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Prince Andrew interview on Jeffrey Epstein fallout: Sponsors drop him

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HRH Prince Andrew, Duke of York visits the Showground on the final day of the 161st Great Yorkshire Show on July 11, 2019 in Harrogate, England.

Ian Forsyth | Getty Images

Corporate sponsors of Prince Andrew of Britain’s initiative to boost entrepreneurship are reconsidering their relationship with the project on the heels of a botched television interview about his former friend, sex criminal Jeffrey Epstein.

The auditing firm KPMG is not renewing its sponsorshop of Andrew’s Pitch@Palace and “made the decision following adverse press scrutiny around Prince Andrew,” SkyNews reported Monday. KPMG did not immediately respond to a request for comment from CNBC.

A spokesman for pharmaceuticals giant AstraZeneca, told CNBC, “Our three year partnership with pitch@palace is due to expire at the end of this year and is currently being reviewed.”

The logo of insurance broker Aon, which had been prominently featured on the Pitch@Palace website as a “global partner,” is no longer there.

A person familiar with the company said that Aon — before Andrew’s recent interview — asked for the removal of its logo, which Aon believed had been prematurely posted. The person said that the company never finalized an agreement to be a sponsor.

The bank Standard Chartered declined to comment to CNBC. Requests for comment from Barclays, Tencent, Hult International Business School, Inmarsat and Bosch Group were not immediately answered.

Andrew, son of Britain’s Queen Elizabeth II, is just one of a number of high-profile people whose past friendship with Epstein came under renewed scrutiny after the wealthy investor’s arrest in July on federal child sex trafficking charges.

Presidents Donald Trump and Bill Clinton were also friends with Epstein before he pleaded guilty in 2008 to soliciting an underage prostitute in Florida.

Andrew, in his interview with BBC Newsnight that aired over the weekend, denied having sex with one of Epstein’s accusers, Virginia Giuffre in 2001, and discussed his decision to sever ties with Epstein after his conviction in Florida.

But the interview sparked widespread criticism over Andrew’s answers and demeanor, particularly when he pooh-poohed Giuffre’s claim that he was “sweating all over me” on a London dance floor around the time of their alleged sexual encounter.

Andrew said he was incapable of sweating in most cases at that time because of an “overdose of adrenaline” as a result of a stress reaction he experienced while being shot at during the Falklands War with Argentina in 1982.

“I have no recollection of ever meeting this lady. None whatsoever,” said Andrew, who is also known as the Duke of York.

But there is a photo of a young Giuffre and Andrew together. Both of them are smiling and Andrew has his arm around Giuffre, as the royal’s friend, Ghislaine Maxwell, stands behind them.

Prince Andrew with Virginia Giuffre and Ghislain Maxwell.

Source: Attained through court documents.

Giuffre and other Epstein accusers have said Maxwell directed them to have sex with various friends of her former boyfriend and confidant Epstein. Giuffre has said she had sex with Andrew at Maxwell’s behest.

Andrew also said that he had spent four nights at Epstein’s massive townhouse in Manhattan when he went there to end his friendship with him.

“It was a convenient place to stay,” Andew said, when asked why he stayed with Epstein for multiple days, much less for any time at all.

Andrew said that in hindsight, that was “the wrong thing to do.”

“I admit fully that my judgment was probably colored by my tendency to be too honorable but that’s just the way it is,” Andrew said.

Dickie Arbiter, who previously was press officer at Buckingham Palace, said in a tweet that the interview was “not so much a car crash but an articulated lorry crash.”

“Lorry” is the British term for truck.

Andrew agreed to the interview on the heels of continued publicity regarding Giuffre’s claims that he had sex with her at Maxwell’s home in London.

Epstein, 66, died in August from what authorities have ruled was a suicide by hanging while being held in a federal jail in Manhattan.

Epstein had been held in that jail since early July, when he was arrested on sex trafficking charges.

Prosecutors alleged that Epstein had sexually abused dozens of underage girls at his Manhattan residence and in his Palm Beach, Florida, mansion from 2002 through 2005.

