WASHINGTON — Whether it was a shot across the bow or a simple restatement of his boss’s views, Timothy F. Geithner’s assertion that China “manipulates” its currency has complicated a crucial front in President Obama’s efforts to improve America’s relations with the world.
China experts here said there were several other signs that the Obama administration could take a harder line toward Beijing, including Mr. Obama’s emphasis on climate change and the environment in trade negotiations and Secretary of State Hillary Rodham Clinton’s focus on human rights.
The Chinese Ministry of Commerce responded tartly to the charge by Mr. Geithner, Mr. Obama’s nominee for Treasury secretary. “Directing unsubstantiated criticism at China on the exchange-rate issue will only help U.S. protectionism and will not help towards a real solution to the issue,” the ministry said late on Friday in a statement to Agence France-Presse.
China starts off on weaker footing with Mr. Obama than it did with his predecessor, George W. Bush. Mr. Bush and his last Treasury secretary, Henry M. Paulson Jr., cultivated Chinese leaders and refused to call Beijing a manipulator. Mr. Obama has little personal experience of China, and lacks senior advisers with a deep interest in or knowledge of the country. With the American economy in a deep slump, and China trying to ramp up its exports to cushion a sharp slowdown there, experts worry that trade relations between the countries could deteriorate.
If the United States repairs its image in many parts of the world, that could make it harder for the Chinese to present themselves as an alternative to American influence in Asia, Africa, and elsewhere.
“The Chinese are probably one of the few people in the world who were sorry to see President Bush go, and are nervous about his successor,” said Kenneth G. Lieberthal, a visiting fellow at the Brookings Institution who worked on China policy for the Clinton administration.
“They saw the Inaugural Address as having some uncomfortable elements for them,” Mr. Lieberthal said. “They are uneasy about Hillary Clinton. She has, in their assessment, not been a friend of China.”
The Chinese news media played down the significance of Mr. Geithner’s remarks, which were made in writing to the Senate Finance Committee as part of the confirmation process.
Rather than dwell on or analyze the reference to China’s currency, the Chinese official newspaper, The People’s Daily, quoted Mr. Geithner as saying that the currency manipulation issue would take a back seat to working with China to alleviate the global financial crisis. The headline said, “U.S. Treasury secretary-designate vows to deepen U.S.-China economic ties.”
American experts agree that the United States will have to work closely with China to engineer a global recovery, and the two countries have each embarked on costly programs to stimulate their economies. The Obama administration will also depend on China to continue buying Treasury bills and other government debt to finance its $825 billion recovery package.
Yet several things could conspire to spoil that cooperation. The Treasury must decide later in the spring whether to label China a currency manipulator, under a law that requires the administration to report to Congress twice a year on the exchange rate practices of trading partners.
In his written response, Mr. Geithner appeared to leave the administration plenty of wiggle room. “The question is how and when to broach the subject in order to do more good than harm,” he said.
But as a candidate, Mr. Obama took a tough line on China’s practices, saying that Beijing pegged its currency at an artificially low rate and pledging to use diplomatic means to force a change.
“This is not good for American firms and workers, not good for the world, and ultimately likely to produce inflation problems in China itself,” Mr. Obama said in a campaign essay for the American Chamber of Commerce in China.
Advocates for closer ties said they worried that unless the administration developed an overall framework for the relationship, individual events like the Treasury report could dictate the atmosphere.
It is not clear that such a framework exists. Mrs. Clinton was careful to steer clear of currency issues in her testimony to the Senate. In that testimony, she demurred on the question of whether the Obama administration would continue the “strategic economic dialogue,” a semiannual meeting on economic issues between the two countries that was led by Mr. Paulson.
Mrs. Clinton does not have the same extensive history with China that she has had with other countries. She is best known there for a speech she gave in 1995 in Beijing about women’s rights, and some China experts said they worried that her positions on trade and human rights could be a problem. Mr. Obama’s focus on energy and climate change, experts said, could cut both ways. If China and the United States could find ways to cooperate on stemming the growth of greenhouse gases, it could become the cornerstone of the relationship. If not, it could be dangerously disruptive.
Nicholas R. Lardy, an expert on the Chinese economy at the Peterson Institute of International Economics in Washington, said the financial crisis had upended many of the assumptions about the relationship.
China’s currency, he noted, has increased in value in recent months because it is pegged to the dollar, which has risen as investors fled to safe investments. China’s trade surplus with the United States has stopped growing, as American consumers stop buying so many Chinese imports.
C. Fred Bergsten, the Peterson institute’s director, said Mr. Geithner had another target in mind with his remark.
“It was a shot across the bow of Congress,” he said. “The administration is saying, ‘We will be tougher on the Chinese on trade, so you don’t need to pass protectionist legislation.’ ”
Saturday, January 24, 2009
State Bank of India, ICICI Profits Advance on Bond Investments
Jan. 25 (Bloomberg) -- State Bank of India and ICICI Bank Ltd., the nation’s two largest lenders, said third-quarter profit increased after government bonds posted their biggest quarterly gains in at least a decade, boosting investment returns.
State Bank, which accounts for almost a fifth of the nation’s loans, yesterday posted a 37 percent advance in net income to 24.8 billion rupees ($503 million), matching analyst forecasts. At Mumbai-based ICICI, profit rose 3.3 percent to 12.7 billion rupees, more than analysts had expected.
India’s central bank cut interest rates four times in the final three months of 2008 as inflation slowed, helping 10-year bonds complete their best year since 2001. That boost may not sustain banks going forward, as they set aside more funds to cover loan delinquencies by corporate clients and consumers.
“Gains from treasury will be limited as we go ahead,” U.P. Bhat, who manages 43 billion rupees at Canara Robeco Asset Management Co. in Mumbai, said by telephone. “Economic activity is unlikely to pick up before the second-half and banks may find it difficult to increase lending.”
Growth in Asia’s third-largest economy has slowed for two straight quarters, and the government forecasts an expansion of 7 percent in the fiscal year ending March 31, the weakest since 2003, after recording average annual growth of more than 9 percent in the previous three years.
In the most recent quarter, bond holdings buoyed both banks. At ICICI, income from treasury operations, which includes trading in bonds and currencies, climbed more than three-fold from a year earlier to 9.76 billion rupees. At State Bank, also based in Mumbai, treasury income jumped 51 percent climb to 60 billion rupees.
Diverging
In other areas, the performances of the two lenders diverged. State Bank’s deposits climbed 36 percent in the quarter, and advances rose 29 percent, with large companies’ borrowings rising 47 percent and retail credit increasing 27 percent.
ICICI’s deposits fell 9 percent to 2.09 trillion rupees. Advances dropped 1.3 percent, even as loan growth for Indian banks averaged 28 percent in the three months ended Dec. 31, according to central bank data.
State Bank’s gross non-performing assets as a percentage of loans shrank to 2.61 percent, from 2.82 percent a year earlier. The lender increased the funds set aside to cover defaults by 16 percent to 5.15 billion rupees.
ICICI increased its provisions by 33 percent to 10.1 billion rupees.
Bad Debts
“Banks will have to watch out for rise in bad debts, especially from the real estate sector,” said Canara Robeco’s Bhat.
ICICI last year racked up the largest losses tied to the global financial crisis among Indian lenders, leading to a run on the bank in September as depositors grew concerned about the company’s capital adequacy.
ICICI reduced operating expenses by 19 percent during the quarter, without specifying how it did so.
“ICICI will have to cut its rates to once again get competitive,” said R.K. Gupta, who manages 2.5 billion rupees at Taurus Mutual Fund in New Delhi including ICICI shares. Still, “the results are better than expected and will ensure that investor confidence isn’t shattered. The worst seems to be over for the bank.”
ICICI fell 64 percent in 2008, surpassing the 52 percent drop in the nation’s benchmark Sensitive Index and 42 percent decline in State Bank’s stock, as investors shunned the company on concern that it might record bigger losses on overseas investments tied to failed U.S. financial institutions.
ICICI fell 3.8 percent to 363.85 rupees on Jan. 23, valuing the company at 405 billion rupees. The shares have declined 19 percent this year. That compares with a 10 percent retreat in the Sensex.
State Bank declined 4.5 percent to 1,041.5 rupees on Jan. 23, valuing the company at 661 billion rupees. Like ICICI, its shares have fallen 19 percent in 2009.
State Bank, which accounts for almost a fifth of the nation’s loans, yesterday posted a 37 percent advance in net income to 24.8 billion rupees ($503 million), matching analyst forecasts. At Mumbai-based ICICI, profit rose 3.3 percent to 12.7 billion rupees, more than analysts had expected.
India’s central bank cut interest rates four times in the final three months of 2008 as inflation slowed, helping 10-year bonds complete their best year since 2001. That boost may not sustain banks going forward, as they set aside more funds to cover loan delinquencies by corporate clients and consumers.
“Gains from treasury will be limited as we go ahead,” U.P. Bhat, who manages 43 billion rupees at Canara Robeco Asset Management Co. in Mumbai, said by telephone. “Economic activity is unlikely to pick up before the second-half and banks may find it difficult to increase lending.”
Growth in Asia’s third-largest economy has slowed for two straight quarters, and the government forecasts an expansion of 7 percent in the fiscal year ending March 31, the weakest since 2003, after recording average annual growth of more than 9 percent in the previous three years.
In the most recent quarter, bond holdings buoyed both banks. At ICICI, income from treasury operations, which includes trading in bonds and currencies, climbed more than three-fold from a year earlier to 9.76 billion rupees. At State Bank, also based in Mumbai, treasury income jumped 51 percent climb to 60 billion rupees.
Diverging
In other areas, the performances of the two lenders diverged. State Bank’s deposits climbed 36 percent in the quarter, and advances rose 29 percent, with large companies’ borrowings rising 47 percent and retail credit increasing 27 percent.
ICICI’s deposits fell 9 percent to 2.09 trillion rupees. Advances dropped 1.3 percent, even as loan growth for Indian banks averaged 28 percent in the three months ended Dec. 31, according to central bank data.
State Bank’s gross non-performing assets as a percentage of loans shrank to 2.61 percent, from 2.82 percent a year earlier. The lender increased the funds set aside to cover defaults by 16 percent to 5.15 billion rupees.
ICICI increased its provisions by 33 percent to 10.1 billion rupees.
Bad Debts
“Banks will have to watch out for rise in bad debts, especially from the real estate sector,” said Canara Robeco’s Bhat.
ICICI last year racked up the largest losses tied to the global financial crisis among Indian lenders, leading to a run on the bank in September as depositors grew concerned about the company’s capital adequacy.
ICICI reduced operating expenses by 19 percent during the quarter, without specifying how it did so.
“ICICI will have to cut its rates to once again get competitive,” said R.K. Gupta, who manages 2.5 billion rupees at Taurus Mutual Fund in New Delhi including ICICI shares. Still, “the results are better than expected and will ensure that investor confidence isn’t shattered. The worst seems to be over for the bank.”
ICICI fell 64 percent in 2008, surpassing the 52 percent drop in the nation’s benchmark Sensitive Index and 42 percent decline in State Bank’s stock, as investors shunned the company on concern that it might record bigger losses on overseas investments tied to failed U.S. financial institutions.
ICICI fell 3.8 percent to 363.85 rupees on Jan. 23, valuing the company at 405 billion rupees. The shares have declined 19 percent this year. That compares with a 10 percent retreat in the Sensex.
State Bank declined 4.5 percent to 1,041.5 rupees on Jan. 23, valuing the company at 661 billion rupees. Like ICICI, its shares have fallen 19 percent in 2009.
Price Waterhouse Auditors Arrested in Satyam Inquiry
Jan. 24 (Bloomberg) -- PricewaterhouseCoopers LLP’s Indian affiliate, the auditor of Satyam Computer Services Ltd., said two partners were arrested by police as authorities extended the nation’s largest fraud inquiry.
Srinivas Talluri and S. Gopalakrishnan were remanded to judicial custody on charges of “conspiracy and co- participation,” A. Shivanarayana, a police spokesman in Andhra Pradesh state, said from the province’s capital Hyderabad, where Satyam is based. Price Waterhouse said in an e-mailed statement it didn’t know why two partners were detained.
Seven years after the implosion of Enron Corp. led to the dissolution of accounting firm Arthur Andersen LLP, the Satyam case has put PricewaterhouseCoopers in the spotlight. Indian police, fraud squad, markets regulator and accounting body have started investigations after Satyam founder Ramalinga Raju said Jan. 7 that he had fabricated $1 billion of assets.
“Over the last fortnight, the firm has fully cooperated in all inquiries and has provided the documents called for by the Indian authorities,” Price Waterhouse said today in a statement from New Delhi. “We greatly regret that two Price Waterhouse partners have been detained today for further questioning.”
PricewaterhouseCoopers LLP may also face scrutiny in the U.S. after Satyam’s New York-listed equities lost 82 percent of their market value in two weeks. The U.S. Securities and Exchange Commission is investigating whether Satyam misled investors and officials from the SEC plan to coordinate inquiries with counterparts in India.
Fudged Accounts
The auditing firm said Jan. 15 that its reports could no longer be relied on after former chairman Raju said he’d fudged the accounts. The Institute of Chartered Accountants of India, a statutory body which oversees auditors, will report on its investigation into Price Waterhouse on Feb. 11.
Prosecutors allege Satyam padded employee numbers to siphon off cash and forged documents to support fake bank deposits.
