Trump denies asking Comey to drop probe, decries ‘witch hunt’

U.S. President Donald Trump, striking a defiant tone on Thursday after days of political tumult, denied asking former FBI Director James Comey to drop a probe into his former national security adviser and decried a “witch hunt” against him.
Trump’s terse denial followed reports by Reuters and other media about a memo written by Comey alleging that Trump made the request to close down the investigation into Michael Flynn and Russia in February. Trump fired Comey on May 9.
“No. No. Next question,” Trump told a news conference in the White House, when asked if he “in any way, shape or form” ever urged Comey to end the probe.
Comey’s dismissal last week set off a series of jarring developments that culminated on Wednesday in the Justice Department’s appointment of a special counsel to probe possible ties between Russia and Trump’s 2016 presidential campaign.
They included media reports that Trump discussed sensitive intelligence on the Islamic State militant group with Russia’s foreign minister.
In a pair of morning Twitter posts and at a later news conference, the Republican president described calls by some on the left for his impeachment as “ridiculous” and said he had done nothing to warrant criminal charges.
“The entire thing has been a witch hunt and there is no collusion between certainly myself and my campaign – but I can always speak for myself – and the Russians. Zero,” he told the news conference, standing alongside Colombian President Juan Manuel Santos.
In his earlier Twitter posts, Trump criticized the naming of former FBI Director Robert Mueller as a special counsel by Deputy Attorney General Rod Rosenstein, an official he himself appointed.
“With all of the illegal acts that took place in the Clinton campaign & Obama Administration, there was never a special counsel appointed!” Trump wrote on Thursday morning.
He did not offer any evidence of such acts in his reference to former Democratic President Barack Obama and former presidential candidate Hillary Clinton.
“This is the single greatest witch hunt of a politician in American history!” Trump tweeted.
Democrats rejected Trump’s characterization.
“This is a truth hunt,” said Democratic Senator Amy Klobuchar.
Russia has denied U.S. intelligence agencies’ conclusion that it interfered in the election campaign to try to tilt the vote in Trump’s favor. Trump has long bristled at the notion that Russia played any role in his November election victory over Clinton.
Trump fired Flynn on Feb. 14 for misleading Vice President Mike Pence about the extent of his conversations last year with Russia’s ambassador.
Reuters reported on Thursday that Flynn and other Trump campaign advisers were in contact with Russian officials and others with Kremlin ties in at least 18 calls and emails during the last seven months of the presidential race.
U.S. stocks recovered ground on Thursday as upbeat economic data emboldened investors to return to the market, a day after Wall Street saw the biggest selloff in eight months on worries the political turmoil could undermine Trump initiatives such as tax cuts that investors see as favoring economic growth.
DIVIDING THE COUNTRY
Rosenstein, the No. 2 Justice Department official, named Mueller amid mounting pressure in Congress for an independent investigation beyond existing FBI and congressional probes into the Russia issue.
Trump later told news anchors at the White House that Mueller’s appointment was a “very, very negative thing,” adding:
“I believe it hurts our country terribly, because it shows we’re a divided, mixed-up, not-unified country.”
Rosenstein briefed senators on Thursday but made no public comments. One of the attendees, speaking on condition of anonymity, described Rosenstein as anxious and nervous and said he drank multiple glasses of water “and spilled one.”
Afterward, Republican Senator Lindsey Graham told reporters that “everything he said was that you need to treat this investigation as if it may be a criminal investigation.”
A self-described friend of Comey’s wrote in a public blog post on Thursday that Comey had told him that he had rebuffed a Trump request for loyalty by promising only honesty.
“He also told me that Trump was perceptibly uncomfortable with this answer,” wrote Benjamin Wittes, a senior fellow at the Brookings Institution and a critic of Trump.
“And he said that ever since, the President had been trying to be chummy in a fashion that Comey felt was designed to absorb him into Trump’s world – to make him part of the team.”
Democratic Senator Claire McCaskill said Rosenstein told senators that he knew Comey would be fired before he wrote his letter accusing him of missteps as FBI director, including his handling of an election-year probe into Clinton’s use of a private email server while she was secretary of state.
The White House initially said last week that Trump was prompted to fire Comey after reading the Rosenstein letter. Trump later said he had already decided to dismiss him and was thinking of “this Russia thing.”
The New York Times reported on Thursday that Trump called Comey weeks after he took office on Jan. 20 and asked him when federal authorities were going to say Trump was not under investigation. It cited two people briefed on the call.
Comey told Trump he should not contact him directly about FBI investigations but follow procedure and have the White House counsel ask the Justice Department, which oversees the FBI, the Times reported.
A key issue Mueller may have to tackle is whether Trump has committed obstruction of justice, an offense that could be used in any effort in the Republican-led Congress to impeach him and remove him from office.
Asked about possible obstruction of justice, Republican House of Representatives Speaker Paul Ryan told reporters the special counsel would “follow the facts where ever they may lead” and that “it is premature to prejudge anything at this point.”

