the half-percentage point many economists had expected. A further rate rise is expected next month.

“The central bank acted correctly, but it cannot stop there. It is important not to be too lenient in dealing with this,” said Castelar.

Silvia Matos, a co-ordinator at the Brazilian Economy Institute, also pointed to Brazil’s weakening currency as a contributing factor to inflation. But she said the slide in the real was triggered by investor concerns over Brazil’s deteriorating public finances.

Following the creation of two separate stimulus packages to mitigate the impact of Covid-19, government debt has risen to about 90 per cent of gross domestic product, a high level for an emerging market economy.

The rollout of the second of these packages began this month, with 45m Brazilians set to receive $50 a month for four months.

Critics said, however, these stipends were not nearly enough to keep people both fed and at home in lockdown.

“It is essential that the emergency aid is of a greater value, so that people do not leave the house but no one also stays at home starving,” said Marcelo Freixo, a federal lawmaker with the leftwing PSOL party.

“We need to reduce the circulation of the disease. Brazil is already experiencing 4,000 deaths per day. We will reach 500,000 total deaths by the middle of the year.”

Matos says that inflation had hit poorer citizens much harder than middle-class and rich Brazilians because a larger portion of their income was dedicated to food, the price of which has increased substantially.

“The only thing that could help right now is to get out of this pandemic,” she said.

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Can CVC pull off a $20bn ‘deal of the century’ at Toshiba?

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Proposed management buyout looks like an improbable win for the Japanese conglomerate’s embattled CEO



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