Satyam had about 33 billion rupees ($674 million) of “fictitious and non-existent” accounts, public prosecutor K. Ajay Kumar told a hearing on Jan. 22. The company had about 40,000 employees, compared with the 53,000 claimed by Satyam, he said.
India’s biggest corporate fraud investigation is being led by teams from the Andhra Pradesh state police’s criminal investigation department, the markets regulator, the independent accounting body and the government’s serious fraud office.
Separate Entity
Satyam’s state-appointed board has almost arranged funds to help tide over a cash crunch till the end of March, the company said yesterday. The board has hired KPMG and Deloitte Touche Tohmatsu to restate the accounts.
Satyam is struggling to raise cash to pay salaries after Raju said he had falsified accounts for several years. It is also battling to stop off customers from joining State Farm Mutual Automobile Insurance Co. in canceling contracts.
Price Waterhouse has offices in nine Indian cities, according to the firm’s Web site. The Indian operation is a separate legal identity from PricewaterhouseCoopers International Ltd., according to the Web site.
The auditor’s clients include Maruti Suzuki India Ltd., maker of half the cars in the country, and the local units of Colgate-Palmolive Co., the world’s largest toothpaste maker.
PricewaterhouseCoopers LLP has a “vigorous global network” allowing member firms to “operate simultaneously as the most local and the most global of businesses,” the firm says on its Web site. The site also includes a disclaimer that each member firm “is a separate and independent legal entity.”
Larsen & Toubro
Larsen & Toubro Ltd., India’s biggest engineering company, yesterday tripled its stake in Satyam to give it greater say in the rescue of the software exporter.
Larsen bought shares in the open market to triple its holding from 4 percent, Chief Financial Officer Y.M. Deosthalee said in by telephone from Mumbai, where the company is based.
Satyam’s board has short-listed three candidates each for the positions of chief executive officer and chief financial officer and an announcement will be made in the coming week, Satyam said yesterday.
Delays in raising funds and appointing a chief executive officer are costing Satyam customers. At least two of them have given notice about terminating their contracts, board member Kiran Karnik said on Jan. 21.
Srinivas Talluri and S. Gopalakrishnan were remanded to judicial custody on charges of “conspiracy and co- participation,” A. Shivanarayana, a police spokesman in Andhra Pradesh state, said from the province’s capital Hyderabad, where Satyam is based. Price Waterhouse said in an e-mailed statement it didn’t know why two partners were detained.
Seven years after the implosion of Enron Corp. led to the dissolution of accounting firm Arthur Andersen LLP, the Satyam case has put PricewaterhouseCoopers in the spotlight. Indian police, fraud squad, markets regulator and accounting body have started investigations after Satyam founder Ramalinga Raju said Jan. 7 that he had fabricated $1 billion of assets.
“Over the last fortnight, the firm has fully cooperated in all inquiries and has provided the documents called for by the Indian authorities,” Price Waterhouse said today in a statement from New Delhi. “We greatly regret that two Price Waterhouse partners have been detained today for further questioning.”
PricewaterhouseCoopers LLP may also face scrutiny in the U.S. after Satyam’s New York-listed equities lost 82 percent of their market value in two weeks. The U.S. Securities and Exchange Commission is investigating whether Satyam misled investors and officials from the SEC plan to coordinate inquiries with counterparts in India.
Fudged Accounts
The auditing firm said Jan. 15 that its reports could no longer be relied on after former chairman Raju said he’d fudged the accounts. The Institute of Chartered Accountants of India, a statutory body which oversees auditors, will report on its investigation into Price Waterhouse on Feb. 11.
Prosecutors allege Satyam padded employee numbers to siphon off cash and forged documents to support fake bank deposits.
Satyam had about 33 billion rupees ($674 million) of “fictitious and non-existent” accounts, public prosecutor K. Ajay Kumar told a hearing on Jan. 22. The company had about 40,000 employees, compared with the 53,000 claimed by Satyam, he said.
India’s biggest corporate fraud investigation is being led by teams from the Andhra Pradesh state police’s criminal investigation department, the markets regulator, the independent accounting body and the government’s serious fraud office.
Separate Entity
Satyam’s state-appointed board has almost arranged funds to help tide over a cash crunch till the end of March, the company said yesterday. The board has hired KPMG and Deloitte Touche Tohmatsu to restate the accounts.
Satyam is struggling to raise cash to pay salaries after Raju said he had falsified accounts for several years. It is also battling to stop off customers from joining State Farm Mutual Automobile Insurance Co. in canceling contracts.
Price Waterhouse has offices in nine Indian cities, according to the firm’s Web site. The Indian operation is a separate legal identity from PricewaterhouseCoopers International Ltd., according to the Web site.
The auditor’s clients include Maruti Suzuki India Ltd., maker of half the cars in the country, and the local units of Colgate-Palmolive Co., the world’s largest toothpaste maker.
PricewaterhouseCoopers LLP has a “vigorous global network” allowing member firms to “operate simultaneously as the most local and the most global of businesses,” the firm says on its Web site. The site also includes a disclaimer that each member firm “is a separate and independent legal entity.”
Larsen & Toubro
Larsen & Toubro Ltd., India’s biggest engineering company, yesterday tripled its stake in Satyam to give it greater say in the rescue of the software exporter.
Larsen bought shares in the open market to triple its holding from 4 percent, Chief Financial Officer Y.M. Deosthalee said in by telephone from Mumbai, where the company is based.
Satyam’s board has short-listed three candidates each for the positions of chief executive officer and chief financial officer and an announcement will be made in the coming week, Satyam said yesterday.
Delays in raising funds and appointing a chief executive officer are costing Satyam customers. At least two of them have given notice about terminating their contracts, board member Kiran Karnik said on Jan. 21.
Friday, January 23, 2009
Satyam Chief Is Accused of Falsifying Size of Work Force, Then Stealing Payroll
NEW DELHI — The head of Satyam Computer Services confessed to making up more than 10,000 employees to siphon money from the software company and to using his elderly mother’s name to buy land with the cash, a prosecutor said in a court appearance Thursday.
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Mahesh Kumar A./Associated Press
B. Ramalinga Raju, the founder and chairman of Satyam, has been held in custody since his arrest two weeks ago.
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B. Ramalinga Raju, the founder and chairman of Satyam, an Indian information services outsourcing company, also confessed to forging documents related to bank deposits, K. Ajay Kumar, a prosecutor with the Crime Investigation Department of the Indian police, told a court in the southern city of Hyderabad.
Mr. Raju’s lawyer, S. Bharat Kumar, told the court that the prosecutor’s claims were false and reiterated the denial afterward, news agencies reported. The accusation of “diversion of funds is nothing but imagination,” Bloomberg News reported the lawyer as saying. “All through the interrogation there were no questions about any diversion of funds, laundering of funds. And there were no admissions.”
The prosecutor argued that Mr. Raju, his brother and the chief financial officer of Satyam should remain in police custody, which a judge extended until Friday.
Ajay Kumar, the prosecutor, told the court that Satyam had 40,000 employees, far fewer than the nearly 53,000 it claimed. The money recorded as having been paid to those employees was actually used by Mr. Raju to buy land in other people’s names. Mr. Raju had conducted nearly 400 such “benami” land deals — or deals under a fake name — including some under his mother’s name, Mr. Kumar said.
Satyam, which is based in Hyderabad, has global clients and listings on the New York Stock Exchange and Euronext. It became the focus of the highest-profile fraud case in India after Mr. Raju said on Jan. 7 that he had fabricated about $1 billion in cash at the company and padded profit margins — though conversations with investigators and the prosecutors’ account appeared to indicate that the extent of the fraud was much more severe than that.
Making up employees might sound complicated, but investigators said it was not that difficult. “Employees are just code numbers in your system,” explained one person involved in the investigation, who was granted anonymity to provide details about it. “You can create any amount of them. All you need to do is make sure the income tax is deducted properly” and insurance is paid.
Satyam’s new state-appointed board has hired KPMG and Deloitte Touche Tohmatsu to restate the accounts, Bloomberg reported. The growing size and scope of the fraud is forcing many of its corporate clients to rethink their software and back-office operations, analysts say. The revelation that employee numbers may have been fudged could intensify such re-evaluations, as clients question whether their invoices have been padded.
Satyam claims a third of the Fortune 500 companies as clients; General Motors, General Electric and Nestlé do business with Satyam. So far, just one client, State Farm Insurance, has publicly broken ties with Satyam.
The company’s global links, and its international stock listings, mean that prosecutors and investigators from India are joining forces with those from the United States to determine how far the fraud went and how it was committed. Investigators in India say that the Securities and Exchange Commission in Washington is working with the Indian market regulator, the Securities and Exchange Board of India.
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Mahesh Kumar A./Associated Press
B. Ramalinga Raju, the founder and chairman of Satyam, has been held in custody since his arrest two weeks ago.
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B. Ramalinga Raju, the founder and chairman of Satyam, an Indian information services outsourcing company, also confessed to forging documents related to bank deposits, K. Ajay Kumar, a prosecutor with the Crime Investigation Department of the Indian police, told a court in the southern city of Hyderabad.
Mr. Raju’s lawyer, S. Bharat Kumar, told the court that the prosecutor’s claims were false and reiterated the denial afterward, news agencies reported. The accusation of “diversion of funds is nothing but imagination,” Bloomberg News reported the lawyer as saying. “All through the interrogation there were no questions about any diversion of funds, laundering of funds. And there were no admissions.”
The prosecutor argued that Mr. Raju, his brother and the chief financial officer of Satyam should remain in police custody, which a judge extended until Friday.
Ajay Kumar, the prosecutor, told the court that Satyam had 40,000 employees, far fewer than the nearly 53,000 it claimed. The money recorded as having been paid to those employees was actually used by Mr. Raju to buy land in other people’s names. Mr. Raju had conducted nearly 400 such “benami” land deals — or deals under a fake name — including some under his mother’s name, Mr. Kumar said.
Satyam, which is based in Hyderabad, has global clients and listings on the New York Stock Exchange and Euronext. It became the focus of the highest-profile fraud case in India after Mr. Raju said on Jan. 7 that he had fabricated about $1 billion in cash at the company and padded profit margins — though conversations with investigators and the prosecutors’ account appeared to indicate that the extent of the fraud was much more severe than that.
Making up employees might sound complicated, but investigators said it was not that difficult. “Employees are just code numbers in your system,” explained one person involved in the investigation, who was granted anonymity to provide details about it. “You can create any amount of them. All you need to do is make sure the income tax is deducted properly” and insurance is paid.
Satyam’s new state-appointed board has hired KPMG and Deloitte Touche Tohmatsu to restate the accounts, Bloomberg reported. The growing size and scope of the fraud is forcing many of its corporate clients to rethink their software and back-office operations, analysts say. The revelation that employee numbers may have been fudged could intensify such re-evaluations, as clients question whether their invoices have been padded.
Satyam claims a third of the Fortune 500 companies as clients; General Motors, General Electric and Nestlé do business with Satyam. So far, just one client, State Farm Insurance, has publicly broken ties with Satyam.
The company’s global links, and its international stock listings, mean that prosecutors and investigators from India are joining forces with those from the United States to determine how far the fraud went and how it was committed. Investigators in India say that the Securities and Exchange Commission in Washington is working with the Indian market regulator, the Securities and Exchange Board of India.
Asian Stocks Drop for Third Week on Growth, Earnings Concerns
Jan. 24 (Bloomberg) -- Asian stocks slumped for a third week amid mounting concern the financial crisis is reigniting as the deepening global recession cut into corporate profits.
HSBC Holdings Plc, Europe’s largest bank, lost 11 percent for the week after the U.K. and U.S. governments were forced to provide new bailouts for banks and Nouriel Roubini said credit losses could surpass $3 trillion. Sony Corp. plunged 13 percent after forecasting a record loss, while Samsung Electronics Co., the world’s largest liquid-crystal display television maker, dropped 5.8 percent after posting its first quarterly loss.
The MSCI Asia Pacific Index slid 5.2 percent this week to 80.32, the lowest level since Dec. 5. The benchmark measure fell for a third consecutive week, the first time since October it has done so.
“Market jitters remain as banks’ asset quality worsens in slowing economies,” said Kim Young Il, head of equities at Korea Investment Trust Management Co. in Seoul, which manages the equivalent of $6.2 billion. “The attention is now on whether this signals a second round in the financial crisis.”
Financial companies posted the biggest declines on the benchmark index, which slumped by a record 43 percent last year as the credit crunch tipped the world’s largest economies into recession, forcing companies to cut jobs amid slumping profits.
Japan’s Nikkei 225 Stock Average lost 5.9 percent in the week as the yen’s climb to the highest since 1995 against the dollar added to exporters’ woes. Most benchmark indexes retreated across the region, except in China, where the central government unveiled additional measures to support the economy.
‘Effectively Insolvent’
Concerns banks will be nationalized weighed on shares of lenders throughout the world. The U.K. government moved to raise its stake in Royal Bank of Scotland Group Plc, while Bank of America Corp. received a bailout and was forced to slash its dividend to 1 cent.
HSBC tumbled 11 percent to HK$57.45. Morgan Stanley and Goldman Sachs Group Inc. have predicted the bank, which gets about a fifth of its revenue in North America, may have to raise additional capital.