Epstein’s death remains under investigation. A forensic pathologist hired by Epstein’s brother has said that the injuries that caused Epstein’s death are more commonly seen in cases of homicide than in suicide.

Prosecutors in the U.S. Attorney’s Office for the Southern District of New York also are continuing to investigate the allegations that Epstein’s crimes were abetted by employees and other associates, who allegedly provided him with a steady stream of young women and girls to satisfy his obsessive sexual cravings.

Last week, the co-executors of Epstein’s estate asked a judge in the U.S. Virgin Islands to approve the creation of a compensation fund for his sex abuse victims.

More than a dozen women are now suing Epstein’s estate, claiming he abused them. The estate is valued at upward of $570 million.

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US budget deficit to break $1 trillion in fiscal 2020, CBO says

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The U.S. budget deficit likely will break the $1 trillion barrier in 2020, the first time that has happened since 2012, according to Congressional Budget Office estimates released Tuesday.

After passing that mark this year, the deficit is expected to average $1.3 trillion between 2021-30, rising from 4.6% of GDP to 5.4% over the period. That’s well above the long-term average since around the end of World War II. The deficit since then has not topped 4% of GDP for more than five consecutive years, averaging just 1.5% over the period.

As part of a spending pattern that the CBO deemed unsustainable, the national debt is expected to hit $31.4 trillion by 2030. 

Tuesday’s projections reflect a slight increase from the estimates presented in August 2019.

In addition to the debt and deficit outlook, the CBO expects the economy to grow at a 2.2% pace in 2020. The office also estimated that real exports will rebound this year, driven mostly by a push in aircraft exports once the Boeing 737 MAX deliveries resume.

Economic growth also will come based on continued consumer strength and a rebound in business fixed investment, according to the CBO. 

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Trump administration ‘disappointed’ with UK decision on Huawei 5G

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WASHINGTON — The Trump administration expressed disappointment in the U.K.’s decision to allow Chinese telecommunications giant Huawei limited access to some British 5G mobile networks.

“The United States is disappointed by the UK’s decision,” a senior Trump administration wrote in an emailed statement to CNBC. The official added that the Trump administration will work “with the U.K. on a way forward that results in the exclusion of untrusted vendor components from 5G networks.”

The U.K. said equipment made by Huawei would not be banned but that access will be restricted from “sensitive functions.”

U.K. Prime Minister Boris Johnson’s government made the decision despite warnings from President Donald Trump, who has called Johnson a “friend,” key figures in the Republican Party and members of Johnson’s own Conservative party.

The latest development comes as the Trump administration works to isolate Chinese tech firm Huawei from developing a larger foothold in U.S. partner countries. The administration has specifically worked to keep members of the “five eyes” intelligence-sharing group, which includes the UK, Canada, Australia, and New Zealand, from working with Huawei.

In 2018, the Pentagon halted sales of Huawei and ZTE mobile phones and modems on military bases around the world due to potential security risks.

“We continue to urge all of our partners and allies to carefully assess the multifaceted impacts of allowing untrusted vendors access to important 5G network infrastructure,” Pentagon spokesman U.S. Army Lt. Col. Dave Eastburn wrote in a statement to CNBC.

“It’s been assessed that there is no safe option for untrusted vendors to control any part of a 5G network,” Eastburn added.

Long-standing concerns

U.S. officials have long complained that Chinese intellectual property theft has cost the economy billions of dollars in revenue and thousands of jobs and that it threatens national security. China maintains that it does not engage in intellectual property theft.

When asked about the issue by CNBC on his first day as secretary of Defense, Mark Esper said he was “very concerned about Chinese technology getting into our systems or the systems of our allies.”

“Huawei is the poster child right now for that,” Esper said, adding that the U.S. trade war with China is as much about national security as it is about the economy.

“When I was in Brussels three weeks ago we talked about this among defense ministers on how do we preserve the integrity of our networks as an alliance and so that will continue to be important for me as we go forward,” he said in July, referring to a NATO visit he made while acting Defense secretary.

