NEWS

Ukraine forces kill up to five rebels, Russia starts drill near border

Ukrainian forces killed up to five pro-Moscow rebels on Thursday as they closed in on the separatists' military stronghold in the east, and Russia launched army drills near the border in response, raising fears its troops would invade.

The Ukrainian offensive amounts to the first time Kiev's troops have used lethal force to recapture territory from the fighters, who have seized swathes of eastern Ukraine since April 6 and proclaimed an independent "People's Republic of Donetsk".

Ukraine's acting president accused Moscow of supporting "terrorism at the state level" against his country for backing the rebels, who the government blames for kidnapping and torturing a politician found dead on Saturday.

The Ukrainian Interior Ministry said its forces backed by the army had removed three checkpoints manned by armed groups in the separatist-controlled city of Slaviansk.

"During the armed clash up to five terrorists were eliminated," it said in a statement, adding that one person had been wounded on the side of the government forces.

A rebel spokeswoman in Slaviansk said two fighters had died in a clash in the same area, northeast of the city center. Slaviansk's separatist self-proclaimed mayor, Vyacheslav Ponomaryov, quoted on a local news site, said one man was shot dead and another badly wounded on the northeastern outskirts of the city. He said the dead had been unarmed.

The Kremlin, which says it has the right to invade its neighbor to protect Russian speakers, has built up forces on Ukraine's border - estimated by NATO at up to 40,000 troops.

Defence Minister Sergei Shoigu announced Moscow had launched military drills near the border in response to "Ukraine's military machine" and NATO exercises in eastern Europe. Kiev demanded an explanation within 48 hours of action on the border.

Russia already seized and annexed the Crimean peninsula from Ukraine last month after President Vladimir Putin overturned decades of post-Cold War diplomacy by announcing the right to use military force in neighboring countries.

An invasion of mainland Ukraine's industrial heartland would be a far more serious action. It had seemed beyond contemplation only weeks ago but now looks like a real threat, although the full extent of Putin's territorial ambitions remains a mystery.

In St Petersburg, Putin said that if the authorities in Kiev had used the army in eastern Ukraine, it would be a very serious crime against their own people.

"It is just a punitive operation and it will of course incur consequences for the people making these decisions, including (an effect) on our interstate relations," Putin said in a televised meeting with regional media.

Washington criticized the Russian drills on the frontier. It was "exactly the opposite of what we have been calling on the Russians to do, which is to de-escalate the situation," Pentagon spokesman Colonel Steve Warren said.

Russia's Foreign Ministry responded that it was up to Washington to halt the Ukrainian military action, and "force the Kiev authorities, who are wards of the United States, to restrain themselves and not use force."

Reuters journalists saw a Ukrainian detachment with five armored personnel carriers take over a checkpoint on a road north of Slaviansk in the late morning after it was abandoned by separatists who set tires alight to cover their retreat.

However, two hours later the troops pulled back and it was unclear if Kiev would risk storming Slaviansk, a city of 130,000 that has become the military stronghold of a movement seeking annexation by Moscow of Ukraine's industrialized east.

"FINISH WHAT WE HAVE STARTED"

At another checkpoint set up by the Ukrainian military, a soldier said they were there to instill law and order.

"Those separatists, they violated the constitution, they are torturing the country, they violated laws, they do not recognize the authority of police, so the army had to move in and we will finish what we have started so help me God," he said.

Under an accord signed by Russia, Ukraine, the United States and European Union in Geneva last week, illegal armed groups are supposed to disarm and go home, including the rebels occupying about a dozen buildings in the largely Russian-speaking east.

However, the rebels have shown no sign of retreating. U.S. President Barack Obama blamed Russia for failing to carry out the Geneva deal and said he was ready to impose new sanctions.

Putin said sanctions were "dishonorable" and destroyed the global economy but that so far the damage had not been critical.

Moscow also flexed its economic muscles, with the government suggesting foreign firms which pull out of the country may not be able to get back in. A source at Gazprom said the Russian exporter had slapped an additional $11.4 billion bill on Kiev. Ukraine is negotiating to reverse east-west pipelines so that it can receive gas from Europe if Moscow cuts it off.

