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Network Rail not consulted before plan to move £36bn to HS2 replacements

Sunak cancelled northern leg of UK high-speed link in favour of list of projects that have since been questioned

UK ministers did not consult Network Rail before unveiling a £36bn set of proposed transport schemes to replace the northern leg of the HS2 high-speed line.

Prime Minister Rishi Sunak set out the “Network North” plan at the Conservative party conference this month as a replacement for building the second phase of HS2. The government billed it as the most ambitious plan ever drawn up for transport in the north of England.

But ministers did not speak to the public body responsible for rail infrastructure before Sunak’s announcement, according to several people familiar with the matter.

Network Rail owns and operates the UK rail network. It is responsible for upgrading current railway lines and the longer-term planning for shaping future investment decisions.

It is working on projects to improve connections in the north of England, including the multibillion-pound Transpennine route upgrade between Manchester and York.

In a written answer to a question posed in parliament by the opposition Labour party, rail minister Huw Merriman said that “following the announcement” of Network North on October 4, the government was talking to Network Rail “and our other delivery partners, to refine our plans”.

Sunak set out his transport plan as a replacement for the Birmingham to Manchester leg of HS2, after the project was plagued by delays and cost overruns. Questions over the future of the high-speed link dominated national political debate for several weeks prior to his announcement, which drew a backlash from business groups.

He said the decision to funnel future transport spending from HS2 into local schemes would “make a real difference across the nation” and better reflect voters’ priorities.

“This is the right way to spread growth and opportunity,” Sunak told his conference, stressing that half of the investment would be in northern England, which has historically suffered from poor transport links.

He added that HS2 was “the ultimate example” of an old consensus that no longer represented value for money.

Many of the replacement projects outlined as part of Network North were rail upgrades, including electrification schemes and the reopening of lines closed decades ago.

Parts of that plan began to unravel within hours, as it transpired a number of schemes had been published in error, some already existed and others had been promised previously but had never materialised.

Shadow transport secretary Louise Haigh called the policy a “fantasy plan”.

“The public deserve better than this shambolic wishlist of half-baked plans,” she said. “Little wonder these botched proposals took 24 hours to fall apart, when they failed to even consult industry experts.”

Since Sunak announced the policy, the government has said it will need to sign off individual business cases put forward by all of the projects listed in Network North, raising concerns that some may never be built.

The government said it was “reinvesting every penny of the £36bn saved from HS2 which . . . will deliver hundreds of projects in the Midlands, north and across the country”.

“We are working closely with Network Rail and other partners to help deliver this,” it added.

Network Rail said: “We continue to work with the Department for Transport to refine future rail investment plans.”

Prosecutors alleged manager of Glen Point Capital had attempted to artificially move dollar-rand exchange rate

A New York jury has convicted Neil Phillips, the high-profile manager of a London-based hedge fund previously backed by George Soros, over an alleged scheme to manipulate the US dollar to South African rand exchange rate as part of a ploy to trigger a $20mn options payment.

The 53-year-old Briton, who co-founded the emerging markets-focused Glen Point Capital in 2015, was found guilty on Wednesday of commodities fraud after a week-long trial. He was acquitted on a related count of conspiracy to commit commodities fraud.

Prosecutors had accused Phillips of attempting to artificially move the price of the dollar below the strike price for a “one touch option” his fund bought in late 2017. That instrument paid $20mn if the rand-dollar pairing hit a particular level before January 2018.

They alleged that on Boxing Day of 2017, Phillips directed hundreds of millions of dollars of dollar-rand trades “for the express purpose of artificially driving the [dollar-rand] rate below 12.50”, and “personally directed” a Singapore-based employee of a bank to sell about $725mn in dollars in exchange for rands, which pushed down value of the dollar-rand exchange rate.

“As soon as Phillips had achieved his objective and the [dollar-rand] rate fell below 12.50 due to Phillips’s manipulative spot-trading, Phillips immediately directed that [the employee] cease trading,” prosecutors wrote in the indictment.

His lawyers had argued in court filings that the trades were all lawful, consisting of “legitimate transactions made on the open market”, and that the alleged victims were sophisticated financial institutions and investors.

In a statement, Damian Williams, the US attorney for the Southern District of New York, welcomed the verdict, saying a jury had found that Phillips had “intentionally manipulated . . . the world’s largest decentralised financial market”.

“The policing of the financial markets is critical to the health and sanctity of our economy,” he added, commending his office for “continuing to be a global law enforcement leader in ensuring fair market activity for investors at every level”.

Phillips will be sentenced at a later date. He faces a maximum of 10 years in prison.

“We are extremely disappointed by the verdict and believe strongly that Neil Phillips is innocent of the one charge on which he was found guilty,” said Sean Hecker, a lawyer for the hedge fund manager. He added: “We will continue to fight for the right result.”

