Tag Archives: Financial Crime

Ukraine Braces for Major Russian Offensive

Russia is preparing to launch a major new offensive against Ukraine in the coming weeks, a top Ukrainian security official said, adding to mounting concerns in Kyiv and the West that the Kremlin is preparing a renewed push to seize large areas of the country.

“Russia is preparing for maximum escalation,” said

Oleksiy Danilov,

the secretary of Ukraine’s National Security and Defence Council, in an interview with Sky News published online early Wednesday local time. “It is gathering everything possible, doing drills and training.”

The warning comes after weeks in which Ukrainian and Western officials have pointed to the risk of a possible new offensive by Russia in the months ahead. Within Russia, the military is under pressure to regain battlefield momentum after it lost broad swaths of territory to a Ukrainian offensive during the second half of last year. Ukraine’s forces recaptured large areas of the country seized by Russia earlier in the year, including Kherson, the only regional capital occupied by the Kremlin’s military.

Since the Ukrainian military’s offensive, the front lines of the conflict have become largely static, with Russia making incremental gains around the small city of Bakhmut. It has become a central battlefield in the war, with Russia sending wave upon wave of newly recruited soldiers to the front line.

Russia mobilized roughly 300,000 additional soldiers starting last September in what the Russian government termed a partial mobilization of reservists. Mr. Danilov said that he expected more than half of those newly mobilized soldiers would be used in any new offensive.

Mr. Danilov also said that a new Russian assault could coincide with the anniversary of Russia’s full-scale invasion of the country on Feb. 24, 2022.

A Ukrainian serviceman entered a shelter near a front-line position in the Donetsk region of eastern Ukraine at the end of January.



Photo:

yasuyoshi chiba/Agence France-Presse/Getty Images

Ukrainian President

Volodymyr Zelensky

said separately on Tuesday evening that he has been discussing with senior officials plans to thwart any new attempt by Russia to reverse its battlefield losses in Ukraine.

“We are studying the situation in detail in all major operational directions and in the long term. What the occupier is preparing for, and how we are already responding to Russia’s preparations for a revanche attempt,” he said in his nightly address to the nation.

In recent weeks Ukrainian officials have coupled warnings of a new Russian offensive with calls for Western countries to supply more weapons that could help counter a renewed attack. Following a decision last week by the U.S., Germany and other countries to provide Ukraine with at least 120 main battle tanks, Ukrainian officials have called for jet fighters. President Biden said on Monday that the U.S. wouldn’t provide F-16 warplanes to Ukraine, although he didn’t put a time frame on the prohibition.

Separately, Ukraine’s top prosecutor announced a slew of corruption cases against former senior Ukrainian officials on Wednesday. In a post on Facebook,

Andriy Kostin

said his office had officially notified six former top officials at the ministry of defense and other institutions of the cases. The accusations against them range from misuse of funds to embezzling and accepting bribes.

The announcement comes less than two weeks after Mr. Zelensky fired nearly a dozen senior officials in an effort to prevent and clamp down on corruption. The crackdown is seen as critical to his efforts to ensure the continued flow of Western military and financial support. Ordinary Ukrainians, who are fighting and dying by the thousands in the war, have also insisted on an end to corruption in the country.

“Corruption in war is looting!” said Mr. Kostin. “My signal to all officials at all levels, wherever they are: there will be no return to the past.”

Fighting raged in Ukraine’s east, the Ukrainian military said on Wednesday morning, with Ukrainian forces repelling Russian attacks in at least eight separate areas in the Donetsk region, including around Bakhmut, where Ukrainian troops have held out against overwhelming Russian firepower for more than six months. Ukraine’s military general staff said in an update on the fighting posted on Facebook that it inflicted heavy losses on Russian forces in the east. 

The Russian Defense Ministry on Wednesday said that Russian forces had eliminated Ukrainian units and fighting vehicles in the Donetsk region.

Outside of Bakhmut, Russian forces last month captured the nearby mining town of Soledar, raising fears that Russia’s mobilization of reservists was beginning to help it reclaim the military initiative in an area that has become highly symbolic and costly for both sides, although with uncertain strategic value on the battlefield. 

Russia also continued lethal shelling of the city of Kherson, which Ukrainian forces recaptured in November, local officials said. The region’s military administration said in a morning update on Wednesday that one person had been killed and another injured as Russian forces launched 42 separate mortar and rocket attacks on the area over the past day.

Russia has made incremental gains around Bakhmut, a Ukrainian city that has become a central battlefield in the war.



Photo:

Emanuele Satolli for The Wall Street Journal

The British Defense Ministry said Wednesday morning that Kherson “remains the most consistently shelled large Ukrainian city outside of the Donbas,” though Russia’s rationale for expending ammunition there remained unclear.

“Commanders are likely partially aiming to degrade civilian morale and to deter any Ukrainian counter-attacks across the Dnipro River,” the ministry said in an intelligence update posted on Twitter.

Ukraine’s recapture of Kherson was one of the most important symbolic defeats for the Kremlin in the entire war, providing a psychological boost for Ukrainian forces and a strategic victory in Ukraine’s push to retake its critical port cities along the Black Sea. Ukrainian officials have also said they have been striking in Russian-occupied territory south of the Dnipro river, which flows past the city of Kherson, since November.

Write to Jared Malsin at jared.malsin@wsj.com

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Elon Musk, Tesla Poised for Trial Over Tweets Proposing to Take Car Maker Private

Elon Musk

is headed to court in a securities-fraud trial over tweets from 2018 in which he floated the possibility of taking

Tesla Inc.

private, with in-person jury selection poised to begin Tuesday. 

The class-action case originates with an Aug. 7, 2018 tweet in which the Tesla chief executive said, “Am considering taking Tesla private at $420. Funding secured.” 

An investor,

Glen Littleton,

sued Tesla, Mr. Musk and members of Tesla’s board at the time, alleging that Mr. Musk’s tweets were false and cost investors billions by spurring swings in the prices for Tesla stock, options and bonds. In court filings, Mr. Musk has said he was indeed considering taking Tesla private and believed he had the support of Saudi Arabia’s sovereign-wealth fund to do so. The deal, which would have been valued around $72 billion, never materialized.

