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Financial Times Europe July 21 22 2012, Financial Times

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‘This will be
like therapy’
Stella
McCartney
has lunch
with the FT
LIFE & ARTS
Power, death
and politics
Inside the scandal
that shook China
LIFE & ARTS
Plus
Francis Fukuyama on why conservatives must learn to love the state
Comment
|
Saturday July 21
/
Sunday July 22 2012
|
EUROPE
World Business Newspaper
12 die in
shooting at
US cinema
News Briefing
Oil price
Brent front-month ($ per barrel)
130
120
At least 12 people
were killed and
dozens injured
when a gunman
opened fire at a
late screening of
the new Batman
film at a cinema
in a suburb of
Denver, Colorado,
yesterday
Report, Page 4
110
100
90
Apr
2012
Jul
Source: Thomson Reuters Datastream
Brent rises as Middle East
tensions grow, Page 12
Ai loses court appeal
Chinese court upholds
$2.4m tax fine against
dissident artist.
Page 4
Eye for the Tiger
Heineken faces battle as
it makes $4bn bid for
control of APB, maker
of Tiger beer.
Page 9
Picture: AP
Protest punks on trial
Russian punk band
members face seven
years in jail over an
anti­Putin song.
Page 4
Syrians flee as violence escalates
China doubts hit Rmb
Renminbi at bottom of
its dollar trading band,
as companies demand
dollars.
Page 13
Shelling in Damascus
kills more than 50
UN to extend mandate
of observer mission
Syrian authorities boasted of
driving rebels out of a key
neighbourhood in the heart of
Damascus as gunfire and shell-
ing by pro-regime loyalists
drove thousands from the capi-
tal on the eve of the Islamic
holy month of Ramadan.
“We had to leave,” said Hana,
an Iraqi refugee who fled to
Syria to escape her country’s
civil war in 2006 but has again
had to flee this week. “Some
people walked as there was no
bus and others are stuck there
and can’t leave because of the
shelling. There is no electricity,
no water.”
At least 145 were killed
around the country, including
more than 50 in Damascus and
its outskirts, local activists said.
“With the spread of deadly
violence, I am gravely con-
cerned for the thousands of Syr-
ian civilians and refugees who
have been forced to flee their
homes,” said António Guterres,
UN High Commissioner for Ref-
ugees.
The bloody 16-month conflict
has alarmed the world and led
to calls for outside intervention.
But outside powers have been
helpless to prevent the conflict’s
relentless escalation.
An attempt by western and
Arab nations to impose UN
Security Council sanctions on
Syria failed this week after Rus-
sia and China used their veto.
However, the Security Council
agreed late yesterday to extend
the mandate of its observer mis-
sion to Syria for another 30
days.
A fourth senior military com-
mander, Maj Gen Hisham
Bakhtiar, targeted in Wednes-
day’s high-profile bomb attack
on Mr Assad’s military com-
mand, died of his wounds yes-
terday. The bomb, which killed
the president’s brother-in-law,
Assef Shawkat, and two other
top security officials, has galva-
nised the opposition, which took
control of or briefly held several
important transit outposts along
the Turkish and Iraqi frontiers
late on Thursday.
Ferocious battles between pro-
regime security forces and rebel
fighters yesterday left corpses
on streets of the capital, accord-
ing to witnesses and amateur
video posted to the internet.
Activists reported increased
shelling of the Midan neighbour-
hood as regime reinforcements
continue to arrive in the dis-
trict’s outskirts to consolidate
their control. Syrian state televi-
sion declared that the neigh-
bourhood had been “cleansed”
of anti-government militants.
A series of blasts before and
after Friday prayers sent smoke
rising over Midan and other
southern districts of the city.
Heavy automatic weapons fire
rang from Midan’s labyrinthine
old district, while a helicopter
flew high overhead.
Additional reporting by Roula
Khalaf in Beirut
Gene drug go­ahead
Dutch group gets green
light from European
regulators for pioneering
gene therapy.
Page 9
By Michael Peel in Damascus
and Borzou Daragahi in Beirut
Thousands of civilians flooded
Syria’s borders with Turkey,
Lebanon and Iraq yesterday as
the intensifying conflict
between the regime of Bashar
al-Assad and an increasingly
militarised opposition hurtled
towards all-out war.
Person in the News
Despite the huge task
ahead, Marissa Mayer
can only benefit at the
helm of Yahoo.
Page 7
Bubble shattered, Page 2
Editorial Comment, Page 6
www.ft.com/syria
Deteriorating outlook drives Spain’s
borrowing costs near euro­era highs
By Robin Wigglesworth and
Alice Ross in London
Spain now expects to remain
in recession until 2014, adding
further headwinds to its fight to
regain the confidence of finan-
cial markets.
As a result, Spain’s 10-year
bond yields rose to a high of
7.284 per cent yesterday, accord-
ing to Bloomberg data, only
slightly below the euro-era high
of 7.285 per cent touched earlier
in the crisis. Tradeweb, a rival
data provider, said the 10-year
yield
est since late last November.
“It’s a pretty bad day. It has
been quite a sell-off, especially
in the front end,” said Peter
Goves, a strategist at Citigroup.
“The auction earlier this week
wasn’t well received, and the
problems in the Spanish regions
eurozone’s rescue facilities – in
addition to its already agreed
€100bn bank rescue.
Adding to eurozone tensions,
the European Central Bank
piled pressure on Athens to
agree reforms ahead of a visit
by international lenders by say-
ing it would not accept Greek
government debt “for the time
being” in exchange for central
bank funds.
The turmoil in Spain also
infected Italy, the world’s third
largest bond market. Rome’s
10-year bond yields climbed
sharply above the 6 per cent
mark, and Italy’s benchmark
stock index shed 4.4 per cent,
the most since April.
Germany’s 10-year bond yield
fell to as low as 1.15 per cent.
Spain’s borrowing costs soared
to within a whisker of a euro-
era high as mounting fears over
its wilting economy and govern-
ment finances overwhelmed the
eurozone’s approval of loans to
help Madrid recapitalise banks.
The euro tumbled to its lowest
level in more than two years
against the dollar, losing 1 per
cent to dip below $1.22 as inves-
tors fled for the safety of the US
currency, and the Spanish stock
market suffered its worst day in
over two years.
Investors have been worried
by a disappointing Spanish bond
auction on Thursday, which was
followed yesterday by the Valen-
cia region’s request for emer-
gency aid from the central gov-
ernment, and Madrid’s down-
beat revised forecasts for its
economy.
