It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Wednesday, November 15, 2023
CRIMINAL CAPITALI$M Ultrawealthy charities that are helping no one and report nothing cost U.S. taxpayers billions every year, report says
Irina Ivanova Wed, November 15, 2023 Getty Images
Americans sent half a trillion dollars to charity last year—a substantial chunk of money to pay for worthy causes left unaddressed by the government and corporations.
But a huge portion of that money isn’t going to food pantries or scientific research or even churches. Instead, the ultrawealthy, including many billionaires who have pledged to give away their technology or stock-market-fueled fortunes, are funneling their wealth through opaque financial instruments, where it can sit for years tax free without touching an actual charity, according to a new report from the progressive think tank Institute for Policy Studies.
“There's a fair amount of charitable dollars that are not being deployed, where the donors have already gotten a tax break,” Chuck Collins, director of the Program on Inequality at IPS, told Fortune.
More than one-quarter of charitable giving in the U.S. last year went to donor-advised funds, or DAFs, according to the National Philanthropic Trust. DAFs are vehicles that give the donor an immediate tax deduction, but allow money to sit potentially for decades without being used for actual charitable work.
DAFs are the fastest-growing type of charitable investment, according to Fidelity. Among the ultrawealthy, they are the most popular, and many of the headline-grabbing billionaire donations in recent years have gone to DAFs.
In 2021, Bill Gates donated $15 billion; Elon Musk gave $5.7 billion, Jack Dorsey gave $700 million, and Mark Zuckerberg $700 million—but rather than individual charities, those donations all went to the donors’ DAFs or family foundations, IPS notes. Last year, more than two-thirds of the billionaires who signed the Giving Pledge, a nonbinding promise to give away the bulk of their wealth to charity in their lifetimes, gave either to donor-advised funds or their family foundations. A donation in name only
Proponents of DAFs say that their structure encourages giving: The tax deduction encourages wealthy patrons to dedicate money for charity even before they’ve decided which cause to support. “Donors may have good reasons to postpone grants,” a Stanford Law School article says.. In one hypothetical, a tech founder who “sells a startup for millions of dollars” may want to donate her takings but is too busy to immediately decide how to direct the funds; a DAF is a good choice for this person, the law article notes.
However, while DAFs could in theory grow the charitable pie, in practice, they too often allow the donor the illusion of charity while letting them keep control of their funds, critics say.
While a gift to a DAF is treated the same as an outright gift to the Red Cross or United Way, in practice, it “effectively allows the donor to retain ongoing control over the charitable disposition and investment of the donated assets,” tax scholars Roger Colinvaux and Ray Madoff wrote in 2019. What’s more, “donors are under no obligation, and have no incentive, ever to release their advisory privileges to make the funds available for charitable use.”
And ultrawealthy donors get a substantially larger tax break than a middle-class worker. As much as 74 cents of every dollar given to charity comes back to the donor in the form of tax breaks, according to calculations by Colinvaux and Madoff, with the highest-earning donors getting the biggest benefits A person in the top tax bracket would save 37% of their federal income tax for every dollar they contribute with a charitable donation; a similar amount of state income tax; and, depending on what they donate and when, they can also avoid capital gains tax and estate tax. (By contrast, a typical worker who makes about $60,000 and doesn’t own stocks would save 22% from their cash contribution, in addition to any state tax savings.)
What’s more, because there's no way to track donations from particular DAF accounts, they act as a form of “dark money,” allowing donors to give vast sums, essentially anonymously, to a range of potentially unsavory organizations, including nonprofits that advocate for specificpolitical causes or organizations classified as hate groups, IPS says.
“This allows DAFs to be used to hide transfers — similar to the way the ultra-wealthy use multiple shell companies to hide the movement of money among offshore accounts,” IPS writes.
All of these strategies are completely legal, the IPS notes, as are other potentially questionable tactics used by family foundations—such as paying family members to serve as foundation trustees or act as executives of foundations, sometimes at salaries in the hundreds of thousands of dollars a year. However, the IPS argues, they erode public trust in charities and the tax system overall.
“The fact that billionaires opt out of paying taxes, have these closely held family foundations and get to play God about where the money goes, that’s private power — unaccountable private power,” Collins said.
“At this point philanthropy is at risk of becoming taxpayer-subsidized private power.” Big tax losses
Estimates of how much the tax system loses to all kinds of charitable deductions are inevitably low, since only some philanthropic transactions are tracked, IPS notes. Still, it estimates that taxpayers’ losses are in the billions.
Last year, the corporate and personal charitable tax deductions directly cost the U.S. $73 billion, IPS said—substantially more than the budget of the Department of Energy or Department of Labor. If accounting for the gains in investments made by charities themselves, which are also tax-exempt, the losses exceed $110 billion. And they go into the hundreds of billions when estimating the cost of donations of special assets, like stock, real estate. or art.
“We the taxpayers are chipping in quite a bit in the lost revenue,” Collins said. Given the size of this public subsidy to ostensibly charitable causes, Collins argues that taxpayers deserve more transparency from increasingly popular vehicles like DAFs, as well as stricter laws to make sure their activities are, actually, charitable.
IPS is advocating to change the tax laws including requiring that DAFs spend a certain amount of money every year, like private foundations must do, and increase their reporting, as well as closing loopholes that let foundations transfer funds to DAFs.
“They're being marketed as a ‘you can have it all’ donation instrument,” Collins says. “Give the money, you can still control the investing side, you get a tax break — and there's a secrecy element.”
Hong Kong Ousts Dubai as Biggest Hub for Russian Gold Trade
Malaika Kanaaneh Tapper and Eddie Spence Wed, November 15, 2023
(Bloomberg) -- Shut out of London following the invasion of Ukraine, Russian gold trading switched to Dubai. Now it’s shifting again, to the bullion hub of Hong Kong.
The city has long been a key conduit for bullion entering the Chinese mainland — the world’s biggest consumer market — but since April, Russian shipments surged. Hong Kong imported 68 tons of Russian gold this year, four times as much as the whole of 2022.
The shift to Hong Kong was driven by US sanctions on Russia’s top gold miners, as well as a crackdown by the United Arab Emirates on illicit activities in its bullion market, according to people familiar with the matter. The move east underlines the challenge faced by the West in curbing resource flows that fund the Kremlin’s war machine.
Before the invasion of Ukraine, almost all the gold exported from Russia — the world’s second-largest miner — was shipped to vaults in London, the center of the global bullion trade. But the Kremlin’s attack made Russian gold taboo in the mainstream industry, even before a formal ban blocked imports to the Group of Seven Nations and European Union.
When Russian gold was locked out of London, Dubai — a key transit hub for bullion being shipped to Middle East and Asian markets — was the initial beneficiary. The UAE maintained its neutral stance this year, refusing to take formal measures against Russian gold despite lobbying by the US and UK, people familiar with the discussions said.
Russia shipped 96.4 tons of bullion to the UAE in 2022, making it the country’s largest supplier. That was more than five times the volume exported through Hong Kong.
While there’s still no UAE ban on importing Russian gold, volumes have fallen significantly. That’s partly due to regulatory clean-up, after the Middle East nation was added to a watch-list by the Financial Action Task Force, a global money laundering watchdog.
Bank transfers in the UAE have been subjected to increased oversight, while cash payments are monitored through a mandatory government database, which has made paying Russian exporters more difficult, people familiar with the matter said. US sanctions in May on Russia’s biggest gold miners — Polyus JSC and the local unit of Polymetal International Plc — also had a chilling effect as UAE traders and banks are more reluctant to deal with designated entities, the people said.
Some Dubai-based gold buyers began rerouting shipments to Hong Kong, according to preliminary data from trade-tracking firm ImportGenius, based on Russian customs figures for the six months through August.
Other UAE firms pulled back altogether. State-owned logistics firm Transguard, which is part of airline Emirates Group, said in May it had stopped transporting Russian gold.
“The UAE operates with clear and robust processes against illicit goods, money laundering and sanctioned entities, and implements the highest international governance standards across the gold trade,” the government-chaired Gold Bullion Committee wrote in a statement to Bloomberg. The UAE will continue to trade “in compliance with all current international norms as set down by the United Nations.”
Last Wednesday, the UK issued a fresh round of sanctions on companies linked to the Russian gold trade, including Dubai-based Paloma Precious DMCC, which it said had imported $300 million from the country. The firm was formerly the shareholder of Emirates Gold DMCC, the refinery suspended from the UAE’s accredited list due to concerns about its ownership.
At the same time, China has made it clear that it wants to boost trade with Russia, underscoring the close ties between the nations’ leaders Xi Jinping and Vladimir Putin since the invasion of Ukraine. Beijing has provided diplomatic and economic support to Moscow that has helped blunt the effects of Western sanctions, while China is now the largest importer of fossil fuels from Russia.
VPower Finance Security (Hong Kong) Ltd., which moves cash and precious metals for some of China’s biggest financial institutions, is a key player in handling newly imported gold from Russia, data from ImportGenius shows. VPower did not respond to an email seeking comment.
The shift to Hong Kong was also helped by a surge in Chinese gold prices above international ones in September. That drew bullion into the country, creating profitable arbitrage opportunities for banks with import licenses.
(Updates with government statement in 11th paragraph. An earlier version corrected attribution of the statement)
Mining giant Glencore snubs London with $7bn coal deal listing
Matt Oliver Tue, November 14, 2023 Gary Nagle, chief executive of Glencore, believes its new business will get a better valuation in the US - Jose Cendon/Bloomberg
Glencore has become the latest company to snub the London Stock Exchange after confirming proposals to spin off and list its coal business in New York.
The FTSE 100 mining giant has announced it will acquire a majority stake in the steelmaking coal business of Canada-based Teck Resources for $6.9bn (£5.5bn), bringing to a close months of tense negotiations.
It sets the stage for a break-up of Glencore, which is proposing to split off the newly combined coal businesses into a standalone entity.
The demerger is expected to happen within 24 months of the Teck deal closing, assuming it is approved by shareholders.
But in a blow to the City, bosses on Tuesday reiterated plans to list the combined coal business in New York rather than London – with secondary listings also going elsewhere, to Toronto and Johannesburg.
The remaining Glencore group, which will focus on the “transition metals” used in electric cars and other green technologies, will remain listed in London.
Glencore proposed a New York listing for the coal business because of the large pools of capital available and a “pragmatism” among American investors who are more willing to invest in fossil fuels, a source close to the company said.
On Tuesday, he said there was a strong appetite in North American markets for a coal business, adding: “We believe we would get a better valuation for this business in New York than we would in London.”