U.S. District Judge

Edward Chen,

who is overseeing the San Francisco jury trial that is scheduled to run through Feb. 1, has ruled that Mr. Musk’s tweets about taking the company private weren’t true and that he acted recklessly in making them. 

Questions for the jury include whether Mr. Musk’s tweets were material to investors and whether he knew they were untrue.

The case is unusual in that securities-fraud cases usually resolve before going to trial, such as through a settlement, said

Jill Fisch,

a securities-law professor at the University of Pennsylvania. The defendants in this case face “an uphill battle” in light of the judge’s pretrial decision about the veracity of Mr. Musk’s statements, she said.

Attorneys for the lead plaintiff didn’t respond to a request for comment, nor did an attorney for Tesla, Mr. Musk and the other board members.

Twitter has been in turmoil since Elon Musk took over. To get a sense of what’s going on behind the scenes, The Wall Street Journal spoke with former Tesla and SpaceX employees to better understand how Musk leads companies. Illustration: Ryan Trefes

Mr. Musk is expected to take the stand as early as Wednesday, some two months after he did so in Delaware in a trial over his pay package at Tesla. In 2021, he also appeared before Delaware’s business-law court to defend Tesla’s roughly $2.1 billion 2016 takeover of home-solar company SolarCity Corp. 

Also on the list of possible witnesses are Tesla board chair

Robyn Denholm,

board members

Ira Ehrenpreis,

James Murdoch

and

Kimbal Musk

—the CEO’s brother. The head of investor relations,

Martin Viecha,

also may be called.

SHARE YOUR THOUGHTS

What do you think will be the outcome of the case over Elon Musk’s 2018 Tesla tweet? Join the conversation below.

This week’s trial comes at a busy time for Mr. Musk, who has been scrambling to turn around Twitter Inc. after buying the social-media company last fall in a deal valued at $44 billion. His rocket company SpaceX is pushing for the first orbital launch of a new rocket Mr. Musk wants to use for deep-space missions. 

Tesla, meanwhile, has slashed prices across its vehicle lineup, with some of last week’s cuts in the U.S. nearing 20%, in a bid to juice demand. The company’s stock has fallen roughly 70% since its peak in November 2021, erasing around $850 billion in market value. Mr. Musk’s personal wealth has fallen more than $200 billion in that time, according to the Bloomberg Billionaires Index.

Court proceedings involving Mr. Musk can be feisty. In the SolarCity case, for example, Mr. Musk called opposing counsel a “bad human being.”

Tesla has reduced prices across its vehicle lineup in an effort to boost demand.



Photo:

Jay Janner/USA TODAY NETWORK/Reuters

In advance of this week’s trial, Mr. Musk asked the court to move the trial to Texas on the basis that potential jurors in San Francisco could be biased against him. Judge Chen rejected the request. 

“It isn’t that hard it seems to me to find 15 people,” he said.  

The court requires nine jurors and six alternates to proceed with the case. Roughly 190 potential jurors were asked to fill out questionnaires about their views of Mr. Musk and other issues. The court plans to bring in about 50 of them for further questioning Tuesday. 

Opening arguments could start as early as Tuesday after the jury is selected.

The lead plaintiff is seeking damages for investor losses he alleges stemmed from Mr. Musk’s and Tesla’s statements. Tesla stock closed up 11% the day Mr. Musk initially tweeted about potentially taking Tesla private, later giving back all those gains and falling further as questions emerged about the deal. 

The defendants have said the plaintiff won’t be able to prove to a jury that the statements were materially false. Mr. Musk was considering taking Tesla private, the defendants have said, even if some of his assertions about the deal may not have been literally accurate.

Defendants, in a trial brief, said Mr. Musk believed he had secured backing to take the car maker private from Saudi Arabia’s sovereign-wealth fund, the Public Investment Fund. A lawyer for the defendants said Friday that his team had chosen not to enforce subpoenas calling on fund representatives to testify. The sovereign-wealth fund didn’t respond to a request for comment.

Mr. Musk and Tesla each agreed in 2018 to pay $20 million to settle civil charges brought by the Securities and Exchange Commission over the same tweets. Mr. Musk also agreed to step down as chairman of the company, while remaining CEO. He later said in legal filings that he felt pressured to settle with the SEC. Last year, a federal judge denied Mr. Musk’s request to scrap his settlement.

Write to Rebecca Elliott at rebecca.elliott@wsj.com and Meghan Bobrowsky at meghan.bobrowsky@wsj.com

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Argentine Court Sentences Vice President Cristina Kirchner to Six Years in Prison

BUENOS AIRES—A federal court on Tuesday convicted Vice President

Cristina Kirchner

of fraud charges and sentenced her to six years in prison for embezzling money through public-construction contracts, a blow for a leftist government grappling with soaring inflation and one of the worst economic crises in two decades.

A three-judge panel said Mrs. Kirchner, along with several other former aides, would be permanently banned from holding public office, capping a long-running graft case against Argentina’s most prominent and polarizing politician. Mrs. Kirchner served as president for two terms from 2007 to 2015 before becoming the first vice president in the country to be tried and convicted on graft charges while in office.

Mrs. Kirchner, a driving force in the populist Kirchnerismo movement for two decades, denied the accusations, saying she is the victim of political persecution. She is expected to appeal the judgment, a process that Argentine legal experts say could drag on for years and hamper prosecutors’ efforts to ban her from holding office.

She might also never serve jail time because she enjoys immunity from prosecution. In addition, Argentine law prohibits prison time for people over 70 years old. Mrs. Kirchner turns 70 in February.

“This sentencing, my compatriots, is not one based on the laws of the constitution,” Mrs. Kirchner said in a video address just after the court’s decision. “This is a parallel state, a judicial mafia.”

Though Mrs. Kirchner had in the past left open another possible run for the presidency, she said on Tuesday following the sentence: “I will not be a candidate.”

“I won’t be a candidate for anything, not president, not senator,” said Mrs. Kirchner, who has also been a senator since 2019 and is considered the most dominant leader of her left-leaning political movement. “My name will not be on any ballot.”

The court also found eight others guilty of defrauding the state, sentencing them from three to six years in prison while acquitting four others. The case centered on the granting of public contracts to a construction mogul, Lázaro Báez, who was close to the Kirchner family.