London mayor’s
Olympic desire
To hell with taekwondo and
beach volleyball, it’s the Eton
wall game, played only by
boys of the elite public school,
that Boris Johnson, London’s
mayor, wishes was being
played at one of the city’s
Olympic venues. “I think it
would be very good to have
the wall game as an Olympic
sport,” Mr Johnson says
about his true sporting love.
‘We are approaching a
crunch moment.
Ten­year yields
above 7 per cent are
quite corrosive’
touched
a
record
of
7.309 per cent.
“We are approaching a crunch
moment,” said Nick Gartside,
chief investment officer for
international fixed income at
JPMorgan Asset Management.
“Ten-year yields above 7 per
cent are quite corrosive.”
The sell-off was particularly
sharp in shorter-dated Spanish
government bonds.
Spain’s two-year bond yield
surged to 5.76 per cent, the high-
remain a fundamental part of
the outlook.”
Spain has been selling mainly
short-dated bonds to reduce its
interest rate payments. Rising
short-term borrowing costs
exacerbated concerns that
Madrid may be forced to seek a
full sovereign bailout from the
Interview, Page 2
Loan deal, Page 3
Utilities fight tax plan, Page 8
Markets, Pages 11 & 12
Lex, Page 16
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FINANCIAL TIMES
JULY 21/JULY 22 2012
WORLD NEWS
Olympics set to
ring changes
for London –
and its mayor
Syria
A sense of insulation in capital crumbles among rich and poor alike
Gunfire shatters ‘Damascus
bubble’, stoking fear and panic
By Michael Peel in Damascus
Fighting on all fronts
weeks, it doesn’t really
matter what Boris Johnson
says. It never does seem to
matter. A fascinated
international media posse
will lap up every
Johnsonian quote.
The London games will
therefore not just be a
showcase for the capital
but for its mayor: a man
whose idiosyncratic mix of
populist rightwing views
and amiable social
liberalism have made him
a frontrunner to succeed
David Cameron as Tory
leader.
He professes to being
unruffled by prophecies of
transport and security
calamity. “We’re at that
pre-games, psychological
trough, the pre-curtain up
moment when the media,
understandably and
rightly, is scouring the
landscape for
imperfections,” he says.
However, this can only
“intensify the joy and
exhilaration that will come
with the opening of the
games and the beginning
of the sport and the
athletics”.
Part of the pre-games
tension stems from the
great British reserve, he
believes. But surely part of
the public’s indecision
about the Olympics is
bound up in long-standing
concerns about the games’
£9.3bn budget, value for
Interview
Boris Johnson
Mayor of London
The event will not
just be a showcase
for the capital but
for the Tory leader’s
potential successor,
writes
Roger Blitz
A large explosion sent smoke curling
behind the minaret of the Majid
mosque in Midan, central Damascus,
the first in a series of blasts yesterday
across the area and southern districts
of the city beyond.
The crackle of light weapons and
bursts of heavier automatic fire shat-
tered what should have been a peace-
ful day for the country’s Muslim
majority: Friday prayers on the eve of
the holy month of Ramadan.
“This is Afghanistan, not Damas-
cus!” exclaimed Mudar, a Midan resi-
dent as the sounds of war engulfed his
neighbourhood. “There is never going
to be peace again.”
The violence that swept Syria’s cap-
ital through the afternoon was confir-
mation of what Damascenes have
known for almost a week now: the
16-month battle against President
Bashar al-Assad’s regime is ripping
apart their city.
The comforting notion of a “Damas-
cus bubble”, insulated from the
bloody conflict raging elsewhere in
the nation, has collapsed. In its place
were fear and panic.
Some Damascenes were piling into
private cars or buses, trying to escape
a conflict that is still localised but
feels like it is going on almost every-
where – and has left many people pre-
paring for the worst.
“The problem now is bread,” said a
teacher named Riad, clutching a plas-
tic bag of flat bread and explaining
that only one of the five bakeries in
his area was still open. “We don’t
know what is going on, or what is
going to be.”
The fighting came after a dramatic
week in which clashes between gov-
ernment forces and the rebel Free Syr-
ian Army erupted around the city, as
a battle long fought in the capital’s
suburbs burst into the city centre.
On Wednesday, the regime was fur-
ther rocked by the assassination of
three top security officials, including
Assef Shawkat, Mr Assad’s brother-in-
law, allegedly in a bombing in a gov-
ernment building in the heavily
guarded Rawda area. A fourth, nat-
ional security chief Hisham Bakhtiar,
died of his wounds yesterday.
Checkpoints manned by govern-
ment soldiers ringed streets around a
city that was spookily quiet in many
places yesterday. On the route to
Barzeh, a flashpoint to the north-east,
tank tracks and black scorch marks
from burning tyres told of an earlier
battle. A section of roadway had been
blasted to bits, while a police four-by-
four lay abandoned and rammed into
the metal shutters of a shop.
Outside the Tishreen government
military hospital, a lost-looking young
man said he had been trapped there
overnight after members of the rebel
Free Syrian Army attacked the facil-
ity.
“There was shelling, there was
shooting from both sides,” said the
man, named Imad, a regime supporter
once beguiled by Mr Assad’s promise
that his authoritarian leadership
guaranteed social stability.
“Freedom was how it was before –
not how it is now.”
In Midan, government forces,
including armoured personnel carri-
ers and tanks, guarded entrances to
the labyrinthine old part of the dis-
trict, where resentment of the Assad
family’s 40-year rule has long flour-
ished. Four green buses, usually
deployed on the city’s urban transport
network, arrived filled instead with
soldiers. One detachment barrelled
out prematurely, only to be sent back
on so the buses could speed closer to
the front line.
As explosions peppered Midan and
areas towards the equally rebellious
To hell with taekwondo. Be
gone, beach volleyball. It’s
the Eton wall game, played
only by the boys of the
elite public school, that
Boris Johnson wishes was
being played at one of
London’s Olympic venues.
“It’s very important to
get these things out – I
think it would be very
good to have the wall
game as an Olympic
sport,” says the London
mayor and Old Etonian
about his true sporting
love, a peculiar cross
between football and rugby
that rarely yields a score.
Even now, with less than
a week to the curtain
rising for London’s
Olympic bow, it is still
hard to believe Mr Johnson
will have such a lead role
at the opening ceremony.
The Chinese will be
stunned. Four years ago,
they accused him of being
“rude, arrogant and
disrespectful” for accepting
the Olympic flag at
Beijing’s closing ceremony
from Jacques Rogge, the
International Olympic
Committee president, with
hand in pocket and jacket
unbuttoned.