Glencore expects the Teck deal to close in the third quarter of 2024, paving the way for a listing of the coal business by the second half of 2026.
The proposal to list in New York comes amid concerns in London about an exodus of companies going abroad or being taken private.
Earlier this year, Cambridge-based chip designer Arm also snubbed the London Stock Exchange when it decided to list its shares in New York, despite heavy lobbying by the UK Government.
It came after Aveva, the industrial software business, was delisted by French parent Schneider, of France and cyber security company Avast was bought by US-based NortonLifeLock.
Australian mining giant BHP was also among those to delist from London in 2022, with the company choosing to centralise in Australia instead.
This year, research by City broker Peel Hunt has found the London market is expected to lose up to 30 businesses worth more than £100m, amid yet more takeovers and delistings.
Glencore Wins Teck Coal Unit, Paving Way for Its Own Split
Thomas Biesheuvel and Jacob Lorinc Tue, November 14, 2023
(Bloomberg) -- Glencore Plc will buy a majority stake in Teck Resources Ltd.’s coal business, ending a months-long saga that transfixed the mining industry and setting the stage for the commodity giant to exit the coal business itself.
The two companies have spent much of the year in a bitter public fight after Teck rejected an unsolicited $23 billion offer from Glencore, which proposed creating two new metals- and coal-focused companies. The Glencore offer, while unsuccessful, was enough to disrupt an earlier plan by Teck to spin off its coal business.
For Glencore and its relatively new chief executive officer, Gary Nagle, the deal represents a company defining moment that will pave the way for an exit from its hugely profitable but polluting thermal coal business and leave it focused on metals needed for the energy transition. Glencore intends to put the combined coal operations into a new company listed on the New York Stock Exchange within two years of the acquisition closing, Nagle said.
“I don’t think this is a second prize,” Nagle said on a conference call. “We’ve done very well acquiring an excellent asset.”
For Teck, the deal finally ends its struggle to find a solution for its mines that produce steelmaking coal after years of studying various options, while securing the cash it needs to fund its metals business.
Teck shares rose 2.7% as of 9:37 a.m. in Toronto, while Glencore rose 4% in London.
In the deal announced Tuesday, Glencore will pay $6.93 billion for a 77% stake in Teck’s business, while steelmakers Nippon Steel Corp. and Posco, which currently own minority stakes in Teck coal mines, will hold the rest. Glencore said it also expects to pay $250 million to $300 million to acquire a shareholder loan made by Teck to the coal business. The Glencore deal, which requires Canadian government approval, implies an enterprise value of $9 billion for Teck’s coal business.
The fight over Teck has highlighted the challenges facing miners with large coal operations — the businesses are big profit drivers for both companies, but many investors are increasingly reluctant to hold exposure to the polluting fossil fuel.
Before the Teck proposal became public, Glencore had previously said it would continue running its mines until they were depleted, even as many of its rivals pulled out of the thermal coal business. Assuming Glencore’s plans to split out the business proceed, its remaining operations — like Teck’s — will be focused on metals such as copper and zinc.
Glencore’s successful coal bid is an ironic end to the acrimonious saga, after Teck and its controlling shareholder, Norman Keevil, pointedly attacked the Swiss company’s track record in rejecting its earlier takeover proposal. The deal will ensure “continued socially and environmentally responsible steelmaking coal operations and enhanced benefits for Canada,” Teck said on Tuesday.
Nippon Steel, which currently owns 2.5% in some of Teck’s coal assets, will convert the ownership and put in additional cash to take a 20% stake in the business, while Posco will convert its ownership stake in Teck mines to a 3% holding in the business.
Teck, which will now have no exposure to the coal business, said it will use the proceeds to pay off debts, build new metal mines and return some to shareholders. Best Value
“We were able to achieve what we saw as the best value for this transaction as well as a clean separation,” said Teck CEO Jonathan Price. “The valuation for this transaction was clearly superior.”
The deal caps a difficult year for the Canadian miner. Alongside the bruising takeover battle with Glencore, it has also faced a cost blowout at its flagship new copper mine in Chile which was originally the main lure for Glencore. The company must now reassure shareholders that it can use the coal sale proceeds to build new copper mines on time and on budget.
The Glencore deal won’t require a vote by Teck’s shareholders, unlike the earlier spinoff plan that was abandoned after it failed to win enough support.
The separation of the coal business may also make Teck a target for some of the industry’s biggest names, who are keen to add more exposure to copper. Teck said Tuesday that Glencore had agreed to a two-year standstill from the time of closing, which would prevent it making a further unsolicited takeover bid.
The deal will need to be approved by the Canadian government, which has been increasingly focused on protecting the country’s natural resources. The fight over Glencore’s initial takeover offer drew the attention of federal and regional government officials.
Bloomberg Businessweek
Glencore coal deal shows power of fossil fuels - even on their way out
Tue, November 14, 2023 By Clara Denina and Pratima Desai
LONDON (Reuters) -Glencore's deal to buy Teck Resources' steelmaking coal unit shows how cheap fossil fuels can be a lucrative option for companies - for a decade or two at least - even as they are phased out in favour of renewable energy.
Western companies may be loathe to search for new sources of coal or build new mines, but investors say coal still has a powerful role to play in the coming years since it can be used to feed the needs of the global shift to cleaner energy. Demand for coal - driven by Asia - remains strong, lifting prices.
Coking coal is emerging as a top option for companies to make a foray into, as it is used to make steel, an important component in large infrastructure and renewable projects.
The world's largest miner BHP, for example, also decided this year to hold on to its higher-quality coking coal assets, after a 2020 review of its wider coal portfolio prompted the sale of some mines.
By buying Teck's coking coal business, Glencore will create a coal powerhouse that analysts say should generate between $5 billion and $6 billion a year in free cash flow. The company is already one of the world's biggest listed producers of thermal coal, with an output of around 110 million tonnes a year, and also has its own coking coal assets.
Among the most polluting fossil fuels, thermal coal is used to produce electricity and is being phased out as part of a global transition to clean energy sources.
Glencore CEO Gary Nagle reiterated the company's commitment to phasing out its thermal coal assets over time, but said he believes demand for both thermal and coking coal will continue to be strong for years to come.
Mining investors agree.
"The world economy benefits from cheap energy. However you are going to get that energy: coal, natural gas...that cheap carbon energy helps to build economically viable renewable energy, otherwise renewable energy starts to look expensive," said Ian Woodley, portfolio manager at Old Mutual.
"With a reasonable lifespan, up to 30 years, (these companies) are saying they are not going to go through a major exploration drive or build new mines, but will be investing for safe and productive production, and then harvesting these assets for cash with everything going back to shareholders, it is going to be a big capital return story," he added. COKING COAL PRICES SURGE
As Western banks and insurers stand by pledges to restrict lending and insurance coverage to the sector over climate change concerns, expansion of coal mines is unlikely.
Still, global demand for coal reached an all-time high of 8.3 billion tonnes in 2022, half of which came from China, the International Energy Agency (IEA) said.
Coking coal prices rose this year to above $300 a tonne due to tight supply and optimism that the global economy will avoid a deep recession.
Thermal coal prices stand at around $120 a tonne, after surging to a record high above $400 last year as countries desperately sought alternatives to Russian gas after the start of the war in Ukraine.
"Asia is not going to stop burning coal any time," said an investor at a natural resources fund, adding that the company will find a way to make money off the assets even after they are spun off.
Glencore said it would spin off the combined coking coal and thermal coal assets within two years of the deal's closing and eventually list those assets in New York, with secondary listings in Toronto and Johannesburg.
"Coking coal is unique so it won't go away... Teck has been one of our most profitable investments," said Peter Letko, co-founder of investment firm Letko Brosseau, calling Teck's steelmaking business a "prized asset".
(Reporting by Clara Denina and Pratima Desai, additional reporting by Divya Rajagopal; Editing by Veronica Brown and Deepa Babington)
Canada likely to approve Glencore-Teck deal despite foreign investment scrutiny
Tue, November 14, 2023
By Divya Rajagopal
TORONTO (Reuters) -As Glencore prepares for the long grind to convince Canada of the virtues of the Swiss trader-led consortium's $9 billion bid for Teck Resources' coal unit, investors and lawyers are optimistic about the deal approval despite the government's increased scrutiny of foreign investments.
In recent years, Canada has tightened the Investment Canada Act (ICA), the main tool the government uses to review inbound deals to ensure transactions are not harmful to national security.
Glencore CEO Gary Nagle's initial bid for the entire Teck Resources faced stiff opposition from Justin Trudeau's Liberal government and from the premier of British Columbia, where the company is based. Teck twice rebuffed Glencore's overtures.
On Tuesday, the federal innovation ministry declined to specifically comment on Glencore's bid, citing confidentiality provisions of the Act, but said any transaction involving a Canadian company and a foreign company would be subject to a review under the ICA.
"All regulatory processes will be followed regarding review of the proposal," Finance Minister Chrystia Freeland said during a conference. "The government concern remains to protect Canadian jobs, environmental issues, rights of indigenous people; Teck is important for Canada and they are a champion for Canada."Greg McNab, a partner with law firm Dentons who specializes in the energy and mining sector, said he expects the deal to be approved by the government.
"The Canadian government makes a lot of tax revenues from coal, but it does not want to be seen as blocking the sale of those assets to someone else, at least from the public policy perspective," McNab added.
After seven months of pitched battles, Glencore on Tuesday was finally able to persuade Teck to sell a 77% stake in the Canadian miner's steelmaking coal business for $6.9 billion in cash, with 20% going to Japan's Nippon Steel Corporation.
Anticipating an intense and a long review, Glencore has made a 28-point commitment to ICA, including a pledge to keep the company headquartered in Vancouver with a majority of the board of directors and senior leadership made up of Canadian nationals. Glencore expects the transaction to close in the third quarter of 2024.
United Steelworkers union (USW), representing over 4,000 Teck employees in British Columbia, said it would not support the proposed sale of Teck's steelmaking coal operations to Glencore without further commitments.
"While we see a number of good and broad commitments such as job retention, a Vancouver-based head office... underlying concerns persist regarding Glencore's role as a corporate entity," USW Western Canada Director Scott Lunny said, adding that there has been no communication from the company.
In the past five fiscal years starting in 2018/19, nearly 100 inbound deals were subject to Canada's extended national security review, of which 10 were forced to divest stakes, one was blocked and two reviews are ongoing.
While the number of companies undergoing extended reviews has increased, outright rejections have been rare.
