9 Trumpworld Figures Who Should Fear Mueller the Most

Wednesday’s sentencing of onetime Trump fixer Michael Cohen to 36 months of prison continues a frenetic pace of revelations around the Russia probe. Nearly every single day since Thanksgiving has brought fresh developments in special counsel Robert Mueller’s probe of Russia’s attack on the 2016 election.

Even as the president continues to rail about the “Witch Hunt” on Twitter, Mueller’s strategy looks like anything but. Nearly every defendant he’s targeted has pleaded guilty, meaning he’s moving against people with overwhelming evidence. Those targets have mostly, in turn, cooperated—naming more alleged crimes and suspects. Similarly, in the one instance he has been forced to go to trial, Mueller prevailed handedly, winning convictions against former Trump campaign chairman Paul Manafort in every category of charges he brought. Mueller has also assiduously handed off certain crimes to other prosecutors, be it identity theft stemming from Russia’s Internet Research Agency, foreign lobbying questions, and even referring the original Cohen case to the Southern District in New York.

Together, those facts paint the picture of a conservative prosecutor, focused on demonstrable crimes and clear cases of criminal behavior. Mueller famously sees the world in black and white, right versus wrong, and all of his investigations have Russia and Russian influence as their core focus. Thus far he’s stayed clear of anything that might appear gray.

The pace of developments shows no sign of slowing, either. Thursday apparently will see a guilty plea from alleged Russian spy Maria Butina, whose role in the 2016 election and ties to gun-rights groups like the National Rifle Association remain perplexing.

CNN’s John Berman has described it as the “12 days of Mueller.” The filings thus far, taken together, have clarified where Mueller is heading, and appear to help delineate who is likely on the special counsel’s “naughty list” this holiday season. The past two weeks of rapid-fire filings, court appearances, and news reports show several people and entities potentially in Mueller’s sights.

Here are the reasons you should be concerned if you’re:

Jared Kushner

Former national security adviser Michael Flynn’s original plea deal made clear that he called Russian ambassador Sergey Kislyak at the direction of a “very senior” transition official, which media reports have identified as presidential son-in-law Jared Kushner. Subsequent court filings have made clear that Flynn’s early cooperation encouraged others to cooperate as well. That likely includes at least K.T. McFarland, another national security aide, whose memory reportedly evolved after Flynn’s plea. Her revised memory likely also ratchets up the scrutiny of Kushner’s role on the campaign, where he was in the room for the infamous June 2016 Trump Tower meeting, and the transition, where he reportedly tried to create a communications backchannel with Russia and met with the head of the Russian development bank, Sergei Gorkov. Mueller has outlined in recent court filings his view that “senior government leaders should be held to the highest standards,” which sounds like an as-yet-unfired warning shot against other “senior government leaders.” Kushner, as a senior White House adviser, now fits that bill.

Donald Trump, Jr.

Michael Cohen’s plea agreement never mentions the presidential son by name, but it potentially implicates Don Jr. in at least two critical areas. First, vis-à-vis the Trump Tower Moscow deal, Cohen says he kept the Trump Organization and family members up to date on the conversations with Russia, which appears to undercut Don Jr.’s testimony to Congress that he didn’t know much about the proposed development and, besides, the deal never went very far anyway. Cohen, and thus the special counsel, appears to possess evidence that both halves of that dismissal were false. With the Cohen plea agreement 10 days ago, Mueller has made clear that he considers lying to Congress within his purview.

Second, and more intriguing, is how Cohen discusses the November 2015 approach by a Russian intermediary offering “political synergy” with the campaign. One of the most confounding puzzle pieces of the investigation remains publicist Rob Goldstone’s email initiating the infamous June 2016 Trump Tower meeting, at which Don Jr., Jared Kushner, and Paul Manafort met with Russians who had promised to help the campaign. Goldstone’s email said, “This is obviously very high level and sensitive information but is part of Russia and its government’s support for Mr. Trump.” We’ve never known what “part of Russia and its government’s support for Mr. Trump” meant specifically, but the way Goldstone phrased it seems to imply that such help wouldn’t come as a surprise to Don Jr. The Cohen plea agreement now lays the groundwork that such help might have been quite well known inside Trumpworld, given that 2015 overture. The offer of “political synergy,” a synonym that sounds a lot like “collusion” or “conspiracy,” makes it much harder to imagine a naive acceptance of the Russian help come June 2016.

President Donald Trump

While the president tried to brush off recent developments as “peanut stuff” Tuesday night, the potential criminal liability focused on the White House seems to grow with nearly every court filing. Prosecutors have now made clear their belief that the president himself, aka “Individual-1,” directed Michael Cohen to commit campaign finance violations, a felony. Given Cohen’s general slipperiness in court, they’re almost certainly basing that allegation on precise documentary evidence, potentially even the covert recordings that Cohen liked to make. On Wednesday, SDNY reached a deal with National Enquirer publisher AMI that explicitly states that the Cohen payments were intended to prevent a story about Trump’s alleged affair with Karen McDougal from “influencing the election.”