It’s not merely the
dishevelment, the
buffoonery, the cocking a
snook at the IOC and its
pomposity that makes his
place at the Olympics high
table feel so unlikely. It’s
just that from a distance,
one never had Alexander
Boris de Pfeffel Johnson
down as a sporting chap.
Sitting besuited at a
boardroom table in his
office on the ninth floor at
City Hall, he is taken
aback to being asked about
his sporting prowess.
“Do you really want to
know this? I was quite
good at rugby,” says the
mayor (tight head prop,
Balliol College, Oxford).
“But the game in which I
really excelled, and I have
no hesitation telling you
this, was the wall game. I
was keeper of college wall
and the mixed wall. I
played three times on St
Andrew’s day and we won
every time.”
Turning to more
conventional sports, did he
follow the Olympics as a
lad? “A little bit . . . I think
it would probably be fair
to say I wasn’t as
obsessive about the
Olympics as perhaps I was
about some of those great
Test series.”
He turns to his Olympics
adviser: “Is this the right
thing to say?”
Over the next three
Key questions
Bab al-Hawa,
briefly held
by rebels
Jarabulus,
held by rebels
TURKEY
Will regime forces retake border
posts lost to the rebels?
Regime forces claim to have
reasserted control over the
rebellious neighbourhood of Midan
in Damascus, but can they chase
the rebels out of other strongholds
in the capital?
Are the rebels bringing sucient
reinforcements and supplies into
the capital and will they be able to
wage a sustained guerrilla war?
Will the regime decide to give up
on certain areas of the country to
focus on Damascus and its
surroundings?
Will new fronts open up in Aleppo,
which has been gradually getting
more tense?
Kilis
Qamishli
Domiz
IRAQ
Aleppo
Border point
Idlib
Refugee camp
Latakia
SYRIA
Estimated total
number of refugees*
Deir
Azzour
Hama
‘It will take time
before you see
economic returns
in east London. But
it will happen’
Tartus
120,000
Rastan
Abu Kamal,
taken by rebels
July 19, border
closed by Iraq
July 20
Homs
* In Turkey, Iraq, Lebanon and Jordan.
Includes unregistered refugees
LEBANON
Masnaa
SYRIA
money and lasting benefits.
“I think the Olympics
will prove to have been a
successful investment,” he
says, taking a gentle swipe
at naysayers such as “the
jaundiced Financial Times
readership” for
underestimating the
economic advantages to
London and the UK
economy.
“The £9.3bn, yes, it’s a
lot of money and yes, it
will take time before you
see economic returns in
east London on that scale.
But it will happen and
there have already been
very, very significant
transformations to London
that are of huge, huge
benefit.”
The mayor will be
spending much of his time
during the games seeking
immediate investment
returns during what he
calls a “schmoozathon” of
international investors.
And is he happy to press
the flesh with anyone,
even business people of
dubious reputation? “As
the Emperor Vespasian
said when he taxed the
urinals outside the
Colosseum,
pecunia non
olet
[money does not stink]
is our view when it comes
to attracting [investment] –
within reason.”
Damascus
QABOUN
BARZEH
Site of bomb attack,
July 18, National
Security HQ,
Rawda
IRBIN
GOLAN
HEIGHTS
Daraa
DUMAR
JOBAR
JORDAN
MALKI
Presidential
Palace
DAMASCUS
Ramtha
Al Marjeh Square,
Interior Ministry
100 km
Mafraq
MEZZAH
KAFR
SOUSEH
Registered Syrian refugees
(estimates)
MIDAN
Lebanon
28,100
Jordan
33,400
Iraq
6,500
Turkey
13,000
TADAMON
Site of clashes over
the last week
(Kurdish origin)
HAJAR ASWAD
5 km
SAIDA ZEINAB
Sources: UNHCR
Photo: EPA
FT Graphic
southern district of Tadamon beyond,
a helicopter flew overhead – “our gift
from Russia”, said one resident, in a
sardonic reference to Mr Assad’s most
steadfast
ing from the pockets of his sleeveless
black jacket. “Because Assad wants to
save his seat.”
Moments later, he and others were
sent scattering by the sound of two
explosions, suggesting the start of
another of the assaults the govern-
ment says are intended to flush out
armed rebels.
Elsewhere in the city, the regime’s
forces have anxieties they may never
have expected at the heart of their
power. On Thursday in the upscale
Malki district, where regime militia-
men in rifles and suits stood guard on
street corners, one paced up and down
like a nervous animal. Asked what
was happening in the area, he mut-
tered only “Problems!” before continu-
ing his walk to nowhere.
It is a sign of how the battle for
Syria’s capital is shattering the cer-
tainties of the loyal and rich, as well
as the lives of people in the poor areas
where much of the fighting takes
place. One regime supporter described
being woken in terror by the explo-
sions close to her house in an upscale
part of the Mezzeh area. “The scary
thing is we are not knowing any more
what will happen next,” she said.
While no one is predicting the out-
come of this asymmetric and unpre-
dictable conflict between a heavily
armed regime and a guerrilla-style
rebel movement, many see it as a
decisive encounter with a momentum
that flagging international diplomacy
on Syria is very unlikely to check.
“There is never going to be peace
again,” said Mudar, the Midan resi-
dent. “There will be a zero moment.”
international
ally
and
armourer.
People in the surrounding streets
said the area had been the site of
intense fighting and government
shelling. Many expected the regime to
take a bloody revenge for the heavy
blows dealt to its authority.
That process seemed already to
have begun in the suburb of Irbin,
where rubble and broken glass were
strewn across streets where power
lines sagged low over the road. Resi-
dents said 35 people had died in a
government attack the previous day.
“They will kill everybody,” said a
local member of the Free Syrian
Army, a pistol and ammunition peep-
WORLD
BLOG
James Blitz on the
security risks
posed by the
conflict in Syria
www.ft.com/
theworld
Editorial Comment, Page 6
Beijing opens inquiry into
US solar panel ingredients
Muslims begin toughest
Ramadan for decades
Chinese flock to cinema as
foreign film limit is raised
on the rise, partly because
of a global slowdown in
installations of wind tur-
bines and solar panels that
has left many manufactur-
ers struggling. Share prices
of the world’s largest wind
and solar companies have
tumbled over the past 12
months.
China is the biggest glo-
bal producer of solar pan-
els, accounting for close to
half of worldwide produc-
tion. Much of the polysili-
con used in Chinese panels
is imported from abroad.