New ferry links North Korea and Russia despite U.S. calls for isolation

A new ferry between isolated North Korea and Russia docked for the first time at the Pacific port of Vladivostok on Thursday, in spite of U.S. calls for countries to curtail relations with Pyongyang over its nuclear and missile programs.
The launch of the weekly service linking Vladivostok and the North Korean port of Rajin also came despite North Korea’s test-firing of a new type of ballistic missile on Sunday that landed in the sea near Russia.
The ferry’s Russian operators say it is purely a commercial venture, but the service’s launch coincides with what some experts say is a drive by North Korea to build ties with Moscow in case its closest ally China turns its back.
The service is pitched at Chinese tourists wanting to travel by sea to the Pacific port of Vladivostok, according to the operators.
China has no ports on the Sea of Japan, so traveling to North Korea and on to Vladivostok is the quickest way of reaching Vladivostok by sea.
“It’s our business, of our company, without any state subsidies, involvement and help,” Mikhail Khmel, the deputy director of Investstroytrest, the Russia firm operating the ferry, told reporters.
The new ferry link comes in spite of recent calls by U.S. Secretary of State Rex Tillerson for countries to fully implement U.N. sanctions and review their ties with North Korea to pressure it to give up its weapons programs.
“We call on all nations to fully implement U.N. Security Council Resolutions, and sever or downgrade diplomatic and commercial relations with North Korea,” a spokeswoman for the U.S. State Department, Katina Adams, said when asked about the new ferry service.
Adams noted Russia’s “obligation” under U.N. Security Council resolutions, “to inspect all cargo, including personal luggage, of any individual traveling to or from” North Korea.
Journalists were unable to see passengers disembarking from the North Korean-flagged vessel Mangyongbong at Vladivostok because Russian officials kept them away from the quayside, citing unspecified security reasons.
But Reuters television was able to speak to three passengers, who said they were representatives of Chinese tourism agencies.
One of the passengers showed a photograph on her smartphone she said had been taken on board. It showed a plaque with an inscription in Korean which, she said, bore the name of North Korea’s long-dead founder Kim Il Sung.
The United States has been discussing possible new U.N. sanctions on North Korea with China, which disapproves of North Korea’s development of nuclear weapons and ballistic missiles to deliver them, but remains its main trading partner.
Washington is looking to toughen U.N. sanctions to cut off Pyongyang’s sources of funding and to block smuggling of materials needed for its weapons programs.
Russia, especially the port of Vladivostok, is home to one of the largest overseas communities of North Koreans, who send home much-needed hard currency.
To date, there are no signs of a sustainable increase in trade between Russia and North Korea, but Russia has taken a more benign stance toward Pyongyang that other major powers.
Speaking in Beijing this week, Russian President Vladimir Putin said Moscow was against North Korea’s nuclear program, but that the world should talk to Pyongyang instead of threatening it.
Asked about the ferry, Russian Foreign Ministry spokeswoman Maria Zakharova said on Thursday she “didn’t see a connection” between the new service and political issues.