Glencore said it would demerge the coal units of both companies within 24 months of the deal's close.
The deal announced on Tuesday isn't subject to approval by Teck shareholders, who in April scuppered a planned split of the company.
While all investments are subject to national security review, only significant acquisitions of control of Canadian businesses by foreign investors are reviewed for net benefit.
"I will be surprised that the deal will be scuttled because the way the deal is structured with multiple parties," said Peter Letko, co-founder of Letko Brosseau, a Montreal-based asset management firm and a Teck investor.
"I think this is a fair deal, they have accomplished what they (Teck) wanted to do, remove the higher emission product from their portfolio. This was the strategy of the Keevil family too," Letko added, referring to Teck's Keevil family which owns 55% of Teck's Class A shares though Temagami Mining.
(Reporting by Divya Rajagopal;Additional reporting by Akanksha Khushi; Writing by Denny Thomas; Editing by Jonathan Oatis and Miral Fahmy)
CANCEL IT
Judge's ruling advances plan to restructure $10 billion debt of Puerto Rico's power company Associated Press Finance Tue, November 14, 2023 Deteriorated U.S. and Puerto Rico flags fly on a roof eight months after the passing of Hurricane Maria in the Barrio Jacana Piedra Blanca area of Yabucoa, a town where many continue without power in Puerto Rico, May 16, 2018. A federal judge on Tuesday, Nov. 14, 2023, tentatively approved a portion of the newest plan to restructure $10 billion of debt owed by Puerto Rico’s power company amid heated negotiations between creditors and the U.S. territory’s government.
(AP Photo/Carlos Giusti, File)
SAN JUAN, Puerto Rico (AP) — A federal judge on Tuesday tentatively approved a portion of the newest plan to restructure $10 billion of debt owed by Puerto Rico’s power company amid heated negotiations between creditors and the U.S. territory’s government.
The overall debt restructuring plan has been amended four times this year by a federal control board that oversees Puerto Rico’s finances. A confirmation hearing is set for March 2024 as various bondholders continue to oppose the plan.
The board did not have immediate comment on the judge’s decision regarding the plan's disclosure statement, which requires modifications before bondholders vote on it. The decision was issued after an hours-long hearing that drew protesters to the courthouse who are opposed to electric bill increases outlined in the plan.
Numerous restructuring attempts have failed, with several creditors seeking to recuperate more money than what the plan currently offers. The plan was amended for a third time in August and a fourth time over the weekend.
The newest proposal seeks to cut the power company’s debt by nearly 80%, to some $2.5 billion. If approved, it is expected to lead to increases in residential and commercial power bills that already are among the highest of any U.S. jurisdiction.
The power company is Puerto Rico's only agency that has yet to restructure its debt since the territory's government announced in 2015 that it was unable to pay its more than $70 billion public debt, accumulated through decades of mismanagement, corruption and excessive borrowing. In 2017, Puerto Rico filed for the biggest U.S. municipal bankruptcy in history.
Adobe faces EU antitrust warning over Figma deal, sources say
Tue, November 14, 2023 The corporate logo of software company Adobe is seen in Posa Studio school in Caracas
By Foo Yun Chee
BRUSSELS (Reuters) - Adobe's $20 billion bid for cloud-based designer platform Figma is set to face an EU antitrust warning in the coming days, three people familiar with the matter said, a move that would ratchet up pressure on the Photoshop maker to offer remedies.
Tech deals around the world have recently attracted tougher antitrust regulatory scrutiny amid fears that some bigger companies may be acquiring rival start-ups to shut them down or boost their market power.
The European Commission is readying a statement of objections to send to the companies in the coming days, the people said.
Such documents or charge sheets set out the EU competition watchdog's concerns on why deals could be anti-competitive.
The EU agency opened a full-scale investigation into Adobe's proposed acquisition in August, saying that it could reduce competition in global markets for interactive product design tools and also shut out rivals.
The Commission and Adobe, which can offer remedies to stave off the EU warning, declined to comment.
Some companies prefer to wait for a statement of objections so that they know the precise regulatory worries before they offer concessions.
San Francisco-based Figma's web-based collaborative platform for designs and brainstorming is used by tech companies such as Zoom Video Communications, Airbnb and Coinbase.
The Commission is due to decide on the deal by Feb. 5.
(Reporting by Foo Yun Chee; Editing by Susan Fenton)
CRIMINAL CAPITALI$M
France's top court demands new trial over $2 billion UBS fine
Wed, November 15, 2023
By Tassilo Hummel, Mathieu Rosemain and Noele Illien PARIS (Reuters) - France's top court on Wednesday ruled a new trial should be held over a 1.8 billion-euro ($1.95 billion) fine against UBS for promoting illegal banking services and money laundering in the country.
The court, which also upheld the guilty verdict against the bank, said a new trial would need to take place at the Paris appeals court to determine a new fine, if any.
The ruling reverses and annuls the decision of the Paris Court of Appeal from Dec. 13, 2021, but only insofar as it relates to penalties and civil interests, all other provisions being expressly maintained, the court said.
UBS's shares, which were already up on the day, spiked as much as 3% more after news broke that the 1.8 billion-euro fine was struck down. However, they then erased those gains and more, to last stand up around 1.6%.
The decision by the Cour de Cassation, France's highest judicial court, means the guilty verdict on UBS is final. The court said a new trial over penalties was needed because the previous decision on the fine did not follow all the correct legal procedures.
UBS said it was disappointed the court had upheld the overall verdict against it, adding it continued to maintain that it acted in accordance with all applicable laws and regulations, and would defend itself in the forthcoming trial.
The ruling once again extends uncertainty over the fine for the Swiss bank, which sought to overturn the verdict and penalty for having wooed wealthy French clients into hiding undeclared funds in Swiss bank accounts between 2004 and 2012.
"UBS may be able to partially reduce the 1.1bn euros of provisions currently set aside (for the case)," Keefe, Bruyette & Woods said in a note to clients before the ruling was released.
"However, we would caveat that a new trial may lead to a final settlement above or below the 1.8bn euros," it said, adding that it expected the case to take "multiple years" to come to an end.
LEGAL SAGA
The legal saga has lasted for more than a decade and saw some of the bank's representatives grilled by French judges.
The 1.8 billion-euro fine ordered two years ago against UBS in France was less than half an initial overall penalty of 4.5 billion imposed on the bank after a first trial in 2019.
It is comprised of a 1 billion-euro penalty and 800 million euros in damages owed to the French state.
UBS reported in its third quarter results that it had put aside over $4 billion in provisions for litigation and regulatory matters, roughly half of which is for Credit Suisse. It estimated that the financial implications from the French case alone would come to 1.1 billion euros.
France's top court reviewed whether the Paris appeals court ruling had complied with the law, not the facts that underpinned its decision.
UBS remains involved in a string of litigation and regulatory matters including claims related to the sale of mortgages and residential mortgage-backed securities in the United States.
It also assumed a number of cases from Credit Suisse when it officially took over its former rival and has already settled a number of those, such as with Mozambique over the decade-old $1.5 billion-plus "tuna bond" scandal
($1 = 0.9207 euros)
(Reporting by Tassilo Hummel, Mathieu Rosemain and Noele Illien; Additional reporting by Stefania Spezzati; Editing by Silvia Aloisi and Mark Potter)
UBS Wins Right to Fight for Cut to €1.8 Billion French Fine
Gaspard Sebag and Leonard Kehnscherper Wed, November 15, 2023
(Bloomberg) -- UBS Group AG won a French top court ruling that may help it cut a €1.8 billion ($2 billion) penalty it got two years ago for helping wealthy French clients stash away undeclared funds in Swiss accounts, extending a decade-long spat yet further.
The judges upheld a lower court’s money laundering conviction against UBS but said the overall penalty should be reexamined. The judges called into question the validity of a €1 billion confiscation order and the justification for €800 million in reparation awarded to the French state.
The Cour de Cassation asked a different panel of judges at the Paris appeals court to issue a new ruling on the overall amounts based on Wednesday’s legal guidance. That also reopens the debate on a third part of the penalty, leaving the possibility that the actual criminal fine set at €3.75 million can be increased.
The legal saga in France has rumbled on for more than a decade with UBS fighting on to cut the €4.5 billion penalty it initially got in 2019. The case has also featured twice-failed settlement talks, a banking boss calling his staffers “egomaniacs,” a whistle blower spying on former colleagues during tennis matches and investigators accusing the bank of deploying stealth tactics “worthy of James Bond.”
“UBS continues to maintain that it acted in accordance with all applicable laws and regulations at all times,” the company said in a statement. “UBS will defend itself in the forthcoming trial.”
Read more: UBS’s Record French Tax Fraud Penalty Slashed to $2 Billion
UBS shares jumped after the ruling and were up 2% by 4:28 p.m. in Zurich.
Morningstar analyst Johann Scholtz said the ruling was “a positive” for UBS, adding he didn’t see “much merit” in the initial French decisions.
On Wednesday, the top court also confirmed a prior finding that UBS covertly and unlawfully dispatched Swiss bankers in France to encourage prospective clients to move money across the border.
Throughout the French trials, UBS deployed a vast team of high-powered attorneys, executives and communications staff to deny the bank ever helped French citizens hide funds and hammer on the weaknesses in the case.
The bank relentlessly questioned the truthfulness of bankers-turned-witnesses, saying one “lied” and accusing another of stealing €750,000 from clients. But it’s the Swiss bank’s arguments on the amount of the overall penalty that have held the most sway with judges in France.
In the meantime, UBS acquired local rival Credit Suisse in a rescue that closed in June. The deal has set the bank on one of the most complex integrations since the financial crisis, which includes efforts to keep key talent in certain areas while shedding other aspects of the business.
UBS has also been winding down its backlog of unresolved cases this year, including a $1.4 billion settlement over US mortgage-backed securities. Switzerland’s biggest bank also reached a settlement with Mozambique over Credit Suisse’s role in a ship-financing scandal.
--With assistance from Alan Katz and Steven Arons.
(Updates throughout)
Bloomberg Businessweek
New York state sues PepsiCo over plastics pollution
Reuters Wed, November 15, 2023
NEW YORK (Reuters) -New York state sued PepsiCo on Wednesday, accusing the beverage and snack food giant of polluting the environment and endangering public health through its single-use plastic bottles, caps and wrappers.
The lawsuit filed in state court in upstate Erie County is among the first by a U.S. state to target a major plastics producer.
