text
stringlengths 502
25.5k
| labels
stringclasses 5
values |
|---|---|
Libya takes $1bn in unfrozen funds
Libya has withdrawn $1bn in assets from the US, assets which had previously been frozen for almost 20 years, the Libyan central bank has said.
The move came after the US lifted a trade ban to reward Tripoli for giving up weapons of mass destruction and vowing to compensate Lockerbie victims. The original size of Libya's funds was $400m, the central bank told Reuters. However, the withdrawal did not mean that Libya had cut its ties with the US, he added.
"We are in the process of opening accounts in banks in the United States," the central bank's vice president Farhat Omar Ben Gadaravice said. The previously frozen assets had been invested in various countries and are believed to have included equity holdings in banks. The US ban on trade and economic activity with Tripoli - imposed by then president Ronald Regan in 1986 after a series of what the US deemed terrorist acts, including the 1988 Lockerbie air crash - was suspended in April. Bankers from the two country's had been working on how to unfreeze Libya's assets. | business |
Cactus diet deal for Phytopharm
A slimming aid made from a southern African cactus is set to be developed by UK firm Phytopharm and Unilever.
Anglo-Dutch food giant Unilever will help the pharmaceutical firm develop the snacks containing Hoodia extract. Phytopharm shares jumped 10.7% on the news, with analysts saying sales of $600m (£309m) a year were possible. The plant, licensed to Phytopharm in 1997, has been used for thousands of years by the Sans bushmen of the Kalahari desert to stave off hunger. Studies have reportedly shown the plant curbs appetite instead of reducing calorific intake like many existing products.
Phytopharm will receive an initial fee of £6.5m from Unilever - out of a potential total of £21m - as well as future royalties on product sales. Under the deal, production of the Hoodia cactus at Phytopharm's nursery in South Africa will also rise from eight million plants to potentially hundreds of millions, said Phytopharm chief executive Richard Dixey. The firm had initially hoped to market a slimming drug from Hoodia with Pfizer. But the research collaboration came to an end in 2003. Analysts said Unilever could launch the new products in 2007. "This deal goes a long way to restoring the market faith in Phytopharm's pipeline after the Pfizer exit," said analyst Erling Refsum at Nomura. | business |
Brazil plays down Varig rescue
The Brazilian government has played down claims that it could step in to save the country's biggest airline.
Brazil's airport authority chief Carlos Wilson had claimed the government was on the brink of stepping in to save Varig, Brazil's flagship airline. However, the country's vice president Jose Alencar has said the government still is looking for a solution. Varig is struggling under a huge debt burden of an estimated debt of 6.5 billion reais ($2.3bn or £1.2bn). Asked whether a rescue was on the cards following a meeting of the country's Congress to discuss the airline's crisis, Mr Alencar replied: "No, I don't think so. We will see."
Earlier, Mr Wilson had said that president Luiz Inacio Lula da Silva has decided to step in and a decree of some kind of intervention could be signed this week. "In practice, it will be an intervention, although this is not the technical name used", he said. An intervention means that the government would take administrative control of the company and its finances. For that to happen Varig's main shareholder, the non-profit Ruben Berta Foundation which represents the airline's employees, would have to be removed, Mr Wilson said. However, no jobs would be lost and the airline would keep on flying, he added. Varig, which operates in 18 countries apart from Brazil, has been driven to the brink of collapse because of the country's economic downturn.
The depreciation of Brazil's currency has had a direct impact on the airline's dollar debt as well as some of its costs. Business has improved recently with demand for air travel increasing and a recovery in the Brazilian economy. The airline could also win a sizeable windfall from a compensation claim against the government. On Tuesday the courts awarded Varig 2bn reais ($725m), after ruling in favour of its compensation claim against the government for freezing tariffs from 1985 to 1992. But the government can appeal the decision. | business |
Bombardier chief to leave company
Shares in train and plane-making giant Bombardier have fallen to a 10-year low following the departure of its chief executive and two members of the board.
Paul Tellier, who was also Bombardier's president, left the company amid an ongoing restructuring. Laurent Beaudoin, part of the family that controls the Montreal-based firm, will take on the role of CEO under a newly created management structure. Analysts said the resignations seem to have stemmed from a boardroom dispute. Under Mr Tellier's tenure at the company, which began in January 2003, plans to cut the worldwide workforce of 75,000 by almost a third by 2006 were announced. The firm's snowmobile division and defence services unit were also sold and Bombardier started the development of a new aircraft seating 110 to 135 passengers.
Mr Tellier had indicated he wanted to stay at the world's top train maker and third largest manufacturer of civil aircraft until the restructuring was complete. But Bombardier has been faced with a declining share price and profits. Earlier this month the firm said it earned $10m (£19.2m) in the third quarter, down from a profit of $133m a year ago. "I understand the board's concern that I would not be there for the long-term and the need to develop and execute strategies, and the need to reshape the management structure at this time," Mr Tellier said in a statement on Monday. Bombardier said restructuring plans drawn up by Mr Tellier's would continue to be implemented. Shares in Bombardier lost 65 Canadian cents or 25% on the news to 1.90 Canadian dollars before rallying to 2.20 Canadian dollars. | business |
Brazil approves bankruptcy reform
A major reform of Brazil's bankruptcy laws has been approved by the country's Congress, in a move which it is hoped will cut the cost of borrowing.
The bill, proposed in 1993, has finally been approved by the leadership of President Luiz Inacio Lula da Silva. The old law, dating from 1945, gave priority first to workers, second to tax revenue and finally to creditors. The new legislation changes this, giving priority to creditors and limiting payments to workers. The new regulations will limit payments to workers to 150 times the minimum monthly salary, which is currently $94. The law also makes it more difficult for a company to declare bankruptcy. However, when a firm is declared bankrupt it will gain protection from creditors for 180 days while a recovery plan is worked out.
The proposals were opposed in the past by leftist parties, including Mr Lula's Worker Party. They considered that they undermined workers' rights. But President Lula became a defender of the reforms, arguing that the country's bank lending margins were among the highest in the world and were damaging the economy. According to Andreas Adriano of Latin Trade Magazine, the new bankruptcy law will help in reducing the spread - difference between the interest rates of the banks and federal bonds. Nevertheless, Mr Adriano said to reduce the basic interest rate the Central Bank needs to change its policy, focusing not only on inflation but also on economic growth. | business |
Retail sales show festive fervour
UK retail sales were better than expected in November as Christmas shoppers began their seasonal flock to the High Street, figures show.
The Office for National Statistics (ONS) said retail sales rose 0.6% on the month and 6.1% on the year. But the figures, along with this week's inflation report, could trigger another interest rate rise in the New Year. However, recent data from the British Retail Consortium showed a 0.2% slip in High Street sales during November.
The ONS data confounded analyst expectations. Many had expected sales to fall slightly in November as shoppers put off buying Christmas presents until December. However, retailers' attempts to draw in the crowds may be behind November's unexpected rise in sales, they say. Aggressive tactics, such as one-day discount sales adopted by stores such as Marks & Spencer, appear to have paid off. "Price discounting has certainly accounted for much of this because the value of retail sales hasn't grown as much as volumes," said Investec economist David Page. The figures sparked a rally for sterling as the data supported the view that it is too early to assume that base rates have peaked. | business |
Cairn shares slump on oil setback
Shares in Cairn Energy, a UK oil firm, have closed down 18% after a disappointing drilling update and a warning over possible tax demands.
The company said tests had shown no significant finds in one of its Indian oil fields, but was upbeat about the potential of other areas. It also said the Indian government had told it to pay a production tax, for which Cairn argues it is not liable. Cairn's shares have jumped by almost 400% this year. Investors had piled into Cairn after the company announced significant oil finds in India this year. Chief executive Bill Gammell said on Friday he was "disappointed" with exploration in the so-called N-C extension area in Rajasthan. Investors had held high hopes of major oil finds in this area. But Cairn said estimates had been revised in what was a "significant downgrade of the initial expectation".
Cairn also said that the government believed the company was liable to pay taxes under its production-sharing contract. The company said the rate would be about 900 rupees ($20.40; £10.50) per tonne, or seven barrels, of oil. A spokesman for the firm said that the tax would wipe 5% of the field's current value.
"Cairn refutes the government's position," Mr Gammell said. He insisted that the contract made it clear that the tax should be shouldered by the licensee - India's state-run Oil & Natural Gas Corp (ONGC) - and not the contractor. "We have a pretty strong legal case here," he added, saying it would only become an issue once the firm started production. Investors took a dim view of the statements though. The shares closed down 247p, or 18%, at 1115 pence. "I think people were slightly over-ambitious for how quickly Cairn would be able to develop and potentially offload these reserves," said analyst Jason Kenney at ING.
The disappointments overshadowed increased production targets for Cairn's existing oilfields. The company raised targets for its Mangala and Aishwariya fields in India from 60,000 barrels a day to between 80,000 and 100,000 barrels a day. Its Mangala field, thought to contain a billion barrels, is its biggest find to date. "These two fields will provide the core of the future developments in Rajasthan," Mr Gammell said. Cairn added that it would be appraising another field early next year. Mr Gammell set up the company in the 1980s and has successfully switched its focus to South Asia from interests in the US and Europe. Cairn, which also operates in Nepal and Bangladesh, was catapulted into the FTSE 100 index of leading UK shares earlier this year after the sharp rise in its share price. | business |
French boss to leave EADS
The French co-head of European defence and aerospace group EADS Philippe Camus is to leave his post.
Mr Camus said in a statement that he has accepted the invitation to return full-time to the Lagardere group, which owns 30% of EADS. "I will give up my role as soon as the board of directors asks me to do so," he said. Airbus head Noel Forgeard is now set to replace Mr Camus, bringing the company's power struggle to an end. Fighting between Mr Camus and Mr Forgeard has hit the headlines in France and analysts feared that this fighting could destabilise the defence and aerospace group. French finance minister Herve Gaymard is on record as saying that he "deplored" the infighting at the company. The company should now be able put this dispute behind it, with the departure of Mr Camus and with the clear support given to Mr Forgeard by the Lagardere group, the main French shareholder of EADS. The other main shareholders of EADS are the French government (15%) , who also support Mr Forgeard, and Germany's DaimlerChrysler (30%). Rainer Hertrich, the German co-head of EADS will also step down when his contract expires next year.
Mr Camus recently came under pressure as it became clear that the A380 superjumbo was running over budget. EADS - Airbus' majority owner - admitted earlier this week that the project was running 1.45bn euros (£1bn; $1.9bn) over budget. But Mr Forgeard has denied this, telling French media that there is no current overrun in the budget. "But for the sake of transparency, we told our shareholders last week that if we look at the forecast for total costs of the project up to 2010, there is a risk that we will go over by around 10%, which is about 1bn euros (£686m; $1.32bn)," he told France's LCI Television. Due to enter service in 2006, the A380 will replace the Boeing 747 jumbo as the world's biggest passenger aircraft. | business |
AstraZeneca hit by drug failure
Shares in Anglo-Swedish drug have closed down 8% in UK trade after the failure of its Iressa drug in a major clinical trial.
The lung cancer drug did not significantly prolong survival in patients with the disease. This setback for the group follows the rejection by the US in October of its anti-coagulant pill Exanta. Meanwhile, another of its major money spinners - cholesterol drug Crestor - is facing mounting safety concerns. "This would be two of the three blockbuster drugs that were meant to power the company forward failing... and we've got risks on Crestor," said Nick Turner, analyst at brokers Jefferies.
AstraZeneca had hoped to pitch its Iressa drug against rival medicine Tarceva. But Iressa proved no better than a placebo in extending lives in the trial involving 1,692 patients. Tarceva - made by OSI Pharmaceuticals, Genentech and Roche - has already proved to be successful in helping prolong the life of lung cancer patients. AztraZeneca has now appointed a new executive director to the board. John Patterson will be in charge of drug development. The company said Mr Patterson would make "substantial changes to the clinical organisation and its processes". "I am determined to improve our development and regulatory performance, restore confidence in the company and value to shareholders," said chief executive Tom McKillop. | business |
Strong quarterly growth for Nike
Nike has reported its best second-quarter earnings, helped by strong demand for its athletic shoes and Converse sneakers.
The global sports giant said it posted a profit of $261.9m (£135.6m), for the three months to 30 November, up from $179.1m in the same period last year. Revenues increased 11% to $3.1bn, from $2.8bn for the same period in 2003. Nike, whose products are endorsed by Tiger Woods among other sports stars, said "demand continues to grow". The results came after a strong first quarter of the year for the firm based in Beaverton, Oregon.
Philip Knight, chairman and chief executive, said: "Nike's second-quarter revenues and earnings per share reached all-time high levels as a result of solid performance across our global portfolio. "Our businesses in the United States and emerging markets such as China, Russia and Turkey, combined with favourable European exchange rates, helped drive much of this growth." He added: "With the first half of our fiscal year in the books, we remain confident that our business strategy and consistent execution will allow us to deliver on our goals of healthy, profitable growth." The firm reported worldwide futures orders for athletic footwear and gear, scheduled for delivery from December 2004 to April 2005, of $4.9bn. That is 9.1% higher than such orders reported for the same period last year. | business |
Stormy year for property insurers
A string of storms, typhoons and earthquakes has made 2004 the most expensive year on record for property insurers, according to Swiss Re.
The world's second biggest insurer said disasters around the globe have seen property claims reach $42bn (£21.5bn). "2004 reinforces the trend towards higher losses," said Swiss Re. Tightly packed populations in the areas involved in natural and man-made disasters were to partly to blame for the rise in claims, it said. Some 95% of insurance claims were for natural catastrophes, with the rest attributed to made-made events.
The largest claims came from the US, which was struck by four hurricanes, and Japan, which suffered the highest concentration of typhoons for decades plus a major earthquake.
Europe suffered fewer natural disasters, but 191 people were killed and more than 2,000 injured in March after the terrorist attack on train stations in Madrid. The damages claimed in 2004 eclipsed previous years, including 2001 when the 11 September attacks pushed claims up to $37bn. Swiss Re said it had registered about 300 natural and man-made disasters around the world in 2004. Twenty-one thousand people lost their lives in the catastrophes with a cost to the global economy of around $105bn (£54bn). | business |
Parmalat sues 45 banks over crash
Parmalat has sued 45 banks as it tries to reclaim money paid to banks before the scandal-hit Italian dairy company went bust last year.
The firm collapsed with debts of about 14bn euros ($19bn; £10bn) and new boss Enrico Bondi has already taken legal action against a number of lenders. He claims the banks were aware of the problems but continued to work with the company so they could earn commissions. Parmalat has not identified which banks it has gone after this time. Under Italian law, administrators can seek to get back money paid to financial institutions prior to insolvency, if there is a suspicion that the institutions knew that the company was in financial trouble. The firm also said it is preparing further law suits.
According to the Reuters news agency, 35 of the companies sued on Thursday are Italian while the remaining 10 are international. The unidentified Parmalat source also told Reuters that the company was planning to take action against a total of 80 financial institutions. Among those already targeted are Bank of America, UBS, Credit Suisse First Boston, Deutsche Bank and Citigroup. It has also gone after auditors Grant Thornton. They have all denied any wrongdoing. Parmalat was declared insolvent in December 2003 after it emerged that 4bn euros thought to be held in an offshore account did not in fact exist. In the investigation that followed it became apparent that the company, among other things, had been billing clients twice in order to boost sales and bolster the balance sheet. That enabled Parmalat to borrow heavily and expand overseas, allowing it to become a darling of the Italian stock exchange. | business |
Irish company hit by Iraqi report
Shares in Irish oil company Petrel Resources have lost more than 50% of their value on a report that the firm has failed to win a contract in Iraq.
Reuters news agency reported that Iraq's Oil Ministry has awarded the first post-war oilfield contracts to a Canadian and a Turkish company. By 1700 GMT, Petrel's shares fell from 97p ($1.87) to 44p ($0.85). Petrel said that it has not received any information from Iraqi authorities to confirm or deny the report.
Iraq is seeking to award contracts for three projects, valued at $500m (£258.5m). Turkey's Everasia is reported by Reuters to have won a contract to develop the Khurmala Dome field in the north of the country. A Canadian company, named IOG, is reported to have won the contract to run the Himrin field. Ironhorse Oil and Gas has denied to Reuters that it is the company in question. These two projects aim to develop Khurmala field to produce 100,000 barrels per day and raise the output of Himrin. The winners of the contract are to build new flow lines and build gas separation stations. The contract to develop the Suba-Luhais field has not yet been awarded as Iraq's Oil Ministry is studying the offers. If Iraq's cabinet approves the oil ministry's choice of companies, then this will be the first deal that Iraq has signed with a foreign oil company. Iraq is still trying to boost its production capacity to match levels last seen in the eighties, before the war with Iran. Oil officials hope to double Iraq's output by the end of the decade. | business |
Yukos unit fetches $9bn at auction
A little-known Russian company has bought the main production unit of oil giant Yukos at auction in Moscow.
Baikal Finance Group outbid favourite Gazprom, the state-controlled gas monopoly, to buy Yuganskneftegas. Baikal paid 260.75bn roubles ($9.37bn: £4.8bn) for Yugansk - nowhere near the $27bn Russia says Yukos owes in taxes. Yukos reacted immediately by repeating its view that the auction was illegal in international and Russian law, and said Baikal had bought itself trouble.
"The company considers that the victor of today's auction has bought itself a serious $9bn headache," said Yukos spokesman Alexander Shadrin. He said the company would continue to make "every lawful move" to protect tens of thousands of shareholders in Yukos from "this forcible and illegitimate removal of their property". Meanwhile, Tim Osborne, head of Yukos main shareholders' group Menatep, said that Yukos may have to declare itself bankrupt, and that legal action would be taken, outside Russia, against the auction winners. Reports from Russia say Baikal has paid a deposit of nearly $1.7bn from a Sberbank (Savings Bank) account to the Russian Federal Property Fund, for Yugansk.
The sale came despite a restraining order issued by a US court dealing with the firm's bankruptcy application for Chapter 11 protection. Yukos has always insisted the auction was state-sponsored theft but Russian authorities argued they were imposing the law, trying to recover billions in unpaid taxes. There were originally four registered bidders, and with its close ties to the Kremlin, state-backed gas monopoly Gazprom had been seen as favourite. But just two companies turned up for the auction, Gazprom and the unknown Baikal Finance Group, named after a large freshwater lake in Siberia. And, according to Tass news agency, Gazprom did not make a single bid, leaving the way open for Baikal, which paid above the auction start price of 246.75bn roubles.
Mystery firm Baikal Finance Group is officially registered in the central Russian region of Tver, but many analysts believe it may be linked to Gazprom. Kaha Kiknavelidze, analyst at Troika Dialog, said: "I think a decision that Yugansk should end up with Gazprom was taken a long time ago. So the main question was how to structure this transaction.