Dow Corning, a US com-
pany that is among the
world’s largest producers
of polysilicon, expressed
dismay over the Chinese
anti-dumping investigation
yesterday. Robert Hansen,
chief executive, said that
the Chinese investigation
would affect the company’s
ability to sell material to
China – which is the biggest
market for Dow Corning’s
polysilicon subsidiary,
Hemlock Semiconductor.
Leslie Hook, Beijing
Additional reporting by
Gwen Chen in Beijing
year, governments are try-
ing to alleviate the hard-
ships of the month-long
sunrise-to-sunset fast.
Morocco resets the clock so
believers can break the fast
an hour early. Pakistan
promises to reduce daily
blackouts, which can last
up to 22 hours. Public serv-
ants are allowed to work
fewer hours.
The Muslim lunar calen-
dar moves back through the
seasons, so Ramadan starts
11 days earlier each year
under the western calendar.
The last time Ramadan
started in mid-July was in
1980. Winter fasts are easier
because of cooler tempera-
tures and shorter days.
Religious authorities in
the United Arab Emirates
allow labourers to break
their fast if the temperature
exceeds 50°C.
Other Muslim scholars
say labourers can break
their fast if they feel weak
or thirsty. They have to
make up the days later, said
Sheik Mohammed Ali, an
Iraqi Shia cleric.
AP, Gaza City
president later this year,
Beijing raised its limit of 20
imported films a year to 34
– with the additional 14 to
be screened in 3D or Imax
format. The change had
been forced by a World
Trade Organisation ruling
which demanded Beijing
relax and reform its import
and distribution regime for
foreign films. The State
Administration for Radio,
Film and Television said
this ruling had led to the
screening of 14 foreign pic-
tures in the first half.
A 3D version of the 1997
blockbuster
Titanic
grossed
Rmb934m.
Mission Impossi-
ble: Ghost Protocol
, with
Rmb679m, and
The Aveng-
ers
, with Rmb564m, ranked
second and third among
imported films in the first
half. Warner Brothers’ Bat-
man trilogy,
The Dark
Knight Rises
, which hits US
cinemas this weekend, is
expected to see ticket sales
from foreign markets
exceed those from domestic
box office sales for the first
time.
Trade dispute
Summer fasting
Box office sales
China has launched an anti-
dumping investigation into
US exports of a key solar
panel ingredient, a move
that raises the stakes in the
escalating US-China trade
dispute.
Earlier this year, the US
slapped anti-dumping
duties of more than 35 per
cent on imports of Chinese
solar panels, a ruling that
was criticised by Chinese
producers.
In what industry insiders
said was a retaliatory step,
China’s ministry of com-
merce announced yesterday
that it would investigate
anti-dumping penalties
for exports of solar-grade
polysilicon, a key ingredi-
ent in solar panels, from
the US and South Korea.
A ruling is expected by
July 20 2013, the ministry
said.
Beijing is not unique in
its decision to focus on
clean energy in a trade
investigation. Such disputes
in the sector appear to be
Muslims from Morocco to
Afghanistan are steeling
themselves for the toughest
Ramadan in more than
three decades. No food or
drink, not even a sip of
water, for 14 hours a day
during the hottest time of
the year.
The test of self-restraint
is made only harder by
daily power cuts in some
parts of the Muslim world
such as Iraq, Pakistan and
tiny Gaza.
With temperatures in the
some regions routinely
climbing above 40°C and
days at their longest of the
Foreign films earned
Rmb5.27bn ($826m) from
ticket sales in China in the
first six months of this
year, over 90 per cent more
than box office sales during
the same period in 2011.
Coming after China
opened its market a little
wider to overseas produc-
tions, the jump underlines
the promise of film in the
world’s most populous
country, which is building
new screens faster than any
other nation.
China is expected to over-
take Japan as the world’s
second-largest film market
this year.
Following a US visit of Xi
Jinping, the Chinese vice-
president who is expected
to succeed Hu Jintao as
Communist party chief and
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$826m
First half ticket sales for
foreign films in China
Muslims in Jerusalem pray at
the start of Ramadan
Kathrin Hille, Beijing
  FINANCIAL TIMES
JULY 21/JULY 22 2012
★
3
WORLD NEWS
Spain loan
deal fails
to increase
confidence
Tour de force
Wiggins on course
Continuing doubts
see bond yields rise
Reluctance in north
to aid south grows
capital markets. Spain had
hoped the bank overhaul
would reassure financial
markets that it could con-
tain the crisis and avoid a
larger bailout.
Under the terms of the
deal, a first payment of up
to €30bn is expected to
arrive in Spanish coffers
before the end of the month
so that the country can
begin recapitalising a finan-
cial system that has been
devastated by a property
bubble collapse and reces-
sion.
Olli Rehn, Europe’s eco-
nomics commissioner, said:
“The aim of this pro-
gramme is . . . to provide
Spain with healthy, effec-
tively regulated and rigor-
ously supervised banks,
capable of nurturing sus-
tainable economic growth.”
Mr Rehn noted that Spain
would also be expected to
cure the government’s
excessive budget deficit by
2014 and push through
structural reforms.
But the tense debate over
the bailout this week in
some national parliaments
– particularly Finland and
Germany – reflects growing
reluctance among credit-
worthy northern members
to continue supporting
struggling governments on
the eurozone periphery.
“It was a necessary deci-
sion to take, even though
it’s very hard,” said Jyrki
Katainen, the Finnish
prime minister, after parlia-
ment approved its share of
the bailout yesterday. “It’s
unpopular, but we have to
take responsible moves.”
Additional reporting by
Miles Johnson in Madrid
By Joshua Chaffin
in Brussels
Even as eurozone finance
ministers unanimously
approved a loan package of
up to €100bn for Spain to
repair its banks, the coun-
try’s rising bond yields sug-
gested doubts about the
country’s financial status
were continuing to grow.
The approval by the euro-
zone’s 17 finance ministers
was granted during a con-
ference call yesterday. It
had been considered a for-
mality after they reached a
political agreement with
Spain earlier this month.
The decision came as
Madrid revised its growth
forecast for 2013 downward,
with the government saying
it expected the economy to
contract 0.5 per cent next
year, instead of growing 0.2
per cent, with unemploy-
ment remaining around 24
per cent.
In another sign of the
growing strain on the coun-
try’s finances, authorities in
Valencia said that they
would seek support from an
€18bn emergency fund cre-
ated by the central govern-
ment to help the regions.