State Attorney General Letitia James accused PepsiCo of contributing to a public nuisance by generating a significant share of plastic waste found in and near the upstate Buffalo River, including more than 17% of trash that could be readily traced to specific brands.
She also said the company failed to warn consumers about the potential health and environmental risks of plastics in its more than 100 brands, and misled the public about its efforts to fight plastics pollution.
James said such pollution can enter drinking water after breaking down, contributing to health problems.
"All New Yorkers have a basic right to clean water, yet PepsiCo's irresponsible packaging and marketing endanger Buffalo’s water supply, environment, and public health," she said in a statement.
PepsiCo did not immediately respond to a request for comment.
The complaint said health problems can include early puberty in females, reduced sperm counts, altered functions of reproductive organs, obesity, altered sex-specific behaviors, and increased rates of some types of cancers. The effects from plastic additives have been observed in mammals, and researchers expect the same effects would be observed in humans, the lawsuit said.
The lawsuit seeks to force PepsiCo to stop causing a nuisance, clean up contamination, and provide other relief.
PepsiCo is based in Purchase, New York. In addition to Pepsi cola, its brands include Cheetos, Cracker Jack, Doritos, Fritos, Gatorade, Lay's, Lipton, Mountain Dew, Ocean Spray, Quaker, Ruffles and Tostitos.
Connecticut and Minnesota have previously filed plastics-related litigation as well, alleging companies falsely and deceptively marketed bags as recyclable when they cannot be recycled in state facilities. California in 2022 announced it was conducting an investigation into the fossil fuel and petrochemical industries' role in plastic pollution.
(Reporting by Clark Mindock and Jonathan Stempel in New York; Editing by Chizu Nomiyama and Jonathan Oatis)
Sunak’s Rwanda plan in tatters after Supreme Court judges rule it unlawful
The unanimous ruling by judges agreed with a Court of Appeal decision in June that found that Mr Sunak’s £140m deal was unlawful because of deficiencies in the Rwandan asylum system. Both courts found that sending anyone to Rwanda would be in breach of the European Court of Human Rights (ECHR) as there was a “real risk” they could be returned to their home countries to face “persecution or other inhumane treatment”.
No courts have found the plan to remove asylum seekers to a third-country unlawful in principle but have rather taken issue with the system in place in Rwanda. This could open up the possibility that the government could re-negotiate the deal with Rwanda in future or seek a similar deal with other countries.
Mr Sunak told MPs on Wednesday that he was working on a “new treaty” with Rwanda and, if this doesn’t work, he is “prepared to revisit our domestic legal frameworks”. Under the new treaty, the government will try to get Kigali to agree to give asylum seekers a home in their country even if their claims are rejected. Rishi Sunak was accused by Suella Braverman of having ‘no plan B’ if the Rwanda deal was found unlawful (Getty/PA)
President of the Supreme Court Lord Reed was clear in the judgement that the refugee agency UNHCR, who gave evidence in the case, should be trusted in their assessment that Rwanda was not a safe country for asylum seekers. He also emphasised that withdrawing the UK from the ECHR would not solve the government’s problems as the UK has other legal obligations to protect the rights of refugees.
The ruling of the five judges was a resounding loss for the government, with Lord Reed telling the court: “The evidence shows that there are substantial grounds for believing that there is a real risk that asylum claims will not be determined properly, and that asylum seekers will therefore be at risk of being returned directly or indirectly to their country of origin.”
He said that “the changes and capacity-building needed to eliminate that risk may be delivered in the future”, but that they were not currently in place.
The Rwanda plan is a core part of the prime minister’s pledge to stop small boat crossings, although charities and ministers disagree over whether it will be a significant deterent.
It is also an important part of the Illegal Migration Bill, which would deport all small boat migrants without their asylum claims being considered.
Without the Rwanda agreement, the government has nowhere to deport asylum seekers to.
The judgement has drawn criticism from the right of the Conservative party, with the Tory deputy chairman Lee Anderson calling on the government to “ignore the law” and start flights anyway.
Former cabinet minister Simon Clarke said the ruling was “a serious challenge to who governs Britain”.
The Rwanda deal was originally signed by Priti Patel in April 2022 as a five-year arrangement.
Under the agreement, the UK has already paid £120m in development funding to Rwanda and £20m to receive the first group of asylum seekers, and will also pay for the processing and integration costs for each person sent there. This will cost an estimated £169,000 per person, according to a government assessment. Rishi Sunak has said that the government will seek a ‘new treaty’ with Rwanda (PA)
Refugee charities hailed the ruling as a “victory for the rights of men, women and children who simply want to be safe”.
Care4Calais, who were a claimant in the initial legal challenge against the plan, said that the ruling was “a victory for humanity”. “Today’s judgement should bring this shameful mark on the UK’s history to a close,” CEO Steve Smith said.
One of the asylum seekers that the government tried to send to Rwanda in June 2022 has told The Independent that he “was so happy” at the news that their deportation plans had failed.
He called on Mr Sunak’s government to process his asylum claim and those of other migrants who he said are “living in limbo” waiting on their decisions.
He was in the Supreme Court, along with charity Care4Calais, when the decision was announced and he said he could tell by the body language of those around him that his claim against the government had succeeded. He said he was “proud” to be part of the legal action against the government and “it was my duty to do it for all the other people”.
In a scathing letter published on Tuesday night ahead of the court decision, Ms Braverman accused Mr Sunak of betraying his promise to the nation to do “whatever it takes” to stop the boats. She said that Mr Sunak had agreed a deal with her when she was appointed home secretary that would have allowed specific “notwithstanding clauses” into new legislation enabling the government to exclude international law. This would in effect be a way of ignoring the ECHR on certain issues without fully withdrawing from it.
She accused Mr Sunak of rejecting this proposal and failing to prepare a plan B if the government didn’t succeed in the courts. Reacting to Wednesday’s ruling, Ms Braverman said “the government must introduce emergency legislation” or “admit defeat”.
At Mr Sunak’s new-look cabinet on Tuesday, new home secretary Mr Cleverly outlined the options available to the government in light of the Supreme Court ruling. The prime minister’s official spokesman said that leaving the ECHR was not discussed at the meeting.
Mr Cleverly has in the past said that he did not think leaving the ECHR was necessary to ensure the UK’s tough approach to immigration. He told MPs on Wednesday that: “National governments can’t just vote themselves out of international commitments”.
Here are the five most damning statements in the Rwanda Supreme Court decision. ‘Real risk’ asylum seekers sent back to face ‘ill-treatment’
In their written judgment, the justices found there would be a risk of genuine asylum seekers being returned by Rwanda to the home country from where they fled, facing ill-treatment.
Lords Reed and Lloyd-Jones said the court is unanimously of the view that “the evidence establishes substantial grounds for believing that there is a real risk that asylum claims will not be determined properly, and that asylum seekers will in consequence be at risk of being returned directly or indirectly to their country of origin.
“In that event, genuine refugees will face a real risk of ill-treatment in circumstances where they should not have been returned at all.”
Lord Reed added in a summary of the Supreme Court’s ruling that changes needed in Rwanda’s asylum system to “eliminate the risk” of refugees being returned to their countries of origin where they could face bad treatment “have not been shown to be in place now”.
He said there was a legal rule that “refugees must not be returned to their countries of origin, either directly or indirectly, if their life or freedom would be threatened in that country”.
“That rule is called the principle of non-refoulement,” he said. Rwanda ‘rejects 100%’ of those fleeing some conflict zones
In their judgment, the Supreme Court also warned that Rwanda has a 100 per cent rejection rate for asylum seekers from conflict zones, including Afghanistan, Syria and Yemen.
The UN Refugee Agency said Rwanda had a “100 per cent rate of rejection of asylum claims from countries in known conflict zones from which asylum seekers removed from the UK may well come, such as Syria, Yemen and Afghanistan, although the UK authorities often find that such claims are well-founded”, Lord Reed said.
The judge said the UNHCR gave “over 100 examples” of Rwanda sending refugees back to their countries of origin and had argued that the Rwandan government had an “apparent misunderstanding of its obligations under the Refugee Convention”.
Lord Reed added that the UNHCR has given evidence over Rwanda’s “failure” to fulfil a “similar” agreement with Israel over the removal of asylum seekers, with some people being “routinely moved clandestinely to a neighbouring country from which they were liable to be returned to where they came from and face bad treatment.” Police warn Rwandans in UK about state plans to kill them
In their decision, the justices explained that British police have had to warn Rwandan nationals living in Britain of credible plans to kill them by the Rwandan state.
It read: “In 2017, in proceedings to which the Secretary of State was party, the Divisional Court found that Rwanda was ‘a state which, in very recent times, has instigated political killings, and has led British police to warn Rwandan nationals living in Britain of credible plans to kill them on the part of that state’.”
The justices added that Rwanda has a “poor human rights record”, noting the UK government’s own criticism of the country in 2021 for “extrajudicial killings, deaths in custody, enforced disappearances and torture”. UK government officials have also “raised concerns about constraints on media and political freedom”, said the Supreme Court. UNHCR’s evidence ‘naturally of greatest weight’
In the 56-page judgment, the Supreme Court made clear that they accepted the weight of the evidence provided by the refugee agency UNHCR, criticising the divisional courts for failing “to give proper consideration to the UNHCR’s evidence”, which was crucial to proving that the Rwandan asylum system was not fit to process claims.
What weight to put on the UNHCR evidence has been an issue of contention in the courts, with one of the judges in the Court of Appeal ruling that the government’s assessment trumped concerns expressed by the refugee agency. The Supreme Court has instead agreed with the UNHCR in their assessment that Rwanda is not a safe country for asylum seekers.
The justices said: “UNHCR’s evidence will naturally be of greatest weight when it relates to matters within its particular remit or where it has special expertise in the subject matter.” ‘Refugees protected by other treaties’ if UK removed from ECHR
President of the Supreme Court Lord Reed used his judgment to make clear that even if the UK decided to withdraw from the European Court of Human Rights (ECHR), this would not automatically make the Rwanda deal legal.
Lord Reed emphasised the UK has signed up to other legislation that protects the rights of refugees beyond the ECHR. He said: “Asylum seekers are protected against refoulement by several international treaties ratified by the UK.”
These included the the United Nations (UN) Refugee Convention, the UN Convention against Torture and Other Cruel, Inhuman or Degrading Treatment and the UN International Covenant on Civil and Political Rights, he said.