As a powerful figure in President Alberto Fernández’s political coalition, Mrs. Kirchner’s legal troubles are likely to weigh on an unpopular government facing what economists call a challenging economic environment.

Mr. Fernández and his economy minister, Sergio Massa, agreed to austerity measures and cutting energy subsidies earlier this year as part of a deal with the International Monetary Fund to refinance $44 billion in debt to avoid a default. Mrs. Kirchner has opposed efforts to reduce the budget deficit, clashing with the president, while backing the printing of pesos to fund generous social programs.

An opposer of Argentine Vice President Cristina Kirchner is seen in Buenos Aires last month.



Photo:

Luis Robayo/Agence France-Presse/Getty Images

Argentina’s poverty rate has risen, jumping from 28% in 2017 to 43% this year, according to a study by the Catholic University of Argentina. Annual inflation hit 88% in October, the government statistics agency said, tops in the Group of 20 and the highest pace of consumer price increases since Argentina faced hyperinflation in the early 1990s. And economists expect inflation to hit 100% by year’s end. The peso, meanwhile, has weakened sharply against the dollar this year, raising concerns about a painful devaluation amid low reserves at the Central Bank.

Mrs. Kirchner and her supporters say the investigation has generated animosity against her, leading to a purportedly failed assassination attempt in September after prosecutors formalized charges against her.

In a puzzling incident, a man thrust a gun in Mrs. Kirchner’s face as she greeted supporters outside her apartment and pulled the trigger. The weapon didn’t discharge, and the vice president was unharmed. A Brazilian man residing in Argentina was arrested immediately after the attack. Authorities haven’t disclosed a motive.

The criminal case against Mrs. Kirchner stems from her time as president, when the government granted highway building contracts to the construction magnate, Mr. Báez, in the southeastern province of Santa Cruz, a stronghold of Kirchnerismo.

Argentine antigraft prosecutors had sought 12 years in prison and a public-office ban, alleging that Mrs. Kirchner used her position to conspire with aides and Mr. Báez to receive kickbacks for fraudulent contracts for projects, some of which were never completed. The alleged conspiracy cost the government nearly $1 billion, prosecutors said.

While the court found Mrs. Kirchner guilty of defrauding the state, it didn’t find her guilty of leading a criminal conspiracy.

Mr. Báez, who is already serving a 12-year sentence on money-laundering charges, had in the past denied the allegations, showing off schools and other projects that he said demonstrated that the contracts issued to him were legitimate.

Mrs. Kirchner’s conviction is likely to further erode support for Mr. Fernández’s government, which has an approval rating of about 18%, according to Mariel Fornoni, director of Management and Fit, an Argentine political consultancy. In public-opinion surveys, corruption is topped only by inflation as citizens’ primary concern, said Ms. Fornoni.

In recent months, Mrs. Kirchner had criticized some of the Fernández administration’s efforts to reduce subsidies on gas and other utilities. Her comments, Ms. Fornoni said, had heightened speculation she would seek public office in elections next year, when Mr. Fernández’s term ends.

Mrs. Kirchner “has high levels of rejection” in polls, Ms. Fornoni said. But she said that the vice president also has had a base of strong supporters hovering at 25%, which until her announcement on Tuesday made her the leading figure in the ruling Peronist Party.

“It’s going to be hard to find anyone else to generate confidence in Argentina,” Ms. Fornoni said.

Mrs. Kirchner and her husband, Néstor Kirchner, president from 2003 to 2007, presided over the country during a tide of left-leaning governments across Latin America that used revenue from high commodity prices to ramp up public spending and forged alliances to counter the U.S. influence in the region.

With leftist governments again emerging in countries around the region, Mrs. Kirchner had a new bevy of allies, some of whom had criticized the investigation in Argentina.

In August, the presidents of México, Colombia and Bolivia joined Argentina in signing a joint statement calling the case against Mrs. Kirchner political persecution. “They’re trying to bury the ideals and values that she represents with the final objective to implant a neoliberal model,” the statement said.

In her comments after Tuesday’s verdict, Mrs. Kirchner cast the conviction as a ruling against the populist system she had furthered in Argentina. “They’re condemning me because they’re condemning a model of economic development and recognition of people’s rights,” she said.

Write to Kejal Vyas at kejal.vyas@wsj.com

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Donald Trump’s Fate in Justice Department Probes Headed for Special Counsel

WASHINGTON—Attorney General

Merrick Garland

appointed a former federal and international war-crimes prosecutor as special counsel on Friday to oversee Justice Department investigations into former President

Donald Trump.

Jack Smith, who once led the Justice Department unit that investigates public corruption and since 2018 was the chief prosecutor at The Hague investigating war crimes in Kosovo, will be the third special counsel in five years to examine issues involving Mr. Trump.

He will lead both the probe into the handling of classified documents at Mr. Trump’s Mar-a-Lago resort in Florida and oversee key aspects of the sprawling Justice Department investigation into efforts by Mr. Trump and his allies to overturn his 2020 election loss.

“The Special Counsel is authorized to prosecute federal crimes arising from the investigation of these matters,” Mr. Garland said in a brief memo naming Mr. Smith to the post. The memo said Mr. Smith’s remit doesn’t include cases against those who were physically present at the Jan. 6, 2021, riot at the Capitol.

The appointment comes three days after Mr. Trump announced another bid for the presidency and would mark the naming of the third independent prosecutor in five years to examine issues involving Mr. Trump.

Jack Smith previously led the Justice Department unit that investigates public corruption.



Photo:

U.S. Department of Justice

The move reflects the sensitivity of Mr. Garland overseeing any investigation into Mr. Trump now that he is a declared presidential candidate. President Biden, who has said he intends to run for re-election in 2024, nominated Mr. Garland to head the Justice Department in part for the former judge’s promise to insulate the agency from political influence.

Some legal experts have anticipated such an appointment. Regulations governing special counsels provide for the attorney general to name an outsider if he determines that the investigation or prosecution presents a conflict of interest for the department and recusals of certain officials wouldn’t be enough to overcome the concerns.