"I would not exclude that the structure of the deal has slightly changed and Gazprom now has a partner. "I would also not exclude that Baikal will decline to pay in 14 days, that are given by law, and Gazprom is then recognised as the winner. This would give Gazprom an extra 14 days to accumulate the needed funds. "Another surprise was that the winner paid a significant premium above the starting price." However, Gazprom has announced it is not linked to Baikal in any way. And Paul Collison, chief analyst at Brunswick UBS, said: "I see no plausible explanation for the theory that Baikal was representing competing interests. "Yugansk will most likely end up with Gazprom but could still end up with the government. There is still potential for surprises." Yugansk is at the heart of Yukos - pumping close to a million barrels of oil a day. The unit was seized by the government which claims the oil giant owes more than $27bn in taxes and fines. Yukos says those tax demands are exorbitant, and had sought refuge in US courts.
The US bankruptcy court's initial order on Thursday - to temporarily block the sale - in response to Yukos filing for Chapter 11 bankruptcy protection, was upheld in a second ruling on Saturday. The protection, if recognised by the Russian authorities, would have allowed Yukos' current management to retain control of the business and block the sale of any company assets. Yukos has said the sale amounts to expropriation - punishment for the political ambitions of its founder, Mikhail Khodorkovsky. Mr Khodorkovsky is now in jail, on separate fraud charges. But President Vladimir Putin has described the affair as a crackdown on corruption - and the BBC's Sarah Rainsford in Moscow says most Russians believe the destruction of Yukos is now inevitable. Hours before the auction lawyers for Menatep, a group through which Mr Khodorkovsky and his associates control Yukos, said they would take legal action in other countries. Menatep lawyers, who were excluded from observing the auction, said they would retaliate by seeking injunctions in foreign courts to impound Russian oil and gas exports. | business |
S&N extends Indian beer venture
The UK's biggest brewer, Scottish and Newcastle (S&N), is to buy 37.5% of India's United Breweries in a deal worth 4.66bn rupees ($106m:£54.6m).
S&N will buy a 17.5% equity stake in United, maker of the well-known Kingfisher lager brand, and make a public offer to buy another 20% stake. A similar holding will be controlled by Vijay Mallya, chair of the Indian firm. The deal was a "natural development" of its joint venture with United, said Tony Froggatt, S&N's chief executive.
Its top brands include Newcastle Brown Ale, Foster's, John Smith's, Strongbow and Kronenbourg. In 2002 S&N and United agreed to form a strategic partnership, one that would include a joint venture business and a UK investment in the Indian brewer. The joint venture was established in May 2003. with both parties having a 40% stake in the venture - Millennium Alcobev. Millennium Alcobev will now be merged with United, which expects post-merger to have about half of India's beer market.
India, with a population of more than one billion, consumes about 1.2 billion bottles of beer every year. Kingfisher has market share of about 29%. In addition to the equity stake S&N is to invest 2.47bn rupees in United through non-convertible redeemable preference shares. Meanwhile, United's budget airline, Kingfisher Airlines, is to buy 10 A320 aircraft from Airbus and has the option to buy 20 more aircraft in a deal worth up to $1.8bn. The airline, the brainchild of Mr Mallya, expects to start its operations by the end of April. The new airline would break even in the very first year of operation, Mr Mallya said. | business |
Euronext 'poised to make LSE bid'
Pan-European group Euronext is poised to launch a bid for the London Stock Exchange, UK media reports say.
Last week, the LSE rejected a takeover proposal from German rival Deutsche Boerse - the 530 pence-a-share offer valued the exchange at about £1.35bn. The LSE, which saw its shares rise 25%, said the bid undervalued the business. Euronext - formed after the Brussels, Paris and Amsterdam exchanges merged - is reportedly working with three investment banks on a possible offer. The LSE, Europe's biggest stock market, is a key prize, listing stocks with a total capitalisation of £1.4 trillion.
Euronext already has a presence in London due to its 2001 acquisition of London-based options and futures exchange Liffe. Trades on the LSE are cleared via Clearnet, in which Euronext has a quarter stake.
Euronext, which also operates an exchange in Lisbon, last week appointed UBS and ABN Amro as additional advisors. It is also working with Morgan Stanley. Despite the rejection of the Deutsche Boerse bid last week, Werner Seifert, chief executive of the Frankfurt-based exchange, may well come back with an improved offer. It has long wanted to link up with London, and the two tried and failed to seal a merger in 2000. Responding to the LSE's rebuff, Deutsche Boerse - whose market capitalisation is more than £3bn - said it believed it could show its proposal offered benefits, and that it still hoped to make a cash bid.
Last week the LSE said not only was the bid undervalued, but that it had "been advised that there can be no assurance that any transaction could be successfully implemented". However, it has indicated it is open for further talks. Meanwhile, German magazine Der Spiegel said part of Mr Seifert's negotiations with the LSE were about where to base the future board of any merged exchange. While Mr Seifert has suggested a merged company would be run out of London, the mayor of Frankfurt has raised concerns that such a move could cost German jobs. Many analysts believe German Boerse has more financial firepower than Euronext if it came to a bidding war. | business |
Christmas shoppers flock to tills
Shops all over the UK reported strong sales on the last Saturday before Christmas with some claiming record-breaking numbers of festive shoppers.
A spokesman for Manchester's Trafford Centre said it was "the biggest Christmas to date" with sales up 5%. And the Regent Street Association said shops in central London were also expecting the "best Christmas ever". That picture comes despite reports of disappointing festive sales in the last couple of weeks.
The Trafford Centre spokeswoman said about 8,500 thousand vehicles had arrived at the centre on Saturday before 1130 GMT. "We predict that the next week will continue the same trend," she added.
It was a similar story at Bluewater in Kent. Spokesman Alan Jones said he expected 150,000 shoppers to have visited by the end of Saturday and a further 100,000 on Sunday. "Our sales so far have been 2% up on the same time last year," he said. "We're very busy, it's really strong and people will be shopping right up until Christmas. "Over the Christmas period we're expecting people to spend in excess of £200m at the centre."
On Saturday afternoon, a spokeswoman for the St David's Shopping Centre in Cardiff said it looked like being its busiest day of the year with about 200,000 shoppers expected to have visited by the close of play. At the St Enoch's Shopping Centre in Glasgow, more than 140,000 shoppers - an all-time record - were expected to have passed through the doors by its closing time of 1900 GMT. Senior business manager Jon Walton said: "It has been phenomenal - absolutely mobbed. "Every week footfall has been showing strong growth and at the weekends it has been going mad." Regent Street Association director Annie Walker said on Saturday: "The stores were heaving today and a lot of people are going to be doing last minute shopping as many people finished work on Friday and can go in the week."
She said reports of a slump in pre-Christmas sales were related to the growing popularity of internet sales. "I do think this has had a lot to do with reports of lower sales figures," she said. "Internet shopping has gone up enormously and not all stores have websites." | business |
Mystery surrounds new Yukos owner
The fate of Russia's Yuganskneftegas - the oil firm sold to a little-known buyer on Sunday - is the subject of frantic speculation in Moscow.
Baikal Finance Group emerged as the auction winner, agreeing to pay 260.75bn roubles (£4.8bn; $9.4bn). Russia's newspapers claimed that Baikal was a front for gas monopoly Gazprom, which had been expected to win. The sale has destroyed Yukos, once the owner of Yuganskneftegas, said founder Mikhail Khodorkovsky. "Yuganskneftegas has been sold in the best traditions of the 90s. The authorities have made themselves a wonderful Christmas present - Russia's most efficient oil company has been destroyed," the Interfax news agency quoted Mr Khodorkovsky as saying via his lawyers.
Gazprom had been expected to win the auction but is thought to have failed to get finance for the deal after a US court injunction barred it from taking part. Last week, Yukos filed for Chapter 11 bankruptcy protection in the US in a last-ditch attempt to hang on to Yuganskneftegas, which accounts for 60% of its output. A US judge banned Gazprom from taking part in the auction and barred international banks from providing the firm with cash. "They screwed up the financing," said Ronald Smith, an analyst at Renaissance Capital in Moscow. "And Gazprom doesn't have this sort of money lying around."
Gazprom has denied that it is behind the purchase. "It is a front for somebody but not necessarily for Gazprom," said Oleg Maximov, an analyst at Troika Dialog in Moscow. "We don't know if this company is linked 100% to Gazprom.
"We tried to find it, but we couldn't and as far as I know, the papers had the same result." The sale has however bought time for Gazprom to raise the money needed for the purchase, analysts said. One scenario is that Baikal will not pay when it is supposed to in two weeks time, putting Yuganskneftegas back in the hands of bailiffs and back within the reach of Gazprom. Yukos is not planning on letting go of its unit without a fight and has threatened legal action against any buyer. Menatep, Yukos main shareholders' group, has also threatened legal action. Yukos claims that it is being punished for the political ambitions of its founder, Mikhail Khodorkovsky, who is now in jail facing separate fraud charges. It has been hit with more than $27bn in taxes and fines and many observers now say that the break up of the firm that accounts for 20% of Russia's oil output is inevitable. | business |
Euronext joins bid battle for LSE
Pan-European stock market Euronext has approached the London Stock Exchange (LSE) about a possible takeover bid.
"The approach is at an early stage and therefore does not require a response at this point," LSE said. Talks with the European stock market and with rival bidder Deutsche Boerse will continue, the LSE said. Last week, the group rejected a £1.3bn ($2.5bn) takeover offer from Deutsche Boerse, claiming that it undervalued the business. LSE saw its shares surge 4.9% to a new high of 583p in early trade, following the announcement on Monday.
The offer follows widespread media speculation that Euronext would make an offer for LSE. Experts now widely expect a bidding war for Europe's biggest stock market, which lists stocks with a total capitalisation of £1.4 trillion, to break out. Commentators say that a deal with Euronext, which owns the Liffe derivatives exchange in London and combines the Paris, Amsterdam and Lisbon stock exchanges, could potentially offer the LSE more cost savings than a deal with Deutsche Boerse.
A weekend report in the Telegraph had quoted an unnamed executive at Euronext as saying the group would make a cash bid to trump Deutsche Boerse's offer. "Because we already own Liffe in London, the cost savings available to us from a merger are far greater than for Deutsche Boerse," the newspaper quoted the executive as saying. Euronext chief executive Jean-Francois Theodore is reported to have already held private talks with LSE's chief executive Clara Furse. Further reports had suggested that Euronext could make an offer in excess of the LSE's 533p a share closing price on Friday. However, Euronext said it could not guarantee "at this stage" that a firm offer would be made for LSE. There has been extensive speculation about a possible takeover of the company since an attempted merger with Deutsche Boerse failed in 2000. | business |
Iraq and Afghanistan in WTO talks
The World Trade Organisation (WTO) is to hold membership talks with both Iraq and Afghanistan.
But Iran's bid to join the trade body has been refused after the US blocked its application for the 21st time. The countries stand to reap huge benefits from membership of the group, whose purpose is to promote free trade. Joining, however, is a lengthy process. China's admission in 2001 took 15 years and talks with Russia and Saudi Arabia have been taking place for 10 years. Membership of the Geneva-based WTO helps guarantee a country's goods receives equal treatment in the markets of other member states - a policy which has seen it become closely associated with globalisation.
Iraq's Trade Minister Mohammed Mustafa al-Jibouri welcomed the move, describing it as significant as November's decision by the Paris Club of creditor nations to write off 80% of the country's debts. Assad Omar, Afghanistan's envoy to the United Nations in Geneva, said accession would contribute to "regional prosperity and global security". There are now 27 countries seeking membership of the WTO. Prospective members need to enter into negotiations with potential trading countries and change domestic laws to bring them in line with WTO regulations. Before the process gets under way, all 148 WTO members must give their backing to applicant countries. The US said it could not approve Iran's application because it is currently reviewing relations. But several nations criticised the approach, and European Union ambassador to the WTO, Carlo Trojan, said Iran's application "must be treated independently of political issues". | business |
Diageo to buy US wine firm
Diageo, the world's biggest spirits company, has agreed to buy Californian wine company Chalone for $260m (£134m) in an all-cash deal.
Although Diageo's best-known brands include Smirnoff vodka and Guinness stout, it already has a US winemaking arm - Diageo Chateau & Estate Wines. Diageo said it expects to get US regulatory approval for the deal during the first quarter of 2005. It said Chalone would be integrated into its existing US wine business.
"The US wine market represents a growth opportunity for Diageo, with favourable demographic and consumption trends," said Diageo North America president Ivan Menezes. In July, Diageo, which is listed on the London Stock Exchange, reported an annual turnover of £8.89bn, down from £9.28bn a year earlier. It blamed a weaker dollar for its lower turnover. In the year ending 31 December 2003, Chalone reported revenues of $69.4m. | business |
Tokyo says deflation 'controlled'
The Japanese government has forecast that the country's economic growth will slow to 1.6% in the next fiscal year starting in April 2005.
While it predicts this fall from the current 2.1% level, it said it was making progress on ending deflation. The figures were given by economics minister Heizo Takenaka who said the economy would grow by 2% in 2006/07. He said the consumer price index (CPI) would rise 0.1% in the next fiscal year, the first gain since 2000/01. "We are attempting to make real economic conditions better and to overcome deflation. I think we are on track," said Mr Takenaka. Deflation - or falling consumer prices - has plagued Japan for more than five years. To ease the problem the Bank of Japan has regularly flooded the money market with excess cash to keep short term interest rates at 0% in an attempt to spur economic activity. | business |
No seasonal lift for house market
A swathe of figures have provided further evidence of a slowdown in the UK property market.
The Council of Mortgage Lenders (CML), British Bankers Association (BBA) and Building Societies Association (BSA) all said mortgage lending was slowing. CML figures showed gross lending fell by 4% in November as the number of people buying new homes fell. Elsewhere, the BBA added underlying mortgage lending rose by £4m in November, compared to October's £4.29m. The CML said that loans for new property purchases fell 25% year-on-year to 85,000 - the lowest total seen since February 2003.
Data from the CML showed lending fell to just over £25bn in November, from £25.5bn a year earlier. Separate figures from the Building Societies Association showed the value of mortgage approvals -- loans agreed but not yet made -- stood 32% lower than at the same time last year, at a seasonally-adjusted £2.98bn. The figures come hot on the heels of new data from property website Rightmove which suggested owners must indulge in a "winter sale" and slash prices by up to 8%. Miles Shipside, commercial director at Rightmove, said sellers would have to be "more realistic with their asking prices" to tempt buyers. The average asking price of a home fell by more than £600 from £190,329 in November to £189,733 in December, while the length of time it takes to sell a home rose to 81 days from 53 in the summer.
Rightmove said estate agents were set to enter 2005 with a third more properties on their books than a year ago. "Even once the quieter holiday period is over, sellers will find themselves competing with a lot of other properties on the market. In any business, excess supply and low demand means one thing - cut prices," Mr Shipside said.
"The proof is that some properties that have been appropriately discounted are selling, even in the current market." Overall, asking prices have fallen 3.3% from their July peaks as the equivalent of £6,500 has been cut from an average property. A host of mortgage lenders and economists have predicted that property prices will either fall or stagnate in 2005. "What is apparent is a picture of a slowing market, but one that should remain stable as we return to more normal volumes of lending over 2005 as a whole," CML director general Michael Coogan said. "It's a fairly consistent picture, showing that mortgage demand has fallen back again, which is consistent with a continuing correction in the housing market," Investec economist Philip Shaw said. "However, the figures do suggest only a modest weakening, and we stand by our view that the property market will remain in the doldrums for some time, though a collapse is still unlikely." | business |
Yukos seeks court action on sale
Yukos will return to a US court on Wednesday to seek sanctions against Baikal Finance Group, the little-known firm which has bought its main asset.
Yukos has said it will sue Baikal and others involved in the sale of Yuganskneftegas for $20bn in damages. Yukos' US lawyers will attempt to have Baikal assets frozen after the Russian government ignored a US court order last week blocking the sale. Baikal's background and its motives for buying the unit are still unclear.
Russian newspapers have claimed that Baikal - which bought the Yuganskneftegas production unit for $9.4bn (261bn roubles, £4.8bn) on Sunday at a state provoked auction - has strong links with Surgutneftegas, Russia's fourth-biggest oil producer. Many observers believe that the unit, which produces 60% of Yukos' oil output, could ultimately fall into the hands of Surgutneftegas or even Gazprom, the state gas firm which opted out of the auction.
The Russian government forced the sale of Yukos' most lucrative asset as part of its action to enforce a $27bn back tax bill it says the company owes. Yukos' US lawyers claim the auction was illegal because the firm had filed for bankruptcy and therefore its assets were now under the protection of US bankruptcy law which has worldwide jurisdiction. On Wednesday, Yukos will also seek further legal remedies to prevent the break-up of the group. "We believe the auction was illegal and we intend to pursue all legal recourses available to us," Yukos spokesman Mike Lake told Agence France Press. "If it exports that oil, it will be marketing a stolen product," he added. The future ownership of Yuganksneftegas remains unclear amid widespread suggestions that Baikal was established as a front for other interests.
Speaking on Tuesday, President Putin said Baikal was owned by individual investors who planned to build relationships with other Russian energy firms interested in the development of Yuganskneftegas. President Putin also suggested that China's National Petroleum Corporation could play a role in the unit's future after signing a commercial agreement with Gazprom to work on joint energy projects. Yukos has claimed that the sale of its main asset will lead to the collapse of the company. Commentators and Yukos itself claim the firm is the target of a government campaign to destroy it because of the political ambitions of its founder, Mikhail Khodorkovsky. | business |
Indy buys into India paper
Irish publishing group Independent News & Media is buying up a 26% stake in Indian newspaper company Jagran in a deal worth 25m euros ($34.1m).
Jagran publishes India's top-selling daily newspaper, the Hindi-language Dainik Jagran, which has been in circulation for 62 years. News of the deal came as the group announced that its results would meet market forecasts. The company reported strong revenue growth across all its major markets.
Group advertising revenues were up over 10% year-on-year, the group said, with overall circulation revenues are expected to increase almost 10% year-on-year. This was helped by the positive impact of "compact" newspaper editions in Ireland and the UK, it said. "2004 has proven to be an important year for Independent News & Media," said chief executive Sir Anthony O'Reilly. "Our simple aim at Independent is to be the low cost producer in every region in which we operate. I am confident that we will show a meaningful increase in earnings for 2005."
Meanwhile, the group made no comment about the future of the Independent newspaper despite recent speculation that Sir Anthony had held talks with potential buyers over a stake in the daily publication. He has consistently denied suggestions that the Independent and the Independent on Sunday are up for sale. Buy it is understood that the recent success of the smaller edition of the Independent, which has pushed circulation up by 20% to 260,000, has prompted interest from industry rivals, with Daily Mail & General Trust tipped as the most likely suitor. The loss-making newspaper is not expected to reach break-even until 2006. | business |
Senior Fannie Mae bosses resign
The two most senior executives at US mortgage giant Fannie Mae have resigned after accounting irregularities were uncovered at the company.
Chief executive Franklin Raines, a former senior official in the Clinton administration, and chief financial officer Tim Howard have left the firm. Fannie Mae was criticised by financial regulators and could have to restate its earnings by up to $9bn (£4.6bn). It is America's second largest financial institution.
Recent investigations have exposed extensive accounting errors at Fannie Mae, which supplies funds to America's $8 trillion mortgage market. Last week, the firm was admonished by the Securities and Exchange Commission which said it had made major errors in its financial reporting.