The court filings contain growing signs, too, that Mueller could be building not just a case around conspiracy during the 2016 campaign, but also about “expansive obstruction.” A case like that could include the possible coordination of lies following Russia revelations, such as Cohen’s in front of Congress. A specific line from the special counsel’s filing in Cohen’s case also jumps out: “By publicly presenting this false narrative, the defendant deliberately shifted the timeline of what had occurred in hopes of limiting the investigations into possible Russian interference in the 2016 US presidential election.” It’s not hard to imagine that same line cut-and-pasted into a future obstruction case regarding Donald Trump’s personal handling of a false narrative put out by the White House after reports first surfaced of the June 2016 meeting at Trump Tower. Maybe the firing of FBI director James Comey—which has seemed central to any obstruction investigation—will ultimately end up just part of a larger, longer, more coordinated attempt to mislead and misdirect attention around the Russia investigation. After all, there’s historical precedent for this: Part of the Watergate articles of impeachment charged Richard Nixon with “making or causing to be made false or misleading public statements for the purpose of deceiving the people of the United States.”

The Trump Organization

In one of my first columns on the special counsel’s investigation, I noted that the FBI focuses on taking down entire, corrupt organizations: mafia families, drug cartels, terrorism rings. That’s its DNA, and why federal investigations take so long; they work step-by-step, from the bottom up, to dismantle the whole enterprise. There are increasing signs that the Trump Organization—the family business built around the Trump brand—might be in its crosshairs. Corporate malfeasance expert Kurt Eichenwald, who literally wrote the book on Enron, points out how closely the Trump Organization appears to be implicated in Cohen’s hush money payments, and the apparently narrow circle of people who could have participated in them. Cohen’s plea deal also alleges that the Trump Organization’s business was closely tied into the Trump Tower Moscow project; BuzzFeed broke word that the company had floated the idea of offering the $50 million penthouse to Putin himself. It’s been known, too, for some time that Trump Organization CFO Allen Weisselberg has been cooperating with investigators. Between him and Cohen—and Cohen’s voluminous seized records—a clear trail may appear for prosecutors to follow. With the Trump Foundation already under legal fire, will the president’s namesake company follow suit? And that’s all before New York’s new attorney general takes office too, promising a fulsome investigation into Trump’s world.

Jerome Corsi and Associates

The alleged criminal liability of conspiracy theorist Jerome Corsi has already been laid out in the aborted plea agreement that he leaked after the deal with Mueller’s office fell apart. How far Corsi’s role may stretch to encompass WikiLeaks founder Julian Assange and Trump associate Roger Stone remains an open question too.

Michael Cohen

Even after Wednesday’s prison sentence, which settles the nine (nine!) felonies he has currently pleaded guilty to, there’s some reason to believe that Cohen might not be out of the woods. The Southern District of New York in its sentencing filing made clear its unhappiness that Cohen didn’t fully cooperate, providing a full and complete list of the crimes he’d participated in over the years. As they wrote, “Cohen repeatedly declined to provide full information about the scope of any additional criminal conduct in which he may have engaged or had knowledge.” Given that those federal prosecutors in Manhattan are likely continuing their reported investigation of the Trump Organization, it seems like Cohen could still face potential criminal liability as the other cases proceed.

Business partners of Michael Flynn

One of the most intriguing aspects of the sentencing memo filed by Michael Flynn’s lawyers was its reference to how Flynn met with prosecutors for over 62 hours, across 19 meetings, and “produced thousands of documents to the Department of Justice,” including “sweeping categories of documents held by his two companies, rather than fight over the breadth of subpoenas, and facilitated the production of electronic devices.” Given that the court filings reference Flynn’s business work—not the Trump campaign—and that part of Flynn’s plea agreement focused on his plotting with the Turkish government, it appears one of the undisclosed criminal investigations he has helped with involves those interactions.

Konstanin Kilimnik

The Ukrainian businessman who served as Paul Manafort’s onetime business partner—and alleged Russian intelligence asset—is all over the Manafort court filings in a way that makes clear the special counsel has a unique, focused interest in him and his role in the campaign. He’s already been implicated in Manafort’s alleged witness tampering scheme, but there’s no reason to think Mueller is done with him. Franklin Foer, who has written the most in-depth coverage of Manafort’s world, says Kilimnik’s appearance in the new documents “foreshadow[s] an ominous return.”

Alexander Torshin

The Russian politician and banker has been linked in court documents to Maria Butina, the alleged spy likely to plead guilty on Thursday. Torshin appeared to “handle” Butina, building ties to the NRA; her guilty plea will likely shed additional light on Torshin’s role, particularly if she provides active cooperation with investigators.


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Garrett M. Graff (@vermontgmg) is a contributing editor for WIRED and the coauthor of Dawn of the Code War: America’s Battle Against Russia, China, and the Rising Global Cyber Threat. He can be reached at [email protected]

Amazon’s Holiday Toy Catalog Is Advertising Parents Actually Want

Never underestimate the market-moving potential of a nagging child. “Mom, Dad, I want THIS for Christmas!” is a phrase that each year leads to billions of dollars of toy sales. And it’s a phrase parents can appreciate, because knowing what your kid actually wants to find under the tree helps minimize Christmas morning tears. Toy manufacturers and retailers spend millions of dollars each year to make sure their products are the ones on everyone’s wishlist, with TV and online ads, special retail displays, and old-fashioned toy catalogs.

The stakes are particularly high this holiday season, since one-time retail juggernaut Toys R Us closed all its US locations earlier this year. Even while its sales were declining, Toys R Us still accounted for around 12 percent of the estimated $27 billion total toy sales in 2017, according to Juli Lennett of NPD Group, the leading toy industry analysts in the US.

With Toys R Us gone, those sales are up for grabs, and Amazon wants them. The digital-first company was already beating Toys R Us in market share. And while it alone was not responsible for the demise of Toys R Us—poor business decisions and its sizable debt were also to blame—Amazon did put intense pressure on the toy store chain with extremely low prices, especially during the past few holidays seasons, using its familiar tactic of sacrificing profit for market share. Toys R Us couldn’t compete. Now Amazon hopes to feed from the carcass.