U.S. financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is “effectively insolvent,” New York University Professor Nouriel Roubini, who predicted last year’s economic crisis, said on Jan. 20. Institutions worldwide have so far reported writedowns and losses of more than $1 trillion.
Mizuho Financial Group Inc., Japan’s second-largest listed lender, dropped 15 percent to 212 yen. National Australia Bank Ltd., the country’s biggest by assets, slumped 12 percent to A$16.94.
Sony, Samsung Electronics
Sony, the maker of PlayStation3 game consoles, lost 13 percent to 1,802 yen. The company said it expects a record 260 billion yen ($2.9 billion) operating loss for the year ending in March amid falling demand, the strong yen and costs to restructure its business.
“Sony’s loss forecast was an order of magnitude greater than what some analysts had estimated,” Soichiro Monji, chief strategist at Daiwa SB Investments Ltd., which manages the equivalent of $53 billion, said in an interview with Bloomberg Television. “The bad news about earnings and economies is accumulating.”
China this week reported its slowest rate of growth in seven years as the economy expanded at an annualized 6.8 percent pace in the fourth quarter. South Korea’s central bank also said the country’s economy shrank a 5.6 percent last quarter, the biggest decline since the Asian financial crisis a decade ago.
Samsung lost 5.8 percent to 442,000 won as it reported a fourth-quarter net loss amid slumping demand for its computer chips, televisions and mobile-phone handsets. Angang Steel Co., China’s second-largest steelmaker, tumbled 21 percent to HK$6.45 in Hong Kong after saying 2008 profit plunged 55 percent.
HSBC Holdings Plc, Europe’s largest bank, lost 11 percent for the week after the U.K. and U.S. governments were forced to provide new bailouts for banks and Nouriel Roubini said credit losses could surpass $3 trillion. Sony Corp. plunged 13 percent after forecasting a record loss, while Samsung Electronics Co., the world’s largest liquid-crystal display television maker, dropped 5.8 percent after posting its first quarterly loss.
The MSCI Asia Pacific Index slid 5.2 percent this week to 80.32, the lowest level since Dec. 5. The benchmark measure fell for a third consecutive week, the first time since October it has done so.
“Market jitters remain as banks’ asset quality worsens in slowing economies,” said Kim Young Il, head of equities at Korea Investment Trust Management Co. in Seoul, which manages the equivalent of $6.2 billion. “The attention is now on whether this signals a second round in the financial crisis.”
Financial companies posted the biggest declines on the benchmark index, which slumped by a record 43 percent last year as the credit crunch tipped the world’s largest economies into recession, forcing companies to cut jobs amid slumping profits.
Japan’s Nikkei 225 Stock Average lost 5.9 percent in the week as the yen’s climb to the highest since 1995 against the dollar added to exporters’ woes. Most benchmark indexes retreated across the region, except in China, where the central government unveiled additional measures to support the economy.
‘Effectively Insolvent’
Concerns banks will be nationalized weighed on shares of lenders throughout the world. The U.K. government moved to raise its stake in Royal Bank of Scotland Group Plc, while Bank of America Corp. received a bailout and was forced to slash its dividend to 1 cent.
HSBC tumbled 11 percent to HK$57.45. Morgan Stanley and Goldman Sachs Group Inc. have predicted the bank, which gets about a fifth of its revenue in North America, may have to raise additional capital.
U.S. financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is “effectively insolvent,” New York University Professor Nouriel Roubini, who predicted last year’s economic crisis, said on Jan. 20. Institutions worldwide have so far reported writedowns and losses of more than $1 trillion.
Mizuho Financial Group Inc., Japan’s second-largest listed lender, dropped 15 percent to 212 yen. National Australia Bank Ltd., the country’s biggest by assets, slumped 12 percent to A$16.94.
Sony, Samsung Electronics
Sony, the maker of PlayStation3 game consoles, lost 13 percent to 1,802 yen. The company said it expects a record 260 billion yen ($2.9 billion) operating loss for the year ending in March amid falling demand, the strong yen and costs to restructure its business.
“Sony’s loss forecast was an order of magnitude greater than what some analysts had estimated,” Soichiro Monji, chief strategist at Daiwa SB Investments Ltd., which manages the equivalent of $53 billion, said in an interview with Bloomberg Television. “The bad news about earnings and economies is accumulating.”
China this week reported its slowest rate of growth in seven years as the economy expanded at an annualized 6.8 percent pace in the fourth quarter. South Korea’s central bank also said the country’s economy shrank a 5.6 percent last quarter, the biggest decline since the Asian financial crisis a decade ago.
Samsung lost 5.8 percent to 442,000 won as it reported a fourth-quarter net loss amid slumping demand for its computer chips, televisions and mobile-phone handsets. Angang Steel Co., China’s second-largest steelmaker, tumbled 21 percent to HK$6.45 in Hong Kong after saying 2008 profit plunged 55 percent.
Australia Won’t ‘Hesitate’ to Boost Economy, Treasurer Says
Jan. 24 (Bloomberg) -- Australia’s government won’t hesitate to stimulate the economy further should the need arise amid the global recession, Treasurer Wayne Swan said.
Swan, speaking to the New York investment community, said the government could add to some A$45 billion ($29 billion) in stimulus already announced should economic conditions worsen.
“We will not hesitate to take whatever further action is necessary to support growth and jobs,” Swan, 54, said in speech notes received via e-mail. “Major financial institutions, some of which have withstood world wars and the Great Depression, have either collapsed or been bailed out.”
Since October, Australia’s government has announced almost A$45 billion in aid for families, pensioners, bond markets, home buyers, and extra spending on schools and roads. Reserve Bank of Australia Governor Glenn Stevens, meanwhile, has embarked on the biggest round of interest-rate cuts in almost two decades.
Australia’s “strong balance sheet” and positive net worth position have given the government and central bank “more room” than most countries to adjust settings, Swan said.
The government’s recent spending boost came after credit markets froze following the bankruptcy of Lehman Brothers Holdings Inc. on Sept. 15, prompting governments and central banks around the world to bail out financial institutions and try to revive growth.
Trading Partners
Australia’s biggest trading partners of China and Japan are suffering as the global recession pummels exports. China, which accounts for a fifth of global growth, expanded at its weakest pace in seven years in the fourth quarter; Japan’s first recession since 2001 is deepening.
Australia’s economy expanded at its weakest pace in eight years in the third quarter. The unemployment rate rose to 4.5 percent in December, the highest in almost two years, as mining companies, airlines, and automakers fired full-time workers, adding to signs the economy faces its first recession since 1991.
The nation’s economy is not immune to the global financial crisis, but is nonetheless well-placed to weather it, Swan said.
“The appreciation of the Australian dollar is helping provide a substantial stimulus to the domestic economy,” Swan said. “Australia’s housing market also has positive characteristics.”
The government, in its latest forecast, said the economy will grow 2 percent in the year ending June 30, 2009. The central bank in November lowered its 2008 economic growth forecast to 1.5 percent from 2 percent.
Swan, speaking to the New York investment community, said the government could add to some A$45 billion ($29 billion) in stimulus already announced should economic conditions worsen.
“We will not hesitate to take whatever further action is necessary to support growth and jobs,” Swan, 54, said in speech notes received via e-mail. “Major financial institutions, some of which have withstood world wars and the Great Depression, have either collapsed or been bailed out.”
Since October, Australia’s government has announced almost A$45 billion in aid for families, pensioners, bond markets, home buyers, and extra spending on schools and roads. Reserve Bank of Australia Governor Glenn Stevens, meanwhile, has embarked on the biggest round of interest-rate cuts in almost two decades.
Australia’s “strong balance sheet” and positive net worth position have given the government and central bank “more room” than most countries to adjust settings, Swan said.
The government’s recent spending boost came after credit markets froze following the bankruptcy of Lehman Brothers Holdings Inc. on Sept. 15, prompting governments and central banks around the world to bail out financial institutions and try to revive growth.
Trading Partners
Australia’s biggest trading partners of China and Japan are suffering as the global recession pummels exports. China, which accounts for a fifth of global growth, expanded at its weakest pace in seven years in the fourth quarter; Japan’s first recession since 2001 is deepening.
Australia’s economy expanded at its weakest pace in eight years in the third quarter. The unemployment rate rose to 4.5 percent in December, the highest in almost two years, as mining companies, airlines, and automakers fired full-time workers, adding to signs the economy faces its first recession since 1991.
The nation’s economy is not immune to the global financial crisis, but is nonetheless well-placed to weather it, Swan said.
“The appreciation of the Australian dollar is helping provide a substantial stimulus to the domestic economy,” Swan said. “Australia’s housing market also has positive characteristics.”
The government, in its latest forecast, said the economy will grow 2 percent in the year ending June 30, 2009. The central bank in November lowered its 2008 economic growth forecast to 1.5 percent from 2 percent.
Larsen Raises Stake in Satyam as Board Arranges Funds
Jan. 23 (Bloomberg) -- Larsen & Toubro Ltd., India’s biggest engineering company, raised its stake in Satyam Computer Services Ltd. to 12 percent to give it greater say in the rescue of the fraud-hit software exporter.
Larsen bought shares in the open market to triple its holding from 4 percent, Chief Financial Officer Y.M. Deosthalee said in by telephone from Mumbai, where the company is based.
Satyam’s state-appointed board has almost arranged funds to help tide over a cash crunch till the end of March, the Hyderabad-based company said today. Larsen said it is raising its holdings to safeguard the engineering company’s interest, amid a flurry of interest from potential bidders to buy the software provider, which is battling to keep customers from defecting.
“This is a win-win both for government and Satyam as Larsen will provide the stability,” said Sanjay Makhija, head of institutional sales at Fortune Financial Services Ltd. in Mumbai. “This investment will provide” a base for Larsen, he said.
Deosthalee declined to comment if Larsen would increase its stake beyond the 15 percent threshold that would trigger a mandatory offer for the company.
“There’s a lot of corporate action happening in the company, we need to make sure we have a meaningful stake in Satyam to safeguard our interest,” Deosthalee said. “We have not made up our mind whether we want to buy the company.”
Final Stages
Satyam, at the center of India’s biggest fraud inquiry, said today arrangements to raise funds were in the final stages and details would be announced before Jan. 28.
“The immovable properties of the company, including all campuses owned by it, are free of any” charge, the company said in a statement sent to the Bombay Stock Exchange at the end of a meeting of its state-appointed board of directors in Hyderabad. “Collections from the receivables have been robust.”
The Indian software provider plans to expedite collection from its customers and take steps to cut costs, the board said.
“The board has also met and interacted with a number of investment bankers and will take a decision in the next few days,” Satyam said in the statement.
Government-appointed directors plan to hire a financial adviser to devise a rescue plan, Deepak Parekh, a nominee on the Satyam board said on Jan. 21.
CEO, CFO Shortlist
The board has short-listed three candidates each for the positions of chief executive officer and chief financial officer and an announcement will be made next week, Satyam said today.
Satyam is struggling to raise cash to pay salaries after its former Chairman Ramalinga Raju said he had inflated assets by more than $1 billion. The provider is also battling to ward off customers from joining State Farm Mutual Automobile Insurance Co. in canceling contracts.
“The selected person will be uniquely qualified to lead the company during this period of transition and will be a leader of global standing and recognition,” Satyam said.
The U.S. Securities and Exchange Commission is said to be investigating whether Satyam misled investors, following inquiries by India’s fraud office, auditing body, markets regulator and local police.
Satyam padded employee numbers to siphon off cash and forged documents to support fake bank deposits, a public prosecutor said in a court in Hyderabad yesterday.
Satyam had about 33 billion rupees ($670 million) of “fictitious and non-existent” accounts, public prosecutor K. Ajay Kumar told a hearing for the company’s arrested founder Raju. The Hyderabad-based company had 40,000 employees, short of the 53,000 claimed by Satyam, he said.
‘No Basis to Doubt’
“The board has confirmed that prima facie, there appears to be no basis to doubt” the employee strength, Satyam said today. “The independent investigation process is expected to reaffirm this fact in the coming weeks.”
Satyam’s state-appointed board this month hired KPMG and Deloitte Touche Tohmatsu to restate the accounts.
India’s government is building a case against Raju two weeks after his admission he’d falsified earnings sparked a plunge in Satyam’s stock.
The charge of diversion of funds was “nothing but imagination,” Raju’s lawyer S. Bharat Kumar told reporters yesterday.
Raju and his younger brother Rama were arrested on Jan. 9 after the former chairman said he had fabricated accounts at India’s fourth-largest software provider for several years. The company’s stock gained 31 percent today, paring its loss since Raju’s admission to 78 percent.
The falsified employee data was used to siphon off 200 million rupees every month and one fixed deposit receipt from HDFC Bank Ltd. was forged, the prosecutor told the 6th Additional Chief Metropolitan Magistrate’s court in Hyderabad.
The employee data as was available on the company’s system was right, Hari Thalapalli, head of marketing and former human resources chief at Satyam, said from Hyderabad yesterday. The provider had 48,000 employees a year ago, Thalapalli said on Jan. 20, citing data from when he headed the human resources department. The computer services provider was likely to have added more employees in subsequent quarters, he said at the time.
Approached by Buyers
Satyam has been approached by potential buyers, board member Tarun Das said this week.
Larsen & Toubro Ltd. has a rescue plan which it will present to Satyam’s board, the Economic Times reported yesterday, without saying where it got the information.