Several regions, including
Catalonia with an economy
the size of Portugal’s, have
called on Madrid to support
them in refinancing their
debts after finding them-
selves closed out from the
Bradley Wiggins, centre, cycles with the peloton past a field of sunflowers during the 18th stage of the Tour de France between Blagnac and Brive­La­Gaillarde yesterday. Wiggins, who
retained the yellow jersey with a lead of 2mins 5sec, seems certain to become the first British winner of the Tour when it ends in Paris tomorrow. See Lex
Reuters
ECB raises pressure on Athens over debt collateral
Greece, said it would assess
the eligibility of Greek debt
after the troika had finished
its review on Athens’
progress in implementing
its
its promised reforms.
The ECB’s move will
force Greece’s beleaguered
banks to seek “emergency
liquidity assistance” – fund-
ing that is made available
from the Greek central
bank but at a far higher
cost than loans secured
from the ECB. Analysts
estimated that Greek banks
would seek up to €50bn in
ELA on top of €62bn
already drawn under the
programme.
James Ashley, an econo-
mist at RBC Capital Mar-
kets, said: “It’s hard to see
how the troika can report
back positively on Greece.
It looks as though ELA is
now going to become the
primary source of funding
for the country’s banks.”
The pressure on the
Greek government comes as
it faces a €3.1bn repayment
to the ECB on August 20,
funds Athens will struggle
to scrape together since
eurozone finance ministers
have said they will not
decide on the next Greek
aid payment until Septem-
ber. Greek government offi-
cials have hinted they will
try to seek a bridge loan,
but EU officials have been
resistant.
According to one senior
EU official, Athens will
probably be forced to raise
the money on the short-
term treasury bill market,
which would come with
high borrowing costs.
It is the second time this
year that the ECB has in
effect refused Greek banks
access to its cash.
The central bank in May
banned the use of Greek
bonds as collateral after
Athens delayed a recapitali-
sation of its banking sys-
tem. The ECB had argued
that until lenders received
more capital, they were
insolvent. Once the recapi-
talisation took place, Greek
banks could return to the
ECB.
National central banks
must cover any losses
incurred through ELA,
whereas in the case of ECB
loans, losses are shared.
One analyst said: “It’s a
two-pronged move by the
ECB: they protect them-
selves from Greek risk
while sending a strong
message to the govern-
ment.”
There was no immediate
comment from the coali-
tion, although Antonis
Samaras, the prime minis-
ter, discussed Greek and
European economic devel-
opments yesterday in a tele-
phone conversation with
Mario Draghi, the ECB pres-
ident.
Mr Samaras also dis-
cussed the Greek economy
in a call with Christine
Lagarde, the IMF managing
director, ahead of next
week’s critical monitoring
mission to Athens by EU
and IMF officials, an official
statement said.
Sell­off setback
Greek bonds
The move will force
banks to seek
emergency funds at
a higher cost, write
Claire Jones
and
Kerin Hope
Greece’s coalition
government was
scrambling yesterday to
find new leaders for
Taiped, the state
privatisation agency, after
its chief executive
resigned, claiming
investors were losing
confidence in the country’s
commitment to a €50bn
programme of disposals.
Costas Mitropoulos said
he had stood down
because “the new
government did not provide
the support the agency
needs under present
conditions”. His resignation
letter was made public by
Greek media.
Ioannis Koukiades, the
agency’s chairman,
stepped down last month
citing personal reasons.
For full story see:
www.ft.com/europe
second
bailout
pro-
gramme.
“They’re playing hard-
ball, it’s a message to the
new government that it has
to get its act together on
reforms,” one senior banker
said.
“But there may be
negative results . . . We’ve
recently seen a good flow of
deposits returning to banks,
helping with liquidity, but
that could easily stop.”
Depositors pulled more
than €10bn from Greek
banks ahead of the June
election amid fears of deep-
ening political instability
and an early “Grexit” from
the eurozone.
About half that amount
has returned after the for-
mation of a three-party
coalition government that
pledged
The European Central Bank
has ramped up the pressure
on Athens ahead of a visit
by international lenders
next week by refusing to
accept Greek government
debt in exchange for central
bank funds.
The ECB said yesterday
that “for the time being”,
Greek bonds would no
longer be eligible as collat-
eral for the central bank’s
regular operations.
The ECB, which along
with the International Mon-
etary Fund and the Euro-
pean Commission forms the
so-called troika of lenders to
to
accelerate
African manufacturers demand
help to compete with Chinese
domestic product of Kenya
or Ethiopia. Chinese
officials pledged to do more
to encourage exports of
African goods, including
expanding the range of
products that qualify for
zero tariffs.
“We should work harder
to . . . improve the trade
mix and upgrade trade,”
Hu Jintao, the Chinese
president, said on
Thursday at the forum.
However, African
manufacturers insist not
enough is being done. In
some countries, notably
South Africa and Kenya,
cheap Chinese wares have
forced local factories to
close, and acted as a
disincentive to anyone
thinking of local
production.
“You can’t compete with
China, it’s impossible as
it’s not a level playing
field,” said Stewart
Jennings, CEO of PG
Group, a South African
glass manufacturer, and
chair of the Manufacturing
Circle, an industry lobby
group with ArcelorMittal,
BMW and SABMiller
among its members.
A Chinese currency he
believes to be 40 per cent
undervalued and the
favourable financing and
other incentives Chinese
companies receive to go
overseas mean South
African businesses feel the
competition acutely.
“If we had to compete
with China we would have
to drop our wage rates by
between 50 per cent and 80
per cent and it can’t be
done. And it’s causing
significant job losses in
Africa. To me, China is
exporting unemployment,”
Mr Jennings says.
But the picture is
complex and varies from
country to country. In
Nigeria, Africa’s most
populous nation, imports
from China did impact on
local industries, especially
textiles. But that was some
years ago and it could be
argued that the country’s
poor infrastructure and
governance were as much
to blame for the lack of
competitiveness.
Also, the easy money
from oil, which accounts
for more than 80 per cent
of national revenues,
meant other sectors, from
manufacturing to
“If I had to go to Italy,
the clothes would be too
expensive,” Mr Obi said.
“So I go to China to get
what people here demand.”
Asked what products he
could take from Nigeria to
sell in China to redress the
trade imbalance, he said:
“Food for the other
Nigerians there?”
On a visit to a trade fair
in China, Sati Bedi, a
Kenyan textile
manufacturer, came face to
face with counterfeit fabric
emblazoned with his own
company’s logo.
“We were kind of chuffed
somebody’s taken the
initiative to copy our fabric
– it means we’re doing
something right,” he says.
But Mr Bedi has since
lost the contract for police
uniforms in Kenya to a
Chinese company, and says
his business survives
thanks only to punitive
tariff barriers that make it
hard for China to compete,
along with rising wages.