And so the ecommerce giant went retro this holiday season, mailing out its first-ever print toy catalog, like the one Toys R Us used to be known for. The “Holiday of Play” lookbook from Amazon is 68 pages long and features toys like the über-popular LOL! Surprise dolls, LEGO’s Star Wars Solo, and the Osmos Genius Kit for iPad. An Amazon representative told WIRED the catalog was sent it to millions of customers in November, but wouldn’t give exact numbers. It’s also available at Whole Foods and some physical Amazon store locations, or online in PDF and Kindle form.

The catalog may be made of paper, but it’s designed as a gateway to a digital transaction. What it lacks in pricing information it makes up in QR codes and stickers that kids can use to make note of presents they want their parents to buy. It also works with the Amazon app: Take a photo of the catalog item you (or your kids) want, and the app will pull up the listing and let you buy it from your phone.

“The great thing about a catalog is that it sits on the coffee table, where kids can find it,” says Steve Pasierb, CEO of The Toy Association, a trade group representing American toy manufacturers. “The catalog is a market share play. Amazon has a huge chance to win a lot of those holiday sales.”

Amazon’s top competitors for Toys R Us’ sales are Target and Walmart, according to experts—traditional retailers that have mailed out holiday catalogs for years. And in the wake of Toys R Us closing, both companies decided to devote more shelf space in their retail locations to toys, says Pasierb. With only a handful of physical stores in a few major cities, Amazon’s toy push comes in the form of a dedicated landing page for kids on its website, and its catalog.

“They’re emulating a proven method of doing business, which is the catalog, but using their muscle to engage at a particular time when there are just fewer retailers now that sell toys,” says Richard Gottlieb, CEO of research firm Global Toy Experts. Gottlieb was impressed with Amazon’s catalog, though he far preferred eBay’s catalog, full of weird and wild and expensive one-of-a-kind toys, which launched this season as well.

Amazon and eBay are joining the many other ecommerce companies still finding that print catalogs have value in the digital era. Catalogs are harder to ignore than the clutter of online ads, one footwear startup founder told Digiday earlier this year, explaining that his company gets a slightly higher return on direct mail versus digital-only marketing. Companies can also use data to target catalogs to customers they know are likely to spend more money. And they are a traditional way for families to compile gift wishlists.

“I’m old enough to remember the Sears catalog,” says Gottlieb. “I remember laying on the floor just going through it. I didn’t get much anything out of it. But you know, marking things, studying it in detail. It was wonderful and a wonderful way to communicate with your parents what you want.”

People really want and love catalogs. Take a glance at the reviews for the Kindle version on Amazon’s website. Plenty of customers posted bad reviews, not because they didn’t like the catalog but because they were annoyed that they didn’t get one.

“Why can’t we get a book and why didn’t we get one? We have been prime members for years, have 4 kids, buy lots of toys, and no book. And we can’t order one,” reads the top-rated review right now. “Would love to have the toy catalog delivered through the mail. The children love looking at it and circling what they like. I dont use Kindle. I’ve been a prime member for many years and did not get one,” reads another. A review from November 15 is even more direct: “Disappointed that I didn’t and can not now get a hard copy in the mail even though I have two small children and spend a ton on toys through Amazon Prime. I AM YOUR TARGET MARKET. Speaking of Target – I’ll be doing my toy shopping there because I am THAT petty.”

The disappointment those Amazon reviewers felt speaks to the reason catalogs have worked so well. They’re convenient, above all. Enjoyable, even. And this time of year, when millions of Americans are going to buy toys, it’s easier for children to thumb through a physical catalog that feels like a big book of wonders than a notoriously hard-to-navigate website.

Kids, especially, don’t have a great way to discover toys on the actual Amazon website. Even its dedicated toy section divided by age group is confusing to navigate. And while the site does have a wishlist feature, parents might not trust their kid to trawl through Amazon’s website on their account, since they could accidentally push one button and buy something. A print catalog is a way for Amazon to directly get its offering in front of children, while also giving parents a little bit more control over the process.

The toy catalog is a familiar marketing throwback in an otherwise rapidly evolving industry. Pasierb notes that with the growth in streaming entertainment for kids, the kinds of ads children see have changed. “Unboxing videos, the online kind of stuff is for a lot of our toy companies as important or now more important than traditional television advertising. A lot of our companies that no longer do traditional TV advertising do almost all exclusively digital,” says Pasierb. The highest-paid YouTube celebrity this year, according to Forbes, was a 7-year-old boy making unboxing videos of toys, earning an estimated $22 million in 12 months.

“[These kinds of ads] are entertainment in their own right,” says Lennett. “A lot of these kids, I don’t think they know the difference between watching a show—a real show—versus watching another kid playing with a toy on YouTube.”

“In my household, the word ‘TV’ is gone. Now it’s just ‘shows.’ Children have already fully internalized the idea of on demand, and that disrupts the ad model completely,” says David Carroll, professor of media design at the New School.

But Carroll doesn’t let his two kids watch YouTube, where they might see those ads. I don’t let my three-year-old son watch it, either. We are the exception; a recent Pew survey found that 81 percent of parents do allow their young kids to watch YouTube. Our reasons are less to do with fear of seeing ads than fear that we can’t control the algorithm and our children might get exposed to inappropriate, creepy, or ideological videos. Instead, our kids mostly watch on-demand shows on Amazon Prime, Netflix, iTunes, or Google Play—and those are largely free of ads.