Some former Justice Department officials and prosecutors have said such an appointment wouldn’t do much to allay criticism of the FBI and Justice Department by Mr. Trump and his supporters. There are few people with the necessary prosecutorial experience and nonpartisan reputation who would be willing to take on the post, those people say.

A special-counsel appointment won’t entirely eliminate the appearance of a conflict, as Mr. Garland and other senior Justice Department officials are still likely to be involved in some decision-making related to the probe, according to people familiar with past special counsels.

The House committee investigating the Jan. 6, 2021, attack on the Capitol voted in mid-October to issue a subpoena for relevant documents and testimony under oath from former President Donald Trump. Photo: Elizabeth Frantz/Reuters

Write to Aruna Viswanatha at Aruna.Viswanatha@wsj.com and Sadie Gurman at sadie.gurman@wsj.com

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China’s Xi Jinping Stakes Out Ambitions, With Himself at the Center

HONG KONG—Chinese leader

Xi Jinping

cast himself as the decisive helmsman his country needs in surmounting great adversity, pledging to build a more secure, powerful and egalitarian nation as he signaled plans to extend his decadelong rule.

In a Sunday speech, opening a Communist Party congress where he is set to defy recent norms and claim a third term as party chief, Mr. Xi issued a robust defense of his record, shaking off concerns over Covid-19, a sluggish economy and troubled ties with the U.S. He recalled his efforts to curb corruption, rally public support for the party and champion China’s political system as a counterweight to Western liberal democracy.

A campaign of “self-revolution,” marked by forceful crackdowns on corruption and political dissent, Mr. Xi said, has “ensured that the party will never change in quality, change its color, or change its flavor”—party parlance for threats to Communist rule in China.

In televised remarks delivered from Beijing’s Great Hall of the People, Mr. Xi also claimed significant successes in fighting Covid-19, enforcing order in Hong Kong and curtailing what he called separatist activism in the island democracy of Taiwan, which Beijing claims as its territory.

He reiterated that Beijing won’t renounce the use of force in unifying Taiwan, so as to deter outside interference and splittist elements. “The complete unification of the motherland must be realized, and it will be realized,“ he said, drawing loud applause.

Mr. Xi directed parts of his speech to addressing concerns about China’s ties to the rest of the world, amid rising geopolitical tensions and Beijing’s own Covid-imposed isolation, reaffirming his support for globalization and adherence to a decades-old national policy of “reform and opening up.”

While Mr. Xi warned of risks, challenges and “even dangerous storms” ahead, his report to the congress largely promised a continuation of his firm-handed rule at home and a more assertive exercise of power abroad, including by making the military combat-ready.

“The work report was unambiguously about continuity,” Joseph Torigian, a professor in Chinese politics and foreign policy at American University, said on Twitter. “Although historic, this Congress will almost certainly not signify fundamental new policy directions.”

In laying out his economic goals, Mr. Xi renewed his promise of a new era of “common prosperity,” in which the party exercises greater control over private capital and distributes China’s wealth more evenly. Such efforts have unnerved entrepreneurs at home and investors from abroad after sweeping regulatory crackdowns on Chinese tech giants and private businesses in recent years.

President Xi addressed several topics including Taiwan, Hong Kong and the fight against Covid-19 in his speech at the party gathering in Beijing.



Photo:

Mark Schiefelbein/Associated Press

Mr. Xi also trumpeted what he called “Chinese-style modernization,” doubling down on his program of party-led economic planning and development. He reiterated calls for ensuring China’s economic self-reliance, urging more indigenous efforts to develop high-end technologies that can serve the nation’s strategic needs—a demand that comes as the U.S. ramps up efforts to deny China access to critical components such as advanced semiconductors.

Since taking power in late 2012, Mr. Xi has assumed a degree of autocratic authority unseen since the Mao Zedong era and upended recent retirement practices to allow himself to stay in office indefinitely.

By taking a third term as party chief, the 69-year-old Mr. Xi would depart from the decadelong leadership cycle that his predecessor set and dismantle succession norms designed to prevent a return to a Mao-style dictatorship. Political analysts expect Mr. Xi to promote protégés and allies into senior party roles and thereby cement his political supremacy.

Mr. Xi devoted much of his speech to emphasizing how his party aligns itself with the Chinese people. “The country is the people, and the people are the country,” he said. The entire party must always “share its destiny and connect heart-to-heart with the people.”

The party has in recent years increasingly described Mr. Xi as renmin lingxiu, or “people’s leader,” a designation that echoes Mao’s title of weida lingxiu, or “great leader.” Party insiders say the congress could confer more tokens of power on Mr. Xi, such as by formally designating him renmin lingxiu and cementing his claim to being on par with Mao as China’s greatest statesmen.

Another possibility would involve shortening the label of Mr. Xi’s political philosophy, “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,” to simply “Xi Jinping Thought.” This would directly mirror “Mao Zedong Thought,” which the party exalts as a guiding ideology second only to Marxism-Leninism.

Chinese President Xi Jinping has used propaganda to extend his rule and set the stage for a third term. WSJ looks at three moments over his 10 years in power that trace his rise to become the country’s most powerful leader since Mao Zedong. Photo illustration: Adam Adada

Mr. Xi’s speech, lasting about 104 minutes, was roughly half the length of his remarks at the 2017 congress, where he spoke for more than 200 minutes. State broadcaster China Central Television said Mr. Xi’s address on Sunday comprised highlights from a full report that congress delegates will review over the coming week.

In the Sunday speech, Mr. Xi declared that the party had scored “historic victories” under his watch, citing the party’s centennial last year, its stewardship over a “new era” in Chinese socialism, and his campaign to eradicate rural poverty. He also reiterated long-term goals that he first laid out five years ago: ensuring that China achieves a degree of “socialist modernization” by 2035 and becomes a “modern socialist power” by the middle of the 21st century.

Some analysts have cited the 2035 target—when Mr. Xi believes China should have become a more equal and prosperous society with an innovative economy and a modernized military—as a possible timeline for his stint as paramount leader.

The party has pitched its twice-a-decade congress as a triumphant moment for China, even as it confronts wide-ranging challenges. Mr. Xi’s zero-tolerance approach to Covid-19 has throttled the domestic economy with repeated lockdowns and disruptions, exacerbated by a property-market slump.