Washington accuses Moscow of sending agents to coordinate the unrest in the east, as it did before seizing Crimea last month. Russia denies it is behind the uprising and says the separatists are responding spontaneously to hostility from Kiev. Russia made similar denials over Crimea until Putin acknowledged last week his troops had indeed acted alongside local militia.

"At the state level, Russia is supporting terrorism in our country," Ukraine's acting President Oleksander Turchinov said in an address to the nation on Thursday. "Armed criminals have taken over buildings, are taking citizens, Ukrainian and foreign journalists, hostage and murdering Ukrainian patriots."

Turchinov called for the eastern offensive this week after the apparent torture and murder of a pro-Kiev town councilor whose body was found on Saturday near Slaviansk.

Volodymyr Rybak had disappeared after being filmed trying to take down a separatist flag while trying to enter the rebel-held town hall where he worked in Horlivka, a town near Slaviansk.

"He was bruised and punctured from head to toe...it's clear they tortured him," said Aleksander Yaroshenko, a family friend who accompanied Rybak's widow when she identified his body at the morgue. "The police have lots of details, they have CCTV footage, they should know who did this," he told Reuters.

Rebels in Slaviansk released U.S. citizen Simon Ostrovsky, one of three journalists they are believed to be holding.

Moscow called for Kiev to release "political prisoners", including a pro-Russian activist named Pavel Gubarev.

U.S. TROOPS ARRIVE IN POLAND

So far, the United States and EU have taken only mild action against Moscow, imposing visa bans and asset freezes on a few Russians, measures Moscow has scoffed at as meaningless. Washington and Brussels both say they are drafting more serious sanctions and will impose them if the Geneva deal collapses.

Even without serious sanctions, Russia's confrontation with the West has hurt its economy as fearful investors send their money abroad. Mutual funds specializing in Russia and Eastern Europe were the 30 worst performers out of 3,489 equity funds for sale in Britain in the three months ending in March.

In NATO member Poland, the first group of a contingent of around 600 U.S. soldiers arrived on Wednesday, part of an effort by Washington to reassure eastern European allies who are worried by the Russian build-up near Ukraine's borders.

However, NATO and the United States have made clear they will not use military force to protect Ukraine itself.

Shoigu, the Russian defence minister, said aircraft would fly increased patrols near the Ukrainian frontier as part of the new exercises. Two local residents in the area told Reuters they had seen attack helicopters flying in formation.

Kiev said the city hall in another eastern town, Mariupol, which had been seized, was back under central control. A separatist crowd later surrounded the building, patrolled by police but otherwise apparently empty.

Kiev also reported a shootout overnight in another part of the east where a Ukrainian soldier was wounded.

Ukraine, a former Soviet republic, slid into unrest late last year when Moscow-backed President Viktor Yanukovich rejected a pact to build closer ties with Europe. Protesters took over central Kiev and he fled in February. Days later, Russian troops seized control of Crimea.

The Ukrainian defence ministry confirmed its involvement in the operation around Slaviansk on Thursday, saying the troops involved were airborne units with experience of such tasks from international peacekeeping missions.

"The morale of our forces will allow them to completely fulfill their task of defending Ukraine," it said.

Unarmed mediators from the Organization for Security and Cooperation in Europe are in eastern Ukraine trying to persuade pro-Russian gunmen to go home, in line with the Geneva accord.

Reuters reporters have not been able to establish that any Russian troops or special forces members are on the ground, though Kiev and Western powers say they have growing evidence that Moscow has a presence. Masked gunmen in the east, widely referred to as "green men", wear uniforms without insignia.

Kiev has been cautious in taking action for fear of triggering a Russian invasion. Last week it ordered an "anti-terrorist operation", but this quickly fizzled out when an armored column of paratroopers surrendered weapons to a separatist crowd.