“The only way [Amazon’s toy offerings] are getting in front of my children is through a catalog,” says Carroll. Only Carroll never got an Amazon catalog, despite his prolific Prime usage. Neither did I. Neither did Lennett, who says, “I’m mad I didn’t get one.” Though her kids are teenagers, she buys lots of stuff on Amazon and thought they’d receive one in the mail, as some of her friends did. An Amazon representative declined to comment on how the company decided who to send the catalog to, though the person offered to send me one. (I declined.)

For Amazon, a catalog also fits well with its bigger push into the physical world, with everything from actual store locations to Dash buttons you physically push to order goods. “[Amazon owner Jeff] Bezos has total world domination as the goal. So from that perspective it makes sense that they would not take a digital-only approach. They would take a whatever works approach,” says Carroll.

For world domination, Amazon has to be everything. And everywhere. Even in the living room, where your kid can find it and come up to you whining, “Mom! I want this!” That is, if Amazon sent you one.


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Kubernetes etcd data project joins CNCF

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Kubernetes: The smart person's guide

Kubernetes: The smart person’s guide

Kubernetes is a series of open source projects for automating the deployment, scaling, and management of containerized applications. Find out why the ecosystem matters, how to use it, and more.

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How do you store data across a Kubernetes container cluster? With etcd. This essential part of Kubernetes has been managed by CoreOS/Red Hat. No longer. Now, the open-source etcd project has been moved from Red Hat to the Cloud Native Computing Foundation (CNCF).

What is etcd? No, it’s not what happens when a cat tries to type a three-letter acronyms. Etcd (pronounced et-see-dee) was created by the CoreOS team in 2013. It’s an open-source, distributed, consistent key-value database for shared configuration, service discovery, and scheduler coordination. It’s built on the Raft consensus algorithm for replicated logs.

Also: Kubernetes’ first major security hole discovered

Etcd’s job is to safely store critical data for distributed systems. It’s best known as Kubernetes’ primary datastore, but it can be used for other projects. For example, “Alibaba uses etcd for several critical infrastructure systems, given its superior capabilities in providing high availability and data reliability,” said Xiang Li, an Alibaba senior staff engineer.

When applications use etcd they have more consistent uptime. Even when individual servers fail, etcd ensures that services keep working. This doesn’t just protect against what would otherwise prove show-stopping failures, it also makes it possible to automatic update systems without downtime. You can also use it to coordinate work between servers and set up container overlay networking.

In his KubeCon keynote, Brandon Philips, CoreOS CTO, said: “Today we’re excited to transfer stewardship of etcd to the same body that cares for the growth and maintenance of Kubernetes. Given that etcd powers every Kubernetes cluster, this move brings etcd to the community that relies on it most at the CNCF.”


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That doesn’t mean Red Hat is walking away from etcd. Far from it. Red Hat will continue to help develop etcd. After all, etcd is is an essential part of Red Hat’s enterprise Kubernetes product, Red Hat OpenShift.

Moving forward, etcd will only grow stronger. It being used by more and more companies, as Kubernetes is adopted by almost every cloud container company. In particular, Phillips said, he expects far more work to be done on etcd security.

Related stories:

Marriott Says It Will Pay for Replacement Passports After Data Breach. Here’s Why That’s Likely Baloney.

As you have no doubt heard by now, Marriott disclosed a massive data breach that exposed up to 500 million customer records. Hackers accessed information in the company’s Starwood reservation system, which affected brands such as W Hotels, St. Regis, Sheraton Hotels & Resorts, Westin Hotels & Resorts, and other properties in the Starwood portfolio, the company said. The intrusion apparently began in 2014, two years before Marriott acquired Starwood. This oversight in the M&A process calls to mind another recent, post-acquisition hacker-surprise: Yahoo, whose two mega-breaches remained undetected when the company sold to Verizon last year. Coincidentally, Marriott’s hack is the biggest suffered by a corporation, second only to those at Yahoo.

After news of the Marriott breach came out, Sen. Charles E. Schumer (D-N.Y.) called on the hotel chain to foot the bill and replace people’s passports which were potentially compromised as part of the breach. Marriott quickly promised to cover the cost for as many as 327 million people whose passport numbers may have been exposed. At a fee of $110 per passport, that would put Marriott on the hook to pay up to $36 billion—a price tag equivalent to the value of the entire company, per its market capitalization. A devastating payout.

Here’s the thing though: While seemingly noble, Marriott’s promise is a bunch of baloney. The company said it will follow through on reimbursement only in instances where it “determine[s] that fraud has taken place.” What this caveat conveniently excludes is that Marriott’s hack likely had little to do with fraud and everything to do with espionage. In other words, if you’re a victim, don’t expect remuneration.

As Reuters reported, investigators believe the perpetrators of this attack were Chinese spies. The breach used tools, tactics, and procedures that matched Beijing’s style. The intrusion is said to have begun shortly after a breach of the government’s Office of Personnel Management, which government officials have attributed to China. The Starwood database represents a massive trove of potential intelligence: information on who is staying where, when—a bonanza for building up profiles of targets and tracking people of interest.

Geng Shuang, China’s Ministry of Foreign Affairs spokesperson, issued a statement saying the country “opposes all forms of cyber attack,” per Reuters. He said the country would investigate the claims, if offered evidence. Meanwhile, Connie Kim, a Marriott spokesperson, said “we’ve got nothing to share” about the Chinese attribution claim.