Tensions with the U.S. and other Western powers have intensified as they challenge Beijing’s push for technological supremacy, territorial claims over Taiwan and continued support for Moscow following Russia’s invasion of Ukraine. Mr. Xi didn’t mention the war in Ukraine during his speech, which wasn’t expected to go into detail on foreign affairs.

Despite tightened security and censorship, frustrations with Mr. Xi’s policies boiled over into overt dissent on Thursday, when a protest took place on a highway bridge in Beijing. Dark smoke swirled over protest banners condemning Mr. Xi as a “traitorous dictator”—a rare display of defiance that was quickly snuffed out by local authorities.

More than 2,300 delegates were present at the Great Hall of the People, including retired party elders. Mr. Xi’s immediate predecessor,

Hu Jintao,

occupied a seat on the dais next to the incumbent’s. Notable absentees included

Jiang Zemin,

the 96-year-old former leader who served as general secretary for 13 years until 2002, as well as former Premier

Zhu Rongji,

who turns 94 this month.

Beijing’s Great Hall of the People, where the Chinese Communist Party’s twice-a-decade congress opened on Sunday.



Photo:

Mark Schiefelbein/Associated Press

The congress, which ends Saturday, will vote on the proposed changes to the party charter and elect a new Central Committee, which since 2007 has comprised more than 370 full and nonvoting alternate members, drawn from senior ranks of the party, government, military and state industry.

The new Central Committee will convene the day after to choose the next Politburo and its elite Standing Committee, the party’s top decision-making body. The Politburo has comprised 25 full members since 2007, while the Politburo Standing Committee has featured seven members since 2012, when it was reduced from nine.

The share of seats that Xi allies occupy in the next leadership would offer clues on how much clout the Chinese leader can exert in pursuing his priorities. Analysts say Mr. Xi isn’t likely to designate any potential successors, as doing so would undermine his own authority.

Top state positions, including the next premier and other ministerial roles, won’t be finalized until China’s annual legislative session next spring.

In his Sunday remarks, Mr. Xi didn’t say whether he plans to stay in power to fulfill the vision he outlined. Mr. Xi would turn 74 years old by the end of his third term, two years younger than Mr. Jiang was when he stepped down as party chief in 2002.

Write to Chun Han Wong at chunhan.wong@wsj.com

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In Brazilian Presidential Election Former Leftist President Wins First Round as Voters Rebuff Current President

Luiz Inácio Lula da Silva waves to supporters on general elections day in São Paulo on Sunday.



Photo:

Rodrigo Paiva/Getty Images

SÃO PAULO—Former president

Luiz Inácio Lula da Silva

took the most votes in Sunday’s first round of Brazil’s presidential elections, edging ahead of President

Jair Bolsonaro

by pledging to focus on the poverty and unemployment made worse by the pandemic and the ensuing global economic crisis.

Mr. da Silva, a standard-bearer of the Latin American left who is widely popular among the poor despite having been jailed on a corruption conviction in 2018, clinched 47.7% of the vote. The tally was just shy of the majority he needed to win outright, with 95.7% of votes counted Sunday night, according to Brazil’s electoral court.

Brazil’s right wing leader notched 43.8% of the votes—far more than the 36-37% support that polls from Datafolha and Ipec said that the ex-army captain would garner. Allies of Mr. Bolsonaro also swept to victory in elections that saw voters cast ballots for members of congress and state governors.

A supporter in São Paulo on Sunday embraced former Brazilian President Luiz Inácio Lula da Silva.



Photo:

Marcelo Chello/Associated Press

Both men emerge from a field of 11 candidates and will likely go head-to-head in a runoff vote on October 30.

Write to Samantha Pearson at samantha.pearson@wsj.com and Luciana Magalhaes at Luciana.Magalhaes@wsj.com

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Appeared in the October 3, 2022, print edition as ‘Brazilians Back Former Leftist President.’

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Najib Razak, Malaysia’s Former Prime Minister, Loses 1MDB Appeal and Is Sent to Prison

KUALA LUMPUR—Former Prime Minister Najib Razak was taken to prison after Malaysia’s top court dismissed his final appeal of corruption convictions, capping a yearslong quest by authorities to prosecute him for his role in one of the world’s largest financial scandals.

The ruling by Malaysia’s Federal Court on Tuesday upheld Mr. Najib’s guilty verdicts on seven charges including abuse of power, money laundering and criminal breach of trust. He was convicted in 2020, sentenced to 12 years in prison and fined almost $50 million, but his punishment was stayed throughout the appeals process.

The 69-year-old Mr. Najib, who remains an influential figure in Malaysian politics, denied wrongdoing throughout the proceedings against him. On Tuesday, he appeared in court with his wife and three children and delivered a lengthy statement before the ruling, saying that the court had treated him unjustly. “At the final stage of a case, it is the worst feeling to have, to realize that the might of the judicial machinery is pinned against me in the most unfair manner,” he said.

The court’s five-member bench unanimously dismissed Mr. Najib’s appeals and affirmed his conviction and sentence, said Federal Court Chief Justice Tengku Maimun Tuan Mat. “The defense is so inherently inconsistent and incredible that it has not raised reasonable doubt on the case,” she said.

Billions of dollars that went missing from Malaysia’s 1MDB has become one of the biggest financial scandals ever, with Goldman Sachs agreeing to pay the U.S. government more for its involvement than it did after the 2008 crisis. Here’s how the alleged fraud happened and then fell apart. (Originally published Oct. 20, 2020) Photo Composite: Adam Falk

Prosecutors accused Mr. Najib of being behind a sprawling multinational fraud scheme involving 1Malaysia Development Bhd., known as 1MDB, the country’s state investment fund. Investigators in Malaysia and the U.S. alleged Mr. Najib and his associates pilfered billions of dollars from the fund while he was in office.

The dismissal of Mr. Najib’s appeal and his immediate imprisonment may repair some of the damage the scandal, which spanned multiple jurisdictions, did to Malaysia’s international reputation. While others have been prosecuted for their involvement in the 1MDB fraud, Mr. Najib was accused of being the political figure at its center.