Putin’s ex-wife linked to multi-million-dollar property business

The former wife of Russian president Vladimir Putin helped create and now supports a foundation that owns a historic Moscow property generating millions of dollars from tenants, a Reuters examination of property records has found.
The building was renovated with help from associates of Putin, and the rental income is paid to a private company owned by a person whose name is the same as the maiden name of Putin’s former wife, corporate records show.
The rent comes from Volkonsky House in central Moscow, which was an aristocrat’s home in pre-Soviet times and is now owned by The Center for the Development of Inter-personal Communications (CDIC). Lyudmila Putina helped set up the non-commercial foundation, according to a report in state newspaper Rossiiskaya Gazeta and two sources who worked with the center. Lyudmila was Putin’s wife from 1983 until their divorce, which was announced in 2013.
The foundation was created in 2002, and in September 2006 Rossiiskaya Gazeta described Lyudmila as a “trustee” of the organization. In an interview with the newspaper that year, she used the term “we” when discussing the foundation, and three sources currently familiar with the foundation’s work said Lyudmila supports a literary prize and publishing arm that the foundation runs.
The CDIC has offices in Volkonsky House, but most of the building is let out to tenants, including two big state banks, documents show.
The tenants pay rent to a company called Meridian, which is 99 per cent owned by a company called Intererservis, corporate and property records reviewed by Reuters in early May showed. Intererservis, according to a state register of corporate entities, has been wholly owned since 2014 by a woman called Lyudmila Alexandrovna Shkrebnyova – which is the maiden name of Putin’s former wife.
Reuters was unable to find documents confirming that Shkrebnyova and Putin’s ex-wife are the same person. But other connections, besides the name, point to the former first lady and the owner of Intererservis being the same person. A previous general director of Intererversis was Olga Alexandrovna Tsomayeva. Several Russian media reports refer to her as the sister of Putin’s former wife. Tsomayeva could not be reached for comment.
In addition, the other 1 percent of Meridian is owned by Tatiana Shestakova, who was the wife of Vasily Shestakov, an old friend and judo sparring partner of Putin, until the Shestakovs divorced in 2013. Shestakova, who also helped create the CDIC, according to the state registry of corporate entities, could not be reached for comment.
The Kremlin property department supervised the renovation work on the Volkonsky House in Moscow’s Vozdvizhenka Street, according to rental documents reviewed by Reuters, even though the building no longer belonged to the state at the time.
A source involved in the renovation said Lyudmila Putina, then still the president’s wife, visited Volkonsky House to inspect the work. “We all knew that the (Kremlin property) department was constantly overseeing the process,” said the source, who spoke to Reuters on condition of anonymity. “When Mrs Putin made an inspection visit, they immediately closed down the whole of Vozdvizhenka Street.”
The Russian bank VTB, one of the current tenants in Volkonsky House, alone pays more than $2 million in annual rent, according to a tender document posted on a government website in 2015.
Reuters was unable to establish the total income Meridian receives from renting out space in the Moscow property or what it pays to the CDIC foundation. The company’s accounts for 2015 show revenues of 225 million rubles ($3.89 million), but do not disclose where the money goes.
Reuters sought comment from Meridian and the CDIC, via letters, telephone calls and visits, but received no reply. The Kremlin press service did not respond to questions about the president’s former wife.
The arrangements appear to fit a pattern in Putin’s Russia, whereby people close to the president benefit from contracts, loans, grants or assets from state enterprises or entities closely linked to the Kremlin. Reuters has previously reported how Putin’s son-in-law, Kirill Shamalov, became a billionaire after marrying a daughter of the president by acquiring a large stake in a leading Russian gas and petrochemicals company. Reuters also reported how Shamalov acquired a substantial property in Biarritz, France, from a close associate of Putin.
Artur Ocheretny, described in Russian media as Shkrebnyova’s new husband since 2015, is the chairman of the management board of the CDIC. In 2014, after a low-profile career running a seafood business and an event-organizing company, he too became the owner of an Art Deco villa in a suburb of Biarritz, according to local sources. His villa is estimated by estate agents to be worth about 6 million euros.