The Marriott breach—which took place quietly over years, as spies prefer—does not appear to have been a cybercriminal score. That’s why the passport payment pledge is probably bunk; nevertheless, if you think you might have been affected, it won’t hurt to follow these steps to refresh your cybersecurity hygiene and better protect yourself.

A version of this article first appeared in Cyber Saturday, the weekend edition of Fortune’s tech newsletter Data Sheet. Sign up here.

U.S. accuses Huawei CFO of Iran sanctions cover-up

VANCOUVER/LONDON (Reuters) – Huawei Technologies Co Ltd’s chief financial officer faces U.S. accusations that she covered up her company’s links to a firm that tried to sell equipment to Iran despite sanctions, a Canadian prosecutor said on Friday, arguing against giving her bail while she awaits extradition.

After nearly six hours of arguments and counter-arguments, no decision was reached and the hearing was adjourned until Monday 10:00 a.m. Pacific Time (1800 GMT).

The case against Meng Wanzhou, who is also the daughter of the founder of Huawei [HWT.UL], stems from a 2013 Reuters report here about the company’s close ties to Hong Kong-based Skycom Tech Co Ltd, which attempted to sell U.S. equipment to Iran despite U.S. and European Union bans, the prosecutor told a Vancouver court.

U.S. prosecutors argue that Meng was not truthful to banks who asked her about links between the two firms, the court heard on Friday. If extradited to the United States, Meng would face charges of conspiracy to defraud multiple financial institutions, the court heard, with a maximum sentence of 30 years for each charge.

Meng, 46, was arrested in Canada on Dec. 1 at the request of the United States. The arrest was on the same day that U.S. President Donald Trump met in Argentina with China’s Xi Jinping to look for ways to resolve an escalating trade war between the world’s two largest economies.

The news of her arrest has roiled stock markets and drawn condemnation from Chinese authorities, although Trump and his top economic advisers have downplayed its importance to trade talks after the two leaders agreed to a truce.

A spokesman for Huawei had no immediate comment on the case against Meng on Friday. The company has said it complies with all applicable export control and sanctions laws and other regulations.

Friday’s court hearing is intended to decide on whether Meng can post bail or if she is a flight risk and should be kept in detention.

The prosecutor opposed bail, arguing that Meng was a high flight risk with few ties to Vancouver and that her family’s wealth would mean than even a multi-million-dollar surety would not weigh heavily should she breach conditions.

Meng’s lawyer, David Martin, said her prominence made it unlikely she would breach any court orders.

“You can trust her,” he said. Fleeing “would humiliate and embarrass her father, whom she loves,” he argued.

The United States has 60 days to make a formal extradition request, which a Canadian judge will weigh to determine whether the case against Meng is strong enough. Then it is up to Canada’s justice minister to decide whether to extradite her.

Huawei CFO Meng Wanzhou, who was arrested on an extradition warrant, appears at her B.C. Supreme Court bail hearing in a drawing in Vancouver, British Columbia, Canada December 7, 2018. REUTERS/Jane Wolsak

Chinese Foreign ministry spokesman Geng Shuang said on Friday that neither Canada nor the United States had provided China any evidence that Meng had broken any law in those two countries, and reiterated Beijing’s demand that she be released.

Chinese state media accused the United States of trying to “stifle” Huawei and curb its global expansion.

IRAN BUSINESS

The U.S. case against Meng involves Skycom, which had an office in Tehran and which Huawei has described as one of its “major local partners” in Iran.

In January 2013, Reuters reported that Skycom, which tried to sell embargoed Hewlett-Packard computer equipment to Iran’s largest mobile-phone operator, had much closer ties to Huawei and Meng than previously known.

In 2007, a management company controlled by Huawei’s parent company held all of Skycom’s shares. At the time, Meng served as the management firm’s company secretary. Meng also served on Skycom’s board between February 2008 and April 2009, according to Skycom records filed with Hong Kong’s Companies Registry.

Huawei used Skycom’s Tehran office to provide mobile network equipment to several major telecommunications companies in Iran, people familiar with the company’s operations have said. Two of the sources said that technically Skycom was controlled by Iranians to comply with local law but that it effectively was run by Huawei.

Slideshow (9 Images)

Huawei and Skycom were “the same,” a former Huawei employee who worked in Iran said on Friday.

A Huawei spokesman told Reuters in 2013: “Huawei has established a trade compliance system which is in line with industry best practices and our business in Iran is in full compliance with all applicable laws and regulations including those of the U.N. We also require our partners, such as Skycom, to make the same commitments.”

U.S. CASE

The United States has been looking since at least 2016 into whether Huawei violated U.S. sanctions against Iran, Reuters reported in April.

The case against Meng revolves around her response to banks, who asked her about Huawei’s links to Skycom in the wake of the 2013 Reuters report. U.S. prosecutors argue that Meng fraudulently said there was no link, the court heard on Friday.

U.S. investigators believe the misrepresentations induced the banks to provide services to Huawei despite the fact they were operating in sanctioned countries, Canadian court documents released on Friday showed.

The hearing did not name any banks, but sources told Reuters this week that the probe centered on whether Huawei had used HSBC Holdings (HSBA.L) to conduct illegal transactions. HSBC is not under investigation.

U.S. intelligence agencies have also alleged that Huawei is linked to China’s government and its equipment could contain “backdoors” for use by government spies. No evidence has been produced publicly and the firm has repeatedly denied the claims.