“We don’t have
economies of scale,
infrastructure and logistics
are a nightmare for us, the
only thing we have is
cheaper labour. Their
fabric is also always going
to be substandard.”
Chris Kirubi, Kenya’s
leading industrialist whose
company Haco Tiger
Brands manufactures
everything from face cream
to pens and household
bleach, blames government
policy for the difficulties
he faces in competing.
“I cannot blame the
Chinese – our own
government policies must
be strong on counterfeits
and come up with
minimum standards for
imports, so that we guide
and protect the
manufacturing industry in
Africa in order to add
value to our own raw
materials,” he says.
Chinese loans and road
construction have helped
bring down transportation
costs, he says. But Kenya’s
infrastructure still needs
work to address problems
like the high cost of
electricity, he says.
Additional reporting by
Katrina Manson, Andrew
England, Tom Burgis and
Leslie Hook
Global trade
Action is needed to
protect industry in
order for value to
be added to region’s
raw materials,
writes
Xan Rice
From the edge of Lagos
Island you have a clear
view of the giant cargo
ships coming in to dock.
Walk a few blocks away
from the water to Balogun
market, and you will see
where some containers’
contents end up.
In small, packed stalls
spilling on to the streets of
Nigeria’s commercial
capital hang suits, fire
extinguishers, shoes,
radios, padlocks, shirts,
clocks, generators and
countless other items. The
common link for many is
the origin.
“All from China,” said
Mustafa Adekule, 29, who
sells suitcases and belts.
“The quality is better than
before and the prices are
low. China is helping us by
making these products we
can afford.”
His customers may be
content, but some
manufacturers and
politicians on the continent
are not. As Jacob Zuma,
the South African
president, pointed out at
the China-Africa Forum in
Beijing, the bilateral trade
pattern which sees mainly
raw materials flowing out
from Africa and finished
goods coming back is not
sustainable.
“Their business has been
aggressive in Africa – in
natural resources, in
uranium, in oil,”
Mahamadou Issoufou,
president of Niger, told the
Financial Times in an
interview last month. “We
are an open country – open
to investors from
anywhere. But we want
‘win-win’ partnerships and
that is our relationship
with China. We will defend
our interests and they will
defend theirs.”
Chinese exports to Africa
jumped 22 per cent last
year to $73bn – which is
more than double the gross
‘We would have to
drop wage rates by
between 50 and 80
per cent and it
can’t be done’
agriculture, were neglected.
Though the government
is trying to remedy this,
most finished goods must
still be imported, from rice,
a staple dish, to T-shirts.
It is not simply a case of
Chinese businessmen
sending their goods to
Lagos; it is people like
Nicholas Obi, a 26-year-old
entrepreneur, travelling to
Guangzhou three or four
times a year to buy
thousands of pairs of
trousers for his Balogun
market stall.
Raw ambition
African exports to China
By product ($bn)
Chinese exports to Africa
By product ($bn)
60
50
Food & other
Manufactured goods,
machinery, chemicals
50
40
Raw materials,
fuel
40
30
30
20
20
10
10
0
0
2000 02
04
06
08
10
2000 02
04
06
08
10
Trade between China and Sub Saharan Africa only
Source: UNCTAD
  4
★
FINANCIAL TIMES
JULY 21/JULY 22 2012
WORLD NEWS
US shocked by cinema mass shooting
Punks go
on trial
for song
about
Putin
Local man believed
to have killed 12
New York mayor
calls for gun curbs
officers in Aurora described
a nightmarish scene as a
gunman set off two gas
canisters and started to
shoot into the packed cin-
ema.
A man was arrested out-
side the theatre with an
assault rifle and several
other weapons. More weap-
ons were found in his
car and police said his
apartment
advertising in Colorado, an
important swing state, fol-
lowing the shooting.
“There are going to be
other days for politics,” Mr
Obama said as he cut short
a campaign trip to Florida.
“This, I think is a day for
prayer and reflection.”
Mr Romney was set to
go ahead with a planned
campaign stop in New
Hampshire. He said he
was “deeply saddened by
the news of the senseless
violence . . . We expect that
the person responsible for
this terrible crime will
be quickly brought to jus-
tice.”
Michael Bloomberg,
mayor of New York, called
on Mr Obama and Mr Rom-
ney to announce specific
plans to curb gun violence
in the US.
Speaking on a local radio
show yesterday, Mr
Bloomberg said: “Soothing
words are nice, but maybe
it’s time that the two people
who want to be president of
the United States stand up
and tell us what they are
going to do about it . . . We
have a right to hear from
both of them concretely,
not just in generalities –
specifically what are they
going to do about guns?”
Despite the horror of the
shootings, the US is
unlikely to move towards
tighter gun legislation.
Across the political spec-
trum yesterday, there was
a rush of prayers and
expressions of sympathy
for the victims, but hardly
any mention from congres-
sional leadership or the two
candidates for the White
House of stricter laws as
a way to prevent future
massacres.
Even the shooting of
Gabrielle Giffords, the
former Arizona congress-
woman, and the killing of
six others by a gunman in
Tucson last year, failed to
spur significant action.
Andrew Arulanandam,
spokesman for the National
Rifle Association, the pow-
erful lobbying group, said:
“Our thoughts and prayers
are with the victims, their
families and the commu-
nity. NRA will not have any
further comment until all
the facts are known.”
The shooting was the
worst episode of gun vio-
lence since the 2007 Vir-
ginia Tech massacre that
left 32 people dead. Aurora
is about 20 miles from
Columbine High School,
where 12 pupils and a
teacher were shot dead by
two teenagers in 1999.
The first calls reporting
the attack came at 12:39am,
police said.
Witnesses said the gun-
man opened fire during a
shooting scene in the film,
sowing confusion.
“I thought it was show-
manship. I didn’t think it
was real,’’ Jennifer Seeger,
who was in the theatre, told
the Associated Press. She
said she was sitting in the
second row when the gun-
man aimed his weapon at
her. She ducked into the
aisle to escape.
Analysts had expected
The Dark Knight Rises
to
generate box office reve-
nues of $190m-$200m in its
opening weekend.
Warner Bros studio said
it was “deeply saddened” by
the shootings.
US massacres
Mass murders in the US:
●
Bath, Michigan. School
bomb. May 1927, 44 dead.
●
Blacksburg, Virginia.
Virginia Tech shooting.
April 2007, 32 dead.
●
Killeen, Texas. Shooting
spree. October 1991, 23
dead.
●
San Diego, California.
McDonald’s shooting. July
1984, 21 dead.