The financial regulator said Fannie Mae would have to raise substantial new capital to restore its balance sheet. Analysts said the SEC's criticism made it impossible for Fannie Mae's senior executives to remain. Mr Raines, head of the Office of Management and Budget under President Clinton, has taken early retirement while Mr Howard has also stepped down, the company said on Tuesday. KPMG, Fannie Mae's independent auditor, will also be replaced. "By my early retirement, I have held myself accountable," Mr Raines said in a statement.
Fannie Mae was found to have violated accounting rules relating to derivatives - financial instruments used to hedge against fluctuations in interest rates - and some pre-paid loans. As a result, it could be forced to restate $9bn in earnings over the past four years, effectively wiping out a third of the company's profits since 2001. Although not making loans directly to buyers, Fannie Mae is the largest single player in the mortgage market, underwriting half of all US house purchases. The firm operates under charter from the US Congress. It has faced stinging criticism from Congressional leaders who held hearings into its finances earlier this year and from government regulator, the Office of Federal Housing Enterprise Oversight (OFHEO). "We are encouraged that the board's announcement signals a new culture and a new direction for Fannie Mae," Armando Falcon, OFHEO director said. The problems afflicting Fannie Mae are just the latest to hit the US mortgage industry. Freddie Mac, the country's other largest mortgage firm, was forced to restate its earnings by $4.4bn last year and pay a $125m fine after an investigation of its books. | business |
Cannabis hopes for drug firm
A prescription cannabis drug made by UK biotech firm GW Pharmaceuticals is set to be approved in Canada.
The drug is used to treat the central nervous system and alleviate the symptoms of multiple sclerosis (MS). A few weeks ago, shares in GW Pharma lost a third of their value after UK regulators said they wanted more evidence about the drug's benefits. But now Canadian authorities have said the Sativex drug will be considered for approval.
Approximately 50,000 people in Canada have been diagnosed with MS and 85,000 people are suffering from the condition in the UK. Many patients already smoke cannabis to relieve their symptoms.
Now, GW Pharma's Sativex mouth spray could be legally available to MS sufferers in Canada within the next few months. This will be the first time a cannabis-based drug has been approved anywhere in the world, representing a landmark for GW Pharma and for patients with MS. Final approval in Canada should now be little more than a formality, analysts said, and the company expects full approval for Sativex early in 2005. "We are delighted to receive this qualifying notice from Health Canada and look forward to receiving regulatory approval for Sativex in Canada in the early part of 2005," said GW Pharma executive chairman Dr Geoffrey Guy.
The UK government granted GW Pharma a licence to grow the cannabis plant for medical research purposes. Satifex consists of a cannabis extract containing tetrahydrocannabinol and cannabidiol, a cocktail that has also proved effective in treating patients with arthritis. Thousands of plants are grown at a secret location somewhere in the English countryside. Despite hopes of regulatory approval last year, a series of delays has put back Sativex's launch in the UK. The latest news sent shares in GW Pharma up 8.5p, or 8.1%, to 113.5p. | business |
Bush to get 'tough' on deficit
US president George W Bush has pledged to introduce a "tough" federal budget next February in a bid to halve the country's deficit in five years.
The US budget and its trade deficit are both deep in the red, helping to push the dollar to lows against the euro and fuelling fears about the economy. Mr Bush indicated there would be "strict discipline" on non-defence spending in the budget. The vow to cut the deficit had been one of his re-election declarations. The federal budget deficit hit a record $412bn (£211.6bn) in the 12 months to 30 September and $377bn in the previous year.
"We will submit a budget that fits the times," Mr Bush said. "It will provide every tool and resource to the military, will protect the homeland, and meet other priorities of the government." The US has said it is committed to a strong dollar. But the dollar's weakness has hit European and Asian exporters and lead to calls for US intervention to boost the currency. Mr Bush, however, has said the best way to halt the dollar's slide is to deal with the US deficit. "It's a budget that I think will send the right signal to the financial markets and to those concerned about our short-term deficits," Mr Bush added. "As well, we've got to deal with the long-term deficit issues." | business |
House prices drop as sales slow
House prices fell further in November and property sale times lengthened as rate rises took their toll, the Royal Institute of Chartered Surveyors found.
A total of 48% of chartered surveyor estate agents reported lower prices in the three months to November - the highest level in 12 years. Meanwhile the number of sales dropped 32% to an average of 22 per surveyor. The amount of unsold properties on their books rose for the sixth month in a row to an average of 67 properties. "The slowdown occurring in the market has given buyers more power to negotiate, but this time of year is traditionally a quiet one," RICS housing spokesman Ian Perry said. "The decision by the Bank of England not to increase interest rates further and the healthy economy is allowing confidence to consolidate."
The figures support recent data from the government and other bodies which all point to a slowdown in the housing market. On Monday, the Council of Mortgage Lenders, British Bankers Association and Building Societies Association all said mortgage lending was slowing. The figures were published as another survey by property website Rightmove said the average asking price of a home fell by more than £600 from £190,329 in November to £189,733 in December. Around the UK, the Midlands and South saw the biggest price falls, while London prices fell but at less than the national rate. In Scotland, where prices have remained on an upward path, increases were more "moderate", RICS added. But the news failed to dent confidence that sales will recover in future, with surveyors at their most optimistic in a year - as new purchase inquiries stabilised despite holding at lower levels. "Sales usually pick up in the New Year and I am confident this year will be no exception," Mr Perry added. Looking ahead, the group is anticipating a quiet start to 2005 with the market picking up in the second half - prompting a 3% rise in prices over the coming 12 months. | business |
Fresh hope after Argentine crisis
Three years after Argentina was hit by a deadly economic crisis, there is fresh hope.
The country's economy is set to grow about 8% this year after seeing 9% growth last year, a sharp turnaround from 2002 when output fell 11%. The unemployment rate is improving, too: It is set to slip below 13% by the end of the year, down from 20% in May 2002. True, problems remain, but the overall picture is one of vast improvement. Even the International Monetary Fund (IMF) admits this. "The Argentine authorities are proud, should be proud, of the strong performance of the economy," Thomas Dawson, an IMF director, said earlier this month.
Argentina has made a remarkable recovery from a hideous and lengthy recession which in 2001 culminated in the government halting debt repayments to its private creditors. The debt default sparked a deep and prolonged economic crisis which, at least initially, was made worse by the government's decisions. Pension payments were halted and bank accounts frozen as part of austerity measures introduced by the government to deal with the country's massive debts. In response, angry crowds of ordinary Argentines took to the streets where dozens of lives were lost in clashes with the police. Two presidents and at least three finance minister resigned in less than a month. Argentina was on the brink of collapse. The fix was found in the currency markets with the abandonment of the peso's decade-long peg to the US dollar in February 2002. The subsequent devaluation saw thousands of people's life savings disappear. Scathes of companies went bust. "Three years ago, every sector [of the economy] was hit by the crisis," said entrepreneur Drayton Valentine. It really was dire.
But since then, the general mood on the ground has improved dramatically, in part because the devaluation helped attract fresh direct investment from abroad and stimulate business within Brazil. "Agriculture and tourism are helping," said entrepreneur Drayton Valentine.
Mr Valentine, who was born in the United States but grew up in Argentina, was fortunate: At the time of the crisis, his savings were held in dollar accounts abroad. But now he is using his money to help with the start-up a trading company. He explained that initially, his firm is going to export building materials to Spain and United States. Then, he would like to diversify to other areas, depending on the market. "Locally there is a sense of recovery, many companies are exporting now," he said, noting that a lot of firms, which were closed during the crisis, are re-opening.
But not all that shines is gold. Argentina is still burdened by its failure to pay private creditors at the end of 2001. President Nestor Kirchner's administration is still trying to hammer out an agreement with the creditors, but with the debts' nominal value standing at around $100bn it is not proving easy. Debt defaults make further lending agreements both difficult and expensive to negotiate. Argentina's current offer implies that the creditors would get just 25 cents for each dollar they are owed, according to the creditors. Understandably, they want more and until they do, both they and others are loath to continue lending. For President Kirchner, this proves a hopeless challenge. Real losses have been suffered and somebody has to pay, observed Jack Boorman, adviser to IMF's managing director, Rodrigo Rato. "Everyone needs to keep in mind the enormous cost on the part of both creditors and the Argentine society and people that will have been endured by the time a settlement is reached," he said. "The cost is enormous, and continues to be paid, and will not be reversed by any restructuring."
With the international negotiations being troubled, it is of little help to President Kirchner that the domestic situation remains strained as well.
This is partly because there are still bank account holders who are waiting to recover some of their deposits. "The situation is bad for those who had previously chosen to save in Argentina, " said Carlos Baez Silva, president of AARA, an association that represents bank account and bond holders. Few people have recovered more than about half their savings, Mr Baez Silva estimated, pointing out that many of the savers who have lost out are pensioners or others who once trusted the government, people who set aside money for the future in the belief that their investment would be safe. "A lot of them invested in good faith," he said. "The Argentine state responded by taking most of their investments." The affair has made Mr Baez Silva disillusioned with the country's legal system. On occasion, the Supreme Court has ruled against the interests of the people he represents, he says, insisting that the system cannot be trusted. "People have to deposit their money in the banks, not necessarily because they trust them but because crime is so high that people cannot have their money in their homes beneath their mattresses." Mr Valentine, who was born in the United States but grew up in Argentina, agreed. "If I have to save pesos [the local currency] there is not much problem, but I will think twice before I deposit dollars in a bank". | business |
Disney settles disclosure charges
Walt Disney has settled charges from US federal regulators that it failed to disclose how family members of directors were employed by the company.
The media giant was not fined by the Securities and Exchange Commission, but has agreed to refrain from any future violations of securities law. Disney failed to tell investors that between 1999 and 2001 it employed three adult children of three then directors. The firm has neither admitted nor denied wrongdoing in the settlement.
The three Disney directors in question in the central matter of the SEC's investigation - Reveta Bowers, Stanley Gold and Raymond Watson - have all since left the company, with Ms Bowers and Mr Watson both retiring, and Mr Gold quitting in 2003. Their children were paid between $60,000 (£30,800) and $150,000 a year, with shareholders not being informed. The SEC also found that Disney did not disclose that a 50% Disney-owned subsidiary company - Lifetime - employed the wife of current Disney director John Bryson, and that she earned more than $1m a year. Louise Bryson remains with Lifetime.
Disney also failed to disclose payments to Air Shamrock, an airline owned by Mr Gold and fellow former Disney directors Roy Disney. Finally, Disney also did not reveal that it provided more than $200,000 annually for office space, secretarial services, and a leased car and driver to former director Thomas Murphy. "Shareholders have a significant interest in information regarding relationships between the company and its directors," said SEC deputy enforcement director Linda Thomsen. "Failure to comply with the SEC's disclosure rules in this area impedes shareholders' ability to evaluate the objectivity and independence of directors." | business |
Putin backs state grab for Yukos
Russia's president has defended the purchase of Yukos' key production unit by state-owned oil firm Rosneft, saying it followed free market principles.
Vladimir Putin said it was quite within the rights of a state-owned company to ensure its interests were met. Rosneft bought 100% of Baikal Finance Group, in a move that amounts to the renationalisation of a major chunk of Russia's booming oil industry. Rosneft will now control about 16% of Russia's total crude oil output. Yukos share jumped in Moscow, climbing as much as 50% before being suspended.
Rosneft is already in the process of merging with Gazprom, the world's biggest gas company, a move that will see Gazprom return to majority state-ownership.
Baikal was the surprise buyer of oil and gas giant Yukos's main production division at a forced auction on Sunday. "Everything was done by market methods," Mr Putin said at his year-end press conference in Moscow. Shedding some light on the Kremlin's motivation, Mr Putin referred to a period of so-called "cowboy capitalism" that followed the collapse of the Soviet Union.
He said privatisations carried out in the early 1990s had involved trickery, including law breaking, by people seeking to acquire valuable state property. "Now the state, using market methods, is safeguarding its interests. I think this is quite normal," the Russian president said. A Rosneft spokesman has said the acquisition is part of its plan to build a "balanced, national energy corporation."
The latest announcement comes after more than a year of wrangling that has pushed Yukos, one of Russia's biggest companies to the brink of collapse. The Russian government put Yukos's Yuganskneftegas subsidiary up for sale last week after hitting the company with a $27bn (£14bn) bill for back taxes and fines.
Analysts say that Yukos's legal attempts to block the auction by filing for bankruptcy protection in the US are probably what caused this week's cloak-and-dagger dealings. Gazprom, the company originally tipped to buy Yuganskneftegas, was banned from taking part in the auction by a US court injunction. By selling the Yukos unit to little-known Baikal and then to Rosneft, Russia is able to circumvent a host of tricky legal landmines, analysts said. "You cannot sue the Russian government," said Eric Kraus, a strategist at Moscow's Sovlink Securities. "The Russian government has sovereign immunity." "The government is renationalising Yuganskneftegas."
Even so, analysts reckon that the saga still has a long way to go. The Rosneft announcement came just hours after Yukos accused Gazprom of illegally taking part in Sunday's auction. It has said it will be seeking damages of $20bn. The claim was made at the latest hearing in the US bankruptcy court in Houston, Texas, where Yukos, had filed for Chapter 11 bankruptcy protection. If found in contempt of the US court order blocking the auction, Gazprom could face having foreign assets seized. Yukos' lawyers had also been expected to try to have Baikal's assets frozen. Lawyers claimed the auction was illegal because Yukos - with an office in Houston - had filed for bankruptcy and therefore its assets were under the protection of US law which has worldwide jurisdiction. Further muddying the waters is a merger between Rosneft and Gazprom which authorities have said will go ahead as planned. | business |
Troubled Marsh under SEC scrutiny
The US stock market regulator is investigating troubled insurance broker Marsh & McLennan's shareholder transactions, the firm has said.
The Securities and Exchange Commission has asked for information about transactions involving holders of 5% or more of the firm's shares. Marsh has said it is co-operating fully with the SEC investigation. Marsh is also the focus of an inquiry the New York attorney-general into whether insurers rigged the market. Since that inquiry was launched in October, Marsh has replaced its chief executive and held a boardroom shake-out to meet criticism by lessening the number of company executives on the board. Prosecutors allege that Marsh - the world's biggest insurance broker - and other US insurance firms may have fixed bids for corporate cover. This is the issue at the heart of the inquiry by New York's top law officer, Eliot Spitzer, and a separate prosecution of five insurers by the State of California. The SEC's investigation into so-called related party transactions includes dealings in the Trident Funds, managed by MMC Capital, the company's private equity firm. Marsh's new chief executive, Michael Cherkasky, is trying to negotiate a settlement with Mr Spitzer. Mr Spitzer has built up a reputation as a fierce critic and campaigner against corporate America's misdeeds.
The uncertainty unleashed by the scandal has prompted three credit rating agencies - Standard & Poor's, Moody's and Fitch - to downgrade Marsh in recent weeks. According to the Financial Times, insurance analysts are now questioning whether Marsh will be able to maintain its strong record of earning growth as they draw up forecasts for the first quarter of next year. Doubts also exist over how much the company may have to pay regulators and lawyers to put the scandal behind. | business |
US firm pulls out of Iraq
A US company has pulled out of a major contract to rebuild Iraq's transport system after attacks on reconstruction efforts, Pentagon officials have said.
Contrack International, of Arlington, Virginia, heads a coalition of firms working on a series of schemes. Its withdrawal from the $325m (£170m) contract in November is thought to be the largest cancellation to date. Contrack said "the original scope of work that was envisioned could not be executed in a cost-effective manner". But the firm denied reports it was withdrawing completely from Iraq. "Members of the joint venture including Contrack are committed to the ongoing reconstruction efforts, are actively working in Iraq and continue to look for new construction opportunities in the country," it said in a statement. The Pentagon's Project and Contract Office (PCO) in Baghdad said it had taken over Contrack's management of the subcontractors working on the transportation projects.
US firms and their workers have been targets of attacks, and security concerns are said to be a major reason for the slow pace of reconstruction in Iraq. Of the $18.4bn in reconstruction funds approved by Congress, less than $2bn has been spent. Lt Col Eric Schnaible of the PCO told the Associated Press news agency Contrack's withdrawal from the transportation contract was a "mutually agreed-to separation" and did not indicate a movement by US companies to leave Iraq. "Some parts of the country are a whole lot more permissive than others," he added. "Where we can get the work done, good things are happening." | business |
Boeing secures giant Japan order
Boeing is to supply Japan Airlines with up to 50 of its forthcoming 7E7 planes in a deal that could be worth as much as $6bn (£3.1bn) for the US giant.
Japan Airlines has made a firm order for 30 of the aircraft, at $120m each, with the option to buy 20 more. Asia's biggest airline joins Japanese rival All Nippon as one of the first carriers to order the mid-size 7E7, which Boeing says is super-economical. Airbus this week announced the first pre-sale of its 7E7 rival - the A350. Boeing's great European competitor is to sell 10 of its forthcoming A350 to Spanish carrier Air Europe, which has the option to buy two more in a deal that could be worth more than $1.8bn. Both the 7E7 and the A350 are being designed to be as fuel-efficient as possible in the 200- to 300-seat sector, and each will be available in both short and long range versions.
Japan Airlines said it had looked at both aircraft before choosing the 7E7, also known as the Dreamliner. "We chose the 7E7 after carefully considering both it and Airbus' aircraft," said a Japan Airlines spokesman. "The 7E7 fits better for what we needed and it could be delivered when we hoped to get it." Boeing continues to enjoy a dominance over Airbus in Japan, and Japanese companies are taking key roles in building the 7E7. The first 7E7s will be delivered to Japan Airlines in April 2008. Boeing has set itself a target of getting 200 firm commitments for the 7E7 by the end of this year, and has orders for 56 so far. Airbus hopes to have 50 orders in place for the A350 by mid-2005. | business |
Banker loses sexism claim
A former executive at the London offices of Merrill Lynch has lost her £7.5m ($14.6m) sex discrimination case against the US investment bank.
An employment tribunal dismissed Stephanie Villalba's allegations of sexual discrimination and unequal pay. But the 42-year-old won her claim of unfair dismissal, resulting from her sacking in August 2003. Her partial victory is likely to cap her compensation to about £55,000, a tiny fraction of what she asked for. The extent of damages will be assessed in the New Year. The action - the biggest claim heard by an employment tribunal in the UK - had been viewed as something of a test case.
The tribunal decided that Ms Villalba had been unfairly dismissed because, having been removed from a senior post, she was entitled to wait to see if a suitable alternative position could be found in the organisation. Ms Villalba, the former head of Merrill's private client business in Europe, has made no decision on whether to appeal.
A spokesman for her lawyers described the decision as "very disappointing", but pointed to some criticism of Merrill's procedures within the lengthy judgement. The tribunal upheld Ms Villalba's claim of victimisation on certain specific issues, including bullying e-mails in connection with a contract, but said it found no evidence of "laddish culture" at the bank. "We said from the start that this case was about performance not gender," Merrill said in a statement. "Ms Villalba was removed by the very same person who had promoted her into the position and who then replaced her with another woman. "Merrill Lynch is dedicated to creating a true meritocracy where every employee has the opportunity to advance based on their skills and hard work."