The probe of Huawei is similar to one that threatened the survival of China’s ZTE Corp (0763.HK) (000063.SZ), which pleaded guilty in 2017 to violating U.S. laws that restrict the sale of American-made technology to Iran. ZTE paid a $892 million penalty.

Reporting by Julie Gordon in Vancouver and Steve Stecklow in London; Additional reporting by Anna Mehler Paperny in Toronto, David Ljunggren in Ottawa, Karen Freifeld in New York, Ben Blanchard and Yilei Sun in Beijing, and Sijia Jiang in Hong Kong; Writing by Denny Thomas and Rosalba O’Brien; Editing by Muralikumar Anantharaman, Susan Thomas and Sonya Hepinstall

U.S. accuses Huawei CFO of Iran sanctions cover-up; hearing adjourned to Monday

VANCOUVER/LONDON (Reuters) – Huawei Technologies Co Ltd’s chief financial officer faces U.S. accusations that she covered up her company’s links to a firm that tried to sell equipment to Iran despite sanctions, a Canadian prosecutor said on Friday, arguing against giving her bail while she awaits extradition.

After nearly six hours of arguments and counter-arguments, no decision was reached and the hearing was adjourned until Monday 10:00 a.m. Pacific Time (1800 GMT).

The case against Meng Wanzhou, who is also the daughter of the founder of Huawei [HWT.UL], stems from a 2013 Reuters report here about the company’s close ties to Hong Kong-based Skycom Tech Co Ltd, which attempted to sell U.S. equipment to Iran despite U.S. and European Union bans, the prosecutor told a Vancouver court.

U.S. prosecutors argue that Meng was not truthful to banks who asked her about links between the two firms, the court heard on Friday. If extradited to the United States, Meng would face charges of conspiracy to defraud multiple financial institutions, the court heard, with a maximum sentence of 30 years for each charge.

Meng, 46, was arrested in Canada on Dec. 1 at the request of the United States. The arrest was on the same day that U.S. President Donald Trump met in Argentina with China’s Xi Jinping to look for ways to resolve an escalating trade war between the world’s two largest economies.

The news of her arrest has roiled stock markets and drawn condemnation from Chinese authorities, although Trump and his top economic advisers have downplayed its importance to trade talks after the two leaders agreed to a truce.

A spokesman for Huawei had no immediate comment on the case against Meng on Friday. The company has said it complies with all applicable export control and sanctions laws and other regulations.

Friday’s court hearing is intended to decide on whether Meng can post bail or if she is a flight risk and should be kept in detention.

The prosecutor opposed bail, arguing that Meng was a high flight risk with few ties to Vancouver and that her family’s wealth would mean than even a multi-million-dollar surety would not weigh heavily should she breach conditions.

Meng’s lawyer, David Martin, said her prominence made it unlikely she would breach any court orders.

“You can trust her,” he said. Fleeing “would humiliate and embarrass her father, whom she loves,” he argued.

The United States has 60 days to make a formal extradition request, which a Canadian judge will weigh to determine whether the case against Meng is strong enough. Then it is up to Canada’s justice minister to decide whether to extradite her.

Huawei CFO Meng Wanzhou, who was arrested on an extradition warrant, appears at her B.C. Supreme Court bail hearing in a drawing in Vancouver, British Columbia, Canada December 7, 2018. REUTERS/Jane Wolsak

Chinese Foreign ministry spokesman Geng Shuang said on Friday that neither Canada nor the United States had provided China any evidence that Meng had broken any law in those two countries, and reiterated Beijing’s demand that she be released.

Chinese state media accused the United States of trying to “stifle” Huawei and curb its global expansion.

IRAN BUSINESS

The U.S. case against Meng involves Skycom, which had an office in Tehran and which Huawei has described as one of its “major local partners” in Iran.

In January 2013, Reuters reported that Skycom, which tried to sell embargoed Hewlett-Packard computer equipment to Iran’s largest mobile-phone operator, had much closer ties to Huawei and Meng than previously known.

In 2007, a management company controlled by Huawei’s parent company held all of Skycom’s shares. At the time, Meng served as the management firm’s company secretary. Meng also served on Skycom’s board between February 2008 and April 2009, according to Skycom records filed with Hong Kong’s Companies Registry.

Huawei used Skycom’s Tehran office to provide mobile network equipment to several major telecommunications companies in Iran, people familiar with the company’s operations have said. Two of the sources said that technically Skycom was controlled by Iranians to comply with local law but that it effectively was run by Huawei.

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Huawei and Skycom were “the same,” a former Huawei employee who worked in Iran said on Friday.

A Huawei spokesman told Reuters in 2013: “Huawei has established a trade compliance system which is in line with industry best practices and our business in Iran is in full compliance with all applicable laws and regulations including those of the U.N. We also require our partners, such as Skycom, to make the same commitments.”

U.S. CASE

The United States has been looking since at least 2016 into whether Huawei violated U.S. sanctions against Iran, Reuters reported in April.

The case against Meng revolves around her response to banks, who asked her about Huawei’s links to Skycom in the wake of the 2013 Reuters report. U.S. prosecutors argue that Meng fraudulently said there was no link, the court heard on Friday.

U.S. investigators believe the misrepresentations induced the banks to provide services to Huawei despite the fact they were operating in sanctioned countries, Canadian court documents released on Friday showed.

The hearing did not name any banks, but sources told Reuters this week that the probe centered on whether Huawei had used HSBC Holdings (HSBA.L) to conduct illegal transactions. HSBC is not under investigation.