●
Austin, Texas. Tower
shooting. August 1966, 16
dead.
●
Edmond, Oklahoma.
“Postal” killings. August
1986, 14 dead.
●
Wilkes­Barre,
Pennsylvania. Shooting
spree. September 1982,
13 dead.
●
Littleton, Colorado.
Columbine massacre.
April 1999, 13 dead.
By Shannon Bond in New
York and James Politi
in Washington
By Charles Clover
in Moscow
A gunman wearing a gas
mask opened fire during a
midnight showing of the
new Batman film, killing 12
people and injuring 59 in
the worst mass shooting in
the US in five years.
The early-morning shoot-
ing in a shopping mall in
the Denver suburb of
Aurora prompted police in
other cities including New
York and London to
increase security at cine-
mas and Warner Brothers,
the studio behind
The Dark
Knight Rises
, to cancel the
film’s Paris premiere.
Witnesses
was
“booby-
trapped”.
The suspect is 24-year-old
James Holmes of Aurora.
The University of Colorado
at Denver told CNN Mr Hol-
mes was enrolled as a grad-
uate
Three members of Russia’s
all female punk band Pussy
Riot have gone on trial in a
Moscow district court sur-
rounded by riot police.
The three young women,
who have been in detention
since early March, face a
maximum sentence of seven
years for “hooliganism
motivated by religious
hatred” after they and two
others allegedly performed
the song
Blessed Virgin,
Mother Mary, Drive Putin
Out!
in Moscow’s Christ the
Saviour Cathedral in Febru-
ary.
The song was addressed
to Vladimir Putin, then
prime minister and now
president, who called for
harsh punishments of the
women in one of the first
signs of an impending polit-
ical crackdown launched
after his inauguration for a
third presidential term in
May.
About 50 protesters
braved the pouring rain
yesterday to stand outside
the courtroom with an
assortment of signs, while
inside, the three women
,
lounging in a metal cage for
defendants, heard the open-
ing motions in the trial.
The three include band
leader Nadezhda Tolokon-
nikova, Yekaterina Samut-
sevich, and Maria Aly-
okhina. They have not
admitted to taking part in
the performance, where
band members’ faces were
obscured by their trade-
mark fluorescent masks.
The start of the trial was
just a technical hearing, but
in an indication of how long
it might last, prosecutors
asked for an additional six
months of detention for the
three accused.
From the start, the Rus-
sian Orthodox Church to
which the majority of Rus-
sians claim adherence, has
called for harsh punish-
ment, citing “religious
hatred” in the women’s per-
formance in the cathedral
and their lack of “repent-
ance”.
In April, Kirill, the
Church patriarch, led a
mass outside the cathedral
in which he appeared to
draw parallels between the
band’s performance and
Bolshevik persecution of
the Church.
Critics, however, say that
the state’s case against
Pussy Riot is weak and that
the trial has been so politi-
cised that it will only dis-
credit the government.
“I think that what they
did is morally wrong, and
there does exist a consensus
on this in our country,”
said Father Andrei
Kurayev, who represents a
liberal branch of the Ortho-
dox Church. “But the size of
the proposed punishment is
quite out of proportion to
what they did,” he added.
He pointed out that it had
been hard for the prosecu-
tion to decide whom to
name as victim of the crime
– in the end, the state iden-
tified nine people, most of
whom were present during
the performance, including
the cathedral’s guards.
Mikhail Kuznetsov, law-
yer for one of the guards,
described the punk band as
the “tip of an iceberg of
extremists, trying to break
down the 1,000-year edifice
of the Russian Orthodox
Church by creating a
schism, guiding the flock
through trickery and cun-
ning not to God, but to
Satan”.
student
in
neuro-
science.
There was no evidence
other people were involved,
police said. They said vic-
tims ranged widely in age
and that some of the
injured were in hospital
with serious wounds.
Barack Obama and Mitt
Romney suspended political
James Holmes: said to be a
neuroscience graduate
and
police
Speculation
mounts over
Romney’s
tax records
which is meant to allow
retirement investments to
appreciate tax-free. A differ-
ent kind of IRA used by
Bain during Mr Romney’s
tenure had a higher limit of
$30,000, but even that does
not explain the IRA’s cur-
rent size.
Tax experts have devised
a different theory of how
Mr Romney’s IRA grew
exponentially, and it
involves a complex valua-
tion of the securities it held.
Edward Kleinbard, a pro-
fessor at USC Gould school
of law, says he believes the
logical explanation is that
Mr Romney valued the
securities – which he com-
pared to options – on the
basis of their “immediate
liquidation value”, as
opposed to their fair market
value. This would have
allowed Mr Romney to
move much more value into
the IRA than the $30,000 cap
would suggest.
A private equity expert
News analysis
Candidate’s coyness
over his $250m
fortune could cost
him at the polls,
writes
Stephanie
Kirchgaessner
Mitt Romney’s refusal to
release more than one year
of his tax records – and the
political price he is paying
for that decision – has
opened the door to all sorts
of
theories
about
what
might lie inside.
For now the speculation
amounts to little more than
informed hypothesis from
tax experts who have exam-
ined the Republican presi-
dential contender’s 2010 tax
release and some baseless
guesswork. But one thing is
abundantly clear: Mr Rom-
ney’s reluctance to follow
the tradition of most presi-
dential candidates and open
up his tax records to public
scrutiny has emerged as a
possibly game-changing
problem for the candidate.
For starters, it is not just
Democrats who are pressing
Mr Romney to be more
transparent. This week, the
editorial board of the con-
servative National Review
argued that “perceptions
matter”, and that Mr Rom-
ney ought to release the
additional records and that
his current posture was
“unsustainable”.
The tax release that has
been released shows that
Mr Romney’s fortune,
amassed through his tenure
at private equity group
Bain Capital, is worth about
$250m and that he holds
accounts in the tax havens
of Bermuda and the Cay-
man Islands.
The most perplexing
aspect of the available tax
return is Mr Romney’s indi-
vidual retirement account,
which is valued at between
$21m and $102m. What
makes the IRA so unusual
is that, at the time in ques-
tion, there was a $2,000
annual limit on how much
an individual could contrib-
ute to such an account,
‘We’ve given all you
people need to
know about our
financial situation’
Ann Romney
Mitt Romney reacts to the Colorado shooting in Bow, New Hampshire, yesterday as theories continue to circulate about his investments
AP
valuation issue. . . . The
question is: Did he comply
in fact with US tax laws
throughout the period when
he wasn’t actively running
for president?” he says.