Patni Computer Systems Ltd. and General Atlantic LLC may team up in a bid to buyout Satyam, the Economic Times reported, citing unidentified investment bankers.
Separately, Satyam has finalized short-term funds from India’s Punjab National Bank and Bank of Baroda to meet its working capital needs, the Financial Chronicle reported, without saying where it got the information. Citibank N.A. will maintain an account where money paid by the software company’s customers will be deposited, the newspaper said.
Delays in raising funds and appointing a chief executive officer are costing Satyam customers. At least two of them have given notice about terminating their contracts, according to board member Kiran Karnik, who declined to name the clients in a text message on Jan. 21.
Larsen bought shares in the open market to triple its holding from 4 percent, Chief Financial Officer Y.M. Deosthalee said in by telephone from Mumbai, where the company is based.
Satyam’s state-appointed board has almost arranged funds to help tide over a cash crunch till the end of March, the Hyderabad-based company said today. Larsen said it is raising its holdings to safeguard the engineering company’s interest, amid a flurry of interest from potential bidders to buy the software provider, which is battling to keep customers from defecting.
“This is a win-win both for government and Satyam as Larsen will provide the stability,” said Sanjay Makhija, head of institutional sales at Fortune Financial Services Ltd. in Mumbai. “This investment will provide” a base for Larsen, he said.
Deosthalee declined to comment if Larsen would increase its stake beyond the 15 percent threshold that would trigger a mandatory offer for the company.
“There’s a lot of corporate action happening in the company, we need to make sure we have a meaningful stake in Satyam to safeguard our interest,” Deosthalee said. “We have not made up our mind whether we want to buy the company.”
Final Stages
Satyam, at the center of India’s biggest fraud inquiry, said today arrangements to raise funds were in the final stages and details would be announced before Jan. 28.
“The immovable properties of the company, including all campuses owned by it, are free of any” charge, the company said in a statement sent to the Bombay Stock Exchange at the end of a meeting of its state-appointed board of directors in Hyderabad. “Collections from the receivables have been robust.”
The Indian software provider plans to expedite collection from its customers and take steps to cut costs, the board said.
“The board has also met and interacted with a number of investment bankers and will take a decision in the next few days,” Satyam said in the statement.
Government-appointed directors plan to hire a financial adviser to devise a rescue plan, Deepak Parekh, a nominee on the Satyam board said on Jan. 21.
CEO, CFO Shortlist
The board has short-listed three candidates each for the positions of chief executive officer and chief financial officer and an announcement will be made next week, Satyam said today.
Satyam is struggling to raise cash to pay salaries after its former Chairman Ramalinga Raju said he had inflated assets by more than $1 billion. The provider is also battling to ward off customers from joining State Farm Mutual Automobile Insurance Co. in canceling contracts.
“The selected person will be uniquely qualified to lead the company during this period of transition and will be a leader of global standing and recognition,” Satyam said.
The U.S. Securities and Exchange Commission is said to be investigating whether Satyam misled investors, following inquiries by India’s fraud office, auditing body, markets regulator and local police.
Satyam padded employee numbers to siphon off cash and forged documents to support fake bank deposits, a public prosecutor said in a court in Hyderabad yesterday.
Satyam had about 33 billion rupees ($670 million) of “fictitious and non-existent” accounts, public prosecutor K. Ajay Kumar told a hearing for the company’s arrested founder Raju. The Hyderabad-based company had 40,000 employees, short of the 53,000 claimed by Satyam, he said.
‘No Basis to Doubt’
“The board has confirmed that prima facie, there appears to be no basis to doubt” the employee strength, Satyam said today. “The independent investigation process is expected to reaffirm this fact in the coming weeks.”
Satyam’s state-appointed board this month hired KPMG and Deloitte Touche Tohmatsu to restate the accounts.
India’s government is building a case against Raju two weeks after his admission he’d falsified earnings sparked a plunge in Satyam’s stock.
The charge of diversion of funds was “nothing but imagination,” Raju’s lawyer S. Bharat Kumar told reporters yesterday.
Raju and his younger brother Rama were arrested on Jan. 9 after the former chairman said he had fabricated accounts at India’s fourth-largest software provider for several years. The company’s stock gained 31 percent today, paring its loss since Raju’s admission to 78 percent.
The falsified employee data was used to siphon off 200 million rupees every month and one fixed deposit receipt from HDFC Bank Ltd. was forged, the prosecutor told the 6th Additional Chief Metropolitan Magistrate’s court in Hyderabad.
The employee data as was available on the company’s system was right, Hari Thalapalli, head of marketing and former human resources chief at Satyam, said from Hyderabad yesterday. The provider had 48,000 employees a year ago, Thalapalli said on Jan. 20, citing data from when he headed the human resources department. The computer services provider was likely to have added more employees in subsequent quarters, he said at the time.
Approached by Buyers
Satyam has been approached by potential buyers, board member Tarun Das said this week.
Larsen & Toubro Ltd. has a rescue plan which it will present to Satyam’s board, the Economic Times reported yesterday, without saying where it got the information.
Patni Computer Systems Ltd. and General Atlantic LLC may team up in a bid to buyout Satyam, the Economic Times reported, citing unidentified investment bankers.
Separately, Satyam has finalized short-term funds from India’s Punjab National Bank and Bank of Baroda to meet its working capital needs, the Financial Chronicle reported, without saying where it got the information. Citibank N.A. will maintain an account where money paid by the software company’s customers will be deposited, the newspaper said.
Delays in raising funds and appointing a chief executive officer are costing Satyam customers. At least two of them have given notice about terminating their contracts, according to board member Kiran Karnik, who declined to name the clients in a text message on Jan. 21.
Thursday, January 22, 2009
Obama Issues Directive to Shut Down Guantánamo
WASHINGTON — President Obama signed executive orders Thursday directing the Central Intelligence Agency to shut what remains of its network of secret prisons and ordering the closing of the Guantánamo detention camp within a year, government officials said.
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The orders, which are the first steps in undoing detention policies of former President George W. Bush, rewrite American rules for the detention of terrorism suspects. They require an immediate review of the 245 detainees still held at the naval base in Guantánamo Bay, Cuba, to determine if they should be transferred, released or prosecuted.
And the orders bring to an end a Central Intelligence Agency program that kept terrorism suspects in secret custody for months or years, a practice that has brought fierce criticism from foreign governments and human rights activists. They will also prohibit the C.I.A. from using coercive interrogation methods, requiring the agency to follow the same rules used by the military in interrogating terrorism suspects, government officials said.
But the orders leave unresolved complex questions surrounding the closing of the Guantánamo prison, including whether, where and how many of the detainees are to be prosecuted. They could also allow Mr. Obama to reinstate the C.I.A.’s detention and interrogation operations in the future, by presidential order, as some have argued would be appropriate if Osama bin Laden or another top-level leader of Al Qaeda were captured.
The new White House counsel, Gregory B. Craig, briefed lawmakers about some elements of the orders on Wednesday evening. A Congressional official who attended the session said Mr. Craig acknowledged concerns from intelligence officials that new restrictions on C.I.A. methods might be unwise and indicated that the White House might be open to allowing the use of methods other than the 19 techniques allowed for the military.
Details of the directive involving the C.I.A. were described by government officials who insisted on anonymity so they could not be blamed for pre-empting a White House announcement. Copies of the draft order on Guantánamo were provided by people who have consulted with Mr. Obama’s transition team and requested anonymity for the same reason.
In remarks prepared for delivery at his confirmation hearings to become director of national intelligence in the Obama administration, Dennis C. Blair, a retired admiral with a long background in intelligence, endorsed the new approach and promised to enforce it rigorously. “It is not enough to set a standard and announce it,” he said.
“I believe strongly that torture is not moral, legal or effective,” he told the Senate Select Committee on Intelligence. “Any program of detention and interrogation must comply with the Geneva Conventions, the Conventions on Torture, and the Constitution. There must be clear standards for humane treatment that apply to all agencies of U.S. Government, including the Intelligence Community,” his written statement said.
As for closing Guantanamo, he said that would take time but must be done because it has become “a damaging symbol to the world.”
“It is a rallyingcry for terrorist recruitment and harmful to our national security, so closing it is important for our national security,” Admiral Blair’s statement said.
“The guiding principles for closing the center should beprotecting our national security, respecting the Geneva Conventions and the rule of law, and respecting the existing institutions of justice in this country. I also believe we should revitalize efforts to transfer detainees to their countries of origin or other countries whenever that would be consistent with these principles. Closing this center and satisfying these principles will take time, and is the work of many departments and agencies.”
The executive order on interrogations is certain to be received with some skepticism at the C.I.A., which for years has maintained that the military’s interrogation rules are insufficient to get information from senior Qaeda figures like Khalid Sheikh Mohammed. The Bush administration asserted that the harsh interrogation methods were instrumental in gaining valuable intelligence on Qaeda operations.
The intelligence agency built a network of secret prisons in 2002 to house and interrogate senior Qaeda figures captured overseas. The exact number of suspects to have moved through the prisons is unknown, although Michael V. Hayden, the departing director of the agency, has in the past put the number at “fewer than 100.”
The secret detentions brought international condemnation, and in September 2006, President Bush ordered that the remaining 14 detainees in C.I.A. custody be transferred to Guantánamo Bay and tried by military tribunals.
But Mr. Bush made clear then that he was not shutting down the C.I.A. detention system, and in the last two years, two Qaeda operatives are believed to have been detained in agency prisons for several months each before being sent to Guantánamo.
A government official said Mr. Obama’s order on the C.I.A. would still allow its officers abroad to temporarily detain terrorism suspects and transfer them to other agencies, but would no longer allow the agency to carry out long-term detentions.
Since the early days after the 2001 attacks, the intelligence agency’s role in detaining terrorism suspects has been significantly scaled back, as has the severity of interrogation methods the agency is permitted to use. The most controversial practice, the simulated drowning technique known as water-boarding, was used on three suspects but has not been used since 2003, C.I.A. officials said.
But at the urging of the Bush administration, Congress in 2006 authorized the agency to continue using harsher interrogation methods than those permitted for use by other agencies, including the military. Those exact methods remain classified. The order on Guantánamo says that the camp, which received its first hooded and chained detainees seven years ago this month, “shall be closed as soon as practicable, and no later than one year from the date of this order.”
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Room for Debate: Torture's Blowback (January 14, 2009)
Room for Debate: The Challenges of Closing Guantánamo (January 13, 2009)
Times Topics: Guantánamo Bay Naval Base (Cuba)
Blog
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* Election Results | More Politics News
Readers' Comments
Readers shared their thoughts on this article.
* Read All Comments (312) »
The orders, which are the first steps in undoing detention policies of former President George W. Bush, rewrite American rules for the detention of terrorism suspects. They require an immediate review of the 245 detainees still held at the naval base in Guantánamo Bay, Cuba, to determine if they should be transferred, released or prosecuted.
And the orders bring to an end a Central Intelligence Agency program that kept terrorism suspects in secret custody for months or years, a practice that has brought fierce criticism from foreign governments and human rights activists. They will also prohibit the C.I.A. from using coercive interrogation methods, requiring the agency to follow the same rules used by the military in interrogating terrorism suspects, government officials said.
But the orders leave unresolved complex questions surrounding the closing of the Guantánamo prison, including whether, where and how many of the detainees are to be prosecuted. They could also allow Mr. Obama to reinstate the C.I.A.’s detention and interrogation operations in the future, by presidential order, as some have argued would be appropriate if Osama bin Laden or another top-level leader of Al Qaeda were captured.
The new White House counsel, Gregory B. Craig, briefed lawmakers about some elements of the orders on Wednesday evening. A Congressional official who attended the session said Mr. Craig acknowledged concerns from intelligence officials that new restrictions on C.I.A. methods might be unwise and indicated that the White House might be open to allowing the use of methods other than the 19 techniques allowed for the military.
Details of the directive involving the C.I.A. were described by government officials who insisted on anonymity so they could not be blamed for pre-empting a White House announcement. Copies of the draft order on Guantánamo were provided by people who have consulted with Mr. Obama’s transition team and requested anonymity for the same reason.
In remarks prepared for delivery at his confirmation hearings to become director of national intelligence in the Obama administration, Dennis C. Blair, a retired admiral with a long background in intelligence, endorsed the new approach and promised to enforce it rigorously. “It is not enough to set a standard and announce it,” he said.
“I believe strongly that torture is not moral, legal or effective,” he told the Senate Select Committee on Intelligence. “Any program of detention and interrogation must comply with the Geneva Conventions, the Conventions on Torture, and the Constitution. There must be clear standards for humane treatment that apply to all agencies of U.S. Government, including the Intelligence Community,” his written statement said.
As for closing Guantanamo, he said that would take time but must be done because it has become “a damaging symbol to the world.”
“It is a rallyingcry for terrorist recruitment and harmful to our national security, so closing it is important for our national security,” Admiral Blair’s statement said.
“The guiding principles for closing the center should beprotecting our national security, respecting the Geneva Conventions and the rule of law, and respecting the existing institutions of justice in this country. I also believe we should revitalize efforts to transfer detainees to their countries of origin or other countries whenever that would be consistent with these principles. Closing this center and satisfying these principles will take time, and is the work of many departments and agencies.”