Based in London's financial district, Ms Villalba worked for Merrill's global private client business in Europe, investing funds for some of Merrill's most important customers. But in 2003 her employers told her she had no future after 17 years with the company, and she was made redundant. Merrill Lynch denied Ms Villalba's claims and said she was removed from her post because of the extensive losses the firm was suffering on the continent. The firm had told the tribunal that Ms Villalba's division had been losing about $1m a week. Merrill said Ms Villalba lacked the leadership skills to turn around the unit. | business |
Building giant in asbestos payout
Australian building products group James Hardie has agreed to pay $1.1bn (£568m) to victims of asbestos-related diseases.
The landmark deal could see thousands of people suffering from lung diseases - caused by asbestos the company once made - receive compensation. The move follows angry protests after the firm said a previous compensation fund was running out of money. A subsequent New South Wales state inquiry criticised Hardie's actions. In September, the inquiry found that the company had misled the public about the amount of money set aside to cover its asbestos-related liabilities, sparking the resignation of its then chief executive, Peter MacDonald.
Campaigners welcomed news of the preliminary agreement. "This is a momentous day in the fight for victims and their families," said asbestosis sufferer Bernie Banton, who leads a victims' association. "There is still a long way to go, but we are getting there." James Hardie chairwoman, Meredith Hellicar, said the deal provided for a funding arrangement "that is affordable, sensible and workable". "At the end of the day we are dealing with compensation for people who are terminally ill. We don't know exactly how many of them there will be, we don't know over what exact period they will fall ill," she said. However, the deal still has to receive the approval of Hardie's shareholders.
Hardie, which currently makes more than 80% of its revenues in the US, was once Australia's biggest supplier of asbestos building materials. In 2001, the company set up a fund to compensate asbestos victims, but it later admitted the fund was running short of money. A decision by Hardie to move its headquarters to the Netherlands - while remaining a listed company in Australia - provoked a damaging public outcry. Victims groups accusing it of trying to escape its responsibilities by moving abroad, a charge the company denies. Australia's securities watchdog is currently investigating Hardie's former chief executive and former chief financial officer over allegations of misleading investors and the general public. | business |
Police detain Chinese milk bosses
Chinese police have detained three top executives at milk firm Yili, with reports suggesting that they are being investigated for embezzlement.
Yili - full name Inner Mongolia Yili Industrial - confirmed its chairman, chief financial officer and securities representative were all in custody. The company, China's third-largest milk producer, is to hold an emergency meeting to debate the issue. A Yili spokesman said it may now move to oust chairman Zheng Junhuai. The spokesman did not say why the three had been detained by the police. The official Xinhua News Agency said the arrest was linked to alleged embezzlement.
Yili has recently been the subject of intense media speculation over its financial operations. Executives are suspected of wrongly using 417m yuan ($50.4m; £26m) of company funds to support a management buyout back in July 2003. Yili's shares were suspended on Tuesday, having fallen by 10% on Monday. The company and its two main rivals - market leader Mengniu Dairy and second place Bright Dairy - dominate a Chinese milk market that has grown by almost 30% over the past five years. Analysts wondered if the scandal at Yili - the latest to befall Chinese companies this year - could be followed by further revelations of corporate wrongdoing. "Investors wonder if Yili's scandal, one of a slew to be uncovered this year, isn't just the tip of the iceberg," said Chen Huiqin, an analyst at Huatai Securities. | business |
India's Deccan seals $1.8bn deal
Air Deccan has ordered 30 Airbus A320 planes in a $1.8bn (£931m) deal as India's first low-cost airline expands in the fast-growing domestic market.
Air Deccan was set up last year and wants to lure travellers away from the railway network and pricier rivals. The potential of the Indian market has attracted attention at home and abroad. Beer magnate Vijay Mallya recently set up Kingfisher Airlines, while UK entrepreneur Richard Branson has said he is keen to start a local operation.
The country has a population of more than a billion people and many observers feel that it is underserved by airlines. Recently however, the booming economy has boosted personal spending power and helped swell the middle classes and the corporate sector. India's government has given its backing to cheaper and more accessible air travel. "The days of flying being a symbol of only maharajas or the rich are over," the minister for civil aviation Praful Patel said earlier. Infrastructure is being built to handle the expected increase in demand and on Tuesday, Agence France Presse reported that a group led by Germany's Siemens won the contract to build a private airport near Bangalore. India's airports authority and the state government will own 13% each of the finished transport hub. For its part, Air Deccan, set up by army officer and silk farmer Gorur Gopinath, plans to increase its fleet to 60 aircraft within five years. To help finance the expansion the company may sell a 25% stake to an investor for about $50m. When it was set up the firm offered tickets that were 50% cheaper than other Indian airlines. It said it was basing its business model on European firms such as Ireland's Ryanair. | business |
Venezuela and China sign oil deal
Venezuelan president Hugo Chavez has offered China wide-ranging access to the country's oil reserves.
The offer, made as part of a trade deal between the two countries, will allow China to operate oil fields in Venezuela and invest in new refineries. Venezuela has also offered to supply 120,000 barrels of fuel oil a month to China. Venezuela - the world's fifth largest oil exporter - sells about 60% of its output to the United States. Mr Chavez's administration, which has a strained relationship with the US, is trying to diversify sales to reduce its dependence on its largest export market.
China's quick-growing economy's need for oil has contributed to record-high oil prices this year, along with political unrest in the Middle East and supply bottlenecks. Oil prices are finishing the year roughly 30% higher than they were in January 2004.
In 2004, according to forecasts from the Ministry of Commerce, China's oil imports will be 110m tons, up 21% on the previous year. China has been a net importer of oil since the mid 1990's with more than a third of the oil and gas it consumes coming from abroad. A lack of sufficient domestic production and the need to lessen its dependence on imports from the Middle East has meant that China is looking to invest in other potential markets such as Latin America. Mr Chavez, who is visiting China, said his country would put its many of its oil facilities at the disposal of China. Chinese firms would be allowed to operate 15 mature oil fields in the east of Venezuela, which could produce more than one billion barrels, he confirmed. The two countries will also continue a joint venture agreement to produce stocks of the boiler fuel orimulsion. Mr Chavez has also invited Chinese firms to bid for gas exploration contracts which his government will offer next year in the western Gulf of Venezuela. The two countries also signed a number of other agreements covering other industries including mining. | business |
Jarvis sells Tube stake to Spain
Shares in engineering group Jarvis have soared more than 16% on news that it is offloading its stake in London underground consortium Tube Lines.
The sale of the 33% stake to Spain's Ferrovial for £146m ($281m) is a lifeline to Jarvis, which was weighed down by debts of more than £230m. The company recently warned it could go under if it did not secure a refinancing deal by mid-January 2005. But now its banks have agreed to extend its credit facilities until March 2006.
The company also said it had agreed terms over the completion of 14 of its biggest construction projects under the government's Private Finance Initiative (PFI).
Jarvis wants to scale back the division, which has proved too costly and has been blamed for many of its problems. Instead, it plans to focus on UK rail renewal, roads and plant hire work. Madrid-based Ferrovial already holds a 33% stake in Tube Lines, which maintains the Jubilee, Northern and Piccadilly lines. The Spanish group has been keen to snap up more UK infrastructure assets, having bought Amey in 2003. Jarvis said the sale, which raked in more than the £100m analysts had expected, would "substantially" enhance its financial position. "I am now confident that we can now move forward in 2005 towards rebuilding Jarvis and return it to growth as a profitable business," said chief executive Alan Lovell. Shares in Jarvis were up more than 16% to 18 pence by the close of trade on Friday. | business |
Honda wins China copyright ruling
Japan's Honda has won a copyright case in Beijing, further evidence that China is taking a tougher line on protecting intellectual property rights.
A court ruled that Chongqing Lifan Industry Group must stop selling Honda brand motorbikes and said it must pay 1.47m yuan ($177,600) in compensation. Internationally recognized regulation is now a key part of China's plans for developing its economy, analysts said. Beijing also has been threatened with sanctions if it fails to clamp down.
Chinese firms copy products ranging from computer software and spark plugs to baby milk and compact discs. Despite the fact that product piracy is a major problem, foreign companies have only occasionally won cases and the compensation awarded has usually been small. Still, recent rulings and announcements will have boosted optimism that attitudes are changing. Earlier this week China said that in future it will punish violators of intellectual property rights with up to seven years in jail. And on Tuesday, Paws Incorporated - the owner of the rights to Garfield the cat - won a court battle against a publishing house that violated its copyright. Other firms that have taken legal action in China, with varying degrees of success, include Yamaha, General Motors and Toyota.
The problem of piracy is not limited to China, however, and the potential for profit is huge. The European Union estimates that the global trade in pirated wares is worth more than 200bn euros a year (£140bn; $258bn), or about 5% of total world trade. And it is growing. Between 1998 and 2002, the number of counterfeit or pirated goods intercepted at the EU's external borders increased by more than 800%, it said. Last month the EU said it will start monitoring China, Ukraine and Russia to ensure they are going after pirated goods. Other countries on the EU's hit list include Thailand, Brazil, South Korea and Indonesia. Any countries that are not making enough of an effort could be dragged to the World Trade Organisation (WTO), a step that could trigger economic sanctions, the EU warned. | business |
Air Jamaica back in state control
The Jamaican government is regaining control of Air Jamaica in an bid to help the ailing company out of its financial difficulties.
The firm has failed to make money since the state sold a majority stake to hotel tycoon Gordon Stewart in 1994. In common with many carriers, Air Jamaica, with debts of $560m (£291m), has been hit by high fuel costs and the impact of the 11 September attacks. The company will be restructured with the aim of finding a new buyer. "The administration is committed to a viable national airline that will serve as a major catalyst for our economy," said Finance Minister Omar Davies. The 35-year-old airline transports about 55% of all passengers to the island and its pilots are reportedly among the best paid in the industry, with senior members of staff earning in excess of $234,000 a year. | business |
Battered dollar hits another low
The dollar has fallen to a new record low against the euro after data fuelled fresh concerns about the US economy.
The greenback hit $1.3516 in thin New York trade, before rallying to $1.3509. The dollar has weakened sharply since September when it traded about $1.20, amid continuing worries over the levels of the US trade and budget deficits. Meanwhile, France's finance minister has said the world faced "economic catastrophe" unless the US worked with Europe and Asia on currency controls. Herve Gaymard said he would seek action on the issue at the next meeting of G7 countries in February. Ministers from European and Asian governments have recently called on the US to strengthen the dollar, saying the excessively high value of the euro was starting to hurt their export-driven economies. "It's absolutely essential that at the meeting of the G7 our American friends understand that we need coordinated management at the world level," said Mr Gaymard.
Thursday's new low for the dollar came after data was released showing year-on-year sales of new homes in the US had fallen 12% in November - with some analysts saying this could indicate problems ahead for consumer activity.
Commerce Department data also showed consumer spending - which drives two thirds of the US economy - grew just 0.2% last month. The figure was weaker than forecast - and fell short of the 0.8% rise in October. The official US policy is that it supports a strong dollar but many market observers believe it is happy to let the dollar fall because of the boost to its exporters.
The US government has faced pressure from exporter organisations which have publicly stated the currency still has further to fall from "abnormal and dangerous heights" set in 2002. The US says it will let market forces determine the dollar's strength rather than intervene directly. Statements from President Bush in recent weeks highlighting his aim to cut the twin US deficits have prompted slight upturns in the currency. But while some observers said the quiet trade on Thursday had exacerbated small moves in the market, most agree the underlying trend remains downwards. The dollar has now fallen for a third consecutive year and analysts are forecasting a further, albeit less dramatic weakening, in 2005. "I can see it finishing the year around $1.35 and we can see that it's going to be a steady track upward for the euro/dollar in 2005, finishing the year around $1.40," said Adrian Hughes, currency strategist with HSBC in London. | business |
Quake's economic costs emerging
Asian governments and international agencies are reeling at the potential economic devastation left by the Asian tsunami and floods.
World Bank president James Wolfensohn has said his agency is "only beginning to grasp the magnitude of the disaster" and its economic impact. The tragedy has left at least 25,000 people dead, with Sri Lanka, Thailand, India and Indonesia worst hit. Some early estimates of reconstruction costs are starting to emerge. Millions have been left homeless, while businesses and infrastructure have been washed away.
Economists believe several of the 10 countries hit by the giant waves could see a slowdown in growth.
In Sri Lanka, some observers have said that as much as 1% of annual growth may be lost. For Thailand, that figure is much lower at 0.1%. Governments are expected to take steps, such as cutting taxes and increasing spending, to facilitate a recovery.
"With the enormous displacement of people...there will be a serious relaxation of fiscal policy," Glenn Maguire, chief economist for the region at Societe Generale, told Agence France Presse. "The economic impact of it will certainly be large, but it should not be enough to derail the momentum of the region in 2005," he said. "First and foremost this is a human tragedy." India's economy, however, is less likely to slow because the areas hit are some of the least developed. The regional giant has enjoyed strong growth in 2004. But India now faces other problems, with aid workers under pressure to ensure a clean supply of water and sanitation to prevent an outbreak of disease.
Thailand's Prime Minister Thaksin Shinawatra has estimated the destruction at 20bn baht ($510m). Analysts said that figure is likely to rise and the country's tourist industry is likely to be hardest hit. Thailand's fishing and real estate sectors also will be affected by Sunday's 9.0 magnitude earthquake, which sent huge waves from Malaysia to Africa. Malaysia said as many as 1,000 fishermen will be affected and that damage to the industry will be "significant", Agence France Presse reported. Rapid rebuilding will be key to limiting the impact of the tragedy. "In three months, we should rebuild 70% of the damage in the three worst hit provinces," said Juthamas Siriwan, governor of the Tourism Authority of Thailand. The outlook for Sri Lanka is less optimistic, with analysts predicting that the country's tourist industry will struggle to recovery quickly. Tourism is a vital to many developing countries, providing jobs for 19 million people in the south east Asian region, according to the World Travel and Tourism Council (WTTC). | business |
Disaster claims 'less than $10bn'
Insurers have sought to calm fears that they face huge losses after an earthquake and giant waves killed at least 38,000 people in southern Asia.
Munich Re and Swiss Re, the world's two biggest reinsurers, have said exposure will be less than for other disasters. Rebuilding costs are likely to be cheaper than in developed countries, and many of those affected will not have insurance, analysts said. Swiss Re has said total claims are likely to be less than $10bn (£5.17bn). Swiss Re believes that the cost would be substantial but that it is unlikely to be in double-digit billions, the Financial Times reported. Munich Re, the world's largest reinsurance company, said that its exposure is less than 100m euros (£70m; $136m).
At least 10 countries have been affected, with Sri Lanka, Indonesia, India and Thailand among the worst hit. The region's resorts and Western tourists are expected to be among the main claimants.
Lloyds of London told the Financial Times it expected its exposure to be limited to "holiday resorts, personal accident, travel insurance and marine risks". A spokeswoman for Hanover Re, Europe's fifth-largest reinsurance firm, estimated tsunami-related damage claims would be in the low double-digit millions of euros. The company has paid out about 300 million euros (£281m; $400m) to cover damage caused recently by four major hurricanes in the US.
But insurers have not had long to assess the economic impact of the damage and reports of more casualties and destruction are still coming through.
"So many things are unclear, it is just too early to tell," said Serge Troeber, deputy head of Swiss Re's natural disasters department. "You need very complicated processes to estimate damages. Unlike the hurricanes, you can't just run a model." He anticipated that his own company's total claims would be less then those from the hurricanes, which the company put at $640m. Allianz, a leading German insurer, said it did not know yet what its exposure would be. However, it said the tidal waves were unlikely to have a "significant" impact on its business. Zurich Financial said they could not yet assess the cost of the disaster.
The impact on US insurance companies is not expected to be heavy, analysts said.
Most US insurers have relatively little exposure to Asia and those that do, pass on a lot of the risk to reinsurance companies or special catastrophe funds. Insured damage could be a fraction of the "billions of dollars worth of destruction in Sri Lanka, India, Thailand, Indonesia, the Maldive Islands and Malaysia," said Prudential Equity Group insurance analyst Jay Gelb. "US insurers are likely to have only minimal to no exposure. It's more likely the Bermuda-based reinsurance [companies] might have some exposure," said Paul Newsome, an insurance analyst at AG Edwards & Co.
Many of the affected countries, such as Indonesia, Sri Lanka or the Maldives, do not usually buy insurance for these kinds of disasters, said a US-based insurance expert. Early estimates from the World Bank put the amount of aid needed for the worst affected countries including Sri Lanka, India, Indonesia and Thailand, at about $5bn (£2.6bn), similar to the cash offered to Central America after Hurricane Mitch.
Mitch killed about 10,000 people and caused damage of about $10bn in 1998. But the cost of the tsunamis on the individuals involved is incalculable. "We cannot fathom the cost of these poor societies and the nameless fishermen and fishing villages ... that have just been wiped out. Hundreds of thousands of livelihoods have gone," said Jan Egeland, head of the UN Office for the Coordination of Humanitarian Affairs. Tourists cutting short their holidays in affected areas may suffer a financial impact too. The Association of British insurers warned that travel insurance does not normally cover cutting short a holiday. It said loss of possessions will usually be covered, but the Association stressed the importance of checking the wording of travel policies. | business |
India-Pakistan peace boosts trade
Calmer relations between India and Pakistan are paying economic dividends, with new figures showing bilateral trade up threefold in the summer.
The value of trade in April-July rose to $186.3m (£97m) from $64.4m in the same period in 2003, the Indian Government said. Nonethless, the figures represent less than 1% of India's overall exports. But business is expected to be boosted further from 2006 when the South Asian Free Trade Area Agreement starts. Both countries eased travel and other restrictions as part of the peace process aimed at ending nearly six decades of hostilities.
Sugar, plastics, pharmaceutical products and tea are among the major exports from India to its neighbour, while firms in Pakistani have been selling fabrics, fruit and spices. "If the positive trend continues, two-way trade could well cross half a billion dollars this fiscal year," India's federal commerce Minister Kamal Nath said. According to official data, the value of India's overall exports in the current fiscal year is expected to reach more than $60bn, while in Pakistan's case it is set to hit more than $12bn. Meanwhile, the Indian Government said the prospects for the country's booming economy remained "very bright" despite a "temporary aberration" this year. Its mid-year economic review forecasts growth of 6-6.5% in 2004, compared with 8.2% in 2003. Higher oil prices, the level of tax collections, and an unfavourable monsoon season affecting the farm sector had hurt the economy in April-September, it said. | business |
US to probe airline travel chaos
The US government is to investigate two airlines- US Airways and Delta Air Lines' Comair subsidiary - after travel chaos over the Christmas weekend.
Staff calling in sick at US Airways and computer failures at Comair left 30,000 passengers stranded and 10,000 pieces of baggage undelivered. US Airways is in Chapter 11 bankruptcy protection for the second time in two years, and battling to cut costs. It is currently trying to negotiate pay cuts with flight and baggage staff.