“The perception has been that people in senior positions of political power can get away with their crimes,” said

Bridget Welsh,

an honorary research associate at the University of Nottingham Malaysia. “Most Malaysians didn’t believe this would ever happen. It’s a good day for justice in Malaysia.”

The scandal led to calls for Mr. Najib’s resignation and his ultimate defeat in elections in 2018, when he was trounced by political rivals who later revived investigations into his alleged financial misconduct. He has since faced 42 criminal charges in five separate cases, most of which are still before the courts.

Najib supporters gathered outside Malaysia’s Federal Court on Tuesday.



Photo:

arif kartono/Agence France-Presse/Getty Images

The decision Tuesday was tied to a case that was the first against him to result in a conviction, and involved allegations that roughly $10 million was transferred from a former 1MDB unit called SRC International Sdn Bhd. into his personal bank accounts.

Tuesday’s ruling ended Mr. Najib’s last avenue of judicial appeal, though he could still be freed by a royal pardon. His political party, the United Malays National Organization, has regained some popularity after its defeat in 2018, which ended its six consecutive decades in power. After Mr. Najib lost the premiership he continued serving as a member of parliament, but now that his conviction has been upheld he is barred from holding his current seat and making any future runs for office.

“This sends a clear signal about where the judiciary stands when corruption is concerned, and that it doesn’t matter who is accused—whether they’re a big fish or a small fish,” said

Malik Imtiaz Sarwar,

a senior lawyer involved in constitutional and public interest litigation. “It’s really an underscoring of the ‘without fear or favor’ principle.”

Malaysian authorities say Mr. Najib oversaw the plunder of 1MDB, which he controlled and expanded after being elected prime minister in 2009. The U.S. Department of Justice said more than $4.5 billion was stolen from the fund between 2009 and 2015 in an elaborate scheme that involved bribing officials in Malaysia and the United Arab Emirates to obtain lucrative deals and raise money for the fund, and laundering the loot through luxury real estate, artwork and Hollywood films.

Lawyers for Najib Razak arrived at Malaysia’s Federal Court on Tuesday.



Photo:

ahmad luqman ismail/Shutterstock

Mr. Najib had a close relationship with Malaysian financier

Jho Low,

the plot’s alleged architect. Mr. Low, whose whereabouts is unknown, has denied wrongdoing. He faces more than a dozen criminal charges in Malaysia and the U.S., including money laundering and bribery. Malaysia’s Attorney General’s Chambers said in July that Mr. Low’s counsel sought a settlement, but the offer was rejected.

In 2018, a New York court charged Mr. Low and two bankers for the global investment firm

Goldman Sachs

with conspiring to launder billions of dollars and violate the Foreign Corrupt Practices Act. The bank has agreed to pay more than $5 billion to settle related lawsuits in the U.S. and Malaysia. One of the accused bankers,

Tim Leissner,

pleaded guilty. The other,

Roger Ng,

was convicted in April.

Civil lawsuits brought by the Justice Department since 2016 resulted in the return to Malaysia of more than $1.2 billion in seized assets linked to the scandal.

Mr. Najib himself was accused by Malaysian investigators of embezzling more than $680 million from 1MDB, some of which was siphoned directly into his personal bank accounts to bankroll his family’s ostentatious lifestyle. Raids on Mr. Najib’s properties in 2018 turned up more than $220 million worth of cash and valuables. Police said they seized a trove of necklaces, watches, tiaras and luxury handbags, some of which were stuffed with cash.

Mr. Najib’s wife,

Rosmah Mansor,

had famously expensive taste: Among the loot was her collection of Birkin bags, a costly line of purses by French design house Hermès.

Throughout his appeals, Mr. Najib cast the judiciary as biased and lodged multiple interventions that political analysts say appeared aimed at prolonging the proceedings—perhaps in hopes that a change of government could offer him a chance at clemency. His final petition to the Federal Court contained 94 grounds of appeal.

The court ruled that his complaints were devoid of merit.

“We can see delaying was clearly part of the tactic,” said Ms. Welsh, of the University of Nottingham Malaysia. “This is all part of a political narrative geared toward finding exit strategies for him.”

Write to Feliz Solomon at feliz.solomon@wsj.com and Ying Xian Wong at yingxian.wong@wsj.com

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Russia Suffers Another Fire at a Supply Depot as It Advances in Eastern Ukraine

An ammunition depot caught fire near Russia’s border with Ukraine, a local official said, the latest in a series of incidents to afflict Russian military facilities in regions adjacent to Ukraine in recent weeks that could pressure supply lines to Russian forces.

The fire at the depot in a village near Belgorod, around 15 miles from the border, was extinguished by early morning Wednesday, according to

Vyacheslav Gladkov,

the regional governor.

Authorities also reported blasts in Russia’s Kursk and Voronezh regions, which are adjacent to Ukraine. The regions’ governors said air-defense systems shot down drones in the early hours of Wednesday.

An ammunition depot in Russia caught fire, after explosions at Ukraine’s border with Moldova raised concerns that the war may spill over; a monument to Russian-Ukrainian friendship was taken down in Kyiv; Poland responded to Russia halting gas supplies. Photo credit: Konstantinos Tsakalidis/Bloomberg News

The incidents follow a series of similar events in recent weeks in the regions neighboring eastern Ukraine, where Russia is attempting to seize territory. Russian officials said two Ukrainian helicopters struck an oil-storage facility on the outskirts of Belgorod on April 1. Fires broke out at two fuel-storage depots in the Bryansk region on Monday.

Russia said the flagship of its Black Sea Fleet, the missile cruiser Moskva, sank in a storm after an ammunition explosion on board on April 14, while the U.S. said it was struck by Ukrainian missiles.

Ukrainian officials have hinted at some involvement in the incidents without expressly acknowledging them.

Russia’s Federal Security Service released this image Wednesday, reporting the detention of two Russian citizens it said were planning to sabotage a facility in Belgorod.



Photo:

FSB/TASS via Zuma Press

“Belgorod, ‘Moskva,’ Bryansk. Constant ‘production incidents.’ How can we not believe in karma for the murder of [Ukrainian] children?”

Mykhailo Podolyak,

a Ukrainian presidential adviser, wrote on Twitter on Monday.