The executive order on interrogations is certain to be received with some skepticism at the C.I.A., which for years has maintained that the military’s interrogation rules are insufficient to get information from senior Qaeda figures like Khalid Sheikh Mohammed. The Bush administration asserted that the harsh interrogation methods were instrumental in gaining valuable intelligence on Qaeda operations.
The intelligence agency built a network of secret prisons in 2002 to house and interrogate senior Qaeda figures captured overseas. The exact number of suspects to have moved through the prisons is unknown, although Michael V. Hayden, the departing director of the agency, has in the past put the number at “fewer than 100.”
The secret detentions brought international condemnation, and in September 2006, President Bush ordered that the remaining 14 detainees in C.I.A. custody be transferred to Guantánamo Bay and tried by military tribunals.
But Mr. Bush made clear then that he was not shutting down the C.I.A. detention system, and in the last two years, two Qaeda operatives are believed to have been detained in agency prisons for several months each before being sent to Guantánamo.
A government official said Mr. Obama’s order on the C.I.A. would still allow its officers abroad to temporarily detain terrorism suspects and transfer them to other agencies, but would no longer allow the agency to carry out long-term detentions.
Since the early days after the 2001 attacks, the intelligence agency’s role in detaining terrorism suspects has been significantly scaled back, as has the severity of interrogation methods the agency is permitted to use. The most controversial practice, the simulated drowning technique known as water-boarding, was used on three suspects but has not been used since 2003, C.I.A. officials said.
But at the urging of the Bush administration, Congress in 2006 authorized the agency to continue using harsher interrogation methods than those permitted for use by other agencies, including the military. Those exact methods remain classified. The order on Guantánamo says that the camp, which received its first hooded and chained detainees seven years ago this month, “shall be closed as soon as practicable, and no later than one year from the date of this order.”
Reliance Net Beats Estimate as Interest Income Surges
Jan. 22 (Bloomberg) -- Reliance Industries Ltd., India’s biggest company by market value, posted earnings that beat estimates as interest almost quadrupled, offsetting lower demand for fuels and petrochemicals caused by the global recession.
Net income dropped 9.8 percent to 35 billion rupees ($713 million), or 23.5 rupees a share, in the three months ended Dec. 31, the refiner and explorer said in a statement in Mumbai. The median estimate of nine analysts was for a profit of 31.2 billion rupees. Sales fell 9.3 percent to 325.3 billion rupees.
Earnings growth may accelerate after billionaire Chairman Mukesh Ambani started the company’s second refinery on Dec. 25 and is close to beginning gas production at India’s biggest field. Interest income surged after the company invested cash from additional shares bought by Ambani in bank deposits.
“Other income seems to have boosted their third-quarter earnings helped by the capital introduced by the promoters,” said Ballabh Modani, Mumbai-based analyst at Enam Securities Pvt., whose profit forecast of 33.5 billion rupees was the closest to the result. Modani has an “outperform” rating on the stock.
Interest income rose to 5.46 billion rupees from 1.41 billion rupees a year earlier. Cash reserves rose to 258 billion rupees after Ambani bought 120 million Reliance shares. More that 95 percent of the company’s cash is held in fixed deposits, according to the statement.
Warrant Conversion
The chairman paid $3.6 billion to buy shares in India’s largest warrant conversion on Oct. 3. The company had allotted the warrants to Ambani in February 2007, entitling him to buy shares at 1,402 rupees apiece in 18 months.
Ambani still needs to convince investors that his new refinery and gas sales, currently banned by a court, will boost profit. Reliance shares have dropped 52 percent in a year, more than the 47 percent decline in the Bombay Stock Exchange’s Sensitive Index.
The drop in third-quarter profit was the first in three years. In the first nine months, net income rose 3.4 percent to 117.3 billion rupees on sales of 1.22 trillion rupees.
Earnings in the year-earlier period excluded gains from an asset sale. Including the one-time gain, net income was 80.8 billion rupees.
Reliance earned $10 on every barrel processed at its 660,000 barrel-a-day plant in Gujarat, the company’s first refinery, compared with $15.4 a barrel a year earlier. Margins at complex refineries in Singapore, Asia’s biggest oil trading centre, were $8.4 a barrel in the week ended Dec. 26, according to a Bank of America report.
Refining Margins
Margins have narrowed as gasoline and diesel prices fell because of a slump in global demand. Prices of fuels including gasoline and naphtha are lower than the oil from which they are produced. Exports account for 70 percent of Reliance’s revenue.
The price of wholesale gasoline loaded on barges near Amsterdam was as much as $7.98 a barrel lower than North Sea Brent crude oil in the three months ended Dec. 31, according to data from broker PVM Oil Associates Ltd.
Falling demand has prompted U.S. refiners, including Valero Energy Corp. and Exxon Mobil Corp., the world’s largest oil company, to reduce runs and shut units for seasonal maintenance.
Mumbai-based Reliance operates complex refineries, which use advanced technology to convert cheap, high-sulfur crude and low- quality products such as fuel oil into gasoline and diesel. Almost no oil is wasted.
‘Slower Demand’
Refining accounted for 45 percent of Reliance’s pretax profit in the third quarter, while oil and gas contributed about 15 percent.
“Refining margins are expected to remain muted till the end of 2010-11 due to overcapacity concerns and slower demand growth,” said Niraj Mansingka, assistant vice-president at Edelweiss Capital Ltd. in Mumbai. “Gas production will offset most of the decline.”
Reliance shares, which declined 37 percent in the third quarter, rose 1.5 percent to 1,136.3 rupees in Mumbai. The earnings were released after the market close.
Reliance’s gas project and new refinery may help the company achieve 66 percent earnings growth in the next two years, Harshad Katkar and Nirmal Raghavan, Mumbai-based analysts at UBS AG, said in a Jan. 19 report.
Ambani is investing $5.2 billion to develop the first phase of the KG-D6 field in the Krishna-Godavari basin, off India’s east coast. The area may hold as much as 9.2 trillion cubic feet of gas, according to partner Calgary, Canada-based Niko Resources Ltd., making it India’s largest gas find.
Gas Lawsuit
The sale of gas from the field has been banned by the Bombay High Court, which is hearing a price dispute between Reliance and its customers, state-owned NTPC Ltd. and Reliance Natural Resources Ltd. The Indian government has asked the court to lift the ban to help overcome shortages of the fuel faced by power utilities and fertilizer makers.
Reliance declined to comment on gas sales because of the lawsuit, the company said in an e-mailed reply to questions on Jan 20.
UBS expects Reliance to start gas production by the end of this quarter after the court passes an interim order allowing sales, analysts Katkar and Raghavan wrote.
Reliance’s new refinery cost 262.2 billion rupees and is 5 percent owned by Chevron Corp. Along with the adjacent, older plant, it is the world’s largest refining complex, according to the company.
Net income dropped 9.8 percent to 35 billion rupees ($713 million), or 23.5 rupees a share, in the three months ended Dec. 31, the refiner and explorer said in a statement in Mumbai. The median estimate of nine analysts was for a profit of 31.2 billion rupees. Sales fell 9.3 percent to 325.3 billion rupees.
Earnings growth may accelerate after billionaire Chairman Mukesh Ambani started the company’s second refinery on Dec. 25 and is close to beginning gas production at India’s biggest field. Interest income surged after the company invested cash from additional shares bought by Ambani in bank deposits.
“Other income seems to have boosted their third-quarter earnings helped by the capital introduced by the promoters,” said Ballabh Modani, Mumbai-based analyst at Enam Securities Pvt., whose profit forecast of 33.5 billion rupees was the closest to the result. Modani has an “outperform” rating on the stock.
Interest income rose to 5.46 billion rupees from 1.41 billion rupees a year earlier. Cash reserves rose to 258 billion rupees after Ambani bought 120 million Reliance shares. More that 95 percent of the company’s cash is held in fixed deposits, according to the statement.
Warrant Conversion
The chairman paid $3.6 billion to buy shares in India’s largest warrant conversion on Oct. 3. The company had allotted the warrants to Ambani in February 2007, entitling him to buy shares at 1,402 rupees apiece in 18 months.
Ambani still needs to convince investors that his new refinery and gas sales, currently banned by a court, will boost profit. Reliance shares have dropped 52 percent in a year, more than the 47 percent decline in the Bombay Stock Exchange’s Sensitive Index.
The drop in third-quarter profit was the first in three years. In the first nine months, net income rose 3.4 percent to 117.3 billion rupees on sales of 1.22 trillion rupees.
Earnings in the year-earlier period excluded gains from an asset sale. Including the one-time gain, net income was 80.8 billion rupees.
Reliance earned $10 on every barrel processed at its 660,000 barrel-a-day plant in Gujarat, the company’s first refinery, compared with $15.4 a barrel a year earlier. Margins at complex refineries in Singapore, Asia’s biggest oil trading centre, were $8.4 a barrel in the week ended Dec. 26, according to a Bank of America report.
Refining Margins
Margins have narrowed as gasoline and diesel prices fell because of a slump in global demand. Prices of fuels including gasoline and naphtha are lower than the oil from which they are produced. Exports account for 70 percent of Reliance’s revenue.
The price of wholesale gasoline loaded on barges near Amsterdam was as much as $7.98 a barrel lower than North Sea Brent crude oil in the three months ended Dec. 31, according to data from broker PVM Oil Associates Ltd.
Falling demand has prompted U.S. refiners, including Valero Energy Corp. and Exxon Mobil Corp., the world’s largest oil company, to reduce runs and shut units for seasonal maintenance.
Mumbai-based Reliance operates complex refineries, which use advanced technology to convert cheap, high-sulfur crude and low- quality products such as fuel oil into gasoline and diesel. Almost no oil is wasted.
‘Slower Demand’
Refining accounted for 45 percent of Reliance’s pretax profit in the third quarter, while oil and gas contributed about 15 percent.
“Refining margins are expected to remain muted till the end of 2010-11 due to overcapacity concerns and slower demand growth,” said Niraj Mansingka, assistant vice-president at Edelweiss Capital Ltd. in Mumbai. “Gas production will offset most of the decline.”
Reliance shares, which declined 37 percent in the third quarter, rose 1.5 percent to 1,136.3 rupees in Mumbai. The earnings were released after the market close.
Reliance’s gas project and new refinery may help the company achieve 66 percent earnings growth in the next two years, Harshad Katkar and Nirmal Raghavan, Mumbai-based analysts at UBS AG, said in a Jan. 19 report.
Ambani is investing $5.2 billion to develop the first phase of the KG-D6 field in the Krishna-Godavari basin, off India’s east coast. The area may hold as much as 9.2 trillion cubic feet of gas, according to partner Calgary, Canada-based Niko Resources Ltd., making it India’s largest gas find.
Gas Lawsuit
The sale of gas from the field has been banned by the Bombay High Court, which is hearing a price dispute between Reliance and its customers, state-owned NTPC Ltd. and Reliance Natural Resources Ltd. The Indian government has asked the court to lift the ban to help overcome shortages of the fuel faced by power utilities and fertilizer makers.
Reliance declined to comment on gas sales because of the lawsuit, the company said in an e-mailed reply to questions on Jan 20.
UBS expects Reliance to start gas production by the end of this quarter after the court passes an interim order allowing sales, analysts Katkar and Raghavan wrote.
Reliance’s new refinery cost 262.2 billion rupees and is 5 percent owned by Chevron Corp. Along with the adjacent, older plant, it is the world’s largest refining complex, according to the company.
Fiat’s Marchionne Considers European Tie-up After Chrysler Deal
Jan. 23 (Bloomberg) -- Fiat SpA Chief Executive Officer Sergio Marchionne, architect of a planned tie-up with Chrysler LLC, may still regard a European alliance as his top priority.
Marchionne, credited with transforming Fiat from the laggard of the European auto industry into one of the continent’s most fashionable brands, said yesterday he’s “willing to start a dialogue” with any company that favors consolidation.
“A partnership with a European rival is vital,” said Emanuele Vizzini, who helps manage about $1.2 billion at Investitori SGR in Milan and lists PSA Peugeot Citroen of France and Germany’s BMW as two “natural candidates” for a merger with the Turin, Italy-based company.
European car sales plunged the most in 15 years in 2008, causing automakers to lay off workers and idle plants to clear stocks. Fiat yesterday cut its earnings forecast and said it won’t pay a dividend. Marchionne last month suggested the crisis could leave three European volume producers standing: Volkswagen AG, Renault SA and a third company built in a bout of consolidation.
The CEO acknowledged yesterday that many in the industry view a Fiat-Peugeot combination as a “marriage made in heaven.” He said he needs to proceed “softly and quietly” toward his goals.
Fiat’s alliance with Chrysler will see it transfer small-car technology to the Auburn Hills, Michigan-based automaker in return for a 35 percent stake and access to its U.S. plants, the companies said Jan. 20.
No Solution
With Fiat’s sales strongest in Europe and Latin America and Chrysler focused on producing larger autos and SUVs for North America, the deal entails little overlap in products or markets. In a recession, that may be no good thing, said David Arnold, an analyst at Credit Suisse in London.
“The Chrysler deal does nothing to solve the overcapacity problem,” said Arnold, who also favors a tie-up between Fiat and Peugeot. An all-European deal could “offset spiraling costs and declining volumes with savings from joint procurement, capital expenditure and research and development.”