Transportation Secretary Norman Mineta said he was "deeply concerned" at the disruption to passengers, and ordered a thorough investigation. Comair's computer breakdown plunged its flight-crew scheduling system into disarray. Altogether, some 1,100 flights were cancelled over the holiday long weekend. Mr Mineta said it was important to understand "what happened, why it happened and whether the carriers properly planned for the holiday travel period and responded appropriately to consumer needs in the aftermath".
Adding to the atmosphere of chaos were mountains of luggage left to pile up when a third of US Airways' baggage handling staff called in sick. There was also a shortage of US Airways flight attendants, with nearly a fifth saying they were too sick to work, leading to many flight cancellations. However, union officials denied there had been a deliberate "sickout". They said that many people have flu at this time of year and that the airline is chronically understaffed.
US Airways ended up cancelling over 100 flights on Christmas Day, stranding passengers in as many as 119 airports. Ground crews at US Airways, the seventh-largest US airline, which is now in Chapter 11 bankruptcy protection, face a court-imposed pay cut next month. The airline needs to negotiate other paycuts if it is to find a route out of bankruptcy. It is looking for paycuts totalling $800m.
"US Airways has a full-scale employee mutiny on its hands," commented Michael Boyd, an industry consultant. Disruptions to flight schedules could discourage customers from flying with US Airways, reducing revenues. US Airways had to cancel approximately 65 flights on Thursday, 180 on Friday, 140 on Saturday, 43 on Sunday and 15 on Monday, said industry officials. The airline said it was "embarrassed by the situation" and "deeply regrets any inconvenience caused to customers," The probe will focus on the industry's compliance with a 1999 agreement aimed at improving the quality of passenger service that has so far allowed airlines to avoid congressionally-mandated standards. Analysts said the Christmas chaos cast doubt on US Airway's ability to emerge from bankruptcy - and was likely to worsen the finances of troubled Delta, parent of Comair. Comair "deeply regrets the inconvenience to all of our customers caused by the severe winter storm in the Ohio River Valley during the busy holiday season, exacerbated by problems with the airline's crew scheduling system, causing additional flight delays and cancellations," the Delta subsidiary said in a statement. | business |
S Korean lender faces liquidation
Creditors of South Korea's top credit card firm have said they will put the company into liquidation if its ex-parent firm fails to back a bail-out.
LG Card's creditors have given LG group until Wednesday to sign up to a $1.1bn rescue package. The firm avoided bankruptcy thanks to a $4.5bn bail-out in January 2004, which gave control to the creditors. LG Group has said any package should reflect the firm's new ownership, and it will not accept an unfair burden. At least seven million people in South Korea use LG Card's plastic for purchases.
LG Card's creditors have threatened parent group LG Group with penalties if it fails to respond to their demands.
"Creditors would seek strong financial sanctions against LG Group if LG Card is liquidated," said Yoo Ji-chang, governor of Korean Development Bank (KDB) - one of the card firm's major creditors. LG Group has said providing further help to the credit card issuer could hurt its corporate credibility and could spark shareholder lawsuits. It says it wants "fair and reasonable guidelines" on splitting the financial burden with the creditors, who now own 99.3% of LG Card. The creditors have asked the government to mediate to avoid any risk to the stability of financial markets, KDB said. Analysts believe a compromise is likely. "LG Group knows the impact on consumer demand and the national economy from a liquidation of LG Card," said Kim Yungmin, an equity strategist at Dongwon Investment Trust Management.
LG Card almost collapsed in 2003 due to an increase in overdue credit card bills after the bursting of a credit bubble. The firm returned to profit in September 2004, but now needs a capital injection to avoid being delisted from the Korea Stock Exchange. The exchange can delist a company if its debt exceeds its assets for two years running. LG card's creditors fear that such a move would triggered massive debt redemption requests that could bankrupt the firm, which owes about $12.05bn. "Eventually, LG Group will have to participate, but they have been stalling to try to earn better concessions," said Mr Kim. | business |
Dollar hits new low versus euro
The US dollar has continued its record-breaking slide and has tumbled to a new low against the euro.
Investors are betting that the European Central Bank (ECB) will not do anything to weaken the euro, while the US is thought to favour a declining dollar. The US is struggling with a ballooning trade deficit and analysts said one of the easiest ways to fund it was by allowing a depreciation of the dollar. They have predicted that the dollar is likely to fall even further.
The US currency was trading at $1.364 per euro at 1800 GMT on Monday. This compares with $1.354 to the euro in late trading in New York on Friday, which was then a record low.
The dollar has weakened sharply since September when it traded about $1.20 against the euro. It has lost 7% this year, while against the Japanese yen it is down 3.2%. Traders said that thin trading levels had amplified Monday's move. "It's not going to take much to push [the dollar] one way or the other," said Grant Wilson of Mellon Bank. Liquidity - a measure of the number of parties willing to trade in the market - was about half that of a normal working day, traders said. | business |
Mild winter drives US oil down 6%
US oil prices have fallen by 6%, driven down by forecasts of a mild winter in the densely populated northeast.
Light crude oil futures fell $2.86 to $41.32 a barrel on the New York Mercantile Exchange (Nymex), and have now lost $4 in five days. Nonetheless, US crude is still 30% more expensive than at the beginning of 2004, boosted by growing demand and bottlenecks at refineries. Traders ignored the possible effects of Asia's tidal waves on global supplies.
Instead, the focus is now on US consumption, which is heavily influenced in the short term by the weather. "With the revised milder temperatures... I'm more inclined to think we'll push lower and test the $40-40.25 range," said John Brady of ABN AMRO. "The market definitely feels to be on the defensive." Statistics released last week showed that stockpiles of oil products in the US had risen, an indication that severe supply disruptions may not arise this winter, barring any serious incident. Oil prices have broken records in 2004, topping $50 a barrel at one point, driven up by a welter of worries about unrest in Iraq and Saudi Arabia, rising demand and supply bottlenecks. London's International Petroleum Exchange remained closed for the Christmas holiday. | business |
Share boost for feud-hit Reliance
The board of Indian conglomerate Reliance has agreed a share buy-back, to counter the effects of a power struggle in the controlling family.
The buy-back is a victory for chairman Mukesh Ambani, whose idea it was. His brother Anil, the vice-chairman, said had not been consulted and that the buy-back was "completely inappropriate and unnecessary". The board hopes the move will reverse a 13% fall in Reliance's shares since the feud became public last month. The company has been fractious since founder Dhirubhai Ambani died in 2002, leaving no will. "Today's round has gone to [Mukesh], there is no doubt about it," said Nanik Rupani, president of the Indian Merchants Chamber, a Bombay-based traders' body. The company plans to buy back 52 million shares at 570 rupees (£6.80; $13) apiece, a premium of more than 10% to its current market price. | business |
Giant waves damage S Asia economy
Governments, aid agencies, insurers and travel firms are among those counting the cost of the massive earthquake and waves that hammered southern Asia.
The worst-hit areas are Sri Lanka, India, Indonesia and Thailand, with at least 23,000 people killed. Early estimates from the World Bank put the amount of aid needed at about $5bn (£2.6bn), similar to the cash offered Central America after Hurricane Mitch. Mitch killed about 10,000 people and caused damage of about $10bn in 1998. World Bank spokesman Damien Milverton told the Wall Street Journal that he expected an aid package of financing and debt relief.
Tourism is a vital part of the economies of the stricken countries, providing jobs for 19 million people in the south east Asian region, according to the World Travel and Tourism Council (WTTC). In the Maldives islands, in the Indian ocean, two-thirds of all jobs depend on tourism.
But the damage covers fishing, farming and businesses too, with hundreds of thousands of buildings and small boats destroyed by the waves. International agencies have pledged their support; most say it is impossible to gauge the extent of the damage yet. The International Monetary Fund (IMF) has promised rapid action to help the governments of the stricken countries cope.
"The IMF stands ready to do its part to assist these nations with appropriate support in their time of need," said managing director Rodrigo Rato. Only Sri Lanka and Bangladesh currently receive IMF support, while Indonesia, the quake's epicentre, has recently graduated from IMF assistance. It is up to governments to decide if they want IMF help. Other agencies, such as the Asian Development Bank, have said that it is too early to comment on the amount of aid needed. There is no underestimating the size of the problem, however. The United Nations' emergency relief coordinator, Jan Egeland, said that "this may be the worst national disaster in recent history because it is affecting so many heavily populated coastal areas... so many vulnerable communities. "Many people will have [had] their livelihoods, their whole future destroyed in a few seconds." He warned that "the longer term effects many be as devastating as the tidal wave or the tsunami itself" because of the risks of epidemics from polluted drinking water.
Insurers are also struggling to assess the cost of the damage, but several big players believe the final bill is likely to be less than the $27bn cost of the hurricanes that battered the US earlier this year.
"The region that's affected is very big so we have to check country-by-country what the situation is", said Serge Troeber, deputy head of the natural disasters department at Swiss Re, the world's second biggest reinsurance firm. "I should assume, however, that the overall dimension of insured damages is below the storm damages of the US," he said. Munich Re, the world's biggest reinsurer, said: "This is primarily a human tragedy. It is too early for us to state what our financial burden will be." Allianz has said it sees no significant impact on its profitability. However, a low insurance bill may simply reflect the general poverty of much of the region, rather than the level of economic devastation for those who live there.
The International Federation of the Red Cross and Red Crescent Societies told the Reuters news agency that it was seeking $6.5m for emergency aid.
"The biggest health challenges we face is the spread of waterborne diseases, particularly malaria and diarrhoea," the aid agency was quoted as saying. The European Union has said it will deliver 3m euros (£2.1m; $4.1m) of aid, according to the Wall Street Journal. The EU's Humanitarian Aid Commissioner, Louis Michel, was quoted as saying that it was key to bring aid "in those vital hours and days immediately after the disaster". Other countries also are reported to have pledged cash, while the US State Department said it was examining what aid was needed in the region. Getting companies and business up and running also may play a vital role in helping communities recover from the weekend's events.
Many of the worst-hit areas, such as Sri Lanka, Thailand's Phuket island and the Maldives, are popular tourist resorts that are key to local economies.
December and January are two of the busiest months for the travel in southern Asia and the damage will be even more keenly felt as the industry was only just beginning to emerge from a post 9/11 slump. Growth has been rapid in southeast Asia, with the World Tourism Organisation figures showing a 45% increase in tourist revenues in the region during the first 10 months of 2004. In southern Asia that expansion is 23%. "India continues to post excellent results thanks to increased promotion and product development, but also to the upsurge in business travel driven by the rapid economic development of the country," the WTO said. "Arrivals to other destinations such as... Maldives and Sri Lanka also thrived." In Thailand, tourism accounts for about 6% of the country's annual gross domestic product, or about $8bn. In Singapore the figure is close to 5%. Tourism also brings in much needed foreign currency. In the short-term, however, travel companies are cancelling flights and trips. That has hit shares across Asia and Europe, with investors saying that earnings and economic growth are likely to slow. | business |
Asia shares defy post-quake gloom
Thailand has become the first of the 10 southern Asian nations battered by giant waves at the weekend to cut its economic forecast.
Thailand's economy is now expected to grow by 5.7% in 2005, rather than 6% as forecast before tsunamis hit six tourist provinces. The full economic costs of the disaster remain unclear. In part, this is because of its scale, and because delivering aid and recovering the dead remain priorities. But Indonesian, Indian and Hong Kong stock markets reached record highs on Wednesday, suggesting that investors do not fear a major economic impact.
The highs showed the gap in outlook between investors in large firms and individuals who have lost their livelihoods.
Investors seemed to feel that some of the worst-affected areas - such as Aceh in Indonesia - were so under-developed that the tragedy would little impact on Asia's listed companies, according to analysts. "Obviously with a lot of loss of life, a lot of time is needed to clean up the mess, bury the people and find the missing. But it's not necessarily a really big thing in the economic sense," said ABN Amro chief Asian strategist Eddie Wong. India's Bombay Stock Exchange inched slightly above its previous record close on Wednesday. Expectations of strong corporate earnings in 2005 drove the Indonesian stock exchange in Jakarta to a record high on Wednesday. In Hong Kong, the Hang Seng index may be benefiting in part from the potential for its listed property companies to gain from rebuilding contracts in the tsunami-affected regions of South East Asia. In Sri Lanka, some economists have said that as much as 1% of annual growth may be lost. Sri Lanka's stock market has fallen about 5% since the weekend, but it is still 40% higher than at the start of 2004.
Thailand may lose 30bn baht (£398m; $768m) in earnings from tourism over the next three months, according to tourism minister Sontaya Kunplome.
In the affected provinces, he expects the loss of tourism revenue to be offset by government reconstruction spending. Thailand intends to spend a similar sum - around 30bn baht - on the rebuilding work. "It will take until the fourth quarter of next year before tourist visitors in Phuket and five other provinces return to their normal level," said Naris Chaiyasoot, director general at the ministry's fiscal policy office. In the Maldives the cost of reconstruction could wipe out economic growth, according to a government spokesman. "Our nation is in peril here," said Ahmed Shaheed, the chief government spokesman. He estimated the economic cost of the disaster at hundreds of millions of dollars. The Maldives has gross domestic product of $660m. "It won't be surprising if the cost exceeds our GDP," he said. "In the last few years, we made great progress in our standard of living - the United Nations recognised this. Now we see this can disappear in a few days, a few minutes." Shaheed noted that investment in a single tourist resort - the economic mainstay - could run to $40m. Between 10 and 12 of the 80-odd resorts have been severely damaged, and a similar number have suffered significant damage. However, many experts, including the World Bank, have pointed out that it is still difficult to assess the magnitude of the disaster and its likely economic impact. | business |
Israeli economy picking up pace
Israel's economy is forecast to grow by 4.2% in 2004 as it continues to emerge from a three-year recession.
The main driver of the faster-than-expected expansion has been exports, with tourism seeing a strong rebound, the statistical office said. The economy is benefiting from a quieter period in Palestinian-Israeli violence and a pick-up in global demand for technology products. The outlook is better than it has been for a number of years, analysts said.
Many companies have focused on cost cutting and greater efficiency, while the government has been trying to trim public spending and push through reforms. The growth figures come about despite a strike earlier this year by about 400,000 public sector worker which closed banks, hospitals, postal services and transport facilities. Growth did slow in the second half, but only slightly. Exports for the year rose by 14%, while tourist revenues were up by 30%. Imports gained by 13%, signalling that domestic demand has picked up again. In 2003, imports declined by 1.8%. In 2003, the economy expanded by 1.3% | business |
S Korea spending boost to economy
South Korea will boost state spending next year in an effort to create jobs and kick start its sputtering economy.
It has earmarked 100 trillion won ($96bn) for the first six months of 2005, 60% of its total annual budget. The government's main problems are "slumping consumption and a contraction in the construction industry". It aims to create 400,000 jobs and will focus on infrastructure and home building, as well as providing public firms with money to hire new workers.
The government has set an economic growth rate target of 5% for next year and hinted that would be in danger unless it took action. "Internal and external economic conditions are likely to remain unfavourable in 2005," the Finance and Economy Ministry said in a statement.
It blamed "continuing uncertainties such as fluctuating oil prices and foreign exchange rates and stagnant domestic demand that has shown few signs of a quick rebound". In 2004, growth will be between 4.7% and 4.8%, the ministry said. Not everyone is convinced the plan will work. "Our primary worry centres on the what we believe is the government's overly optimistic view that its front loading of the budget will be enough to turn the economy around," consultancy 4Cast said in a report.
The problem facing South Korea is that many consumers are reeling from the effects of a credit bubble that only recently burst. Millions of South Koreans are defaulting on their credit card bills, and the country's biggest card lender has been hovering on the verge of bankruptcy for months. As part of its spending plans, the government said it will ask firms to "roll over mortgage loans that come due in the first half of 2005" . It also pledged to look at ways of helping families on low incomes.
The government voiced concern about the effect of redundancies in the building trade. "Given the economic spill over and employment effect in the construction sector, a sharp downturn in the construction industry could have other adverse effects," the ministry said.
As a result, South Korea will give private companies also will be given the chance to build schools, hospitals, houses and other public buildings. It also will look at real estate tax system. Other plans on the table include promoting new industries such as bio-technology and nano-technology, as well as offering increased support to small and medium sized businesses. "The focus will be on job creation and economic recovery, given that unfavourable domestic and global conditions are likely to dog the Korean economy in 2005," the ministry said. | business |
Soros group warns of Kazakh close
The Open Society Institute (OSI), financed by billionaire George Soros, has accused Kazakhstan officials of trying to close down its local office.
A demand for unpaid taxes and fines of $600,000 (£425,000) is politically motivated, the OSI claimed, adding that it paid the money in October. The organisation has found itself in trouble after being accused of helping to topple Georgia's former president. It denies having any role, but offices have had to close across the region.
The OSI shut its office in Moscow last year and has withdrawn from Uzbekistan and Belarus. In the Ukraine earlier this year, Mr Soros - who took on the Bank of England in the 1990s - and won, was pelted by protestors. "This legal prosecution can be considered an attempt by the government to force Soros Foundation-Kazakhstan to cease its activities in Kazakhstan and shut its doors for Kazakh citizens and organisations," the OSI said.
The OSI aims to promote democratic and open, market-based societies. Since the break up of the Soviet Union in 1991, Kazakhstan has been dominated by its president Nursultan Abish-uly Nazarbayev. He has powers for life, while insulting the president and officials has been made a criminal offence. The government controls the printing presses and most radio and TV transmission facilities. It operates the country's national radio and TV networks. Recent elections were criticised as flawed and the opposition claimed there was widespread vote rigging. Supporters, however, say he brings much needed stability to a region where Islamic militancy is on the rise. They also credit him with promoting inter-ethnic accord and pushing through harsh reforms. | business |
Deutsche attacks Yukos case
German investment bank Deutsche Bank has challenged the right of Yukos to claim bankruptcy protection in the US.
In a court filing on Tuesday, it said the Russian oil giant has few Texas ties beyond bank accounts and a Texas-based finance chief. Deutsche Bank claimed Yukos had artificially manufactured a legal case to stop the sale of its main asset. It had wanted to help fund Gazprom's plans for a $10bn (£5.18bn) bid for Yukos unit Yuganskneftegas.
Deutsche Bank would have earned large fees from the deal, which could not be carried out because US chapter 11 bankruptcy rules made the Kremlin's auction of Yuganskneftegas on 19 December illegal under US law.
But the US bankruptcy court judge in Texas granted Yukos an injunction that barred Gazprom and its lenders from taking part. Yuganskneftegas will ultimately end up with Gazprom. The winning bidder at the auction was a previously unknown firm, Baikal Finance Group, which was snapped up days later by Rosneft, a Russian oil firm that is in the process of merging with Gazprom. The effect of these transactions is to renationalise Yuganskneftegas. Deutsche Bank contends Yukos filed for bankruptcy earlier this month in Texas in a desperate and unsuccessful bid to stave off the 19 December auction of its top unit by the Russian government, which was in a tax dispute with Yukos.