UK plan to send asylum-seekers to Rwanda blocked by Supreme Court
Rob Picheta, CNN Wed, November 15, 2023
Britain’s controversial plan to deport asylum-seekers to Rwanda was ruled unlawful by the Supreme Court Wednesday, dealing a potentially fatal blow to Prime Minister Rishi Sunak’s flagship policy on migration and setting up an anticipated revolt from the right wing of his Conservative party.
The UK’s highest court ruled unanimously against the government, siding instead with a previous appeals court ruling that found the policy – which has been roundly condemned by humanitarian bodies – was not lawful.
Its ruling – which unambiguously dismantled the government’s appeal – scuppers an effort to fly asylum-seekers who arrive in the UK illegally to the east African nation. The plan was first announced in April 2022, but has been wrought with legal challenges and has failed to deport a single person.
The ruling is expected to lead to calls from the right of the Conservative Party to leave the European Convention on Human Rights (ECHR), a prospect that has loomed over the government for months and has caused deep rifts between left and right in Britain’s ruling party.
Judges found that Rwanda could not be considered a safe country to which to send asylum seekers, as the government has argued, because there was a risk that genuine refugees would be returned to the countries they had fled from. Protesters waited outside the Supreme Court ahead of Wednesday's ruling. - Leon Neal/Getty Images
“There are substantial grounds for believing that asylum seekers would face a real risk of ill-treatment by reason of refoulement to their country of origin if they were removed to Rwanda,” they wrote in their judgment.
They found that Rwanda’s system for processing asylum claims, its poor human rights record, and its previous failure to comply with non-refoulement agreements meant that the UK government could not be sure asylum seekers would have their claims considered safely and properly.
Sunak told lawmakers on Wednesday he would finalize a new deal with Rwanda that was already being worked on, adding that “if necessary I’m prepared to revisit our domestic legal frameworks.” Any fresh agreement with Rwanda, however, would be subject to further legal scrutiny.
He admitted earlier that the ruling “was not the outcome we wanted, but we have spent the last few months planning for all eventualities and we remain completely committed to stopping the boats.”
More immediately, Sunak must work to navigate the battle within the Conservative Party that has been brewing for months and is expected to erupt following Wednesday’s ruling.
The Supreme Court made clear that the ECHR is not the only convention against which it considered the policy, stating that other international treaties and UK legislation protect refugees and asylum seekers from being deported without guarantees over their safety.
But many on the right of his party have nonetheless been plotting a push to leave the ECHR if the court blocked the policy, a dramatic international withdrawal that moderates have strongly opposed.
The verdict was closely watched in London and across the world, with Britain’s plan considered a test of the viability of offshoring asylum processing.
It was celebrated by humanitarian groups that had long opposed the plan; Care4Calais, which supports refugees in the UK and France, said the judgment “should bring this shameful mark on the UK’s history to a close.”
And Medecins Sans Frontiers said the ruling was an “encouraging result.”
“The new Home Secretary now has a chance to abandon this pointlessly cruel approach, and focus instead on providing safe routes for those seeking sanctuary in the UK. This is the only realistic and humane way of reducing the numbers risking their lives in the Channel.” A costly failure
Wednesday’s ruling was categorical in crushing the government’s policy on multiple fronts. But its impact will be felt for some time; the judgment reignites a debate about illegal migration as a British general election nears, as well as setting the stage for a bitter round of Conservative infighting.
The Rwanda plan was unveiled in response to a soaring number of perilous small boat crossings made by asylum seekers across the English Channel. The rate of crossings has risen rapidly in recent years, a trend Sunak has pledged to reverse.
Under the policy, some asylum seekers would be sent to Rwanda for their asylum claims to be processed. Successful claimants would then be allowed to remain in Rwanda, while those who were unsuccessful would be sent back to their countries of origin. The Manston holding centre for migrants. Small boat crossings to the UK has soared in recent years, a trend that Sunak has pledged to reverse. - Ben Stansall/AFP/Getty Images
The court found that concerns about the Rwandan asylum processing system, and its human rights record, were serious enough to rule the policy illegal.
The scheme was unveiled by former Home Secretary Priti Patel and backed by her successor, Suella Braverman, who was fired from the post on Monday after a string of controversies.
But it has been a costly and public failure for three successive prime ministers. The UK has paid the Rwandan government £140 million ($177 million) for the proposal, the BBC reported.
No flights have taken place; the first scheduled flight to Rwanda was stopped at the 11th hour last year, following an intervention by the European Court of Human Rights, and months of legal challenges then stalled the program.
In a scathing letter to Sunak on Tuesday after her sacking, Braverman said the prime minister’s “magical thinking – believing that you can will your way through this without upsetting polite opinion – has meant you have failed to prepare any sort of credible ‘Plan B’” on illegal migration.
Braverman called Sunak “uncertain, weak, and lacking in the qualities of leadership that this country needs,” and criticized him for being unwilling to leave the ECHR to push the Rwanda plan through – drawing clear battle lines with the prime minister ahead of what could become a civil war within the party.
Natalie Elphicke, the Conservative MP for Dover where the vast majority of small boat crossings to England end their journey, said on Wednesday that the ruling “means the policy is effectively at an end. No planes will be leaving and we now need to move forward.”
But those on the right of the party have been preparing for some time for Wednesday’s result, and quickly began offering stark ultimatums towards the government. The number of undocumented people entering Europe, and then making their way to Britain, has spiraled this year due to conflict, global inequality and climate change, exacerbating a migrant crisis across the continent.
After Wednesday’s ruling, Conservative Party Deputy Chairman Lee Anderson said Britain should “ignore the laws” and “just put the planes in the air now and send them to Rwanda,” PA Media reported.
Opposing illegal migration has become a key pillar of the beleaguered Conservative Party’s pitch to voters, amid polls indicating it has lost support of the public and is heading towards a general election defeat next year.
Its key figures, including Sunak and Braverman, have been accused of using inflammatory language towards illegal migrants as part of a push for votes.
“(Sunak) was told over and over again that this would happen: that it wouldn’t work, and it was just the latest Tory gimmick,” opposition leader Keir Starmer said in the House of Commons on Wednesday. “But he bet everything on it, and now he’s totally exposed.”
“Whether he likes it or not, he’ll have to go back to his office, back to the drawing board, and start from scratch,” Starmer said.
British Supreme Court rules plan to send asylum seekers to Rwanda illegal
Paul Godfrey Wed, November 15, 2023 Demonstrators gathered outside the Supreme Court in London Wednesday to protest the government's Rwanda asylum policy as judges inside upheld a ruling by a lower court that the scheme was unlawful.
Photo by Neil Hall/EPA-EFE
Nov. 15 (UPI) -- Britain's Supreme Court on Wednesday rejected an appeal by the government to overturn a ruling that its controversial plans to deport asylum seekers who arrive in the country without permission to Rwanda were illegal.
The judges concurred 5-0 to uphold a decision by the Court of Appeal in June that the policy was unlawful due to a "real risk" of refugees having their claims in the east African nation wrongly denied, or being sent back to the country they were fleeing in the first place to face persecution or other abuses.
Under the plan, people were supposed to be able to claim asylum in Rwanda, return home, or seek asylum in a third country other than Britain, but the justices said Rwanda was still deporting asylum seekers to countries they had fled even after signing the asylum partnership treaty with Britain in April 2022.
Reading out the judgment, Supreme Court president Lord Reed cited evidence from the U.N. Refugee Agency detailing a similar failed agreement between Israel and Rwanda.
The decision throws into disarray a migration strategy, the heart of which was the government's $175 million agreement with Rwanda aimed at deterring the tens of thousands of people crossing the Channel in small boats each year.
"Stopping the boats" was one of five key pledges for a more secure and prosperous Britain set by Prime Minister Rishi Sunak in January after taking over from Liz Truss in October 2022.
Speaking in the House of Commons after Wednesday's ruling, Sunak said the government would seek a new agreement with Rwanda but that, if necessary, he would be prepared to change laws that allow legal challenges brought under the European Convention on Human Rights and the Human Rights Act.
He said his government would put new plans before parliament "in the coming days" and that the wording of the revised agreement would provide the "reassurance" required.
Conservative Party deputy chairman Lee Anderson said the government should "ignore the laws" and deport asylum seekers immediately upon arrival in Britain.
"Just put the planes in the air now and send them to Rwanda. I think the British people have been very patient, I've been very patient, and now they're demanding action. And this has sort of forced our hand a little bit now.
"It's time for the government to show real leadership and send them back, same day."
The leader of the Labor Party opposition Keir Starmer called the government's policy a "ridiculous, pathetic spectacle."
"Rishi Sunak wasted $175 million of taxpayers' money on his unlawful Rwanda scheme. Only Labor has a proper plan to go after criminal smuggling gangs and clear the Tory asylum backlog."
Charities called for the scheme to be scrapped completely.
UK's Sunak suffers major blow as Rwanda migrant scheme declared unlawful
Michael Holden and Sam Tobin Updated Wed, November 15, 2023
By Michael Holden and Sam Tobin
LONDON (Reuters) -Britain's Supreme Court ruled on Wednesday that the government's scheme to send asylum seekers to Rwanda was unlawful, dealing a crushing blow to Prime Minister Rishi Sunak before an election expected next year.
With his flagship immigration policy in tatters, Sunak said he was working on a new treaty with Rwanda, and said if this did not solve the issue, he would pass new laws and revisit any international treaties which frustrated his plans.
Under the scheme, Britain intended to send tens of thousands of asylum seekers who arrived on its shores without permission to the East African country in a bid to deter migrants crossing the Channel from Europe in small boats.
But the top court on Wednesday unanimously ruled that Rwanda could not be considered a safe third country, delighting opponents who said the policy was unworkable and cruel, and infuriating those on the right wing of Sunak's Conservative Party.
Sunak, whose party is trailing by some 20 points in opinion polls, signalled to those angry lawmakers that Britain could potentially leave the European Convention on Human Rights (ECHR) and other such treaties as some have demanded.
"If it becomes clear that our domestic legal frameworks or international conventions are still frustrating plans at that point, I am prepared to change our laws and revisit those international relationships," Sunak told parliament.
"The British people expect us to do whatever it takes to stop the boats."
The Rwanda scheme has been the central plank of Sunak's immigration policy as he prepares to face an election next year, amid rising concern among some voters about the numbers of asylum seekers from Europe.
The ruling had taken on even greater political significance after Sunak on Monday sacked Interior Minister Suella Braverman, a popular figure on his party's right whose remit included dealing with immigration.
She launched a scathing attack on Sunak on Tuesday, saying he had broken promises on tackling immigration and betrayed the British people.