Obvious overlaps between the activities of Fiat and Peugeot “would allow significant potential savings via joint purchasing from common suppliers,” Credit Suisse said in a note Jan. 12, when it predicted a tie-up between the two companies some time this year. Technology and components would also be spread across more models, reducing overall development costs, the bank said.
Marchionne, 56, is targeting the U.S. following his success in ending four years of losses at Fiat in 2005 with the introduction of new versions of the Punto and Panda and a revival of the 500 minicar, as well as partnerships with competitors to spread costs.
Not Last
Addressing analysts following an earnings announcement yesterday, Marchionne refused to comment directly on the prospects for Fiat getting together with specific companies.
“Chrysler is a first step in that direction -- it’s certainly not the last,” Marchionne said, adding that the U.S. company will have a “pretty good opportunity” to recover from the brink of bankruptcy with the help of Fiat’s technology and opportunities for joint savings.
Fiat, controlled by the Agnelli family, said 2009 profit will be “in excess of 300 million euros,” compared with an initial target of at least 2.9 billion euros. The company burned 30 million euros a day in the fourth quarter, causing net income to tumble 71 percent to 163 million euros.
“We’re telling our clients not to be distracted,” said Adam Jonas, an analyst at Morgan Stanley in London who rates the company “underweight.” “The stock’s not going to trade on how well re-badged Fiats are going to do in the U.S. in 2012.”
When Fiat supplies small cars in the U.S., they will be “re-badged” under one of Chrysler’s brands.
World No. 3
A combination of Fiat, Chrysler and Peugeot-Citroen would create the world’s third-biggest carmaker by volume after Toyota Motor Corp. and General Motors Corp. and would be tough to manage, said Sven Kreitmair, a credit analyst at UniCredit in Munich who cautions against a three-way deal. Obstacles would include the involvement of three different governments, he said.
Peugeot spokesman Pierre-Olivier Salmon declined to comment on the likelihood of a deal with Fiat. Bayerische Motoren Werke of Germany, the largest maker of luxury cars, aims to continue talks about cooperation between its Mini unit and Fiat’s Alfa Romeo brand, spokesman Marc Hassinger said Jan. 21. The company couldn’t be reached for further comment yesterday.
The French state, which has pledged as much as 6 billion euros to help Peugeot and Renault survive the recession, has already sounded a cautious note about any tie-up with Fiat.
“I’m not convinced consolidation is the answer,” Industry Minister Luc Chatel said in a Bloomberg Television interview Jan. 13. “What we need to do is improve compeitiveness so that we can keep automobile production in France.”
Marchionne, credited with transforming Fiat from the laggard of the European auto industry into one of the continent’s most fashionable brands, said yesterday he’s “willing to start a dialogue” with any company that favors consolidation.
“A partnership with a European rival is vital,” said Emanuele Vizzini, who helps manage about $1.2 billion at Investitori SGR in Milan and lists PSA Peugeot Citroen of France and Germany’s BMW as two “natural candidates” for a merger with the Turin, Italy-based company.
European car sales plunged the most in 15 years in 2008, causing automakers to lay off workers and idle plants to clear stocks. Fiat yesterday cut its earnings forecast and said it won’t pay a dividend. Marchionne last month suggested the crisis could leave three European volume producers standing: Volkswagen AG, Renault SA and a third company built in a bout of consolidation.
The CEO acknowledged yesterday that many in the industry view a Fiat-Peugeot combination as a “marriage made in heaven.” He said he needs to proceed “softly and quietly” toward his goals.
Fiat’s alliance with Chrysler will see it transfer small-car technology to the Auburn Hills, Michigan-based automaker in return for a 35 percent stake and access to its U.S. plants, the companies said Jan. 20.
No Solution
With Fiat’s sales strongest in Europe and Latin America and Chrysler focused on producing larger autos and SUVs for North America, the deal entails little overlap in products or markets. In a recession, that may be no good thing, said David Arnold, an analyst at Credit Suisse in London.
“The Chrysler deal does nothing to solve the overcapacity problem,” said Arnold, who also favors a tie-up between Fiat and Peugeot. An all-European deal could “offset spiraling costs and declining volumes with savings from joint procurement, capital expenditure and research and development.”
Obvious overlaps between the activities of Fiat and Peugeot “would allow significant potential savings via joint purchasing from common suppliers,” Credit Suisse said in a note Jan. 12, when it predicted a tie-up between the two companies some time this year. Technology and components would also be spread across more models, reducing overall development costs, the bank said.
Marchionne, 56, is targeting the U.S. following his success in ending four years of losses at Fiat in 2005 with the introduction of new versions of the Punto and Panda and a revival of the 500 minicar, as well as partnerships with competitors to spread costs.
Not Last
Addressing analysts following an earnings announcement yesterday, Marchionne refused to comment directly on the prospects for Fiat getting together with specific companies.
“Chrysler is a first step in that direction -- it’s certainly not the last,” Marchionne said, adding that the U.S. company will have a “pretty good opportunity” to recover from the brink of bankruptcy with the help of Fiat’s technology and opportunities for joint savings.
Fiat, controlled by the Agnelli family, said 2009 profit will be “in excess of 300 million euros,” compared with an initial target of at least 2.9 billion euros. The company burned 30 million euros a day in the fourth quarter, causing net income to tumble 71 percent to 163 million euros.
“We’re telling our clients not to be distracted,” said Adam Jonas, an analyst at Morgan Stanley in London who rates the company “underweight.” “The stock’s not going to trade on how well re-badged Fiats are going to do in the U.S. in 2012.”
When Fiat supplies small cars in the U.S., they will be “re-badged” under one of Chrysler’s brands.
World No. 3
A combination of Fiat, Chrysler and Peugeot-Citroen would create the world’s third-biggest carmaker by volume after Toyota Motor Corp. and General Motors Corp. and would be tough to manage, said Sven Kreitmair, a credit analyst at UniCredit in Munich who cautions against a three-way deal. Obstacles would include the involvement of three different governments, he said.
Peugeot spokesman Pierre-Olivier Salmon declined to comment on the likelihood of a deal with Fiat. Bayerische Motoren Werke of Germany, the largest maker of luxury cars, aims to continue talks about cooperation between its Mini unit and Fiat’s Alfa Romeo brand, spokesman Marc Hassinger said Jan. 21. The company couldn’t be reached for further comment yesterday.
The French state, which has pledged as much as 6 billion euros to help Peugeot and Renault survive the recession, has already sounded a cautious note about any tie-up with Fiat.
“I’m not convinced consolidation is the answer,” Industry Minister Luc Chatel said in a Bloomberg Television interview Jan. 13. “What we need to do is improve compeitiveness so that we can keep automobile production in France.”
Japan Stocks Drop, Extend Weekly Slump, on Sony Loss Forecast
Jan. 23 (Bloomberg) -- Japanese stocks dropped, deepening the longest weekly losing streak in more than three months, as Sony Corp.’s loss forecast and worsening economic figures indicated the recession will be prolonged.
Sony, the world’s No. 2 maker of electronics, plunged 6.5 percent after projecting a loss almost four times greater than analyst estimates as sales of televisions and cameras sank. Office-equipment maker Ricoh Co. slumped 4.5 percent on a Nikkei newspaper report it may cut its profit target. JFE Holdings Inc., the No. 3 steelmaker globally, slid 5.8 percent as an economist survey showed China’s economic slowdown will deepen.
“The bad news about earnings and economies is accumulating,” Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of $53 billion, said in an interview with Bloomberg Television. “Sony’s loss forecast was an order of magnitude greater than what some analysts had estimated.”
The Nikkei 225 Stock Average declined 211.23, or 2.6 percent, to 7,840.51 as of 10 a.m. in Tokyo, while the broader Topix index fell 13.73, or 1.7 percent, to 782.18. The Nikkei was poised for a 4.7 percent slump this week and the Topix slid 4.4 percent. Both gauges were set for third-straight weekly declines, the longest since the period ended Oct. 10.
The Nikkei tumbled by a record 42 percent last year as the world’s biggest economies slipped into recession, and the gauge has lost another 12 percent in 2009. The Bank of Japan yesterday said the nation’s economy will shrink 1.8 percent in the year to March 31 and 2 percent next fiscal year.
Fundamental Change
Sony yesterday joined Toyota Motor Corp. in forecasting an operating loss as the global recession worsened and a stronger yen reduced the value of repatriated overseas sales. Sony expects a record 260 billion yen ($2.9 billion) operating loss for the year to March 31. Analysts had estimated a loss of 70 billion yen.
The electronics maker “will need some time to fundamentally change the business model,” Koya Tabata, an analyst for Credit Suisse Group, wrote in a report dated yesterday. He maintained his “underperform” rating on the shares.
Sony dropped 6.5 percent to 1,813 yen, set for the lowest close since Dec. 24. Bigger rival Panasonic Corp. slid 4 percent to 1,072 yen, and Canon Inc., the world’s biggest digital-camera maker, dived 4.7 percent to 2,555 yen. Hitachi Maxell Ltd., a maker of audio and video tapes, plunged by its 100 yen limit to 780 yen after widening its annual loss estimate.
Deeper Slump
JFE retreated 5.8 percent to 2,200 yen, and Kobe Steel Ltd. slipped 3.5 percent to 137 yen. Nippon Steel Corp., the world’s second-largest maker of the alloy, lost 2.9 percent to 271 yen. A gauge of steelmakers posted the sharpest drop among 33 industry groups on the Topix.
China’s economic slowdown, already the deepest in seven years, is set to worsen, darkening the outlook for suppliers of raw materials. The nation’s gross domestic product will grow 6.3 percent this quarter from a year earlier, according to the median estimate of nine economists surveyed by Bloomberg News. The survey was conducted after yesterday’s report that China’s economy expanded 6.8 percent in the fourth quarter.
Ricoh, Japan’s No. 2 maker of office machines, slumped 4.5 percent to 1,081 yen. Falling sales of copiers and a stronger yen may push the company to cut its full-year profit forecast, the Nikkei newspaper said today.
Nikkei futures expiring in March retreated 2.5 percent to 7,830 in Osaka and slumped 2.4 percent to 7,830 in Singapore.
Sony, the world’s No. 2 maker of electronics, plunged 6.5 percent after projecting a loss almost four times greater than analyst estimates as sales of televisions and cameras sank. Office-equipment maker Ricoh Co. slumped 4.5 percent on a Nikkei newspaper report it may cut its profit target. JFE Holdings Inc., the No. 3 steelmaker globally, slid 5.8 percent as an economist survey showed China’s economic slowdown will deepen.
“The bad news about earnings and economies is accumulating,” Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of $53 billion, said in an interview with Bloomberg Television. “Sony’s loss forecast was an order of magnitude greater than what some analysts had estimated.”
The Nikkei 225 Stock Average declined 211.23, or 2.6 percent, to 7,840.51 as of 10 a.m. in Tokyo, while the broader Topix index fell 13.73, or 1.7 percent, to 782.18. The Nikkei was poised for a 4.7 percent slump this week and the Topix slid 4.4 percent. Both gauges were set for third-straight weekly declines, the longest since the period ended Oct. 10.
The Nikkei tumbled by a record 42 percent last year as the world’s biggest economies slipped into recession, and the gauge has lost another 12 percent in 2009. The Bank of Japan yesterday said the nation’s economy will shrink 1.8 percent in the year to March 31 and 2 percent next fiscal year.
Fundamental Change
Sony yesterday joined Toyota Motor Corp. in forecasting an operating loss as the global recession worsened and a stronger yen reduced the value of repatriated overseas sales. Sony expects a record 260 billion yen ($2.9 billion) operating loss for the year to March 31. Analysts had estimated a loss of 70 billion yen.
The electronics maker “will need some time to fundamentally change the business model,” Koya Tabata, an analyst for Credit Suisse Group, wrote in a report dated yesterday. He maintained his “underperform” rating on the shares.
Sony dropped 6.5 percent to 1,813 yen, set for the lowest close since Dec. 24. Bigger rival Panasonic Corp. slid 4 percent to 1,072 yen, and Canon Inc., the world’s biggest digital-camera maker, dived 4.7 percent to 2,555 yen. Hitachi Maxell Ltd., a maker of audio and video tapes, plunged by its 100 yen limit to 780 yen after widening its annual loss estimate.
Deeper Slump
JFE retreated 5.8 percent to 2,200 yen, and Kobe Steel Ltd. slipped 3.5 percent to 137 yen. Nippon Steel Corp., the world’s second-largest maker of the alloy, lost 2.9 percent to 271 yen. A gauge of steelmakers posted the sharpest drop among 33 industry groups on the Topix.
China’s economic slowdown, already the deepest in seven years, is set to worsen, darkening the outlook for suppliers of raw materials. The nation’s gross domestic product will grow 6.3 percent this quarter from a year earlier, according to the median estimate of nine economists surveyed by Bloomberg News. The survey was conducted after yesterday’s report that China’s economy expanded 6.8 percent in the fourth quarter.
Ricoh, Japan’s No. 2 maker of office machines, slumped 4.5 percent to 1,081 yen. Falling sales of copiers and a stronger yen may push the company to cut its full-year profit forecast, the Nikkei newspaper said today.
Nikkei futures expiring in March retreated 2.5 percent to 7,830 in Osaka and slumped 2.4 percent to 7,830 in Singapore.