Keir Giles,

a Russian security expert at the Chatham House think tank in London, said Russia often suffers from accidents and disasters related to negligence and other factors, so the involvement of Ukraine was unclear so long as it didn’t take responsibility for the incidents.

“The system suffers from self-inflicted injuries in peacetime,” said Mr. Giles. “When put under additional strain of an offensive war, it is no surprise that the rate of natural accidents should increase.”

A fire raged at an oil-storage facility in Russia’s border region of Bryansk earlier this week.



Photo:

Kirill Ivanov/Zuma Press

Russia, meanwhile, said it halted gas flows to Poland and Bulgaria beginning Wednesday, marking a significant escalation in the economic conflict between Moscow and the West. Moscow has been trying to strengthen its faltering currency by insisting customers pay in rubles, raising the prospect that Russia could shut off gas flows to other European countries in response to the sweeping economic sanctions imposed by the West for its invasion of Ukraine. Russia’s finance minister,

Anton Siluanov,

said Wednesday that Russia’s oil production this year could decline by as much as 17% due to the sanctions.

Ursula von der Leyen,

president of the European Commission, decried the announcement from Russian gas company Gazprom as blackmail and said European Union states are working to secure alternative sources of energy and coordinate storage plans across the bloc.

“This is unjustified and unacceptable,” she said. “And it shows once again the unreliability of Russia as a gas supplier.”

Russian President

Vladimir Putin

on Wednesday again warned of dire consequences for any country that intends to “interfere in the ongoing events from the outside and create strategic threats for Russia that are unacceptable to us,” in remarks to the Russian Federal Assembly’s Council of Legislators in Russia’s second city of St. Petersburg.

“They should know that our response to counter strikes will be lightning fast,” Mr. Putin said.

Russia’s Foreign Minister

Sergei Lavrov

had told Russian media on Monday that the West was now engaged in a proxy war with Russia by arming and assisting Ukraine, and that it could escalate into a global conflict with nuclear weapons.

U.S. Defense Secretary

Lloyd Austin,

speaking to reporters at Ramstein Air Base in Germany on Tuesday, said “any bluster about the possible use of nuclear weapons is dangerous and unhelpful.”

People lined up Wednesday at a food distribution center in Zaporizhzhia, in southeastern Ukraine.



Photo:

ed jones/Agence France-Presse/Getty Images

Workers attempted on Tuesday to restore energy, water and internet in the Kyiv-area town of Borodyanka, which was heavily bombed last month.



Photo:

Justyna Mielnikiewicz/MAPS for The Wall Street Journal

Mr. Austin met with defense officials from more than 40 countries in Germany and said that the U.S. and its allies would continue to meet Ukraine’s needs, adding that the stakes of the conflict “reach beyond Ukraine and even Europe.”

Russia’s Federal Security Service, meanwhile, said Wednesday that two Russian citizens were detained as they were allegedly preparing to sabotage a transport-infrastructure site in Belgorod. The agency said the suspects were supporters of Ukrainian nationalists and had sent data about Russian servicemen participating in Moscow’s military operation in Ukraine to the Kyiv-based Peacemaker, a website that publishes the personal information of people who allegedly commit crimes against Ukraine and the country’s national security.

The Wall Street Journal couldn’t independently verify the agency’s report of an attempted sabotage.

Russia’s Defense Ministry said Wednesday that its forces had launched high-precision, long-range sea-based Kalibr missiles at the southeastern Ukrainian city of Zaporizhzhia, where they destroyed hangars at an aluminum plant containing a “large batch of foreign weapons and ammunition supplied by the United States and European countries for Ukrainian troops.” Russian defense officials said their air force hit 59 military facilities in Ukraine overnight, while Russian air-defense systems shot down 18 Ukrainian drones and a Ukrainian tactical Tochka-U missile. Russia’s claims couldn’t be independently verified.

The U.K.’s Defense Ministry said Wednesday that Russian air power is primarily focused on southern and eastern Ukraine, providing support for Russian ground forces as they gradually advance. “Russia has very limited air access to the north and west of Ukraine, limiting offensive actions to deep strikes with stand-off weapons,” it said.

The General Staff of Ukraine’s armed forces, meanwhile, said Russia had made some advances in the east, where it is pressing a new offensive after its initial attempt to take the capital, Kyiv, and remove President

Volodymyr Zelensky

failed. Russian forces seized one village and took the outskirts of another as they tried to surround Ukrainian units in the east, where Ukraine has been fighting against Russian proxy forces since 2014.

Russia is refocusing its offensive in Ukraine on the Donbas region, following setbacks in Kyiv and other northern cities, where it was thwarted in the air and on the ground. But military experts say the landscape of the east could be advantageous for Moscow. Photo Illustration: Laura Kammermann

Russian forces are also attempting to widen a land bridge from Russian-controlled areas of eastern Ukraine’s Donbas region to the Crimean Peninsula in the south, which Moscow annexed eight years ago.

Concerns are growing that neighboring Moldova, another former Soviet republic, could be dragged into the conflict. The breakaway pro-Russian enclave of Transnistria on Wednesday reported gunfire and drones spotted over a village near its border with Ukraine after it said three separate attacks earlier this week targeted a Transnistrian military base, two radio towers and the headquarters of its state security service. The village, Cobasna, hosts what it says is Europe’s largest ammunition depot. No casualties were reported in any of the incidents, but they have stirred concerns that the 1,500 Russian troops stationed in Transnistria could be deployed in western Ukraine.

Moldova has been on edge since the Russian invasion of Ukraine put it on the border of an active war zone, potentially inflaming Moldova’s relationship with Transnistria. The narrow strip of land was carved out of Moldova after a civil war in 1992 and is held by pro-Russian nationalists. Many in the population of 350,000 hold Russian passports.

Diplomatic efforts to end the Ukraine conflict appear to be moving slowly. United Nations Secretary-General

António Guterres

met with Mr. Lavrov and Mr. Putin in Moscow on Tuesday. After the meeting, Mr. Lavrov blamed the war on the North Atlantic Treaty Organization’s expansion and accused the West of attempting to create an alternative global governance outside the U.N.

Mr. Guterres is scheduled to meet with Mr. Zelensky in Kyiv on Thursday.