"This blatant attempt to artificially manufacture a basis for jurisdiction constitutes cause to dismiss this case," Deutsche Bank said in its court filing. Mike Lake, a spokesman for Yukos' lawyers, said on Tuesday that the company stands by its legal action. Yukos is confident of its right to US bankruptcy protection, and "we are prepared to be back in court defending that position again," he said. Yukos has said it intends to seek $20bn in damages from the buyer of Yuganskneftegas once the sale finally goes through. In its filing, Deutsche Bank said Houston was "a jurisdiction in which Yukos owns no real or personal property and conducts no business operations."
It also said the US bankruptcy court should not become involved in "a tax dispute between the Federation and one of its corporate citizens". It suggested the European Court or an international arbitration tribunal were more appropriate jurisdictions for the legal fight between Russia and Yukos. The next hearing in the bankruptcy is expected on 6 January. Analysts believe the tax dispute between the Russian government and Yukos is partly driven by Russian president Vladimir Putin's hostility hostility to the political ambitions of ex-Yukos boss Mikhail Khordokovsky. Mr Khodorkovsky is in jail, and on trial for fraud and tax evasion. | business |
GM in crunch talks on Fiat future
Fiat will meet car giant General Motors (GM) on Tuesday in an attempt to reach agreement over the future of the Italian firm's loss-making auto group.
Fiat claims that GM is legally obliged to buy the 90% of the car unit it does not already own; GM says the contract, signed in 2000, is no longer valid. Press reports have speculated that Fiat may be willing to accept a cash payment in return for dropping its claim. Both companies want to cut costs as the car industry adjusts to waning demand.
The meeting between Fiat boss Sergio Marchionne and GM's Rick Wagoner is due to take place at 1330 GMT in Zurich, according to the Reuters news agency.
Mr Marchionne is confident of his firm's legal position, saying in an interview with the Financial Times that GM's argument "has no legs". The agreement in question dates back to GM's decision to buy 20% of Fiat's auto division in 2000. At the time, it gave the Italian firm the right, via a 'put option', to sell the remaining stake to GM. In recent weeks, Fiat has reiterated its claims that this 'put' is still valid and legally binding. However, GM argues that a Fiat share sale made last year, which cut GM's holding to 10%, together with asset sales made by Fiat have terminated the agreement.
Selling the Fiat's car-making unit may not prove so simple, analysts say, especially as it is a company that is so closely linked to Italy's industrial heritage. Political and public pressure may well push the two firms to reach a compromise. "We are not expecting Fiat to exercise its put of the auto business against an unwilling GM at this point," brokerage Merrill Lynch said in a note to investors, adding that any legal battle would be protracted and damaging to the business. "As far as we are aware, the Agnelli family, which indirectly controls at least 30% of Fiat, has not given a firm public indication that it wants to sell the auto business. "Fiat may be willing to cancel the 'put' in exchange for money." | business |
Record year for Chilean copper
Chile's copper industry has registered record earnings of $14.2bn in 2004, the governmental Chilean Copper Commission (Cochilco) has reported.
Strong demand from China's fast-growing economy and high prices have fuelled production, said Cochilco vice president Patricio Cartagena. He added that the boom has allowed the government to collect $950m in taxes. Mr Cartagena said the industry expects to see investment worth $10bn over the next three years.
"With these investments, clearly we are going to continue being the principle actor in the mining of copper. It's a consolidation of the industry with new projects and expansions that will support greater production." Australia's BHP Billiton - which operates La Escondida, the world's largest open pit copper mine - is planning to invest $1.9bn between now and 2007, while state-owned Codelco will spend about $1bn on various projects. Chile, the biggest copper producer in the world, is now analyzing ways of to keep prices stable at their current high levels, without killing off demand or leading customers to look for substitutes for copper. The copper price reached a 16-year high in October 2004. Production in Chile is expected rise 3.5% in 2005 to 5.5 million tonnes, said Mr Cartagena. Cochilco expects for 2005 a slight reduction on copper prices and forecasts export earnings will fall 10.7%. | business |
US consumer confidence up
Consumers' confidence in the state of the US economy is at its highest for five months and they are optimistic about 2005, an influential survey says.
The feel-good factor among US consumers rose in December for the first time since July according to new data. The Conference Board survey of 5,000 households pointed to renewed optimism about job creation and economic growth. US retailers have reported strong sales over the past 10 days after a slow start to the crucial festive season.
According to figures also released on Tuesday, sales in shopping malls in the week to 25 December were 4.3% higher than in 2003 following a last minute rush. Wal-Mart, the largest US retailer, has said its December sales are expected to be better than previously forecast because of strong post-Christmas sales.
It is expecting annual sales growth of between 1% and 3% for the month. Consumer confidence figures are considered a key economic indicator because consumer spending accounts for about two thirds of all economic activity in the United States. "The continuing economic expansion, combined with job growth, has consumers ending this year on a high note," said Lynn Franco, director of the Conference Board's consumer research centre. "And consumers' outlook suggests that the economy will continue to expand in the first half of next year." The overall US economy has performed strongly in recent months, prompting the Federal Reserve to increase interest rates five times since June. | business |
Cash gives way to flexible friend
Spending on credit and debit cards has overtaken cash spending in the UK for the first time.
The moment that plastic finally toppled cash happened at 10.38am on Wednesday, according to the Association for Payment Clearing Services (Apacs) Apacs chose school teacher Helen Carroll, from Portsmouth, to make the historic transaction. The switch over took place as she paid for her groceries in the supermarket chain Tesco's Cromwell Road branch.
Mrs Carroll was born in the same year that plastic cards first appeared in the UK. "I pay for most things with my debit card, with occasional purchases on one of my credit cards," said Mrs Carroll, who teaches at Peel Common Infants School in Gosport.
Spending patterns for the year and estimates for December led Apacs to conclude that 10.38am was the time that plastic would finally rule the roost. Shoppers in the UK are expected to put £269bn on plastic cards during the whole of 2004, compared with £268bn paid with cash, Apacs said. When the first plastic cards appeared in the UK in June 1966, issued by Barclaycard, but only a handful of retailers accepted them and very few customers held them. "But in less than 40 years, plastic has become our most popular way to pay, due to the added security and flexibility it offers," said Apacs spokeswoman Jemma Smith. "The key driver has been the introduction of debit cards, which now account for two-thirds of plastic card transactions and are used by millions of us every day." | business |
Go-ahead for Balkan oil pipeline
Albania, Bulgaria and Macedonia has given the go ahead for the construction of a $1.2bn oil pipeline that will pass through the Balkan peninsula.
The project aims to allow alternative ports for the shipping of Russian and Caspian oil, that normally goes through Turkish ports. It aims to transport 750,000 daily barrels of oil. The pipeline will be built by the US-registered Albanian Macedonian Bulgarian Oil Corporation (AMBO). The 912km pipeline will run from the Bulgarian port of Burgas, over the Black Sea to the Albanian city of Vlore on the Adriatic coast, crossing Macedonia.
The project was conceived in 1994 but it was delayed because of the lack of political support. By signing the agreement on Tuesday, the prime ministers of Bulgaria, Albania and Macedonia have overcome the problem. "This is one of the most important infrastructure projects for regional, EU, and Euro-Atlantic integration for the western Balkans," said Albanian Prime Minister Fatos Nano. According to Pat Ferguson, President of AMBO, work on the pipeline will begin in 2005 and it is expected to be ready in three or four years. He added that the company had already raised about $900m from the Overseas Private Investment Corporation (OPIC) - a US development agency - the Eximbank and Credit Suisse First Boston, among others. The project has also the support of the European Union. Analysts have said that oil companies like ChevronTexaco, Exxon Mobil and British Petroleum would be happy to find alternative routes to the Bosphorus and Dardanelles Straits. | business |
Durex maker SSL awaits firm bid
UK condom maker SSL International has refused to comment on reports it may be subject to a takeover early in 2005.
A Financial Times report said business intelligence firm GPW was understood to be starting due diligence work on SSL International, for a corporate client. An spokesman for SSL, which makes the famous Durex brand of condom, would not to comment on "market speculation". However the news sent shares in SSL, which also makes Scholl footwear, up more than 6%, or 16.75 pence to 293.5p.
The FT said most the high-profile firm that might woo SSL was Anglo-Dutch household products group Reckitt Benckiser. Eighteen months ago Reckitt Benckiser was at the centre of a rumoured takeover bid for SSL - but that came to nothing. Other firms that have been seen as would-be suitors include Kimberly-Clark, Johnson & Johnson, and private equity investors. Analysts have seen SSL as a takeover target for years. It sold off its surgical gloves and antiseptics businesses for £173m to a management team in May. SSL was formed by a three-way merger between Seton Healthcare, footwear specialists Scholl and condom-maker London International Group. Its other brands include Syndol analgesic, Meltus cough medicine, Sauber compression hosiery and deodorant products, and Mister Baby. | business |
Nasdaq planning $100m-share sale
The owner of the technology-dominated Nasdaq stock index plans to sell shares to the public and list itself on the market it operates.
According to a registration document filed with the Securities and Exchange Commission, Nasdaq Stock Market plans to raise $100m (£52m) from the sale. Some observers see this as another step closer to a full public listing. However Nasdaq, an icon of the 1990s technology boom, recently poured cold water on those suggestions.
The company first sold shares in private placements during 2000 and 2001. It technically went public in 2002 when the stock started trading on the OTC Bulletin Board, which lists equities that trade only occasionally. Nasdaq will not make money from the sale, only investors who bought shares in the private placings, the filing documents said. The Nasdaq is made up shares in technology firms and other companies with high growth potential. It was the most potent symbol of the 1990s internet and telecoms boom, nose-diving after the bubble burst. A recovery in the fortunes of tech giants such as Intel, and dot.com survivors such as Amazon has helped revive its fortunes. | business |
WMC says Xstrata bid is too low
Australian mining firm WMC Resources has said it is worth up to 30% more than a hostile 7.4bn Australian dollar ($5.8bn; £3bn) bid by rival Xstrata.
There is now pressure on Swiss-based Xstrata to increase its takeover offer. A report from investment firm Grant Samuel in WMC defence documents values WMC shares at A$7.17 to A$8.24, against Xstrata's bid of A$6.35 a share. Analysts said the defence documents provided more details on WMC, and may trigger a possible rival bid. "If a bid is going to emerge it is probably likely in the next one to two weeks," said Daiwa Securities analyst Mark Pervan. He said the valuation would put increased pressure on Xstrata to look at "sweetening" its offer. Marc Gonsalves, an executive at Xstrata, said: "We will review the information contained in the target's statement over the next week or so." He added: "While we will review the assumptions made by Grant Samuel in detail, we are extremely sceptical of their conclusion, and suggest that WMC shareholders take extreme care in presuming that these optimistic assumptions are capable of being realised."
Last month Australia's competition watchdog said it would not oppose the purchase of WMC by Zurich and London-based Xstrata. On Tuesday, WMC chairman Tommie Bergman said in a statement the directors believed it was in shareholders' best interest to reject the offer. He said WMC would pursue "value-creating options" provided by a portfolio of "world class assets". And WMC chief executive Andrew Michelmore claimed the Xstrata offer was aimed at creating value for Xstrata's shareholders, and was not being made for the benefit of WMC's shareholders. Grant Samuel said its valuation of WMC was based on lower average prices for nickel, copper and uranium than current market levels. "Any longer term commodity price improvements would only improve our outlook," Mr Michelmore said.
In 2003 Xstrata acquired Australia's largest copper miner - MIM Holdings. WMC Resources is the world's third-largest producer of concentrated nickel, and also a miner of copper and uranium. It owns the Olympic Dam mine in South Australia, which contains about one-third of the world's known uranium resources and is also the world's fourth largest copper mine. Xstrata is a global mining giant with operations in Australia, South Africa, Spain, Germany, Argentina and the UK. Its core products are copper, coking coal, thermal coal, ferrochrome, vanadium and zinc. It also has growing businesses in gold, lead and silver. | business |
Takeover offer for Sunderland FC
Bob Murray, chairman of Sunderland FC, has launched a £1.5m ($2.8m) bid for the club after buying broadcaster BSkyB's stake in the business.
Mr Murray is already Sunderland's leading shareholder, holding a 37.6% stake, and now hopes to take full control of the Championship side. Mr Murray said the club would find it easier to attract more investment by having a single majority owner. Sunderland delisted its shares from the stock market in August.
A lifetime Sunderland supporter and board director since 1984, Mr Murray agreed to buy BSkyB's 4.76% holding in the Wearside club on Tuesday - taking his stake to 42.3%. Under stock market rules, Mr Murray is required to make an offer for the remaining shares that he does not already own at the same price paid for the BSkyB holding of 31p a share.
Should the offer be fully accepted, Mr Murray said he expected to pay a maximum of £1.53m for the remaining shares. He also stressed that fans who wanted to keep in touch with the club's financial affairs could retain a small number of shares, enabling them to attend annual meetings. "The football sector is experiencing significant changes and uncertainty," Mr Murray said in a statement. "The recent speculation surrounding Malcolm Glazer and Manchester United has shown the unsettling effect possible where there are a number of disparate interests," he added. "I believe that this offer will strengthen the company and remove the potential for that type of uncertainty."
Sunderland were relegated from the Premiership in 2003 but are currently pushing for promotion. The club managed to reduce its losses last year from £20.6m to £1.2m after selling a host of leading players. However, the club's turnover dropped sharply from £42.5m to £28.5m over the same period, because of a fall in broadcast revenues. BSkyB bought its stake in Sunderland in 1999 as part of a five year media partnership deal. The deal expired last month. | business |
Warning over US pensions deficit
Taxpayers may have to bail out the US agency that protects workers' pension funds, leading economists have warned.
With the Pension Benefit Guaranty Corporation (PBGC) some £23bn (£12m) in deficit, the Financial Economists Roundtable (FER) wants Congress to act. Instead of taxpayers having to pick up the bill, the FER wants Congressmen to change the PBGC's funding rules. The FER says firms should not have been allowed to reduce the insurance premiums they pay into the PBGC fund. The FER blames this on a 2004 law, in a statement signed by several members, who include Nobel economics laureate William Sharpe. It said it was "dismayed" at the situation and wants Congress to overturn the legislation.
Cash-strapped US companies, including those in the airline, car-making and steel industries, had argued in favour of the 2004 rule change, claiming that funding the insurance premiums adequately would force them to have to cut jobs. "With a little firmer hand on the pensions issues in the US, I think that Congress could avoid having to turn to the taxpayer and instead turn the obligations back onto the companies that deserve to pay them," said Professor Dennis Logue, dean of Price College of Business at the University of Oklahoma. The PBGC was founded in 1974 to protect workers' retirement rights. Its most recent action came last week when it took control of the pilots' pension scheme at United Airlines. With United battling bankruptcy, the carrier had wanted to use the money set aside for pensions to finance running costs. The company has an estimated $2.9bn hole in its pilots' pension scheme, which the PBGC will now guarantee. | business |
Beer giant swallows Russian firm
Brewing giant Inbev has agreed to buy Alfa-Eco's stake in Sun Interbrew, Russia's second-largest brewer, for up to 259.7m euros ($353.3m; £183.75m).
Alfa-Eco, the venture capital arm of Russian conglomerate Alfa Group, has a one-fifth stake in Sun Interbrew. The deal gives Inbev, the world's biggest beermaker, near-total control over the Russian brewer. Inbev bought out another partner in August 2004. Inbev brands include Bass, Stella Artois, Hoegaarden and Staropramen. It employs 77,000 people, running operations in over 30 countries across the Americas, Europe and Asia Pacific.
The Leuven-based brewery said it would own 97.3% of the voting shares and 98.8% of the non-voting shares of Sun Interbrew. The deal is expected to be completed in the first quarter of 2005. Inbev was formed in August 2004 when Belgium's Interbrew bought Brazilian brewer Ambev. Sun Interbrew, which employs 8,000 staff, owns breweries in eight Russian cities - Klin, Ivanovo, Saransk, Kursk, Volzhsky, Omsk, Perm and Novocheboksarsk. There are also three breweries in Ukraine, in the cities of Chernigov, Nikolaev and Kharkov. | business |
US manufacturing expands
US industrial production increased in December, according to the latest survey from the Institute for Supply Management (ISM).
Its index of national manufacturing activity rose to 58.6 last month from 57.8 in November. A reading above 50 indicates a level of growth. The result for December was slightly better than analysts' expectations and the 19th consecutive expansion. The ISM said the growth was driven by a "significant" rise in the new orders. "This completes a strong year for manufacturing based on the ISM data," said chairman of the ISM's survey committee. "While there is continuing upward pressure on prices, the rate of increase is slowing and definitely trending in the right direction."
The ISM's index of national manufacturing activity is compiled from monthly responses of purchasing executives at more than 400 industrial companies, ranging from textiles to chemicals to paper, and has now been above 50 since June 2003. Analysts expected December's figure to come in at 58.1. The ISM manufacturing index's main sister survey - the employment index - eased to 52.7 in December from 57.6 in November, while its "prices paid" index, measuring the cost to businesses of their inputs, also eased to 72.0 from 74.0. The ISM's "new orders" index rose to 67.4 from 61.5. | business |
Singapore growth at 8.1% in 2004
Singapore's economy grew by 8.1% in 2004, its best performance since 2000, figures from the trade ministry show.
The advance, the second-fastest in Asia after China, was led by growth of 13.1% in the key manufacturing sector. However, a slower-than-expected fourth quarter points to more modest growth for the trade-driven economy in 2005 as global technology demand falls back. Slowdowns in the US and China could hit electronics exports, while the tsunami disaster may effect the service sector.
Economic growth is set to halve in Singapore this year to between 3% and 5%. In the fourth quarter, the city state's gross domestic product (GDP) rose at an annual rate of 2.4%. That was up from the third quarter, when it fell 3.0%, but was well below analyst forecasts. "I am surprised at the weak fourth quarter number. The main drag came from electronics," said Lian Chia Liang, economist at JP Morgan Chase. Singapore's economy had contracted over the summer, weighed down by soaring oil prices. The economy's poor performance in the July to September period followed four consecutive quarters of double-digit growth as Singapore bounced back strongly from the effects of the deadly Sars virus in 2003. | business |
Madagascar completes currency switch
Madagascar has completed the replacement of its Malagasy franc with a new currency, the ariary.
From Monday, all prices and contracts will have to be quoted in the ariary, which was trading at 1,893 to the US dollar. The Malagasy franc, which lost almost half its value in 2004, is no longer legal tender but will remain exchangeable at banks until 2009. The phasing out of the franc, begun in July 2003, was intended to distance the country from its past under French colonial rule and address the problem of the large amount of counterfeit francs in circulation. "It's above all a question of sovereignty," Reuters quoted a central bank official as saying. "It is symbolic of our independence from the old colonial ways. Since we left the French monetary zone in 1973 we should have our own currency with its own name." The ariary was the name of a pre-colonial currency in the Indian Ocean island state. | business |
Quiksilver moves for Rossignol
Shares of Skis Rossignol, the world's largest ski-maker, have jumped as much as 15% on speculation that it will be bought by US surfwear firm Quiksilver.