Tuesday, January 20, 2009
Yen Falls as Gain in U.S. Stock Futures Spurs Demand for Yield Email | Print | A A A
Jan. 21 (Bloomberg) -- The yen fell, reversing a gain, on speculation an advance in U.S. stock futures will give investors more confidence to buy higher-yielding assets funded in the Japanese currency.
The yen snapped a two-day winning streak against the dollar after U.S. President Barack Obama called on Americans to take responsibility for rebuilding the economy. Japan’s currency also ended two days of gains versus the euro after a technical chart signaled its 9 percent advance this month was excessive.
“There’s talk that some investors are selling the yen for dollars and euros as they seem to perceive the dollar-yen and the euro-yen reached attractive buying levels,” said Toshihiko Sakai, head of trading for foreign exchange and financial products in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s biggest bank. “The yen has also risen quite a bit so some players may be reducing long positions in the currency.” A long position is a bet an asset will gain.
The yen fell to 90.05 versus the dollar as of 11:27 a.m. in Tokyo from 89.76 late in New York yesterday. It earlier rose as high as 89.69. Japan’s currency dropped to 116.41 per euro from 115.85 late yesterday, after touching 115.30.
The yen snapped a two-day winning streak against the dollar after U.S. President Barack Obama called on Americans to take responsibility for rebuilding the economy. Japan’s currency also ended two days of gains versus the euro after a technical chart signaled its 9 percent advance this month was excessive.
“There’s talk that some investors are selling the yen for dollars and euros as they seem to perceive the dollar-yen and the euro-yen reached attractive buying levels,” said Toshihiko Sakai, head of trading for foreign exchange and financial products in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s biggest bank. “The yen has also risen quite a bit so some players may be reducing long positions in the currency.” A long position is a bet an asset will gain.
The yen fell to 90.05 versus the dollar as of 11:27 a.m. in Tokyo from 89.76 late in New York yesterday. It earlier rose as high as 89.69. Japan’s currency dropped to 116.41 per euro from 115.85 late yesterday, after touching 115.30.
Indian Stocks Decline on Concern of Deepening Global Recession
Jan. 20 (Bloomberg) -- Indian stocks fell for the first time in three days after the U.K. widened a rescue plan for Royal Bank of Scotland Group Plc, sparking concerns that more lenders will need bailouts as the global recession deepens.
ICICI Bank Ltd., the nation’s second-largest bank, and HDFC Bank Ltd, the third-biggest, both declined the most in more than a month.
“RBS shook us up again,” said Shashank Khade, who helps manage $400 million at Kotak Securities Ltd. in Mumbai. “It shows that the rot is much deeper and the downside each bank faces has not been estimated properly.”
The Bombay Stock Exchange’s Sensitive Index, or Sensex, retreated 229.02, or 2.5 percent, to 9,100.55. The S&P CNX Nifty Index on the National Stock Exchange fell 1.7 percent to 2,796.60. The BSE 200 Index slid 2 percent to 1,087.29. Nifty futures for January delivery declined 2 percent to 2,777.
RBS forecast a loss of as much as 28 billion pounds ($40 billion) this year, the biggest in British history.
ICICI fell 4 percent to 396.30 rupees, the lowest since Dec. 8. Housing Development Finance dropped 3.9 percent to 1,485.80 rupees. HDFC Bank Ltd., the No. 3 lender, fell 3 percent to 912.45 rupees, the lowest since Dec. 8. State Bank of India, the largest, slid 2.9 percent to 1,112.90.
Overseas funds sold a net 5.63 billion rupees ($116 million) of Indian stocks on Jan. 16, according to the nation’s stock market regulator.
The following were among the most active shares traded on the Bombay and National stock exchanges. Stock symbols are in parentheses after company names:
Power companies: NTPC Ltd. (NATP IN) India’s biggest power generator, rose 7.55 rupees, or 4.2 percent, to 185.95. Tata Power Ltd. (TPWR IN) the second-biggest, added 8.5 rupees, or 1.1 percent, to 768.55. Reliance Infrastructure Ltd. (RELI IN), an electricity generator and distributor, gained 16.05 rupees, or 3 percent, to 551.40. Power Grid Corp. (PWGR IN), India’s biggest electricity transmission company, jumped 8.75 rupees, or 11 percent, to 87. Neyveli Lignite Corp. (NLC IN), a power producer, jumped 10.05 rupees, or 13 percent, to 87.05.
India plans to increase the rate of return on equity for power projects in a bid to attract investments. The rate of return on equity will be raised to 15.5 percent from 14 percent, India’s electricity regulator said in a statement in New Delhi today. For projects completed on schedule, the rate of return on equity will be 16 percent, the regulator said.
MindTree Consulting Ltd. (MTCL IN) dropped 22.20 rupees, or 9.3 percent, to 216.80, its lowest since listing in March 2007. The Indian computer-services provider set up by former Wipro Ltd. executives said group profit in the three months ended Dec. 31 dropped 56 percent to 87.2 million rupees.
Polaris Software Lab Ltd. (POL IN) surged 10 rupees, or 29 percent, to 44.35, the most since Jan. 2008. The Indian software- services provider to customers such as Citigroup Inc. said profit in the quarter ended Dec. 31 rose 94 percent to 371.7 million rupees.
Maytas Infra Ltd. (MAY IN) dropped 5.55 rupees, falling for an eighth day by its 5 percent daily limit, to 105.40. India ordered its fraud office to probe two companies owned by the founders of Satyam Computer Services Ltd. as they may be linked to the $1 billion fraud at the software maker.
The Indian software maker at the center of a fraud investigation for overstating earnings has a “nexus” with Maytas Properties Ltd. and Maytas Infra, Prem Chand Gupta, Company Affairs Minister, said yesterday.
Satyam rose 1.35 rupees, or 5.3 percent, to 26.85.
Tata Communications Ltd. (TCOM IN) slid 15.3 rupees, or 3.3 percent, to 449.55. The phone company controlled by India’s Tata Group has acquired the 30 percent stake in Neotel Ltd. previously owned by South Africa’s Transnet Ltd. and Eskom Holdings Ltd.
ICICI Bank Ltd., the nation’s second-largest bank, and HDFC Bank Ltd, the third-biggest, both declined the most in more than a month.
“RBS shook us up again,” said Shashank Khade, who helps manage $400 million at Kotak Securities Ltd. in Mumbai. “It shows that the rot is much deeper and the downside each bank faces has not been estimated properly.”
The Bombay Stock Exchange’s Sensitive Index, or Sensex, retreated 229.02, or 2.5 percent, to 9,100.55. The S&P CNX Nifty Index on the National Stock Exchange fell 1.7 percent to 2,796.60. The BSE 200 Index slid 2 percent to 1,087.29. Nifty futures for January delivery declined 2 percent to 2,777.
RBS forecast a loss of as much as 28 billion pounds ($40 billion) this year, the biggest in British history.
ICICI fell 4 percent to 396.30 rupees, the lowest since Dec. 8. Housing Development Finance dropped 3.9 percent to 1,485.80 rupees. HDFC Bank Ltd., the No. 3 lender, fell 3 percent to 912.45 rupees, the lowest since Dec. 8. State Bank of India, the largest, slid 2.9 percent to 1,112.90.
Overseas funds sold a net 5.63 billion rupees ($116 million) of Indian stocks on Jan. 16, according to the nation’s stock market regulator.
The following were among the most active shares traded on the Bombay and National stock exchanges. Stock symbols are in parentheses after company names:
Power companies: NTPC Ltd. (NATP IN) India’s biggest power generator, rose 7.55 rupees, or 4.2 percent, to 185.95. Tata Power Ltd. (TPWR IN) the second-biggest, added 8.5 rupees, or 1.1 percent, to 768.55. Reliance Infrastructure Ltd. (RELI IN), an electricity generator and distributor, gained 16.05 rupees, or 3 percent, to 551.40. Power Grid Corp. (PWGR IN), India’s biggest electricity transmission company, jumped 8.75 rupees, or 11 percent, to 87. Neyveli Lignite Corp. (NLC IN), a power producer, jumped 10.05 rupees, or 13 percent, to 87.05.
India plans to increase the rate of return on equity for power projects in a bid to attract investments. The rate of return on equity will be raised to 15.5 percent from 14 percent, India’s electricity regulator said in a statement in New Delhi today. For projects completed on schedule, the rate of return on equity will be 16 percent, the regulator said.
MindTree Consulting Ltd. (MTCL IN) dropped 22.20 rupees, or 9.3 percent, to 216.80, its lowest since listing in March 2007. The Indian computer-services provider set up by former Wipro Ltd. executives said group profit in the three months ended Dec. 31 dropped 56 percent to 87.2 million rupees.
Polaris Software Lab Ltd. (POL IN) surged 10 rupees, or 29 percent, to 44.35, the most since Jan. 2008. The Indian software- services provider to customers such as Citigroup Inc. said profit in the quarter ended Dec. 31 rose 94 percent to 371.7 million rupees.
Maytas Infra Ltd. (MAY IN) dropped 5.55 rupees, falling for an eighth day by its 5 percent daily limit, to 105.40. India ordered its fraud office to probe two companies owned by the founders of Satyam Computer Services Ltd. as they may be linked to the $1 billion fraud at the software maker.
The Indian software maker at the center of a fraud investigation for overstating earnings has a “nexus” with Maytas Properties Ltd. and Maytas Infra, Prem Chand Gupta, Company Affairs Minister, said yesterday.
Satyam rose 1.35 rupees, or 5.3 percent, to 26.85.
Tata Communications Ltd. (TCOM IN) slid 15.3 rupees, or 3.3 percent, to 449.55. The phone company controlled by India’s Tata Group has acquired the 30 percent stake in Neotel Ltd. previously owned by South Africa’s Transnet Ltd. and Eskom Holdings Ltd.
Tulsa Journal In McCain Country, Acceptance of Obama Grows
TULSA, Okla. — “I voted for John McCain and still would,” said Tim Driskill, in a flatly drawled declaration of certainty that still speaks for many in this place underwhelmed last November by the charms of Barack Obama, then the Democratic nominee for president.
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Billy Joe Daugherty, pastor at Victory Christian Center in Tulsa, Okla., led a prayer Sunday for the new president.
Not a single county in Oklahoma stirred from the orderly phalanx marching behind Mr. McCain, the senator from Arizona who was the Republican nominee, and Mr. Driskill, the owner of an insurance agency in downtown Tulsa, said he was proud to be in those ranks. Statewide, two out of three voters supported Mr. McCain, the highest percentage in the nation.
But that staunchly Republican, conservative Oklahoma is harder to find now. While there are countless Mr. Driskills here — and hardly anyone doubts that Mr. McCain would easily win again in a redo of the vote — there are also new fractures and fault lines as some voters have shifted toward accepting what the rest of the country wrought in giving Mr. Obama a lopsided victory.
In interviews in the week leading up to Mr. Obama’s inauguration, many people here said a tolerant spirit toward his presidency has been hastened, paradoxically, by some of the same groups that voted mostly Republican in the election. Those include active or former military personnel, and people who identify themselves as evangelical Christians, two groups with traditions of respecting hierarchical order and strong leadership.
“Oklahomans understand and respect the elections process,” said Chris Benge, a Republican from Tulsa who serves as speaker of the Oklahoma House. “Once the president has been determined, the vast majority of people are willing to get behind him.”
That does not mean, Mr. Benge said, that Mr. Obama has won Oklahomans over, but only that the campaign season has ended. Do not look for Mr. Benge at any inaugural parties. He said he would be watching what he could of the ceremonies on television in his office between meetings.
But some people have, in fact, changed their minds. Leonard Nelson, 63, a 23-year veteran of both the Army and the Navy, said he had voted for Mr. McCain mainly through military fealty, believing that Mr. McCain’s own military record would make him a better commander in chief.
“But I’ve come to think the better man won,” said Mr. Nelson, owner of the Humidor Cigar Shop, an aromatic haven of pipes, blended tobaccos and customers on a first-name basis. Mr. Nelson said that Mr. Obama, through his cabinet selections, sent a signal of centrist government intention that feels all right to him.
Mr. Nelson’s customers like Cliff A. Stark, a lawyer and pipe smoker, were more representative of the spirit of pained resignation that is common here. “It’s just something you can’t do anything about,” Mr. Stark said.
At one of the city’s biggest evangelical megachurches, Victory Christian Center, with 17,000 members, there were also mixed messages of enthusiasm.
The church’s pastor and founder, Billy Joe Daugherty, said that the selection of the Rev. Rick Warren, a prominent evangelical minister from California, to give the inaugural invocation went a long way to easing fears in Mr. Daugherty’s mostly conservative congregation about a liberal social agenda. Mr. Obama’s selection of Mr. Warren has been denounced by many gay rights advocates and other liberal groups.
“What I’m sensing from Obama in making the choice he did — he’s saying to all groups, ‘Why don’t we come together?’ ” Mr. Daugherty said in an interview.
Inauguration Day, though, will be mostly business as usual. The 5th through 12th graders at Victory Christian Center will watch the ceremony on a big screen, but Mr. Daugherty said he would be traveling. Church staff members might watch in their offices, he said.
To be sure, Oklahoma remains subtly distinct from the national pattern. The state unemployment rate, while up almost a percentage point from where it stood in the fall, is still well below the national average. And the state budget, for the moment, is running a surplus.
Gun sellers have also prospered, marketing the notion that the Obama administration might try to tighten rules on gun ownership. What had been a monthly gun show near downtown has been held twice a month since November.