'BROKEN PROMISES'
After becoming prime minister in October last year, Sunak vowed to "stop the boats", one of the five key pledges of his premiership.
This year more than 27,000 people have arrived on the southern English coast without permission, after a record 45,755 were detected in 2022. Meanwhile the cost of housing the 175,000 migrants waiting an asylum decision is costing 8 million pounds ($10 million) a day.
The Rwanda policy was originally drawn up by former Prime Minister Boris Johnson in an initial 140 million pound ($180 million) deal.
Critics, ranging from opposition lawmakers as well as some Conservatives to church leaders and the United Nations refugee agency, had argued the policy was flawed, a waste of money, immoral and simply would not work.
"He was told over and over again that this would happen, that it wouldn't work, and it was just the latest Tory (Conservative) gimmick," Keir Starmer, leader of the main opposition Labour party, told parliament.
"But he bet everything on it. And now he's totally exposed. The central pillar of his government has crumbled beneath it."
Supreme Court President Robert Reed said the five judges involved agreed there were "substantial grounds for believing that asylum seekers sent to Rwanda would be at real risk of refoulement", meaning being sent back to their country of origin where they could be at risk of ill-treatment.
This would be in breach of a number of international treaties, including the ECHR, Reed said. But he left open the chance the scheme could be resurrected, saying "the changes needed to eliminate the risk of refoulement may be delivered in the future, but they have not been shown to be in place now".
"This has forced our hand a little bit now: we should just put the planes in the air now and force them to go to Rwanda," Lee Anderson, the Conservative's Deputy Party Chairman, was quoted by British media as saying.
"The government should ignore the law and send them back now. These people are intruders and should be sent back."
The ruling will also be examined closely across Europe, where Germany and other governments are looking how to reduce the number of asylum seekers, and the European Union is seeking to overhaul the bloc's migration rules.
($1 = 0.8024 pounds)
(Additioanl reporting by William James, Elizabeth Piper, Andrew MacAskill and Alistair Smout; Editing by Alex Richardson, Kate Holton, William Maclean)
U.K. Supreme Court rules plan to send asylum seekers to Rwanda unlawful
Haley Ott Updated Wed, November 15, 2023
London — The U.K. Supreme Court ruled Wednesday that the government's controversial plan to send asylum seekers who arrive on Britain's shores without prior permission to Rwanda was unlawful.
"There are substantial grounds for believing that asylum seekers would face a real risk of ill-treatment by reason of refoulement to their country of origin if they were removed to Rwanda," the judgment published Wednesday said.
Non-refoulement is a core principle of international law under which asylum seekers are protected from being forced back to the country they fled.
The U.K. government's Rwanda plan
U.K. Prime Minister Rishi Sunak had pledged his government would stop migrants and asylum seekers from crossing over the English Channel in small boats, which they have done in record numbers in recent years. In April 2022, Britain signed a deal with Rwanda to send anyone arriving on its shores without prior permission to the East African nation to have their asylum claims processed there. A protestor is seen outside the U.K. Supreme Court ahead of a ruling in which the court determined that the British government's policy of sending asylum seekers to Rwanda was unlawful, Nov. 15, 2023 in London, England.
/ Credit: LEON NEAL/Getty
The plan cost the U.K. government at least $175 million in payments to the Rwandan government, according to The Associated Press, and the legal challenges that culminated with the Supreme Court's Wednesday ruling meant not a single asylum seeker was ever actually flown to Rwanda.
U.K. government stands by the plan, promises new terms
"This was not the outcome we wanted, but we have spent the last few months planning for all eventualities and we remain completely committed to stopping the boats," Sunak said in response to the ruling, adding later that his government was working on a new treaty with Rwanda and that he would "revisit our domestic legal frameworks" if necessary.
"Illegal migration destroys lives and costs British taxpayers millions of pounds a year. We need to end it and we will do whatever it takes to do so," he said.
Speaking shortly after Sunak, Britain's newly appointed Home Secretary James Cleverly, the government minister in charge of law enforcement and immigration issues, said the government had for months "been working on a plan to provide the certainty that the courts demand," promising to come up with a new treaty with Rwanda that would "make it absolutely clear" to courts in both the U.K. and Europe that the policy "will be consistent with international law."
Rwanda's reaction, and "poor human rights record"
The court's judgment said that part of the reason the U.K. government policy was deemed unlawful was that Rwanda could not be counted on to treat asylum seekers sent there by the U.K. properly.
"Rwanda has a poor human rights record," the judgement said. "The evidence shows that there are substantial grounds for believing that there is a real risk that asylum claims will not be determined properly, and that asylum seekers will therefore be at risk of being returned directly or indirectly to their country of origin. The changes and capacity-building needed to eliminate that risk may be delivered in the future, but they were not shown to be in place when the lawfulness of the Rwanda policy had to be considered in these proceedings."
Rwanda's government said in a statement that the decision was ultimately one for the U.K.'s judicial system, but it took "issue with the ruling that Rwanda is not a safe third country for asylum seekers and refugees, in terms of refoulement," adding that the two nations "have been working together to ensure the integration of relocated asylum seekers into Rwandan society."
"Rwanda is committed to its international obligations, and we have been recognized by the UNHCR and other international institutions for our exemplary treatment of refugees," the statement said.
Rights groups including OXFAM expressed relief at the ruling.
The British government's policy "sought to punish rather than protect those fleeing conflict and persecution," said Katy Chakrabortty, head of policy and advocacy at OXFAM.
The ruling came one day after Britain's previous Home Secretary Suella Braverman — seen as an architect of the Rwanda plan — was fired by Sunak for publishing an opinion piece in a newspaper without edits the prime minister's office had requested.
Government spent more on 'ridiculous' Rwanda scheme than on domestic abuse victims
The government’s Rwanda scheme has cost taxpayers £140 million.
Andy Wells ·Freelance Writer Updated Wed, November 15, 2023
Jess Phillips, the MP for Birmingham Yardley said the cost to the taxpayer of the scheme – £140 million – meant the government had spent more on it than for victims of domestic abuse.
Earlier on Wednesday, five justices at the Supreme Court unanimously rejected the government’s appeal over its policy of removing asylum seekers to the east African nation if they arrive by unauthorised means.
Supreme Court president Lord Reed ruled that there would be a risk of Rwanda returning genuine asylum seekers to face “ill treatment” in the country they had fled.
Responding to the ruling, Phillips posted on X: “Just a little reminder that government have spent more money on the failed Rwanda scheme than it did on domestic abuse refuges for women and children.”
Yahoo News UK has contacted Phillips for further comment.
Labour leader Sir Keir Starmer demanded an apology to the nation from prime minister Rishi Sunak for wasting millions of pounds of taxpayers’ cash on the “ridiculous, pathetic spectacle”.
Sunak vowed to do “whatever it takes” to end Channel crossings, as he set out how the first step will be to “finalise” a new treaty with Rwanda.
The UK's asylum system costs £3 billion a year, with around £8 million spent every day on hotel accommodation for refugees and asylum seekers.
The government’s Illegal Migration Bill estimated included an economic-impact assessment that said removing one person to a third country – like Rwanda – would cost around £63,000 more than keeping them in the UK. Rishi Sunak has vowed to do ‘whatever it takes’ to end Channel crossings. (PA) (House of Commons/UK Parliament, PA Images)
Toufique Hossain, head of public law at law firm Duncan Lewis – which represented six of the lead claimants in the Rwanda case – said the government will now have to consider the legal costs of any future asylum policies they develop.
Speaking outside court, he said: “They will have to bear in mind, whatever deal they make, the waste of taxpayers’ money, hundreds of millions of pounds, in going through a deal before it’s tested in the courts.
Labour said Wednesday’s ruling “exposes Rishi Sunak’s failure to get any grip or have any serious plan to tackle dangerous boat crossings” and that the plan “is unworkable and extortionately expensive”.
Shadow home secretary Yvette Cooper added: “Ministers knew about the weaknesses in this scheme from the start and yet they insisted on making it their flagship policy.” ‘Morally wrong and inhumane’
Alistair Carmichael, the Liberal Democrat home affairs spokesperson said the policy was “immoral, unworkable and incredibly costly for taxpayers”.
He added: “So much time and money has already been wasted.”
The SNP's home affairs spokesperson, Alison Thewliss, said it was “right” that the policy was branded unlawful, adding: “The policy should never have been put on the table. It is morally wrong and inhumane.”
Tim Naor Hilton, the chief executive of Refugee Action, described the Rwanda policy as a “grubby cash-for-humans deportation deal, adding to Yahoo News UK: “It’s now time to scrap this inhumane and unworkable deal and any similar plans it has with other countries – and consign to history the awful and totally unworkable Illegal Migration Act that supports them.“ Lord Reed, president of the Supreme Court, delivered the verdict on the Rwanda scheme on Wednesday, (PA) (PA Video, PA Images)
In a statement to Yahoo News UK, Enver Solomon, CEO of the Refugee Council, said refugees “have been highly distressed, anxious, and traumatised about the prospect of being shipped as though they are human cargo to Rwanda”.
He added: “The plan goes against who we are as a country that stands up for those less fortunate than us and for the values of compassion, fairness and humanity.“
The government loss means the prime minister faces pressure from critics in the right of the Tory party, who insist the Rwanda plan is the right policy.
Jonathan Gullis, part of the New Conservatives grouping of Tory MPs, suggested the government could introduce a “notwithstanding Bill” to override all conventions and treaties the UK is part of or measures to physically push small boats back into French waters in the Channel.
Tory Party deputy chairman Lee Anderson said the government should “ignore the laws” and send migrants back the same day they arrive in the UK.
He described the Supreme Court judgement as a “dark day for the British people” and said ministers should “just put the planes in the air now and send them to Rwanda”.
UK govt doubles down on Rwanda migrant policy despite court defeat
AFP Wed, November 15, 2023
The UK government vowed Wednesday to persevere with a controversial plan to send migrants to Rwanda, despite the Supreme Court upholding a lower court ruling that it was unlawful and should not go ahead.
In a major setback for Prime Minister Rishi Sunak, a five-judge panel at the UK's highest court unanimously sided with an earlier Court of Appeal decision that the policy was incompatible with Britain's international obligations.
In a 56-page ruling, the judges agreed there were "substantial grounds" to believe Rwanda could forcibly return asylum seekers and refugees to a country where they could face persecution.
But within hours of the long-awaited judgment, Sunak and his ministers said the government would press ahead with finalising a "new treaty" with Rwanda to address those concerns.
"We anticipated this judgment... and for the last few months have been working on a plan to provide the certainty that the courts demand," newly appointed interior minister James Cleverly told MPs.