U.S. intelligence agencies have also alleged that Huawei is linked to China’s government and its equipment could contain “backdoors” for use by government spies. No evidence has been produced publicly and the firm has repeatedly denied the claims.

The probe of Huawei is similar to one that threatened the survival of China’s ZTE Corp (0763.HK) (000063.SZ), which pleaded guilty in 2017 to violating U.S. laws that restrict the sale of American-made technology to Iran. ZTE paid a $892 million penalty.

Reporting by Julie Gordon in Vancouver and Steve Stecklow in London; Additional reporting by Anna Mehler Paperny in Toronto, David Ljunggren in Ottawa, Karen Freifeld in New York, Ben Blanchard and Yilei Sun in Beijing, and Sijia Jiang in Hong Kong; Writing by Denny Thomas and Rosalba O’Brien; Editing by Muralikumar Anantharaman, Susan Thomas and Sonya Hepinstall

Apple Begins Offering Active Military, Veterans a 10% Discount In Stores, Online

Apple has a new discount out just in time for holiday season shopping: a 10% discount on some products for any active military servicepeople, as well as veterans.

Officially known as the Apple Veterans and Military Purchase Program, the ongoing discount offer is open to active duty members of the United States Military, National Guard, and Reserve. The offer is also good for immediate family members of individuals in the military, so long as they reside in the same household.

(aapl) Apple has been known to offer discounts to select groups in the past, including enrolled students and academic faculty members at certain colleges and universities. But this marks the first time that Apple has offered a discount to active military personnel or veterans.

The Apple Veterans and Military Purchase Program is available in person in brick-and-mortar Apple retail stores, as well as online through the Apple website. The discount program is intended for personal use only, and any purchases Apple suspects are made for the purposes of resale will be refused or canceled, according to Apple’s terms and conditions for the program. In addition, any consumers interested in taking advantage of the discount must prove their military-related eligibility as well as be at least 18 years of age.

SoftBank's Vision Fund to hire China team, set up mainland office: sources

HONG KONG (Reuters) – The SoftBank-led Vision Fund is hiring an investment team to be based in China as the $100 billion investment giant expands in one of the world’s most vibrant tech markets, two people with direct knowledge of the move told Reuters.

FILE PHOTO: The logo of SoftBank Group Corp is displayed at SoftBank World 2017 conference in Tokyo, Japan, July 20, 2017. REUTERS/Issei Kato/File Photo

The Vision Fund plans to open its first China office in Shanghai next year, followed by Beijing and Hong Kong. Altogether it hopes to hire about 20 people, said the people, who declined to be named as the information was confidential.

The Vision Fund raised more than $93 billion at its first close last May with investors including the sovereign wealth funds of Saudi Arabia and Abu Dhabi, Apple Inc and Hon Hai Precision Industry Co Ltd (Foxconn).

In a statement at the time, SoftBank said the fund was targeting a total of $100 billion within six months.

Earlier this year, the fund hired Eric Chen, who last worked as a Hong Kong-based managing director at private equity firm Silver Lake before setting up his own venture, to head its upcoming China team, the people added.

Chen joined SoftBank Investment Advisers, which oversees Vision Fund, as a partner in March and is based in San Francisco, according to his LinkedIn profile and confirmation from the people. He could not be reached for comment.

A SoftBank spokesman declined to comment.

Already this year the Vision Fund has moved to open offices in India, where it has spent $5 billion betting on the future of technology, and Saudi Arabia, home to its biggest backer – sovereign wealth fund PIF.

The openings come as the fund must manage its sprawling web of portfolio companies covering everything from shared working space to insurance and healthcare.

SoftBank is no stranger in China. Founder Masayoshi Son was an early backer of e-commerce giant Alibaba Group in 2000. Since 2013, SoftBank has invested over $13 billion in Chinese companies such as ride-hailing champion Didi Chuxing. The Vision Fund has made five investments in China, according to Refinitiv data.

Since its first close on May 17 last year, the Vision Fund has invested in truck-hailing company Man Bang Group, Ping An Healthcare and Technology Co, a one-stop healthcare platform backed by Ping An Insurance Group, and most recently Beijing Bytedance Technology Co, China’s largest media start-up managing news aggregator Toutiao and online short-video streaming app TikTok, the data showed.

Bytedance is valued at $75 billion in its latest fundraising, Reuters has reported.

The fund has also invested $500 million in the Chinese unit of U.S.-based shared working space provider WeWork Cos in July, as part of its support for WeWork’s global push.

Reporting by Kane Wu in Hong Kong, adiditonal reporting by Sam Nussey in Tokyo; Editing by Jennifer Hughes and Stephen Coates

A Sleeping Tesla Driver Highlights Autopilot's Biggest Flaw

As technology advances, so must policing. Last week, when a couple of California Highway Patrol officers spotted a man apparently sleeping in the driver’s seat of a Tesla Model S going 70 mph down Highway 101 in Palo Alto around 3:30 am, they moved behind the car and turned on their siren and lights. When the driver didn’t respond, the cops went beyond their standard playbook. Figuring the Tesla might be using Autopilot, they called for backup to slow traffic behind them, then pulled in front of the car and gradually started braking. And so the Tesla slowed down, too, until it was stopped in its lane.

“Our officers’ quick thinking got the vehicle to stop,” says CHP public information officer Art Montiel. The officers arrested the driver, identified in a police report as 45-year-old Alexander Joseph Samek of Los Altos, for driving under the influence of alcohol.