Ocheretny did not respond to a request for comment passed to him via the CDIC.
HELPFUL FRIENDS
The building at 9 Vozdvizhenka Street is known as the Volkonsky House after its former owner General Nikolai Volkonsky, the grandfather of author Leo Tolstoy. In the 20th century, Sergei Yesenin, a popular poet, wrote some of his works there.
This historic site was later owned by the Russian Foreign Ministry, according to a 1992 presidential decree signed by Putin’s predecessor. By 2005, property records show, it had passed to a body called the Center for the Development of the Russian Language, which later changed its name to the Center for the Development of Inter-personal Communications.
Reuters was unable to establish on what terms the language center acquired the building. The agency that handles state property, Rosimushchestvo, did not respond to Reuters questions about the building.
The property was in need of renovation, and around 2005 major refurbishment was carried out. The president’s allies stepped in to help. The Konstantinovsky Foundation, which was set up soon after Putin became president to restore the Konstantinovsky Palace near Putin’s native St Petersburg, provided financial help, according to its website. The president often uses the palace to host foreign leaders.
Vladimir Kozhin, who from 2000 until 2014 was head of the Kremlin property department, was on the board of the Konstaninovsky Foundation at the time the renovation work was carried out on Volkonsky House. Kozhin remains on the board, which has at least one other associate of Putin on it. Neither the Konstantinovsky Foundation nor Kozhin, who is now a presidential aide, responded to requests for comment.
Yelena Krylova, a spokeswoman for the Kremlin property department, said she had no information about the department having been involved in the renovation.
The first phase of work was completed by 2005, according to property documents, and later an extra floor was added. Natalia Samover, a historian who campaigned against the addition, told Reuters: “The building has lost its historical appearance. We no longer have the Volkonsky House, we have an eyesore half a kilometer from the Kremlin.”
Volkonsky House now has 5,288 square meters of floor space available for rent, according to the state property register – an area slightly larger than the White House in Washington D.C.
VALUABLE TENANTS
Foundations such as the CDIC can be created for “social, charitable, cultural, educational, scientific and management objectives,” according to the Russian Justice Ministry. They can carry out entrepreneurial activity so long as it serves the purpose for which a foundation was created. 
For an undisclosed amount, the CDIC lets most of Volkonsky House to Meridian, which sublets out space in the property. VTB, one of Russia’s largest banks, rents 3,011 square meters, according to the 2015 tender document posted on the state procurement website. That document gives the value of the contract as 584 million rubles over a five year period, or $2.02 million per year.
Asked to comment, VTB said in a statement: “We rent these premises for the needs of the retail and corporate businesses of VTB group.”
Other tenants include state lender Sberbank; the Severstroygroup construction company, which has won defense ministry contracts; a travel agency; a sushi restaurant; and a Burger King outlet. Sberbank said it had rented space at market rates as part of its branch strategy; Severstroygroup did not respond to requests for comment.
Knight Frank, an agency that specializes in high-end real estate, said that current market rates in the building were about $600 per square meter per year. If all the leasable space in the building were let at that rate, it would generate annual revenue of $3.18 million.
Meridian’s income does not appear to go to its main owner, Intererservis, which reported revenues in 2015 of just 2.4 million rubles ($41,478) and a net profit of 1.76 million rubles ($30,417).
The CDIC’s most recent available accounts show that in 2015 its income from all sources was 343,350,000 rubles ($5.93 million). It was not clear what all those sources were.
In 2015 the CDIC spent 262,317,000 rubles ($4.53 million), according to the accounts, of which 3.4 percent was spent on social and charitable help, 6.5 percent on holding conferences and seminars, 22 percent on administrative costs and 29 percent on “other activities.” The remaining 39 percent was spent on acquiring fixed assets, stock and other property, and on “miscellaneous” items.
The CDIC did not respond to questions about the sources of its income and how it spent its money.
The Justice Ministry said the foundation had not made annual reports on its activities – as opposed to its financial accounts – publicly available, despite being required to do so by law. The ministry said the foundation had therefore been issued with a warning.