(Additional reporting by Alexander Reshetnikov and Gleb Garanich near Slaviansk; Alissa de Carbonnel in Donetsk; Pavel Polityuk, Natalia Zinets, Richard Balmforth and Alastair Macdonald in Kiev, Denis Dyomkin in Birobidzhan, Russia, Mark Felsenthal in Tokyo, Alessandra Prentice and Vladimir Soldatkin in Moscow; Writing by Christian Lowe, David Stamp, Philippa Fletcher and Peter Graff)

Exclusive: Obama plans to call EU leaders in Russia sanctions push - sources

U.S. President Barack Obama is expected to speak to several European leaders on Friday to try to nudge the EU toward fresh sanctions against Russia over Ukraine, sources familiar with the matter said.

Disagreements among European Union nations on whether to impose new economic sanctions on Russia have held up punitive steps by the United States, said the sources on condition of anonymity, but Washington could also act on its own.

U.S. officials have grown increasingly impatient with what they describe as Russia's failure to live up to its commitments in an April 17 agreement reached in Geneva to try to de-escalate the crisis in Ukraine.

The United States is also frustrated at the reluctance of some European nations, notably Germany and Italy, to impose a new round of economic sanctions on Russia but it would much prefer to act in concert with the EU rather than on its own.

The sources said Obama was expected to speak in a conference call on Friday with British Prime Minister David Cameron, French President Francois Hollande, German Chancellor Angela Merkel and Italian Prime Minister Matteo Renzi to discuss the issue.

A senior administration official confirmed that the president intended to call European allies to discuss sanctions.

Obama is in Asia on a four-nation trip. Speaking in Tokyo on Thursday, he blamed Russia for failing to carry out the Geneva deal and said he was ready to impose new sanctions.

A GRAVE AND EXPENSIVE MISTAKE

In a sign of growing U.S. concern about Ukraine, Secretary of State John Kerry issued what amounted to a warning to Russia not to invade. Russia has some 40,000 troops on its border with Ukraine, some of which staged military exercises on Thursday.

"Following today's threatening movement of Russian troops right up to Ukraine's border, let me be clear: If Russia continues in this direction, it will not just be a grave mistake, it will be an expensive mistake," he said in a hastily arranged appearance at the State Department.

The United States accuses Russia of backing separatists in eastern Ukraine as part of a deliberate attempt to destabilize the region, undermine elections planned for next month, and gain greater influence over Kiev.

Russia seized and annexed the Crimean peninsula from Ukraine last month after President Vladimir Putin overturned decades of post-Cold War diplomacy by announcing the right to use military force in neighboring countries.

Under the accord struck by Russia, Ukraine, the United States and European Union in Geneva last week, illegal armed groups are supposed to disarm and go home, including rebels occupying about a dozen buildings in the largely Russian-speaking east.

The rebels have shown no sign of retreating.

"As President Obama reiterated earlier today, we are ready to act," Kerry said on Thursday.

When he announced the Geneva agreement a week ago, the U.S. secretary of state had said that if Russia did not take steps "over the course of these next days" there would be additional sanctions as a consequence.

Several sources said that the United States did not, however, wish to act on its own.

Washington's basic reasoning is that the practical effect on Russia's economy and markets, as well as the symbolic import of further sanctions, will be greater if the United States is seen to be acting in concert with the European Union.

The United States has so far imposed three rounds of sanctions in connection with the unrest in Ukraine - two aimed at Russian targets and a third focused on Crimean individuals and a Crimean gas company.

The European Union is highly dependent on Russian gas deliveries, and the crisis over Ukraine has fanned concerns about future supply. Russia is also an important market for many EU exporters, notably in Germany.

On March 21, the EU imposed sanctions on 12 Russians and Ukrainians because of Moscow's takeover of Crimea, bringing the number of people targeted by EU asset freezes and travel bans to 33.

On April 14, the EU agreed to expand the list of people subject to such penalties but the bloc has yet to agree on the names or to actually impose the sanctions.

Nokia says handset business sale to Microsoft completed

Nokia on Friday said the sale of its once-dominant handset business to Microsoft has been closed after the companies agreed to leave two factories in India and Korea out of the deal.