Write to James Marson at james.marson@wsj.com and Ann M. Simmons at ann.simmons@wsj.com

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Alleged Covid-19 Fraud Schemes Totaling $150 Million Draw Criminal Charges

Federal prosecutors have charged about 20 people in the past two weeks with allegedly engaging in various fraud schemes related to the Covid-19 pandemic that amounted to about $150 million in improper government claims, around $20 million of which have been paid, officials said.

The Justice Department has stepped up efforts to uncover theft from programs that were pumping billions of dollars into the healthcare system after the outbreak of the pandemic in 2020. The new cases are filed in districts around the country, and provide a sweeping look at how some healthcare providers allegedly sought to cheat Medicare and other programs by bundling charges for unnecessary services—or those that weren’t ever provided—with the delivery of relatively inexpensive Covid-19 tests.

A doctor who ran drive-through Covid-19 testing sites in Maryland, for example, allegedly billed Medicare for many of those tests, along with $1.5 million in other lengthy physician visits that purportedly accompanied them, but never actually happened. The doctor,

Ron Elfenbein,

allegedly told his employees to submit the tests for reimbursement as services that required 30-minute consultations, because the higher complexity services were “the ‘bread and butter’ of how we got paid,” an indictment returned on Tuesday alleged. A woman who answered the phone at Dr. Elfenbein’s company said he wasn’t in the office on Wednesday and a lawyer for him couldn’t be identified.

Attorney General Merrick Garland, glasses, and Kevin Chambers, who was tapped last month to lead the Justice Department’s Covid-19 fraud enforcement efforts.



Photo:

Kevin Lamarque/Associated Press

A nurse practitioner in Miami, Elizabeth Hernandez, allegedly billed Medicare for $134 million in fraudulent claims, using relaxed telemedicine rules to sign orders for unnecessary genetic tests and medical equipment. And people in New Jersey, California and Colorado allegedly sold hundreds of fake vaccine cards created to look like official Centers for Disease Control and Prevention records.

A lawyer for Ms. Hernandez said that she “vehemently denies the charges and didn’t knowingly participate in any scheme to defraud the Medicare program.” The other defendants or their lawyers couldn’t immediately be reached for comment or didn’t immediately respond to requests for comment.

The cases “involve extraordinary efforts to prosecute some of the largest and most wide-ranging pandemic frauds detected to date,” said

Kevin Chambers,

who was tapped last month to lead the Justice Department’s Covid-19 fraud enforcement efforts.

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In the wake of the pandemic, prosecutors and regulators pored over Medicare billing data, spotting anomalies and pursuing a range of investigations. Last year, prosecutors charged another dozen healthcare providers with fraud schemes related to the pandemic totaling $143 million in allegedly false bills to government programs.

In some of the new cases, providers allegedly used Covid-19 testing to obtain personal information and saliva or blood samples from patients, and used them to submit for more expensive tests. In one California case, two owners of a clinical lab—

Imran Shams

and

Lourdes Navarro

—were charged with a healthcare fraud, kickback and money-laundering scheme that involved more than $100 million in fraudulent claims for Covid-19 and respiratory pathogen tests. They also sought to conceal their role by laundering the proceeds through shell companies Ms. Navarro controlled, prosecutors said.

Officials said the pair and other defendants preyed upon patients’ fear during the pandemic to tack on other unnecessary tests that had a more lucrative reimbursement rate but weren’t medically necessary. A lawyer for Ms. Navarro said she would plead not guilty to the charges. “She always tried to follow the law and provide appropriate and quality testing services to the laboratory’s patients. She looks forward to clearing her name in court,” said the lawyer,

Mark Werksman.

A lawyer for Mr. Shams couldn’t immediately be identified.

Prosecutors allege fake Covid-19 vaccine cards were found in a Colorado man’s trash.



Photo:

U.S. Department of Justice

“What is perhaps most disturbing about healthcare fraud is that patients may be harmed in furtherance of fraud schemes advanced by medical professionals who sadly place profit above patients’ health,”

Aaron Tapp,

section chief of the FBI’s financial crimes section said Wednesday.

In other cases, defendants allegedly worked to get around new requirements installed after the Covid-19 outbreak, including a required proof of vaccination at some businesses.

In September, Colorado businessman

Robert Van Camp

told a potential customer—who turned out to be an undercover agent—he had fake Covid-19 vaccine cards. “How are you guys doing that whole vaccine bullshit?” he asked, according to a complaint and arrest warrant filed on Monday, adding that he had sold fake cards to three Olympic athletes and hundreds of others. “Until I get caught and go to jail, f— it, I’m taking the money,” he said, “I’ve saved a thousand lives. I mean we’re talking about people who can’t go to work, can’t go to school, and they’re losing their job. It’s insane they can’t travel because of this bullshit.” He sold the agent five cards for $600.

In October, agents searched Mr. Van Camp’s trash at his home that he shared with an alleged co-conspirator who worked for a defense contractor and had a security clearance, finding handwritten documents titled “Card List” and “Card Order$” with the names of people and amounts, and several torn up vaccine cards, prosecutors alleged. Mr. Van Camp was arrested on Tuesday, according to court records. A lawyer for Mr. Van Camp didn’t immediately respond to a message seeking comment.

Since the start of the Covid-19 pandemic in 2020, the scientific understanding of its transmission and prevention has evolved. WSJ’s Daniela Hernandez explains what strategies have worked for stemming the spread of the virus and which are outdated in 2022. Illustration: Adele Morgan

Write to Aruna Viswanatha at Aruna.Viswanatha@wsj.com and Sadie Gurman at sadie.gurman@wsj.com

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Justice Department Targets ‘Spoofing’ and ‘Scalping’ in Short-Seller Investigation

Federal prosecutors are investigating whether short-sellers conspired to drive down stock prices by sharing damaging research reports ahead of time and engaging in illegal trading tactics, people familiar with the matter said.

The U.S. Justice Department has seized hardware, trading records and private communications in an effort to prove a wide-ranging conspiracy among investors who bet against corporate shares, the people said. One tactic under investigation is “spoofing,” an illegal ploy that involves flooding the market with fake orders in an effort to push a stock price up or down, they said. Another is “scalping,” where activist short-sellers cash out their positions without disclosing it.

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