Anti-Trump Cry Baby Cartoons

Senate tees up ‘accountability act’ as regulation fight intensifies

The U.S. Senate could soon approve a major overhaul of the federal bureaucracy and make lasting changes to regulation of the environment, education, banks and other areas.
On Wednesday a Senate committee sent a bill on to the full chamber that, supporters say, will make regulators more accountable to lawmakers and provide greater understanding of how rules affect the economy.
The next step, debating the bill on the Senate floor, has not been scheduled. The House of Representatives approved companion legislation in January.
Critics say the bill, the Regulatory Accountability Act, creates so many new requirements that it would paralyze regulators working to establish even the most basic rules and standards. They also say it makes cutting industry and banks’ costs a higher priority than protecting public health and safety.
For decades the political parties have been starkly divided over regulation and Republicans are currently winning their battle to lessen the red tape they say ties up business and hurts the economy. Republicans also say former President Barack Obama, a Democrat, pushed regulators to go beyond their duties of executing laws passed by Congress to create policy on their own.
Democrats say regulation, which touches nearly every part of American life, shields average people from health, financial and other threats and is needed to accomplish the goals set in laws.
The Senate bill would require more cost-benefit and other analyses, give courts and the White House greater checks on rulemaking, classify regulations by potential economic impact, and lengthen rulemaking processes.
One progressive group, Public Citizen, estimates it would add 53 steps to major rulemaking, possibly doubling the average amount of time it takes to finalize a regulation – currently four years.
The bill has pitted the powerful business group, the Chamber of Commerce, against progressive ones such as the Natural Resources Defense Council.
Senator Heidi Heitkamp broke ranks with her fellow Democrats to write the accountability act, indicating some members of the party may support the bill when the closely-divided Senate votes.
Also, Senator Claire McCaskill, a Democrat, is working on alternative legislation that her party could find more palatable and could keep some of the bill’s measures.
Since Republicans swept Congress and the White House in November’s elections they have moved swiftly against regulation.
Using the Congressional Review Act, lawmakers killed 14 Obama-era regulations in the span of three months.
Trump’s efforts have yielded mixed results. His order to cut two existing regulations for every new one has stalled during a legal challenge. Meanwhile, the Environmental Protection Agency was jammed with thousands of pleas to maintain regulations when it asked for public comment on Trump’s order to look into repealing or rewriting current rules. The comment period closed Monday.

Republicans worry Trump scandals may doom legislative agenda

Scandals enveloping U.S. President Donald Trump have left Republican lawmakers and lobbyists increasingly gloomy about the prospects for passing sweeping tax cuts, a rollback of Obamacare and an ambitious infrastructure program.
With the White House and both chambers of the U.S. Congress under Republican control, party leaders and their allies in the business community had expected to get quick traction on their plans, with corporate tax cuts among the top priorities.
But four months into Trump’s tenure, only limited progress has been made. The House of Representatives passed a measure to rewrite Obamacare, but the Senate is only in the very early stages of considering the issue. Lawmakers are just beginning their push on tax reform.
In addition to congressional probes that are taking place into possible collusion between Trump’s 2016 campaign team and Russia, the U.S. Justice Department on Wednesday named former FBI Director Robert Mueller to investigate the matter.
“It’s the elephant in the room right now,” said Republican Representative Pat Tiberi. “The smartest minds in the White House know that, whether it’s tax reform or anything else on the public policy front. It’s hard enough to get things done in the U.S. Capitol under the best of circumstances.”
The House Ways and Means Committee will hold a hearing on tax reform on Thursday. Key administration and congressional leaders met Wednesday afternoon to discuss a path forward. But they remain a long way from signing a bill into law.
Senate Majority Leader Mitch McConnell said on Tuesday that “less drama from the White House” was needed to advance legislative priorities.
Republican Senator Lindsey Graham told reporters on Wednesday that the legislative process had “pretty much ground to a halt” amid the tumult in Washington.
Republican Representative Steve Womack said it was important for committees investigating the Russia matter to move forward expeditiously to both ensure that the public gets answers and to clear the way for Congress to move on to other issues.
“Any time we get bogged down on these kinds of issues unrelated to the governing agenda, it serves to delay and to sometimes complicate the real job that we have to do for the American people,” Womack said.
At a news conference on Wednesday, House Speaker Paul Ryan urged his colleagues to “seize this moment” to pass tax reform.
But instead of discussing tax rates and structures, Ryan was faced with a series of questions about James Comey, who Trump fired as director of the Federal Bureau of Investigation last week, and the Russia investigation.
Several lobbyists said that in the past week their corporate clients have grown more cautious on the prospects for tax reform but still hope that at least a small package can be approved.
“My worry level has grown considerably,” one lobbyist said.
Some lobbyists suggested that Congress could consider focusing on tax breaks and perhaps leave aside the comprehensive overhaul of the tax code that they had originally hoped for.
“When this all started, the thing we heard from the Hill was ‘transformative tax reform,’” said a strategist who consults with major companies focused on tax reform. “I think as time passes, tax reform is going to look much different, that it may be begin to look more like tax cuts than tax reform.”