The company said that it now expected the final sales price to rise slightly above the previously announced 5.44 billion euros ($7.52 billion).

Nokia said that due to an ongoing tax dispute with Indian authorities, it would operate the Chennai factory as a contract manufacturing unit for Microsoft.

It also said it will close a plant in Masan, Korea, which about 200 staff.

Nokia added its board of directors was due to meet early next week in relation to the company's strategy assessment.

A media report earlier on Friday said Nokia would outline its new strategy on Tuesday along with its first-quarter results, and that it would also nominate Rajeev Suri, the head of NSN, as the new group CEO.

($1 = 0.7236 Euros)

70 Year Old Man Dies Having Sex With A Married Woman

By SIMON EBEGBULEM BENIN CITY - IT was a shameful death for a 70 years old man identified as David, yesterday, when he slumped and died after having marathon sex with a married woman in a hotel in Benin City. He died at one of the hotels in the Government Reservation Area, Benin City.The incident, according to reports happened at about 1pm. A son to the deceased who did not give his name said his father left home 45 minutes earlier. The son said they were called by the police to come to the Benin Central Hospital only to see the dad's corpse. Doctors on duty said David was brought stone dead to the hospital. The woman was also present at the hospital but policemen ferried her away to prevent her from being mobed. The corpse was deposited at the Central Hospital mortuary.

Sanusi shuns FRC panel, sitting suspended

Mallam Lamido Sanusi

The Financial Reporting Council of Nigeria on Thursday alleged that the Central Bank of Nigeria under the leadership of the suspended governor, Mr. Lamido Sanusi, spent N500bn as intervention fund in various sectors without obtaining the approval of its Board or the Federal Executive Council.

It also alleged at a sitting in Lagos in which the suspended governor was scheduled to appear that the bank under his watch spent N10bn to renovate five palaces of traditional rulers in the country under its education intervention projects.

Sanusi, however, refused to appear before the panel, which is currently investigating the activities of the CBN under his watch.

Sanusi, who said the invitation was in bad faith, has also sued the FRC, according to sources close him.

The FRC had invited Sanusi along with the deputy governors of the CBN to appear before it as part of the ongoing investigation into the activities of the CBN.

The deputy governors are Mr. Kingsley Moghalu, Alhaji Suleiman Barau, Mr. Babatunde Lemo (who recently retired from the bank) and the acting governor of the central bank, Dr. Sarah Alade.

Also invited to appear before the council were the Managing Director, Bank of Industry, Ms. Evelyn Oputu; Mr. Babatunde Dayo and Mr. Gabriel Okpeh.

While everyone showed up for the hearing, Sanusi and Alade did not come.

The Executive Secretary, FRC, Mr. Jim Obazee, later said the sitting of the panel had been suspended following a letter from Sanusi’s lawyer that the investigation was subjudice.

The council also alleged that CBN failed to prepare its financial statements in accordance with the acceptable financial standards.

Obazee said it was wrong for the CBN to have disbursed the N500bn intervention fund through the Bank of Industry and Deposit Money Banks without obtaining necessary approvals.

The deputy governors in attendance could not proof that the CBN obtained the approval of the board for the money to be disbursed.

However, Barau and Lemo denied that the CBN spent N10bn to renovate palaces.

Obazee also said the CBN’s financial statements revealed that the Asset Management Corporation of Nigeria risks constituted 27.3 per cent of its accounts.

According to him, the CBN ought to have properly briefed Mr. President about such level of risks.

Obazee also said the CBN under Sanusi acquired shares in the International Islamic Liquidity Management Corporation without the board’s approval.

Moghalu, Barau and Lemo could not prove that the IILMC transaction followed due process.

On why the CBN account was not acceptable, the FRC boss said, “The process we follow in the FRC is that we receive financial statements from entities by law. Organisations are supposed to submit their financial statements to the FRC and we review for compliance with the accounting or financial standards.

“Having reviewed their books, we report back to you by inviting you for a formal meeting like this.”