Read more: New Defense secretary: ‘We need to be very concerned’ about Chinese tech

Last year, in spite of national security warnings, then-British Prime Minister Theresa May reportedly approved a plan to let Huawei build part of the UK’s 5G network. Her decision was leaked and resulted in the dismissal of then-Defense Secretary Gavin Williamson.

Williamson has denied that he was the source of the leak.

A month prior to Williamson’s departure, then-Chairman of the Joint Chiefs of Staff Gen. Joseph Dunford said that if U.S. allies proceed with Huawei’s equipment, intelligence cooperation could be undermined.

“One of the things that underlines an alliance is the ability to share information and when we share information with allies and partners we have to have common standards of information assurance. We have to be sure that our secrets are protected, whether it be intelligence or technology transfer,” Dunford told a House Appropriations subcommittee in April 2019.

Acting U.S. Secretary of Defense Patrick M. Shanahan and Marine Corps Gen. Joe Dunford, chairman of the Joint Chiefs of Staff, give testimony on the Department of Defense budget posture in review of the Defense Authorization Request for Fiscal Year 2020 and the Future Years Defense Program at the Dirksen Senate Office Building, March 14, 2019.

Navy Petty Officer 1st Class Dominique Pineiro | Department of Defense photo

Echoing Dunford’s sentiments, then-acting Secretary of Defense Patrick Shanahan told lawmakers that “China aims to steal its way to a China-controlled global technological infrastructure, including 5G.”

“Huawei exemplifies the Chinese Communist Party’s systemic, organized, and state-driven approach to achieve global leadership in advanced technology.”

What’s more, the Director of National Intelligence, alongside the heads of the FBI, CIA, NSA, Defense Intelligence Agency, and National Geospatial Intelligence Agency testified before lawmakers in 2018 on potential security risks posed by Huawei and ZTE.

“We’re deeply concerned about the risks of allowing any company or entity that is beholden to foreign governments that don’t share our values to gain positions of power inside our telecommunications networks,” FBI Director Christopher Wray told the U.S. Senate Intelligence Committee.

“It provides the capacity to maliciously modify or steal information. And it provides the capacity to conduct undetected espionage,” Wray added.

Huawei’s denials

Huawei and ZTE have previously denied allegations that their products are used to spy on Americans.

Since 2012, the U.S. government has warned against using Huawei equipment and component parts, alongside one of Huawei’s Chinese competitors, ZTE. The company has been effectively banned since that time, with an executive order from Trump making those recommendations official.

“U.S. government systems should not include Huawei or ZTE equipment,” a 2012 report by the Permanent Select Committee on Intelligence said. “Similarly, government contractors, particularly those working on contracts for sensitive U.S. system, should exclude ZTE or Huawei equipment from their systems.”

As for Huawei’s alleged ties to the Beijing government, the company has strongly denied the accusations. The 2012 report and subsequent intelligence briefings on Huawei do not outline specific proof of Huawei’s ties to Beijing, but assert the risk of allowing Huawei to supply this critical equipment is too great. Huawei officials have said they have repeatedly asked the Department of Defense to allow the company to submit to a risk mitigation process, but no agreement has ever been discussed.

Read more: Huawei USA security chief suggests the company could be open to ‘mitigation measures’ to address US national security concerns

“The task of finding and eliminating every significant vulnerability from a complex product is monumental,” the report reads. “If we consider flaws intentionally inserted by a determined and clever insider, the task becomes virtually impossible.”

— Kate Fazzini and Yelena Dzhanova contributed to this report from CNBC’s global headquarters in Englewood Cliffs, New Jersey

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United Airlines cuts some China flights as demand falls amid coronavirus

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United Airlines on Tuesday said it would suspend dozens of China flights next month because of a “significant decline in demand” to the country as it battles the growing number of coronavirus cases.

United has the most service to China of the U.S. airlines.

The flight cancellations take effect Feb. 1 and last through Feb. 8. It wasn’t immediately clear if United would cancel more flights.

We will continue to monitor the situation as it develops and will adjust our schedule as needed,” United said in a statement.

This is breaking news. Check back for updates.

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