The owners of Rossignol, the Boix-Vives family, are said to be considering an offer from Quiksilver. Analysts believe other sporting goods companies may now take a closer look at Rossignol, prompting an auction and pushing the sale price higher. Nike and K2 have previously been mentioned as possible suitors.
Rossignol shares touched 17.70 euros, before falling back to trade 7.8% higher at 16.60 euros. European sporting goods companies have seen foreign revenues squeezed by a slump in the value of the US dollar, making a takeover more attractive, analysts said. Companies such as Quiksilver would be able to cut costs by selling Rossignol skis through their shops, they added. The Boix-Vives family is thought to have spent the past couple of years sounding out possible suitors for Rossignol, which also makes golf equipment, snowboards and sports clothing. | business |
Dollar hovers around record lows
The US dollar hovered close to record lows against the euro on Friday as concern grows about the size of the US budget deficit.
Analysts predict that the dollar will remain weak in 2005 as investors worry about the state of the US economy. The Bush administration's apparent unwillingness to intervene to support the dollar has caused further concern. However, trading has been volatile over the past week because of technical and automated trading and light demand. This has amplified reactions to news, analysts said, adding that they expect markets to become less jumpy in January.
The dollar was trading at $1.3652 versus the euro on Friday morning after hitting a fresh record low of $1.3667 on Thursday. One dollar bought 102.55 yen.
Disappointing business figures from Chicago triggered the US currency's weakness on Thursday. The National Association of Purchasing Management-Chicago said its manufacturing index dropped to 61.2, a bigger fall than expected. "There are no dollar buyers now, especially after the Chicago data yesterday," said ABN Amro's Paul Mackel. At the same time, German Chancellor Gerhard Schroeder and Italian Prime Minister Silvio Berlusconi voiced concerns about the strength of the euro. Mr Berlusconi said the euro's strength was "absolutely worrying" for Italian exports. Mr Schroeder said in a newspaper article that stability in foreign exchange markets required a correction of global economic imbalances. Investors will now look towards February's meeting of finance ministers from the G7 industrialised nations in London for clues as to whether central banks will combine forces to stem the dollar's decline. | business |
S Korean credit card firm rescued
South Korea's largest credit card firm has averted liquidation following a one trillion won ($960m; £499m) bail-out.
LG Card had been threatened with collapse because of its huge debts but the firm's creditors and its former parent have stepped in to rescue it. A consortium of creditors and LG Group, a family owned conglomerate, have each put up $480m to stabilise the firm. LG Card has seven million customers and its collapse would have sent shockwaves through the country's economy.
The firm's creditors - which own 99% of LG Card - have been trying to agree a deal to secure its future for several weeks. They took control of the company in January when it avoided bankruptcy only through a $4.5bn bail-out.
They had threatened to delist the company, a move which would have triggered massive debt redemptions and forced the company into bankruptcy, unless agreement was reached on its future funding. "LG Card will not need any more financial aid after this," Laah Chong-gyu, executive director of Korea Development Bank - one of the firm's creditors - said.
The agreement will see some 12 trillion won of debt converted into equity. "The purpose of the capital injection is to avoid delisting and the goal will be met," David Kim, an analyst at Sejong Securities, told Reuters. South Korea's consumer credit market has been slowly recovering from a crisis in 2002 when a credit bubble burst and millions of consumers fell behind on their debt repayments. LG Card returned to profit in September but needed further capital to avoid being thrown off the market. South Korea's stock exchange can delist any firm if its debt exceeds its assets two years running. | business |
Dollar slides ahead of New Year
The US dollar has hit a new record low against the euro and analysts predict that more declines are likely in 2005.
Disappointing economic reports dented the currency, which had been rallying after European policy makers said they were worried about the euro's strength. Earlier on Thursday, the Japanese yen touched its lowest versus the euro on concerns about economic growth in Asia. Currency markets have been volatile over the past week because of technical and automated trading and light demand. This has amplified reactions, analysts said, adding that they expect markets to become less jumpy in January.
"People want to go into the weekend and the New Year positioned for a weaker buck," said Tim Mazanec, director of foreign exchange at Investors Bank and Trust. The dollar slid to a record $1.3666 versus the euro on Thursday, before bouncing back to $1.3636. Against the yen the dollar was trading down at $103.05.
The yen, meanwhile, dropped to 141.60 per euro in afternoon trading. It later strengthened to 140.55. Investors are concerned about the size of the US trade and budget deficits and are betting that George W Bush's administration will allow the dollar to weaken despite saying they favour a strong currency. Also playing on investors' minds are mixed reports about the state of the US economy. On Thursday, disappointing business figures from Chicago brought a sudden end to a rally in the value of the dollar. The National Association of Purchasing Management-Chicago said its index dropped to 61.2, more than analysts had expected. German Chancellor Gerhard Schroeder and Italian Prime Minister Silvio Berlusconi voiced concerns about the strength of the euro. Mr Berlusconi said the euro's strength was "absolutely worrying" for Italian exports. Mr Schroeder said in a newspaper article that stability in foreign exchange markets required a correction of global economic imbalances. | business |
VW considers opening Indian plant
Volkswagen is considering building a car factory in India, but said it had yet to make a final decision.
The German giant said it was studying the possibility of opening an assembly plant in the country, but that it remained only a "potential" idea. Its comments came after the industry minister of India's Andhra Pradesh state said a team of VW officials were due to visit to discuss the plans. B. Satyanarayana said he expected VW to co-sign a memorandum of agreement. Several foreign carmakers, including Hyundai, Toyota, Suzuki and Ford, already have Indian production facilities to meet demand for automobiles in Asia's fourth-largest economy. VW's proposed plant would be set up in the port city of Visakhapatnam on India's eastern coast. An Andhra Pradesh official added that VW had already approved a factory site measuring 250 acres. | business |
Ukraine strikes Turkmen gas deal
Ukraine has agreed to pay 30% more for natural gas supplied by Turkmenistan.
The deal was sealed three days after Turkmenistan cut off gas supplies in a price dispute that threatened the Ukrainian economy. Supplies from Turkmenistan account for 45% of all natural gas imported by Ukraine, which has large coal deposits but no gas fields. Turkmenistan is also trying to strike a similar deal with Russia, which is not so dependent on its gas. Turkmen President Saparmurat Niyazov, who signed the contract, said the Turkmen side agreed to lower the price demanded by $2 per 1,000 cubic metres, bringing it down to $58. But the new price is still $14 higher than the price fixed in the contract for 2004. The head of the Ukrainian state-owned Naftohaz company, Yury Boyko, said he was "fully happy" with the deal. On Friday, Turkmenistan acted on a threat and shut off gas supplies to Ukraine in attempt to bring the price dispute to a head. Mr Niyazov said that his government would insist on the same price for supplies to Russia. Analysts say thay may not happen as Russia, the world's leading gas producer, needs the cheap Turkmen gas only to relieve is state-owned Gazprom from costly investment in the exploration of oil fields in Siberia. Turkmenistan is the second-largest gas producer in the world. | business |
Reliance unit loses Anil Ambani
Anil Ambani, the younger of the two brothers in charge of India's largest private company, has resigned from running its petrochemicals subsidiary.
The move is likely to be seen as the latest twist in a feud between Mr Ambani and his brother Mukesh. Anil, 45, has stepped down as director and vice-chairman of Indian Petrochemicals Corporation (IPC). The company was not available for comment. IPC is 46%-owned by Reliance Industries which in turn is run by Mukesh. Mukesh has spoken of ownership issues between the two brothers, who took over control of the Reliance empire following the death of their father in July, 2002.
Reliance's operations have massive reach, covering textiles, telecommunications, petrochemicals, petroleum refining and marketing, as well as oil and gas exploration, insurance and financial services. The brothers' spat has hogged headlines in India during recent weeks, despite a denial from the family that there was anything wrong. Speculation has been rife about what has triggered the stand-off, with some observers blaming Anil's political ambitions, others the heavy investment by Mukesh and Reliance in a mobile phone venture. Shares of IPC dipped on the news in Mumbai, but recovered to trade almost 6% higher. Reliance shares added 1.7%, while Reliance Energy, headed by Anil, jumped 7%. | business |
India opens skies to competition
India will allow domestic commercial airlines to fly long haul international routes, a move it hopes will stoke competition and drive down prices.
However, only state controlled carriers will be able to fly the lucrative Gulf routes, to countries such as Kuwait and Saudi Arabia, for at least three years. Jet Airways and Air Sahara are the two companies that will benefit initially. India is looking to develop its airline industry as booming economic growth drives demand for travel.
Monica Chadha, BBC Delhi reporter, said air travel in India had increased by almost 20% from the previous year and was expected to rise even further. Infrastructure development is lagging demand, however, and will have to improve. "Most international airports in the country are shabby and ill-equipped to handle heavy air traffic," Ms Chada said, adding that while the Civil Aviation minister has promised to modernise and privatise airports little progress has been made. Steps have been take to move things forward and the government recently changed legislation that limited foreign investment in domestic airlines. It raised the maximum stake holding allowed to 49% from 40%. Local press, meanwhile, have reported that the US and India will start negotiations about adding more routes in January. Jet Airways is India's premier private domestic carrier; Air Sahara is ranked third in the category. | business |
Oil rebounds from weather effect
Oil prices recovered in Asian trade on Tuesday, after falling in New York on milder winter weather across the US.
With winter temperatures staying relatively high in the northern US, a barrel of light crude ended Monday down $1.33 to $42.12. However crude prices have rebounded in Asia, rising to $42.30 a barrel for February delivery. In London, trading of Brent crude was suspended for a public holiday, but the price fell to $39.20 in the Far East.
With milder temperatures expected to continue in the northern parts of the US over the next few days at least, analysts have said the price of oil may fall further - even if the decline was only temporary. "Weather has been the Achilles' heel of this market," said ABN AMRO analyst John Brady. "But it is winter in the northeast. Eventually we'll get another cold blast." Despite a fall of more than $12 a barrel from the record highs reached in late October, the price of crude oil remains almost 30% higher than year-ago levels. Prices rose last week after militant attacks in Riyadh, the capital of Saudi Arabia, briefly renewed fears that the supply chain might be broken in the world's leading crude exporter. "The market was panicked but fears essentially evaporated... since there was no follow-up," said Deborah White, senior economist for energy at SG Securities in Paris. | business |
Ban on forced retirement under 65
Employers will no longer be able to force workers to retire before 65, unless they can justify it.
The government has announced that firms will be barred from 2006 from imposing arbitrary retirement ages. Under new European age discrimination rules, a default retirement age of 65 will be introduced. Workers will be permitted to request staying on beyond this compulsory retirement age, although employers will have the right to refuse. Trade and Industry Secretary Patricia Hewitt said people would not be forced to work longer than they wanted, saying the default age was not a statutory, compulsory retirement age. She said employers would be free to continue employing people for as long as they were competent.
Under age discrimination proposals from the Department of Trade and Industry last year workers were to be allowed to work on till 70 if they wished.
Business leaders had opposed the plan as they said it would be too costly and cumbersome. The British Chambers of Commerce welcomed the latest proposal. "This move today is the best of both worlds," it said. "Employers have the ability to define the end point of the employer-employee relationship and employees have flexibility with a right to request to work past the age of 65." But Age Concern said imposing a retirement age of 65 was "cowardly" and a "complete u-turn". "This makes a mockery of the Government's so-called commitment to outlawing ageism, leaving the incoming age discrimination law to unravel," said Gordon Lishman, director general of Age Concern England . "It is now inevitable that older people will mount legal challenges to the decision using European law." The decision will have no impact on the age at which workers can collect their state pension, the government has said. | business |
Fed warns of more US rate rises
The US looks set for a continued boost to interest rates in 2005, according to the Federal Reserve.
Minutes of the December meeting which pushed rates up to 2.25% showed that policy-makers at the Fed are worried about accelerating inflation. The clear signal pushed the dollar up to $1.3270 to the euro by 0400 GMT on Wednesday, but depressed US shares. "The markets are starting to fear a more aggressive Fed in 2005," said Richard Yamarone of Argus Research. The Dow Jones index dropped almost 100 points on Tuesday, with the Nasdaq also falling as key tech stocks were hit by broker downgrades. The dollar also gained ground against sterling on Tuesday, reaching $1.8832 to the pound before slipping slightly on Wednesday morning.
The release of the minutes just three weeks after the 14 December meeting was much faster than usual, indicating the Fed wants to keep markets more apprised of its thinking. This, too, is being taken in some quarters as a sign of aggressive moves on interest rates to come. The key Fed funds rate has risen 1.25 percentage points during 2004 from the 46-year low of 1% reached not long after the 9/11 attacks in 2001. That long trough "might be contributing to signs of potentially excessive risk-taking in financial markets", said the Federal Open Markets Committee (FOMC), which sets interest rates. The odds now favour a further boost to rates at the next meeting in early February, economists said. But the respite for the dollar, which spent late 2003 being pushed lower against other major currencies by worries about massive US trade and budget deficits, may be short-lived. "You can't rule out a further correction... but we don't think it's a change in direction in the dollar," said Jason Daw at Merrill Lynch. "Nothing fundamental has changed." | business |
Weak end-of-year sales hit Next
Next has said its annual profit will be £5m lower than previously expected because its end-of-year clearance sale has proved disappointing.
"Clearance rates in our end-of-season sale have been below our expectations," the company said. The High Street retailer said it now expected to report annual profits of between £415m and £425m ($779m-798m). Next's shares fell more than 3% following the release of the trading statement.
Next chief executive Simon Wolfson admitted that festive sales were "below where we would expect a normal Christmas to be", but said sales should still top analyst expectations.
Among areas where Next could have done better, Mr Wolfson said menswear ranges were "a little bit too similar to the previous year". Mr Wolfson also said that disappointing pre-Christmas sales were "more to do with the fact that we went in with too much stock rather than (the fact that) demand wasn't there for the stock". Next's like-for-like store sales in the five months from 3 August to 24 December were up 2.9% on a year earlier. This figure is for existing Next stores, which were unaffected by new Next store openings. Like-for-like sales growth at the 49 Next stores directly affected by new store openings in their locality was 0.5%.
Overall sales across both its retail and mail order divisions were up 12.4%, Next said. Its Next Directory mail order division saw sales rise 13.4% during the five-month period. "In terms of all the worries about their trading pre-Christmas, it's a result," said Nick Bubb, an analyst at Evolution Securities. "Profits of around £420m would be well within the comfort zone." However, one dealer, who asked not to be named, told Reuters the seasonal sales performance was "not what people had hoped for". "Christmas has been tough for the whole sector, and this is one of the best retailers," he said. Next's trading statement comes a day after House of Fraser and Woolworths disappointed investors with their figures. | business |
Tate & Lyle boss bags top award
Tate & Lyle's chief executive has been named European Businessman of the Year by a leading business magazine.
Iain Ferguson was awarded the title by US publication Forbes for returning one of the UK's "venerable" manufacturers to the country's top 100 companies. The sugar group had been absent from the FTSE 100 for seven years until Mr Ferguson helped it return to growth. Tate's shares have leapt 55% this year, boosted by firming sugar prices and sales of its artificial sweeteners.
"After years of a sagging stock price and a seven-year hiatus from the FTSE 100, one of Britain's venerable manufacturers has returned to the vaunted index," Forbes said. Mr Ferguson took the helm at the company in 2003, after spending most of his career at consumer goods giant Unilever. Tate & Lyle, which was an original member of the historic FT-30 index in 1935, operates more than 41 factories and 20 more additional production facilities in 28 countries. Previous winners of the Forbes award include Royal Bank of Scotland chief executive Fred Goodwin and former Vodafone boss Chris Gent. | business |
Krispy Kreme shares hit
Shares in Krispy Kreme Doughnuts have taken a dunking on Wall Street after the firm revealed it would have to restate its 2004 financial reports.
The company warned the move would cut its profits by $3.8m to $4.9m (£2m to £2.6m) - or between 6.6% and 8.6%. Krispy Kreme said accounting errors had forced the move, adding that its board of directors made the decision to restate its accounts on 28 December. However, the company was unavailable to comment on why it had delayed the news.
It also warned it might have to further restate results for 2004 and 2005.
Shares in Krispy Kreme sank 14.87% - or $1.83 - to close at $10.48 on the news. The revelation comes just a month after the firm warned earnings would be cut by as much as 7.6% as a result of accounting errors. Krispy Kreme said the latest adjustments involved the way it accounted for the repurchase of three franchise restaurants. It added it would now be reviewing how it accounts for its leases. In a further blow, the firm said it had been advised that some of its franchise owners were not in compliance with their loan agreements, and warned it might need to borrow extra money if it was required to honour agreements on franchisee debts or operating leases.
Krispy Kreme added that it had enough cash to fund its current operations, but it could not borrow any more under its existing agreements. "There are many more questions than answers, especially given increased concerns regarding company liquidity," JP Morgan Securities analyst John Ivankoe said in a research note on the firm. The announcement is the latest blow for the one-time darling of Wall Street, which has lost 80% of its stock value in just over a year. The firm is currently facing Securities and Exchange Commission investigation of its accounts. Shareholders have also launched lawsuits against the group, claiming it made false statements and inflated sales. | business |
Germany nears 1990 jobless level
German unemployment rose for the 11th consecutive month in December - making the year's average jobless total the highest since reunification.
The seasonally adjusted jobless total rose a higher than expected 17,000 to 4.483 million, the Bundesbank said. Allowing for changes in calculating statistics, the average number of people out of work was the highest since 1990 - or a rate of 10.8%. Bad weather and a sluggish economy were blamed for the rise. The increase "was due primarily to the onstart of winter", labour office chief Frank-Juergen Weise said.
Unadjusted, the figures showed unemployment rose 206,900 to 4.64 million - with many sectors such as construction laying off workers amid bad weather. "The three years of stagnation in the German economy came to an end in 2004. But the upturn is still not strong enough" to boost the labour market, Mr Weise added. News of the rise came as government welfare reforms came into force, a move that is expected to see unemployment swell still further in coming months. Under the Hartz IV changes, the previous two tier system of benefits and support for the long term unemployed has been replaced with one flat-rate payout. In turn, that means more people will be classified as looking for work, driving official figures higher.
"Be prepared for a nasty figure for January 2005, about five million unemployed on a non-seasonally adjusted basis," warned HVB Group economist Andreas Rees. But he did add that the numbers should "subside" throughout the year, to remain near 2004's level of 4.4 million jobless. "I don't expect a strong and lasting turnaround until 2006," German Economy minister Wolfgang Clement said. By 2010, however, the Hartz IV reforms should help cut the average jobless rate to between 3% and 5%, he added. Europe's biggest economy has been too weak to create work as it struggles to shake off three years of economic stagnation. In recent months companies such as Adam Opel - the German arm of US carmaker General Motors - and retailer KarstadtQuelle have slashed jobs. | business |
Venezuela identifies 'idle' farms
Venezuelan authorities have identified more than 500 farms, including 56 large estates, as idle as it continues with its controversial land reform policy.
Under a 2001 land law, the government can tax or seize unused farm sites. A further 40,000 farms are yet to be inspected, the state's National Land Institute has told Associated Press. Vice president Jose Vicente Rangel has said farmers and ranchers with their titles in order and their lands productive have "nothing to fear." Critics of the land reform policy claim president Hugo Chavez is trying to enforce a communist-style economic programme that ignores property rights and will damage the country. Land owners claim the National Land Institute has made mistakes in classifying lands as public or private.