Theories over what poten-
tially politically damaging
revelation lies within Mr
Romney’s tax records range
from the notion that he
may have paid little tax in
2009 owing to investment
losses from the financial
crisis to speculation he
could even have been one of
thousands of Americans
granted a tax amnesty
related to a crackdown on
Swiss bank accounts.
A campaign official said
the size of the IRA was the
result of a “period of great
growth” and that the now
closed Swiss bank account
was “never” part of the con-
troversy between UBS and
the IRS that opened the
door to the 2009 amnesty.
Mr Romney and his wife
have stood by their decision
not to release more records
or explain in detail some of
the lingering questions
about their personal
finances, saying it would
be used against them by the
Obama campaign.
“We’ve given all you peo-
ple need to know and
understand about our finan-
cial situation and about
how we live our life. And
so, the election, again, will
not be decided on that,”
Mrs Romney said.
A poll released this week
indicated that the Romney
controversy was not neces-
sarily helping Mr Obama. A
CBS/New York Times poll
found confidence in Mr
Obama waning nationally
on the question of his han-
dling of the US economy.
But that does not mean
Democrats will be letting go
of the issue. “There is no
such thing as a free lunch,”
Mr Obama once said when
he was a senator, sponsor-
ing legislation that aimed at
stopping tax avoidance
schemes in places such as
the Cayman Islands. That
message has not changed.
Candidate hopes ‘dancing horse’ will do the business
Mitt Romney is a man who
prides himself on being a
stellar businessman, and he
and his family seem to
approach every aspect of
their life, including hobbies,
through a business lens.
Just look at Rafalca, the
“dancing horse” partly
owned by his wife, Ann,
write Stephanie
Kirchgaessner and
Vanessa Kortekaas
.
The Olympic dressage
horse, which will be making
its debut at the London
games, has, in effect, been
incorporated in an entity
called “Rob Rom
Enterprises”. The Romneys
reported a $77,731 “passive
loss” on the investment,
although, much to the
chagrin of liberal bloggers
combing through the
couple’s tax record, there is
no evidence that it has yet
been used as a tax write­off.
Like Mr Romney’s dog,
Seamus, who once endured
a family vacation in a cart
strapped on top of the
former governor’s car,
Rafalca has been a keen
point of interest on the
campaign trail.
That means the dressage
competition in this year’s
Olympic Games will attract
attention not only from the
sport’s enthusiast but also
political pundits wondering if
it can carry its rider to gold.
According to Axel Steiner,
a long standing member of
the US Equestrian
Federation, the answer is
probably “No”. Rafalca was
“just one of the horses on
the team and all of them
are just trying to do their
best. It’s a team effort”.
Mr Steiner said the
publicity around Rafalca was
in “good fun” and did not
put any extra pressure on
the horse or the team.
Democrats seized on an
image of Rafalca in a recent
political attack that accused
Mr Romney of “dancing
around” the tax issue issue
but then quickly apologised
after the stunt was seen as
a jab at Ann. (Families are
off limits, both sides say.)
The former governor’s
wife has credited riding with
helping her deal with the
effects of multiple sclerosis.
who has been critical of the
industry’s accounting meth-
ods, Victor Fleischer of
Colorado Law, put it this
way: “The only way you get
a $100m IRA is by putting
in property that is difficult
to value and taking advan-
tage of the fact that if there
is something that is diffi-
cult to value, the IRS
doesn’t know how to value
it either.”
Such valuations are com-
mon practice in the private
equity industry when it
comes to accounting for
revenues from carried inter-
est, the share of profits
executives earn from suc-
cessful deals, but are not
standard in IRAs. Mr Klein-
bard argues that it is not
simply “tax titillation” that
has people up in arms about
the returns or envy about
Mr Romney’s wealth.
“He needs to address the
Ann Romney with Rafalca
last month in New Jersey
Contracts & Tenders
Chinese court upholds fine for tax evasion on dissident
By Leslie Hook in Beijing
Ai told the Financial Times
in an interview earlier this
week, ahead of the verdict.
Mr Ai says the fine has
been levied as retribution
for his political activities.
Chinese dissidents are rou-
tinely harassed and jailed,
including Nobel Prize win-
ner Liu Xiaobo, a writer
who is in prison.
Mr Ai, one of whose
works is on display at the
Serpentine Gallery in Lon-
don, was imprisoned with-
out charge for nearly three
months last year in an
apparent crackdown on the
dissident. Although he is
now able to live at home, he
is barred from leaving the
country and says he is fol-
lowed when he leaves his
house.
“When I was held for 81
days [last year], the main
reason they mentioned was
‘inciting subversion of state
power’, but they said they
would use other charges to
charge me – like pornogra-
phy, or taxes, or bigamy,”
recalled Mr Ai. “They said,
we hope that people will
know you are an untrust-
worthy person.”
Chinese authorities have
threatened Mr Ai with por-
nography charges because
his art includes nude pho-
tos.
They have also warned
about possible bigamy
charges, because he had a
child with a lover while
remaining married to his
long-term wife.
Mr Ai was prevented from
attending yesterday’s hear-
ing and previously stopped
from going to earlier hear-
ings in the year-long case.
China’s courts are control-
led by the Communist party
and the judiciary is not
independent
or the courts, they are all
one family. They are never
independent,” said Mr Ai.
“It has been like this for
decades.
“In this system, corrup-
tion and injustice are every-
where.”
Tens of thousands of sup-
porters donated money to
Mr Ai last year to help pay
his legal fees and bail.
Often they did so by mak-
ing Rmb100 bills into paper
aeroplanes and flying them
over the walls of his Beijing
studio.
Mr Ai’s personal wealth
is unknown, but his art
routinely sells for hundreds
of thousands of US dollars
at western auction houses.
A Chinese court has upheld
a Rmb15m ($2.4m) tax case
fine against Ai Weiwei, the
artist whose outspoken
comments and provocative
works have made him one
of the Communist party’s
most high-profile critics.
“The verdict is out. We
lost,” Mr Ai wrote on Twit-
ter yesterday morning.
The court rejected his
appeal and upheld the fine
for tax evasion against his
studio, Beijing Fake Cul-
tural Development, which
is registered in his wife’s
name.
“Rmb15m is an astronom-
ical figure for anyone,” Mr
from
the
state.
In the interview, Mr Ai
said his case had been
marked by irregularities,
adding that he would write
a book to expose how his
case had been twisted by
authorities.
“No matter whether it’s
the tax bureau, the police
Ai Weiwei: plans to write
book about the case
   FINANCIAL TIMES
JULY 21/JULY 22 2012
★
5
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