Putin offers transcript to prove Trump did not pass Russia secrets

Vladimir Putin said on Wednesday that U.S. President Donald Trump had not divulged any secrets during a meeting in Washington with Russian officials and offered to prove it by supplying Congress with a transcript.
But a leading U.S. Republican politician said he would have little faith in any notes Putin might supply.
Two U.S. officials said on Monday Trump had disclosed classified information about a planned Islamic State operation to Russian Foreign Minister Sergei Lavrov when they met last week, plunging the White House into a fresh controversy just four months into Trump’s tenure.
Trump, whose administration has been dogged by allegations that Russia helped him win the White House and that he and his allies are too cozy with Moscow, has defended his decision to discuss intelligence with the Russians after media reports of the meeting alarmed some U.S. and foreign politicians.
President Putin deployed his trademark sarcasm on Wednesday to make clear he thought the accusation that Trump had divulged secrets absurd.
“I spoke to him (Lavrov) today,” a smiling Putin told a news conference with Italian Prime Minister Paolo Gentiloni in the Russian Black Sea resort of Sochi.
“I’ll be forced to issue him (Lavrov) with a reprimand because he did not share these secrets with us. Not with me, nor with representatives of Russia’s intelligence services. It was very bad of him.”
Putin, who still hopes Moscow can repair battered ties with the United States despite a deepening political scandal in the United States related to Trump’s purported Russia ties, said Moscow had rated Lavrov’s meeting with Trump highly.
If the Trump administration deemed it appropriate, Putin said Russia could hand over a transcript of Trump’s meeting with Lavrov to U.S. lawmakers to reassure them that no secrets were revealed.
A Kremlin aide, Yuri Ushakov, later told reporters that Moscow had a written record of the conversation, not an audio recording.
KREMLIN CREDIBILITY
U.S. Republican Senator Marco Rubio was unimpressed with Putin’s offer and alluded to alleged Russian hacking of Democratic groups during the U.S. presidential election.
“I wouldn’t put much credibility into whatever Putin’s notes are,” Rubio said on Fox News. “And if it comes in an email, I wouldn’t click on the attachment.”
Representative Adam Schiff, the top Democrat on the House Intelligence Committee, which is among those probing alleged Russian interference in the 2016 U.S. election, called Putin’s offer “quite amusing.”
“The last person Trump needs to vouch for him right now is Vladimir Putin,” Schiff said in an interview with CBS News. “If they want to send something, you know, hats off. Send it our way… It’s credibility would be less than zero.”
Russia has repeatedly denied interfering in the U.S. election.
Trump is also under pressure over accusations he asked then-FBI Director James Comey to end the agency’s investigation into the Russia ties of former White House national security adviser Michael Flynn.
The allegation stems from a memo written by Comey and seen by a source familiar with the contents of the memo.
In Washington, Republican and Democratic lawmakers said they wanted to see the Comey memo. U.S. Representative Adam Kinzinger joined a small but growing number of Republican lawmakers who have said they would back some sort of independent investigation into Russia’s role in the 2016 election.
“If in fact what was in the memo is true, it’s very concerning and we need to get to the bottom of that,” Kinzinger said on CNN.
‘EITHER STUPID OR CORRUPT’
Complaining about what he said was “political schizophrenia” in the United States, Putin said Trump was not being allowed to do his job properly.
“It’s hard to imagine what else these people who generate such nonsense and rubbish can dream up next,” said Putin, referring to unnamed U.S. politicians.
“What surprises me is that they are shaking up the domestic political situation using anti-Russian slogans. Either they don’t understand the damage they’re doing to their own country, in which case they are simply stupid, or they understand everything, in which case they are dangerous and corrupt.”
Russia has repeatedly said that Trump’s opponents are trying to damage him and Moscow by making what it says are false accusations about the billionaire president and the Russian government which initially had high hopes of a rapprochement.
Officials have told Reuters Trump’s alleged disclosure of classified information to Russia’s foreign minister is unlikely to stop allies who share intelligence with Washington from cooperating.
That view was reinforced on Wednesday when British Prime Minister Theresa May said her government had confidence in its relationship with the United States and would continue to share intelligence with Britain’s most important defense and security ally.