The new treaty will "make it absolutely clear" to British and European courts that the Rwanda policy "will be consistent with international law", he added.
In a call shortly after the ruling, Sunak and Rwandan President Paul Kagame "reiterated their firm commitment to making our migration partnership work", Downing Street said.
"Both leaders... agreed to take the necessary steps to ensure this is a robust and lawful policy and to stop the boats as soon as possible," Sunak's office added.
- 'Appetite' -
The Migration and Economic Development Partnership agreed in April last year envisages sending to Rwanda anyone who has made what London calls "dangerous or illegal journeys" to Britain on boats and hidden in lorries.
The first deportees were aboard a plane to fly to the African country in June 2022 when a last-minute European Court of Human Rights (ECHR) injunction prevented any deportations, prompting the legal challenges.
The government insists the scheme is crucial to deter "illegal" immigration across the Channel from France on inflatable vessels -- an emotive issue set to feature prominently in the next general election.
More than 27,000 have made the perilous journey this year -- down on the nearly 46,000 who crossed in 2022, but still far short of meeting Sunak's vow to "stop the boats".
His administration says both regular and irregular immigration must be slashed to ease pressure on government-funded services, such as health and housing asylum seekers.
Britain's asylum backlog stands at 122,585, after falling 12 percent from a record high in February.
Sunak's government passed legislation in July barring any "illegal" arrivals from claiming asylum, but it relies on finding third countries to send them to.
Opponents criticise the choice of Rwanda, while arguing the policy is overly cruel, costly and difficult to implement.
The government in Kigali said Wednesday it "take(s) issue" with the ruling that it is not a safe third country.
Despite the pledge to push ahead with its Rwanda plan, there is growing speculation London will now try to strike deals with other countries.
Cleverly claimed there was "an appetite for this concept", and said several other European countries were exploring similar agreements.
- 'Ignore the laws' -
The Supreme Court decision could widen rifts in the ruling Conservative party and prompt renewed demands from right-wingers that Britain withdraw from the ECHR.
Former interior minister Suella Braverman launched a scathing attack on Sunak on Tuesday, a day after he sacked her, accusing him of "betrayal" over immigration and saying he had "no appetite for doing what is necessary".
In parliament on Wednesday, Sunak told MPs he was "prepared to change our laws and revisit those international relationships" if "domestic legal frameworks or international conventions" frustrated the plans.
Outspoken Tory party deputy chairman Lee Anderson said ministers should "ignore the laws" and deport migrants the day they arrive.
He branded the court judgment a "dark day for the British people" and said the government should "just put the planes in the air now and send them to Rwanda".
The main Labour opposition, riding high in the polls, accused Sunak of failing to "have any serious plan to tackle dangerous boat crossings".
"Labour argued from the start this plan is unworkable and extortionately expensive," said home affairs spokeswoman Yvette Cooper.
Migrant advocates, including the UN refugee agency UNHCR which advised the Supreme Court on international refugee law and protection standards, welcomed Wednesday's court ruling.
Amnesty International's UK chief executive Sacha Deshmukh urged ministers to "now draw a line under a disgraceful chapter in the UK's political history".
What was the UK's plan to send asylum seekers to Rwanda?
BBC Wed, November 15, 2023 Former Home Secretary Suella Braverman was a strong supporter of the Rwanda scheme.
The UK government wanted to send some asylum seekers to Rwanda, but the policy has been ruled unlawful by the Supreme Court.
The Court said there was a risk that any asylum seeker sent there could be returned to their home country, which would breach UK and international human rights laws.
The five-year trial - announced in April 2022 - would have seen some asylum seekers sent to Rwanda to claim asylum there.
Under the plan, they might have been granted refugee status to stay in Rwanda. If not, they could have applied to settle there on other grounds, or sought asylum in another "safe third country".
The government said the policy would deter people arriving in the UK through "illegal, dangerous or unnecessary methods", such as on small boats which cross the English Channel.
More than 45,700 people used this route to come to the UK in 2022, the highest figure since records began.
Chart showing the number of people crossing the English Channel in small boats, 2018-2023 (15 November 2023)
As of 13 November, the number of small boat crossings in 2023 was a third lower than at the same point the year before, however it is not possible to say if the drop is the result of government migration policies.
In October, shadow immigration minister Stephen Kinnock said the weather had been partly responsible for the fall in numbers, claiming that 2023 was "the wettest summer since 1912".
In their ruling, the five top justices said the Court of Appeal had been right to conclude in June that there had not been a proper assessment of whether Rwanda was a safe country for asylum seekers.
Lord Reed, the Court president, said there was strong evidence to believe that genuine refugees sent to the country could be at risk of being returned to their home countries - where they could face persecution.
The Supreme Court judges also cited Rwanda's poor human rights record, and its past treatment of refugees as a factor in its decision.
In response, Prime Minister Rishi Sunak said he remains "completely committed to stopping the boats".
He told MPs in the House of Commons that the government was in talks with Rwanda about a new treaty, and was "prepared to change our laws" if necessary.
The Rwandan government said it "takes issue" with the ruling that it is not a safe third country for asylum seekers.
"We take our humanitarian responsibilities seriously, and will continue to live up to them," it added.
That figure is the difference between the total cost of removing an individual - estimated to be £169,000 - and the £106,000 spent on housing support if they remain in the UK.
The £169,000 total includes a payment to the third country of around £105,000 per person, as well as £22,000 for flights. Legal challenges meant the first Rwanda flight was cancelled shortly before take-off in June 2022
The Home Office said no cost would be incurred if the policy deterred an individual from entering the UK illegally.
But it said acknowledged it was "uncertain" how many people would be deterred because the policy was "novel and untested".
The UK's asylum system costs £3bn a year. About £8m a day is spent on hotel accommodation for refugees and asylum seekers.
Critics say the daily cost is so high because of the time taken to decide on applications, and a ban on asylum seekers working while waiting for confirmation of their status.
New Rwanda treaty on deportations in the works if judges rule against Government
Charles Hymas Tue, November 14, 2023 Rwanda deportation policy
A new Rwanda treaty to pave the way for deportations of asylum seekers from the UK is set to be drawn up if the Supreme Court rules on Wednesday that the scheme is unlawful.
Ministers are expected to order a rewrite of the agreement with Rwanda if the five Supreme Court judges rule that deficiencies in the country’s asylum system make it unsafe to send asylum seekers there.
It is one of a series of contingency measures being considered if the judges uphold a Court of Appeal ruling that the policy was unlawful because of the risk asylum seekers sent to Rwanda would be returned to their own country and face persecution in breach of their human rights.
But James Cleverly, the new Home Secretary, is expected to argue the Government’s “stop the boats” measures are already working, with a third fewer Channel crossings so far this year owing to fast-track deportations deterring Albanians, increased patrols on northern French beaches and police crackdowns on people smuggling gangs.
Flights to Rwanda have been suspended since last June when the European Court of Human Rights (ECHR) in Strasbourg issued a “rule 39” injunction blocking the deportation of asylum seekers until the legality of the policy was determined by the UK courts.
If the Supreme Court backs the Rwanda policy, ministers plan for the first flights to Rwanda in the New Year. They have taken heart from moves by Strasbourg to make it harder to issue rule 39 injunctions in the event that lawyers for the asylum seekers try to block the flights again by appealing the Supreme Court decision to the ECHR.
The political stakes for Mr Sunak have been raised by the former home secretary Suella Braverman’s claims on Tuesday that his failure to back her demands for even tougher migrant laws could cost him the case, “wasting” a year and putting the Government “back at square one”.
The Supreme Court verdict is expected at around 10am on Wednesday, two hours before Mr Sunak faces Prime Minister’s Questions in the Commons. This will be followed by a statement to MPs by Mr Cleverly spelling out the Government’s response to the judgement.
The Rwanda plan is central to the Prime Minister’s illegal migration act, which gives ministers powers to detain anyone who arrives in the UK illegally and deport them to a “safe” third country or their homelands.
The appeal court found by a two-to-one majority that Rwanda’s asylum system was “inadequate”, meaning there were “substantial” reasons for believing that asylum seekers sent to Rwanda would be wrongly returned to their home countries to face persecution or torture - in breach of article 3 of the ECHR.
If the Supreme Court upholds that verdict, ministers are expected to put in place a new deal with Rwanda addressing the deficiencies in the country’s asylum system, with tighter criteria and guarantees that ensure it reaches the same standards as it would have done in the UK.
This could be elevated into a new Treaty, approved by Parliament, giving it a legal status that would bolster it against further legal challenges by asylum seekers.
As part of the Government’s Supreme Court case which said that the Rwanda system could already be trusted, its lawyers pointed to measures including independent monitoring, quarterly reports on the status of every deported migrant and two Home Office officials permanently based in Kigali to oversee the scheme.
Legal experts have suggested the Government should go further and put British caseworkers in Rwanda to support its asylum system.
In a letter to Mr Sunak, Mrs Braverman and Immigration Minister Robert Jenrick proposed excluding illegal immigrants from using the Human Rights Act to remain in Britain.
The Illegal Migration Act disapplied section 3 of the Act and narrowed the grounds for migrants to challenge their deportation by requiring them to show they faced a risk of serious and irreversible harm. But the two ministers proposed going further as part of plan B if the Government lost the Supreme Court case.
They proposed amending the Act with “notwithstanding” clauses that would direct British courts to ignore ECHR rulings in specific cases, such as when an illegal migrant requests to remain in the UK to preserve their right to family life. It was not clear last night if this will be fully adopted by Mr Sunak.
David Jones, a former Cabinet minister, said: “I would very much hope there would be recognition at last that there is no option but to legislate [to disapply the Act to illegal migration] and I hope that the Government would press on quickly with that.”
Downing Street has maintained that the Government can meet its pledge to stop the boats within its international obligations but will face a clamour from some 50 to 60 backbenchers to quit the ECHR if the Supreme Court rejects its case.
“Sooner or later we’re going to have to bite this bullet and leave these two conventions. This decision has got to be made very soon and I suspect this is what Suella has been pushing for for the last year.”
In an interview with the Telegraph on Monday, Mr Jenrick refused to rule out the possibility of quitting the ECHR. When asked if the UK would leave, he said: “I’ve been clear that we have to do whatever it takes.”
He said for the first time that the Government’s aim was to “stop the boats in their entirety” by the next election. But he admitted that it would not achieve this goal without the prospect of Rwanda flights to deter Channel crossings by migrants.