Neither the cops nor Tesla has confirmed whether the Model S had Autopilot engaged at the time. It seems likely it was, though, since the vehicle was staying in its lane and responding to vehicles around it, even though its driver didn’t wake up until the cops knocked on his window.

Tesla clearly tells its customers who pay the extra $5,000 for Autopilot that they are always responsible for the car’s driving, and that they must remain vigilant at all times. Driving drunk is illegal. And the vehicle’s sorta-self-driving tech may have prevented a crash. But if Autopilot did allow a slumbering and allegedly drunk driver to speed down the highway, it brings up another question: Is Elon Musk’s car company doing enough to prevent human abuse of its technology?

It’s long-standing but still-relevant criticism. Last year, a National Transportation Safety Board investigation into the 2016 death of an Ohio man whose Tesla hit a semi-truck while Autopilot was engaged concluded that Tesla bore some of the blame. When the oncoming truck turned across the path of the Tesla, the sedan didn’t slow down until impact. “The combined effects of human error and the lack of sufficient system controls resulted in a fatal collision that should not have happened,” NTSB Chairman Robert Sumwalt said at the time.

Since then, Tesla has restricted how long a driver can go without touching the steering wheel before the receiving a warning beep. If they don’t respond, the system will eventually direct the car to stop and hit its hazard lights. That makes this incident a bit confusing, as Musk noted in a tweet:

The sensors in the steering wheel that register the human touch, though, are easy to cheat, as YouTube videos demonstrate. A well-wedged orange or water bottle can do the trick. Posters in online forums say they have strapped weights onto their wheels and experimented with Ziplock bags and “mini weights.” For a while, drivers even could buy an Autopilot Buddy “nag reduction device,” until the feds sent the company a cease-and-desist letter this summer.

All of which makes the design of similar systems offered by Cadillac and Audi look rather better suited to the task of keeping human eyes on the road, even as the car works the steering wheel, throttle, and brakes. Cadillac’s Super Cruise includes a gumdrop-sized infrared camera on the steering column that monitors the driver’s head position: Look away or down for too long, and the system issues a sharp beep. Audi’s Traffic Jam Pilot does the same with an interior gaze-monitoring camera.

Humans being human, they will presumably find ways to cheat those systems (perhaps borrowing inspiration from Homer Simpson) but it’s clear a system that monitors where a driver is looking is more robust for this purpose than one that can be fooled by citrus.

It’s possible Tesla will give it a shot. The Model 3 comes with an interior camera mounted near the rearview mirror, and though the automaker hasn’t confirmed what it’s for, don’t be surprised if an over-the-air software update suddenly gives those cars the ability to creep on their human overlords.

And if that doesn’t work, well, there’s always the Ludovico Treatment. Or a car that does all the driving, no human needed.


More Great WIRED Stories

Fintech company Calastone to shift fund network to blockchain

LONDON (Reuters) – Calastone, an investment funds transaction network, said on Monday it will shift its entire system to blockchain in May, a move that could slash costs for the sector by billions of dollars a year.

London-based Calastone provides back and middle-office services to more than 1,700 firms such as JP Morgan Asset Management, Schroders and Invesco, helping them sell their funds across the world through banks and other local financial advisors.

The shift will see more than 9 million messages a month between those counterparties – worth more than 170 billion pounds ($217 billion)- completed on blockchain, marking a move into mainstream finance for a technology whose hype has rarely been matched by widespread usage in major industries.

Currently three separate messages are sent digitally between firms as they buy into a fund: one to place orders, another to confirm receipt, and a third to confirm the price.

Though more reliable than manual methods of communicating like faxes – still used by some in the industry – that messaging process is still cumbersome and time-consuming.

Moving to blockchain could slash as much as 3.4 billion pounds ($4.3 billion) a year in global fund industry costs by pooling trading and settlement processes, Calastone said, citing research by consultants Deloitte.

Savings on such a scale would be a boon to the fund industry as it is buffeted by investor pressure to lower fees – its main source of revenue – and rising costs, much of it linked to tougher regulations after the financial crisis.

“The more you can automate, the more you de-risk, you more you streamline, the more you speed up,” said Andrew Tomlinson, chief marketing officer at Calastone.

FROM HYPE TO REALITY?

Originally conceived to underpin the cryptocurrency bitcoin, blockchain is a shared database that can process and settle transactions in minutes. It does not need middlemen for checks and its entries cannot be changed, making it highly secure.

Proponents say it has the power to revolutionise industries from finance to shipping by making back office jobs more efficient. That prospect has sparked tests by banks and other financial companies across the world over the last few years.

But despite the hype, few blockchain projects have been put into practice in the finance sector, due in part to worries over costs, regulation and how widely used it can become.

Banks and asset managers are also concerned about the security of blockchain, said Matthias Huebner at consulting firm Oliver Wyman in Frankfurt.

“How secure is the technology? Is there a risk of fraud? Is there a risk of data just getting lost?” he said.

Still, Calastone said all of its users would see their trades move to the blockchain.

JP Morgan Asset Management and Invesco – listed as clients on Calastone’s website – declined to comment on the shift when contacted by Reuters. Schroders, also listed as a client, did not respond to a request for comment.

Beyond finance, the majority of blockchain projects launched so far have been in peripheral industries such as ticketing or food supply chains.

Recently, though, others have been launched in the commodities sector, suggesting that the technology is catching on in major sectors.

Big oil companies and trading firms, for instance, are now able to finalise crude oil deals on a blockchain-based platform.

Reporting by Tom Wilson and Simon Jessop, editing by Louise Heavens