GM will cut operations in India, South Africa

General Motors Co plans to quit selling vehicles in India by the end of this year and will sell operations in South Africa, the latest steps in a strategy of focusing cash and engineering effort on fewer, more profitable markets.
The Detroit automaker said on Thursday it will take a $500 million charge in the second quarter to restructure operations in India, Africa and Singapore. It will cancel most of a planned $1 billion investment to build a new line of low-cost vehicles in India.
About $200 million of the charge will be a cash expense, GM said. The moves are expected to save $100 million a year in a sector of GM’s global business that last year lost about $800 million, the company said.
GM President Dan Ammann told Reuters in an interview that the latest restructuring moves – and a series of earlier decisions to quit unprofitable markets – allow GM to focus more money, engineering effort and senior management time on expanding where the company is strong, including China and the North American pickup and SUV business, where GM has a “product onslaught coming.”
GM also has said it is investing about $600 million a year in efforts to develop autonomous vehicles and transportation services.
“What are we spending our time doing?” Ammann said. “Are we spending time pursuing opportunities … or all of our time fixing problems?”
GM, like its Detroit rival Ford Motor Co, has found it increasingly expensive to compete in emerging markets outside of China. GM sold just 49,000 vehicles in India and South Africa combined last year.
Chief Executive Mary Barra traveled to New Delhi in 2015 to announce a plan to invest $1 billion there to build a new line of Chevrolet models developed as part of a Global Emerging Market vehicle program – GEM for short. Since then, auto sales overall in India have slumped, and GM has failed to gain traction against incumbents such as Maruti Suzuki India Ltd.
Now, GM plans to stop selling Chevrolet brand vehicles by the end of the year and will produce vehicles only for export at its remaining factory in Talegaon. The company currently employs about 2,500 workers there.
GM said it would continue work at its design and engineering center near Bangalore.
PULLING BACK IN SOUTH AFRICA
The $5 billion GEM program, which GM is developing with its Chinese partner Shanghai Automotive Industries Corp, remains on track to account for about 2 million vehicles a year in global sales volume, mainly in Latin America, Mexico and China, Ammann said.
“The market opportunity for GEM has continued to grow,” he said.
In a separate move, GM plans to stop building Chevrolet vehicles in South Africa and sell its South African factory to Japan’s Isuzu Motors Ltd, along with the 30 percent stake the U.S. automaker owns in a truck venture with Isuzu Motors. Isuzu agreed in February to buy out GM’s 57.7 percent stake in a joint venture in Kenya.
GM also will cut an undisclosed number of staff at its GM International Operations headquarters in Singapore. About 200 people work in that operation, the company said.
Since Barra took over GM in 2014, the one-time largest automaker in the world has taken aggressive steps to narrow its focus to China, the highly-profitable North American light truck and sport utility market, Latin America, vehicle financing and transportation services that ultimately could use autonomous vehicles.
Despite the restructuring moves, including Barra’s decision in March to sell loss-making European operations to French rival Peugeot SA, GM’s share price has been stuck in a range close around $33 where it went public in 2010 following a government-funded bankruptcy. GM shares closed on Wednesday at $32.42.
Barra and GM’s directors are under pressure from David Einhorn’s Greenlight Capital, which wants GM to split its common stock into two classes, one that pays dividends and a second that would be valued to reflect the company’s potential growth. Greenlight also has put forward a slate of three new directors. GM’s management and incumbent board have rejected Greenlight’s proposals. The hedge fund holds 54.8 million GM shares, or about 3.5 percent of the total.