Mr Sunak is, however, said to be “allergic” to the idea of quitting the ECHR, amid concerns that it could damage UK trade and diplomatic relations with key partners in Europe and the US.
When Foreign Secretary, Mr Cleverly said he was “not convinced” that leaving the ECHR was necessary to ensure the immigration system was robust, and that the UK had the clout to push for changes if needed.
“European countries which are not part of the ECHR is a small club. I am not convinced it is a club we want to be part of,” he said. “That is not suggesting that the interpretation of human rights by judges is something I think has worked well.”
It is thought Mr Sunak would prefer to push for international agreement on reforming the ECHR and Refugee Convention as countries such as Germany, Italy and Austria consider Rwanda-style schemes.
Ministers are looking to expand the list of “safe” countries to which migrants who arrive in the UK illegally could be deported.
Adding nations to the “safe” country list alongside EU countries Switzerland and Albania would make it easier to reject asylum claims and return them to their homelands.
Turkey accounted for 2,121 Channel migrants in the eight months to the end of August, while Egyptians numbered 679. Iraq accounted for 1,774 migrant Channel crossings up to the end of August, but it would be more complex to place the country on the “safe” list because of continuing sectarian violence.
Powers in the Illegal Migration Act allow ministers to ignore ECHR injunctions. Ministers obtained these powers in anticipation that they could be used again if the Government wins its Supreme Court case.
Flouting them would be seen as the “nuclear” option, which is why Mr Sunak and his ministers have been lobbying the Strasbourg court to reform its procedures. They want to avoid the repeat of the eleventh-hour injunction taken by a single unnamed judge behind closed doors that grounded the first Rwanda flights in June 2022.
On Monday, the Strasbourg court signalled a change in approach by stating that they would only be used in “exceptional circumstances” where there was “imminent risk of irreparable harm.” The judges who make the decisions will also be named for the first time.
Tim Loughton, a former minister and member of the Home Affairs Committee, said the court appeared to have been spooked by the growing numbers of European countries turning to Rwanda-style schemes and a potential threat of the UK quitting the ECHR.
“If other countries are supporting so-called ‘illegal’ Rwanda-style schemes like ours then there is pressure for proper wholescale reform of the court,” he said.
However, Enver Solomon, chief executive of the Refugee Council, said: “The Government’s plans to ship people seeking safety on our shores off to Rwanda are in stark contrast to the UK’s long history of offering protection to those who need it through a fair hearing on British soil.
“The Government is showing a callous disregard to victims of trafficking, victims of horrendous torture and abuse and families who have to escape the horrors of war. It’s measures will do little to stop desperate people making dangerous journeys to the UK, and they pose serious safeguarding risks, particularly for children and families.
“Instead of outsourcing our international commitment to provide safe haven to those fleeing for their lives – including people from Afghanistan and Sudan – we should be focusing on operating an orderly, humanex, and fair asylum system, and on expanding safe routes to the UK.”
Rwanda policy ruling: What happens now the Government has lost? Charles Hymas Wed, November 15, 2023 Priti Patel, the former home secretary, signed an initial asylum agreement with Rwanda's minister of foreign affairs in April 2022 - Getty Images/SIMON WOHLFAHRT
Led by the president of the court, their job was to determine whether the Court of Appeal’s three judges were right to rule, by a two-to-one majority, that it was unlawful because Rwanda was not a safe country for asylum seekers.
The hearing was the culmination of an 18-month legal battle and was held to decide whether the Government could implement the proposals in its Illegal Migration Act to detain and deport anyone arriving illegally in the UK to a third country such as Rwanda or their home nation.
The plan was central to Rishi Sunak’s pledge to stop the boats as ministers saw the threat of deportation to Rwanda as a significant deterrent to migrants seeking to cross the Channel to build their lives in the UK. How did the legal battle start?
Following a sharp increase in the number of people crossing the Channel, Boris Johnson, the then-prime minister, announced a plan in April 2022 to deport migrants arriving in small boats to Rwanda for their claims to be processed. He said this would act as a “very considerable deterrent”.
The first flight was scheduled for June 15 but was blocked by a single judge at the European Court of Human Rights who backed a claim by one of the seven passengers that he risked “irreversible harm” if he was deported to Rwanda.
Behind closed doors and at the eleventh hour, the judge issued what is known as a Rule 39 interim injunction blocking the deportation of the asylum seekers until such time as the legality of the policy was determined by the UK courts.
What is the Government’s justification for deportation?
Priti Patel, the then home secretary, argued in the High Court that the asylum seekers had entered the UK illegally, and that she was therefore justified to declare their claims inadmissible.
Under immigration rules, the Home Secretary can remove such an asylum seeker to any safe third country that agrees to accept the asylum claim. She maintained her decisions were made in accordance with the agreement that Rwanda would take asylum seekers from the UK.
The two High Court judges ruled that the Rwanda policy was, in principle, lawful, but said the way in which the Home Secretary had implemented the policy in the claimants’ individual cases was procedurally flawed.
As a result, her decisions in those cases were quashed and remitted to her for reconsideration.
Why did the Court of Appeal rule against the Government?
The Court of Appeal only dealt with the challenges to the lawfulness of the Rwanda policy generally, rather than any individual asylum seekers’ cases.
The three judges ruled by a majority of two to one that deficiencies in the asylum system in Rwanda were such that there were substantial reasons to believe the policy carried a real risk of “refoulement”.
Refoulement is a legal term that describes the possibility migrants sent to Rwanda would be returned to their home countries – where they would face persecution or other inhumane treatment – when, in fact, they have a good claim for asylum. In that sense Rwanda was not a safe third country.
This meant that unless and until the deficiencies in Rwanda’s asylum processes were corrected, removal of asylum seekers to Rwanda would be unlawful and amount to a breach of Article 3 of the European Convention on Human Rights (ECHR), which prohibits torture and inhuman or degrading treatment.
The Court of Appeal unanimously rejected the claimants’ other grounds of appeal. In particular, ministers took heart from the fact that it ruled that the principle of offshoring asylum claims to a third safe country was not a breach of the Refugee Convention.
What was the Supreme Court deciding?
The five judges in the Supreme Court were determining whether the High Court and the Court of Appeal applied the law correctly in coming to their decisions.
At a three-day hearing at the beginning of October, Sir James Eadie KC, the Government’s lawyer, sought to reassure that asylum seekers deported to the central African country would be safe.
He said Rwanda could be trusted to treat asylum seekers humanely as he outlined measures to ensure their safety including independent monitoring, quarterly reports on the status of every migrant deported to the country and two Home Office officials permanently based in Kigali to oversee the scheme.
Sir James indicated that the numbers would be “small” at the start to allow Rwanda to build capacity.
Lawyers for the individual asylum seekers argued that a series of aspirational assurances could not remedy the structural deficiencies as identified by the Court of Appeal which gave rise to a real risk that the migrants would suffer persecution and inhumane treatment, in breach of the ECHR. What happens now the Government has lost?
Ministers are expected to put in place a new deal with Rwanda addressing the deficiencies in the Rwanda asylum system. It could be elevated into a new treaty, approved by Parliament, giving it a legal status that would bolster it against further legal challenges by asylum seekers.
The memorandum of understanding that Ms Patel signed with Rwanda in April 2022 was not approved by MPs before it was signed with Rwanda.
The new agreement is likely to include tighter criteria and guarantees to ensure that legitimate asylum seekers are not deported back to their home countries and extra provisions for legal oversight of migrants who wish to appeal any decision on their asylum claim in Kigali.
The new agreement would seek to address concerns raised by judges in the Court of Appeal hearing about the lack of mechanisms for migrants to lodge appeals and the absence of separation between the judiciary and the executive in Rwanda. Judges concluded that it was unclear what appeal rights asylum seekers would be granted.
There are also plans to send Home Office officials to train case workers in Rwanda to bolster their asylum system. This is designed to address concerns that were raised by the Court of Appeal judges over the lack of experience and resources of officials to process the complexity and magnitude of cases from the UK.
Another option would be emergency legislation to exclude illegal migrants from using the Human Rights Act to remain in Britain. This was proposed in a letter to Mr Sunak by Suella Braverman, the former home secretary, and Robert Jenrick, the immigration minister.
The Illegal Migration Act disapplied Section 3 of the Act and narrowed the grounds for migrants to challenge their deportation by requiring them to show they faced a risk of serious and irreversible harm. But the two ministers proposed going further as part of a back-up plan if the Government lost the Supreme Court case.
They proposed amending the Act with “notwithstanding” clauses that would direct British courts to ignore ECHR rulings in specific cases, such as when an illegal migrant requests to remain in the UK to preserve their right to a family life.
The Government will also come under pressure from as many as 60 Tory MPs to quit the ECHR, which they claim has been exploited by lawyers for asylum seekers to prevent the deportation of illegal migrants.
This poll has been open since Nov 15 2023
Mr Sunak is said to be instinctively against withdrawing from the ECHR, not least because of the international condemnation from allies including the US and France if the UK were to do so.
James Cleverly, the new Home Secretary, declared, when he was foreign secretary, that he was “not convinced” that leaving the ECHR was necessary to ensure the immigration system was robust, and that the UK had the clout to push for changes if needed.
“European countries which are not part of the ECHR is a small club. I am not convinced it is a club we want to be part of,” he said. “That is not suggesting that the interpretation of human rights by judges is something I think has worked well.”
It is thought Mr Sunak would prefer to push for international agreement on reforming the ECHR and Refugee Convention as countries such as Germany, Italy and Austria consider Rwanda-style schemes. UK's Sunak to consider next steps after Rwanda migrant scheme ruled unlawful Reuters Wed, November 15, 2023 Cabinet meeting inside 10 Downing Street in London
LONDON (Reuters) - British Prime Minister Rishi Sunak said on Wednesday that he would consider next steps after the UK Supreme Court ruled that his government's scheme to send asylum seekers to Rwanda was unlawful.
"We have seen today’s judgment and will now consider next steps," Sunak said in a statement.
"This was not the outcome we wanted, but we have spent the last few months planning for all eventualities and we remain completely committed to stopping the boats."
Sunak is due to hold a press conference at 1645 GMT. Interior minister James Cleverly is expected to make a statement to lawmakers this afternoon.
"Crucially, the Supreme Court ... has confirmed that the principle of sending illegal migrants to a safe third country for processing is lawful. This confirms the Government’s clear view from the outset," Sunak said.
"Illegal migration destroys lives and costs British taxpayers millions of pounds a year. We need to end it and we will do whatever it takes to do so."