But the government - Venezuela's largest land owner - say they are proceeding cautiously to prevent conflicts. In a statement, Mr Rangel said the land reform is not against the constitution, which permits private property, while stressing the efforts are to "vindicate social and economically" years of inequality in the country.
One property in conflict with the government is the El Charcote cattle ranch, run by Agroflora, a subsidiary of the UK food group Vestey. Agriculture minister Arnoldo Marquez told Reuters news agency the site's documents "do not guarantee that this is a private land". Administrators of the ranch, however, have complained that pro-Chavez squatters have taken over 80% of the property in the last four years, and the UK government has asked Venezuelan authorities to resolve the conflict. "You should ask the company when they are going to put their papers in order and hand over the land that is not theirs," said Mr Marquez. | business |
Egypt to sell off state-owned bank
The Egyptian government is reportedly planning to privatise one of the country's big public banks.
An Investment Ministry official has told the Reuters news agency that the Bank of Alexandria will be sold sometime in 2005. The move is seen as evidence of a new commitment by the government to reduce the size of public sector. The official said the government has not yet decided whether the sale will take the form of a public flotation. "The most important thing to decide now is the method - whether by selling shares to the public or to a strategic investor from abroad," he said.
Analysts say the public-sector banks have suited the government's monetary, credit and exchange policies. Nevertheless, the Egyptian government has spoken for years about privatising one of the big four state banks - Banque Misr, National Bank of Egypt, Banque du Caire and Bank of Alexandria. It had been expected one of the smallest of the four big public banks - Bank of Alexandria or Banque du Caire - would be sold first. The announcement reinforces the hopes of investors and international financial bodies for a revival of Egypt's privatisation programme. About 190 state-run companies and facilities were sold off from the early 1990s to 1997. The appointment of Mahmoud Mohieldin, a reform-minded technocrat, to the new post of investment minister in July was taken as a sign that more sell-offs were on the way. Both the IMF and World Bank have urged Egypt to remove obstacles to the development of the private sector which they say has a vital role to play in reducing poverty by expanding the economy. | business |
Wal-Mart to pay $14m in gun suit
The world's largest retailer, Wal-Mart, has agreed to pay a total of $14.5m (£7.74m) to settle a lawsuit over gun sales violations in California.
The lawsuit alleged Wal-Mart committed thousands of gun sales violations in California between 2000 and 2003. The total payment includes $5m in fines and more than $4m to fund state compliance checks with gun laws and prevent ammunition sales to minors. Wal-Mart agreed to suspend firearms sales in its California stores in 2003,
The alleged violations included the sale of guns to 23 people who were not allowed to possess them, and delivering 36 guns to customers who acquired them for people not allowed to own firearms. Although Wal-Mart has suspended firearms sales in the state, California attorney general Bill Lockyer said he wanted to be sure the giant supermarket chain would follow state rules in future. "Wal-Mart's failure to comply with gun safety laws put the lives of all Californians at risk by placing guns in the hands of criminals and other prohibited persons," said Mr Lockyer. "Although Wal-Mart has suspended gun sales in California, this settlement will ensure that it follows state law if it renews sales and will also provide valuable public education about the importance of gun safety." The world's largest retailer has not yet decided whether to resume firearms sales in California, company spokesman Gus Whitcomb said. | business |
Yukos heading back to US courts
Russian oil and gas company Yukos is due in a US court on Thursday as it continues to fight for its survival.
The firm is in the process of being broken up by Russian authorities in order to pay a $27bn (£14bn) tax bill. Yukos filed for bankruptcy in the US, hoping to use international business law to halt the forced sale of its key oil production unit, Yuganskneftegas. The unit was however sold for $9.4bn to state oil firm Rosneft but only after the state auction had been disrupted.
Yukos lawyers now say the auction violated US bankruptcy law. The company and its main shareholders have vowed to go after any company that buys its assets, using all and every legal means. The company wants damages of $20bn, claiming Yuganskneftegas was sold at less than market value. Judge Letitia Clark will hear different motions, including one from Deutsche Bank to throw out the Chapter 11 bankruptcy filing. The German lender is one of six banks that were barred from providing financing to Gazprom, the Russian state-owned company that was expected to win the auction for Yuganskneftegas. Deutsche Bank, which is also an advisor to Gazprom, has called on the US court to overturn its decision to provide Yukos with bankruptcy protection.
Lifting the injunction would remove the uncertainty that surrounds the court case and clarify Deutsche Bank's business position, analysts said.
Analysts are not optimistic about Yukos' chances in court. Russian President Vladimir Putin and the country's legal authorities have repeatedly said that the US has no jurisdiction over Yukos and its legal wranglings. On top of that, the firm only has limited assets in the US. Yukos has won small victories, however, and is bullish about its chances in court. "Do we have an ability to influence what happens? We think we do," said Mike Lake, a Yukos spokesman. "The litigation risks are real," said Credit Suisse First Boston analyst Vadim Mitroshin The dispute with the Russian authorities is partly driven by President Putin's clampdown on the political ambitions of ex-Yukos boss Mikhail Khodorkovsky. Mr Khodorkovsky is in jail on charges of fraud and tax evasion. | business |
Deutsche Boerse set to 'woo' LSE
Bosses of Deutsche Boerse and the London Stock Exchange are to meet amid talk that a takeover bid for the LSE will be raised to £1.5bn ($2.9bn).
Last month, the German exchange tabled a 530 pence-per-share offer for LSE, valuing it at £1.3bn. Paris-based Euronext, owner of Liffe in London, has also said it is interested in bidding for LSE. Euronext is due to hold talks with LSE this week and it is reported to be ready to raise £1.4bn to fund a bid. Euronext chief Jean-Francois Theodore is scheduled to meet his LSE counterpart Clara Furse on Friday. Deutsche Boerse chief Werner Seifert is meeting Ms Furse on Thursday, in the third meeting between the two exchanges since the bid approach in December.
The LSE rejected Deutsche Boerse's proposed £1.3bn offer in December, saying it undervalued the business.
But it agreed to leave the door open for talks to find out whether a "significantly-improved proposal" would be in the interests of LSE's shareholders and customers. In the meantime, Euronext, which combines the Paris, Amsterdam and Lisbon stock exchanges, also began talks with the LSE. In a statement on Thursday, Euronext said any offer was likely to be solely in cash, but added that: "There can be no assurances at this stage that any offer will be made." A deal with either bidder would create the biggest stock market operator in Europe and the second biggest in the world after the New York Stock Exchange.
According to the FT, in its latest meeting Deutsche Boerse will adopt a charm offensive to woo the London exchange. The newspaper said the German suitor will offer to manage a combined cash and equities market out of London and let Ms Furse take the helm. Other reports this week said the Deutsche Boerse might even consider selling its Luxembourg-based Clearstream unit - the clearing house that processes securities transactions. Its ownership of Clearstream was seen as the main stumbling block to a London-Frankfurt merger. LSE shareholders feared a Deutsche Boerse takeover would force them to use Clearstream, making it difficult for them to negotiate for lower transaction fees. | business |
Laura Ashley chief stepping down
Laura Ashley is parting company with its chief executive Ainum Mohd-Saaid.
The clothing and home furnishing retailer said Ms Mohd-Saaid had resigned for personal reasons. Her departure will come into effect on 1 February and follows the departure of co-chief executive Rebecca Navarednam on 1 January. Ms Mohd-Saaid is to be replaced by Lillian Tan, presently a non-executive director of the company and head of a Malaysian retailer.
In a statement issued on Thursday, Laura Ashley thanked Ms Mohd-Saaid for her services to the company. Its shares were down 8.51% to 10.75p in late Thursday morning trading on the London Stock Exchange.
Since 2002, Ms Tan has been managing director and chief executive of Metrojaya, one of the largest retail groups in Malaysia. Laura Ashley, which is due to issue its next trading statement in the next few weeks, has in recent months been hit by reports of poor sales. In October last year, it announced the closure of one of its two Welsh factories. In September, the company had said that its half-year clothing sales had been "below expectations". In recent times, it has put renewed focus on home furnishings rather than clothing, but last September it reported that interim six month losses had risen from £1m to £1.2m, while sales had fallen from £138m to £118m.
Laura Ashley, which floated on the London Stock Exchange for £200m ($376m) in 1995, is majority-owned by Malaysia entrepreneur Dr Khoo Kay Peng. In 1996, its share price was more than 200p. It has long been reported that Dr Khoo intends to take the company private, but he has always denied this. "Laura Ashley is a bit of a shrivelled husk of a company," said retail analyst Nick Bubb of Evolution Securities. "It is all pretty odd with its Malaysian owners seemingly just shuffling the deckchairs." Laura Ashley was founded by its late namesake in Kent in 1955, before moving to Mid Wales in 1961 where it still has its main UK factory. | business |
US Airways staff agree to pay cut
A union representing 5,200 flight attendants at bankrupt US Airways have agreed to a new contract that cuts pay by nearly 10%.
The deal will help the carrier, trying to survive by cutting costs by nearly $1bn (£530m) a year, save about $94m. More than two thirds of its 28,000 staff have now accepted wage cuts. But talks are still continuing with a union representing mechanics, baggage handlers and cleaners, which has so far failed to negotiate a new contract. The seventh largest carrier in the US sought bankruptcy protection for a second time in two years last September. It had been one of the quickest to deal with difficulties faced by the aviation industry after the 9/11 attacks in 2001. But it emerged from Chapter 11 bankruptcy in March 2003 to face competition from low-cost carriers and higher fuel costs. US Airways management has said it may need to start liquidating assets if it does not receive concessions from all staff by the middle of this month. | business |
Delta cuts fares in survival plan
Delta Air Lines is cutting domestic fares by as much as 50% as part of a plan to ensure its financial survival.
Other US carriers, including United, have sought bankruptcy protection, amid high fuel costs and competition from discount carriers. Delta is restructuring in a bid to fight off insolvency. This latest move to boost business has prompted speculation other firms will be forced to match their fares, hurting revenues in the sector. Delta's new SimpliFares were trialled from August last year on tickets from Cincinnati, its second-largest hub.
The airline says no one-way economy fare will now be priced higher than $499 (£264), and no first-class fare will be priced higher than $599. It is also eliminating a Saturday-night stay requirement on discount fares and will give further reductions to customers opting for non-refundable tickets, booking in advance and online. Delta, which lost $646m in the three months to September, was forced to cut 6,900 jobs worldwide as part of its aim to slash $5bn from its costs. In October, it reached a crucial agreement with pilots on pay and conditions and it has also issued new shares to staff in return for wage cuts. Airline shares closed lower on the announcement, with Delta, Continental and American Airlines all falling by more than 7%. "We believe the whole airline industry will now have to move in this direction; this will likely hurt revenue in the short run but could be beneficial in the long run," said analyst Ray Neidl at Calyon Securities. | business |
Profits jump at China's top bank
Industrial and Commercial Bank (ICBC), China's biggest lender, has seen an 18% jump in profits during 2004.
The increase in earnings has allowed the firm to write off bad loans and pave the way for a state bailout and eventual stock-market listing. China is trying to clean up its banking system, which is weighed down by billions of dollars of unpaid loans. It has already pumped $45bn (£24bn) into two of its largest banks, and has identified ICBC as a recipient of aid. ICBC's profits were 74.7bn yuan ($9bn; £4.8bn) in 2004, the bank said in a statement. The percentage of non-performing loans dropped to 19.1%, down about 2 percentage points. ICBC was founded in 1984 and had total assets of 5.3 trillion yuan at the end of 2003. China committed to gradually opening up its banking sector when it joined the World Trade Organisation in 2002. | business |
Green reports shun supply chain
Nearly 20% more UK top 250 firms produced non-financial reports on social and environment issues than last year.
But of the 145 companies reporting, 76% didn't examine their supply chains, says the annual Directions survey. Green groups say putting pressure on supply chains is a major way companies can reduce their environmental impact. The survey is published by corporate social responsibility firm Context and branding firm SalterBaxter.
Blake Lee-Harwood, campaigns director at Greenpeace in the UK, said: "It's fairly meaningless to talk about your company's direction in terms of sustainability without having detailed knowledge of your supply chain. "It's also important to get some kind of independent assessment of your reporting."
Less than a quarter of companies (24%) get their corporate social responsibility (CSR) reports independently verified to provide assurances they are accurate and complete, says the survey. To date there are no set standards for non-financial reporting, although the Global Reporting Initiative, an independent pro-sustainability institution, is planning to establish some. The reports surveyed by Directions are published voluntarily. They are usually called corporate social responsibility (CSR) reports, sustainability reports, or social and environmental reports.
Peter Knight, director of Context, says 24 UK top 250 companies reported for the first time this year and, in general, the quality of reports has improved. "The corporate lexicon of homilies, generalities and soft assurances - fluff - is on its way out. There are less pictures of smiling children and butterflies." The UK government will soon require all quoted companies to report their social and environmental risks in a chapter in their annual reports, called the Operating and Financial Review. The regulation is not expected until 2005 and the first reports under this scheme will not be published before 2006. The US seems to lag Europe in producing corporate social responsibility reports. The majority of European top 50 companies (44) publish them and only 27 of the US top 50. | business |
Tsunami to cost Sri Lanka $1.3bn
Sri Lanka faces a $1.3bn (£691m) bill in 2005 for reconstruction after the tsunami which killed more than 30,000 of its people, its central bank says.
This estimate is preliminary, bank governor Sunil Mendis told reporters, and could rise in 2006. The island state is asking for about $320m from the International Monetary Fund to help pay for relief, he said. The bank has 5bn rupees ($50m; £27m) set aside to lend at a lower interest rate to those who lost property. According to Mr Mendis, half the IMF support could come from a freeze on debt repayments, which would free up resources immediately. The rest could come from a five-year emergency loan. Sri Lanka is hoping for a wider freeze from other creditors.
The Paris Club of 19 creditors meets on 12 January to discuss a debt moratorium for the nations hit by the tsunami, which ravaged south and east Asia on 26 December.
Some 150,000 people across the region are feared to be dead and millions have been left homeless and destitute. A full reckoning of the economic cost to Sri Lanka of the tsunami will not be clear for some time to come. But already it looks likely that growth in the first half of 2005 will slow, Mr Mendis told reporters, although he would not say by how much. One side-effect of the disaster has been that the value of the rupee has risen as foreign funds have flooded into the country. The currency has strengthened 4% since late December, coming close to 100 rupees to the US dollar for the first time in more than six months. | business |
Indian oil firm eyes Yukos assets
India's biggest oil exploration firm, Oil & Natural Gas Corp (ONGC), says it is in talks to buy the former assets of troubled Russian crude producer Yukos.
"We are in touch with the concerned Russian entities about the Yukos assets and other opportunities in Russia," said ONGC chairman Subir Raha. Local press had reported that ONGC was looking to buy 15% of Yukos' former key oil production unit for $2bn (£1bn). Yukos is being broken up by Russian authorities to pay a massive tax bill.
It was forced to sell its key production unit Yuganskneftegas (Yugansk) last month after being hit with a bill of $27bn in unpaid taxes and fines.
State-owned Rosneft now owns Yugansk and Russia has said it will turn the oil producer into a stand-alone firm. Indian oil minister Mani Shankar Aiyar discussed ONGC's plans during a trip to Moscow last year, and the topic came up again during Russian president Vladimir Putin's recent visit to New Delhi. "It would make great sense for us to build on that," said Mr Aiyar. India's oil production has stagnated over recent years, and it is having to look abroad to secure future supplies. India imports about 70% of its total oil consumption. At the same time, India's economy is booming and the country's thirst for oil is so strong that it has helped pushed up the price of crude worldwide.
India produces about 793,000 barrels of oil per day (bpd), little changed since the start of the 1990s, according to oil industry analysts Douglas-Westwood. Consumption, meanwhile, has jumped to 2.4 million bpd, compared with 474,000 bpd in 1973.
"For countries to develop, they have to have access to energy," said John Westwood, managing director of oil industry analysts Douglas-Westwood. India is a "dramatically growing economy that must have access to oil". By buying into Yugansk, ONGC would be able to reduce its dependence on Gulf states for oil imports, Mr Westwood explained, especially as the chances of finding and exploiting resources within India are slim. "We forecast that Indian production will go into significant decline," Mr Westwood said. "By 2020, production may only be at half of today's levels." ONGC, which is majority-owned by the Indian state, already has bought petroleum assets in countries including Vietnam, Sudan and Russia. The company is a partner with Rosneft in the Sakhalin-1 oil field off Russia's Siberian coast.
ONGC is, however, not the only firm interested in Yugansk.
Chinese crude company China National Petroleum has also been mentioned as a possible investor, while on Thursday, Italy refused to rule out an interest. ONGC's interest is the latest twist in a saga that has seen one of the world's biggest oil producers brought to its knees. The dispute is partly driven by President Putin's clampdown on the political ambitions of ex-Yukos boss Mikhail Khodorkovsky, who is currently in jail on charges of fraud and tax evasion. Yukos has been battling the Russian authorities for more than a year and has filed for bankruptcy protection in the US. Analysts have questioned how long it can continue to survive without Yugansk. On Thursday, a US court said it will hear arguments for Yukos' bankruptcy claim to be thrown out on 16 February. Should that happen, Yukos will have little chance of clawing back its assets, analysts said. | business |
Monsanto fined $1.5m for bribery
The US agrochemical giant Monsanto has agreed to pay a $1.5m (£799,000) fine for bribing an Indonesian official.
Monsanto admitted one of its employees paid the senior official two years ago in a bid to avoid environmental impact studies being conducted on its cotton. In addition to the penalty, Monsanto also agreed to three years' close monitoring of its business practices by the American authorities. It said it accepted full responsibility for what it called improper activities.
A former senior manager at Monsanto directed an Indonesian consulting firm to give a $50,000 bribe to a high-level official in Indonesia's environment ministry in 2002. The manager told the company to disguise an invoice for the bribe as "consulting fees".
Monsanto was facing stiff opposition from activists and farmers who were campaigning against its plans to introduce genetically-modified cotton in Indonesia. Despite the bribe, the official did not authorise the waiving of the environmental study requirement. Monsanto also has admitted to paying bribes to a number of other high-ranking officials between 1997 and 2002.
The chemicals-and-crops firm said it became aware of irregularities at a Jakarta-based subsidiary in 2001 and launched an internal investigation before informing the US Department of Justice and the Securities and Exchange Commission (SEC). Monsanto faced both criminal and civil charges from the Department of Justice and the SEC. "Companies cannot bribe their way into favourable treatment by foreign officials," said Christopher Wray, assistant US attorney general. Monsanto has agreed to pay $1m to the Department of Justice, adopt internal compliance measures, and co-operate with continuing civil and criminal investigations. It is also paying $500,000 to the SEC to settle the bribe charge and other related violations. Monsanto said it accepted full responsibility for its employees' actions, adding that it had taken "remedial actions to address the activities in Indonesia" and had been "fully co-operative" throughout the investigative process. | business |