Phillips previously worked at London-based BlueBay Asset Management, where he managed a $1.4bn global macro fund before leaving in 2014.

Glen Point Capital stopped trading in February last year, according to company filings.

President’s claim that Hamas is not a terrorist organisation sparks 7% fall in Istanbul benchmark

Turkey’s stock market tumbled on Wednesday after President Recep Tayyip Erdoğan stepped up his criticism of Israel and its allies at a time when Ankara is desperate to secure western investment to fuel its economic overhaul. 

The benchmark Bist 100 index dropped more than 7 per cent in its biggest slide since early February, according to FactSet data. The steep drop triggered multiple trading curbs known as “circuit breakers”, which are designed to soothe panicky markets.

Wednesday’s stock rout came after Erdoğan in the afternoon said: “Israel’s attacks on Gaza are a situation that attests to both murder and a state of mental illness, both for those who carry them out and for those who support them.”

The Turkish president also said Hamas, whose militants killed at least 1,400 people in a brutal attack on Israel on October 7, is not a terrorist organisation but rather a “group for liberation”. Heavy Israeli bombardment of Gaza from land, sea and air has killed more than 6,500 people.

Erdoğan had initially taken a more balanced approach to the Middle East crisis, but he has stepped up his criticism of Israel in recent days, saying that its strikes on Gaza were “amounting to genocide”. He has also criticised the US for sending military assets to the Middle East and for its backing of Israel more broadly. 

The Israel-Hamas conflict has come at a time when Turkey is attempting to extinguish a long-running economic crisis and lure back investors who abandoned the market after years of unorthodox policymaking stoked runaway inflation and other severe imbalances. 

Finance minister Mehmet Şimşek has in recent weeks pitched to investors in the US and Europe and said improving relations with the west was a key pillar of Turkey’s revamped economic programme, which began after Erdoğan’s re-election in May. 

Turkey’s stock market began falling on Wednesday as Erdoğan addressed a meeting of his Justice and Development party in parliament. A Turkish capital markets banker said the remarks dented sentiment, and then once the fall began, high-speed trading firms that followed market momentum amplified the selling pressure. 

The banker added that the market had risen sharply the previous two trading days, meaning there were fewer “marginal buyers” ready to swoop in when stocks fell. The Bist 100 is still up nearly 35 per cent this year in Turkish lira terms as residents have rushed into stocks in an attempt to shield their savings from inflation that is running at nearly 60 per cent. 

Turkey’s international assets were more muted on Wednesday: yields on Turkey’s dollar-denominated bonds ticked slightly higher while the cost to protect against a default using credit default swaps was little changed. The lira was also steady at TL28.12 against the US dollar.

Swiss bank seeks to hold on to Middle Eastern wealthy following staff upheaval

UBS has agreed to extend a $9bn credit facility to Qatar’s former prime minister, Sheikh Hamad bin Jassim bin Jaber al-Thani, as the Swiss lender tries to retain the Middle East’s most affluent investors in the face of staff quitting for rival banks.

Sheikh Hamad, also known as HBJ, is a long-term client of both UBS and Credit Suisse, which was rescued by its Zurich rival this year. He had a combined credit line with both banks of $6bn, and UBS has recently agreed to increase that by 50 per cent, according to people familiar with the terms.

HSBC this summer poached Aladdin Hangari, the former head of Qatar for Credit Suisse and a key relationship manager in the region with close links to HJB and the Qatar Investment Authority, which was one of Credit Suisse’s largest shareholders.

Ali Janoudi, who used to be regional head of UBS’s wealth management business, recently left for Swiss private bank Lombard Odier.

UBS’s wealth management head Iqbal Khan shook up the leadership of the Middle East operations over the summer following the takeover of Credit Suisse, having been under pressure to keep staff from both banks happy who were competing for the same roles.

The new deal with HBJ — which was first reported by Bloomberg — was partly about rebuilding relations with the sheikh after his family lost millions of pounds on the collapse of supply chain finance funds linked to defunct group Greensill Capital two years ago.

HBJ had invested $200mn in the funds, which packaged up invoices owed by Greensill’s customers into investment products.

A distant cousin of the emir in the ruling clan and one of the Gulf state’s richest men, HBJ’s wealth is put at $1.3bn by Forbes, but widely believed to be many multiples of that.

HBJ ran QIA when it first took a stake in Credit Suisse during the global financial crisis.

His son, Sheikh Jassim bin Hamad al-Thani, was a board member of Credit Suisse for seven years, representing Qatari interests at the bank. He recently abandoned a long-running bid to buy Manchester United.

UBS declined to comment while a representative for HBJ did not respond by the time of publication.

UBS has recently temporarily banned staff from taking work trips to the Middle East and cancelled several events in the region because of security concerns as the conflict between Israel and Hamas escalates.