But an economy that looked solid enough two months ago to feel insulated — or at least not shaky enough to nudge many voters toward the idea of changing party control of the White House — has also shivered since then in the chill breeze of recession.
Ron Green saw a change in mid-November. Sales at the downtown deli owned by his wife, Susan, called The Greens on Boulder, dropped 30 percent in one week, compared with the previous year. “Business fell off a cliff,” said Mr. Green, who pitches in at lunch.
In conservations with customers, he said he had heard more business people agree lately that an Obama stimulus plan was sounding pretty good for the city.
Some black people here say their racial anxiety has heightened since the election, an ill-defined uneasiness they feel in mixed-race situations. With 380,000 residents, Tulsa is 70 percent white, 15 percent black and 7 percent Hispanic.
Princetta Rudd-Newman is living through that mix of hope and anxiety. She exults one minute over Mr. Obama’s election, she said, and frets the next over the future of the city she loves.
Her family has a long history here — an uncle began one of Tulsa’s oldest black-owned businesses, a funeral home, in 1917 — and Ms. Rudd-Newman has been trying this month to organize an inauguration party in the city’s historically black north end. But the money has not been coming in, especially at the $150-a-ticket Patriot level, pitched to local white-dominated corporations.
Ms. Rudd-Newman said she did not think it was about race. “It’s financial, in my perception,” she said. “It’s hard times.”
But it is also a time, for many people, to wait and see. The political debate over what might be has developed into more practical considerations about what can be done with the world as it is.
“Nothing’s changed,” said John Rittenoure, a software developer for Tulsa’s electric utility company, referring to his opinion of Mr. Obama. “But you’ve got to give the guy a chance, see what he can do.”
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Obama Reaches Out for McCain’s Counsel (January 19, 2009)
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Brandi Simons for The New York Times
Billy Joe Daugherty, pastor at Victory Christian Center in Tulsa, Okla., led a prayer Sunday for the new president.
Not a single county in Oklahoma stirred from the orderly phalanx marching behind Mr. McCain, the senator from Arizona who was the Republican nominee, and Mr. Driskill, the owner of an insurance agency in downtown Tulsa, said he was proud to be in those ranks. Statewide, two out of three voters supported Mr. McCain, the highest percentage in the nation.
But that staunchly Republican, conservative Oklahoma is harder to find now. While there are countless Mr. Driskills here — and hardly anyone doubts that Mr. McCain would easily win again in a redo of the vote — there are also new fractures and fault lines as some voters have shifted toward accepting what the rest of the country wrought in giving Mr. Obama a lopsided victory.
In interviews in the week leading up to Mr. Obama’s inauguration, many people here said a tolerant spirit toward his presidency has been hastened, paradoxically, by some of the same groups that voted mostly Republican in the election. Those include active or former military personnel, and people who identify themselves as evangelical Christians, two groups with traditions of respecting hierarchical order and strong leadership.
“Oklahomans understand and respect the elections process,” said Chris Benge, a Republican from Tulsa who serves as speaker of the Oklahoma House. “Once the president has been determined, the vast majority of people are willing to get behind him.”
That does not mean, Mr. Benge said, that Mr. Obama has won Oklahomans over, but only that the campaign season has ended. Do not look for Mr. Benge at any inaugural parties. He said he would be watching what he could of the ceremonies on television in his office between meetings.
But some people have, in fact, changed their minds. Leonard Nelson, 63, a 23-year veteran of both the Army and the Navy, said he had voted for Mr. McCain mainly through military fealty, believing that Mr. McCain’s own military record would make him a better commander in chief.
“But I’ve come to think the better man won,” said Mr. Nelson, owner of the Humidor Cigar Shop, an aromatic haven of pipes, blended tobaccos and customers on a first-name basis. Mr. Nelson said that Mr. Obama, through his cabinet selections, sent a signal of centrist government intention that feels all right to him.
Mr. Nelson’s customers like Cliff A. Stark, a lawyer and pipe smoker, were more representative of the spirit of pained resignation that is common here. “It’s just something you can’t do anything about,” Mr. Stark said.
At one of the city’s biggest evangelical megachurches, Victory Christian Center, with 17,000 members, there were also mixed messages of enthusiasm.
The church’s pastor and founder, Billy Joe Daugherty, said that the selection of the Rev. Rick Warren, a prominent evangelical minister from California, to give the inaugural invocation went a long way to easing fears in Mr. Daugherty’s mostly conservative congregation about a liberal social agenda. Mr. Obama’s selection of Mr. Warren has been denounced by many gay rights advocates and other liberal groups.
“What I’m sensing from Obama in making the choice he did — he’s saying to all groups, ‘Why don’t we come together?’ ” Mr. Daugherty said in an interview.
Inauguration Day, though, will be mostly business as usual. The 5th through 12th graders at Victory Christian Center will watch the ceremony on a big screen, but Mr. Daugherty said he would be traveling. Church staff members might watch in their offices, he said.
To be sure, Oklahoma remains subtly distinct from the national pattern. The state unemployment rate, while up almost a percentage point from where it stood in the fall, is still well below the national average. And the state budget, for the moment, is running a surplus.
Gun sellers have also prospered, marketing the notion that the Obama administration might try to tighten rules on gun ownership. What had been a monthly gun show near downtown has been held twice a month since November.
But an economy that looked solid enough two months ago to feel insulated — or at least not shaky enough to nudge many voters toward the idea of changing party control of the White House — has also shivered since then in the chill breeze of recession.
Ron Green saw a change in mid-November. Sales at the downtown deli owned by his wife, Susan, called The Greens on Boulder, dropped 30 percent in one week, compared with the previous year. “Business fell off a cliff,” said Mr. Green, who pitches in at lunch.
In conservations with customers, he said he had heard more business people agree lately that an Obama stimulus plan was sounding pretty good for the city.
Some black people here say their racial anxiety has heightened since the election, an ill-defined uneasiness they feel in mixed-race situations. With 380,000 residents, Tulsa is 70 percent white, 15 percent black and 7 percent Hispanic.
Princetta Rudd-Newman is living through that mix of hope and anxiety. She exults one minute over Mr. Obama’s election, she said, and frets the next over the future of the city she loves.
Her family has a long history here — an uncle began one of Tulsa’s oldest black-owned businesses, a funeral home, in 1917 — and Ms. Rudd-Newman has been trying this month to organize an inauguration party in the city’s historically black north end. But the money has not been coming in, especially at the $150-a-ticket Patriot level, pitched to local white-dominated corporations.
Ms. Rudd-Newman said she did not think it was about race. “It’s financial, in my perception,” she said. “It’s hard times.”
But it is also a time, for many people, to wait and see. The political debate over what might be has developed into more practical considerations about what can be done with the world as it is.
“Nothing’s changed,” said John Rittenoure, a software developer for Tulsa’s electric utility company, referring to his opinion of Mr. Obama. “But you’ve got to give the guy a chance, see what he can do.”
Satyam Said to Draw SEC Scrutiny in Accounting Case
Jan. 20 (Bloomberg) -- The U.S. Securities and Exchange Commission is investigating whether India’s Satyam Computer Services Ltd. misled investors in an alleged $1 billion accounting fraud, two people familiar with the matter said.
Officials from the SEC have discussed the case with counterparts in India and plan to coordinate inquiries involving the nation’s fourth-biggest software exporter, one of the people said. The people declined to be identified because the SEC’s role in the case isn’t public.
Satyam Chairman Ramalinga Raju said on Jan. 7 that he had fabricated $1 billion of cash and assets, sparking an 85 percent plunge in the stock. American depositary receipts for the Hyderabad-based company trade in New York, requiring it to file financial statements with U.S. regulators and submit to their jurisdiction.
“It’s too big a matter for the SEC to take a pass,” said Charles Clark, a former SEC enforcement attorney who now works at Kirkland & Ellis LLP in Washington. “What will make it challenging is the practicalities of investigating a fraud in a country that’s incredibly far away.”
SEC spokesman John Nester declined to comment. “We haven’t got any information about the investigation,” a Satyam spokesperson said in a text message.
Price Waterhouse
India’s inquiries are being led by teams from the Andhra Pradesh state police’s criminal investigation department, the markets regulator, the independent accounting body and the government’s serious-fraud office.
In a Jan. 7 letter to Satyam directors, Raju said he had falsified the accounts “for several years” and quit. He and his brother Rama, the managing director, were detained Jan. 9 on charges including forgery, breach of trust and criminal conspiracy. India’s government fired other directors and appointed a new board to oversee the company.
The SEC will probably examine whether Satyam’s auditor, Price Waterhouse India, ignored irregularities and may look into what role the accounting firm’s U.S. affiliate played in checking financial reports, said James Coffman, a former SEC attorney who investigated auditors including Arthur Andersen LLP.
“Even if the U.S. firm didn’t perform the audit, they may have been reckless in terms of signing off on the audit or knowing that the audit didn’t comply” with U.S. accounting standards, Coffman said. Regulators haven’t accused the auditing firm of wrongdoing in the case.
Suspect Documents?
Mike Davies, a PricewaterhouseCoopers LLP spokesman who is based in London, said the U.S. firm “was the reviewer for the U.S. filings for Satyam.” He declined to elaborate. A spokesman for Price Waterhouse India couldn’t be reached for comment.
In a letter to Satyam directors disclosed to the Bombay Stock Exchange Jan. 14, the firm said its audit reports for the company could no longer be relied upon after Raju’s alleged admissions.
“We placed reliance on management controls over financial reporting, and the information and explanations provided by the management,” the firm said in the letter.
PricewaterhouseCoopers LLP has a “vigorous global network” allowing member firms to “operate simultaneously as the most local and the most global of businesses,” the firm says on its Web site. The site also includes a disclaimer that each member firm “is a separate and independent legal entity.”
Satyam had used forged documents from four banks including Citigroup Inc. and HSBC Holdings Plc to inflate assets by $1 billion, the Wall Street Journal reported today, citing an unidentified person familiar with India’s probe.
Officials from the SEC have discussed the case with counterparts in India and plan to coordinate inquiries involving the nation’s fourth-biggest software exporter, one of the people said. The people declined to be identified because the SEC’s role in the case isn’t public.
Satyam Chairman Ramalinga Raju said on Jan. 7 that he had fabricated $1 billion of cash and assets, sparking an 85 percent plunge in the stock. American depositary receipts for the Hyderabad-based company trade in New York, requiring it to file financial statements with U.S. regulators and submit to their jurisdiction.
“It’s too big a matter for the SEC to take a pass,” said Charles Clark, a former SEC enforcement attorney who now works at Kirkland & Ellis LLP in Washington. “What will make it challenging is the practicalities of investigating a fraud in a country that’s incredibly far away.”
SEC spokesman John Nester declined to comment. “We haven’t got any information about the investigation,” a Satyam spokesperson said in a text message.
Price Waterhouse
India’s inquiries are being led by teams from the Andhra Pradesh state police’s criminal investigation department, the markets regulator, the independent accounting body and the government’s serious-fraud office.
In a Jan. 7 letter to Satyam directors, Raju said he had falsified the accounts “for several years” and quit. He and his brother Rama, the managing director, were detained Jan. 9 on charges including forgery, breach of trust and criminal conspiracy. India’s government fired other directors and appointed a new board to oversee the company.
The SEC will probably examine whether Satyam’s auditor, Price Waterhouse India, ignored irregularities and may look into what role the accounting firm’s U.S. affiliate played in checking financial reports, said James Coffman, a former SEC attorney who investigated auditors including Arthur Andersen LLP.
“Even if the U.S. firm didn’t perform the audit, they may have been reckless in terms of signing off on the audit or knowing that the audit didn’t comply” with U.S. accounting standards, Coffman said. Regulators haven’t accused the auditing firm of wrongdoing in the case.
Suspect Documents?
Mike Davies, a PricewaterhouseCoopers LLP spokesman who is based in London, said the U.S. firm “was the reviewer for the U.S. filings for Satyam.” He declined to elaborate. A spokesman for Price Waterhouse India couldn’t be reached for comment.
In a letter to Satyam directors disclosed to the Bombay Stock Exchange Jan. 14, the firm said its audit reports for the company could no longer be relied upon after Raju’s alleged admissions.
“We placed reliance on management controls over financial reporting, and the information and explanations provided by the management,” the firm said in the letter.
PricewaterhouseCoopers LLP has a “vigorous global network” allowing member firms to “operate simultaneously as the most local and the most global of businesses,” the firm says on its Web site. The site also includes a disclaimer that each member firm “is a separate and independent legal entity.”
Satyam had used forged documents from four banks including Citigroup Inc. and HSBC Holdings Plc to inflate assets by $1 billion, the Wall Street Journal reported today, citing an unidentified person familiar with India’s probe.
Singapore Economy May Post Biggest Decline on Record
Jan. 21 (Bloomberg) -- Singapore’s economy may shrink a record 5 percent this year as exports slump, increasing pressure on the government to take steps to help businesses and consumers.
Singapore is going through its sharpest and deepest recession, which may be the longest in the country’s history, said Ravi Menon, an official at the trade ministry. Gross domestic product may shrink 2 percent to 5 percent this year, the ministry said today.
The Singapore dollar fell after the government cut its economic forecast for the second time in less than three weeks. Finance Minister Tharman Shanmugaratnam will unveil this year’s budget plan tomorrow to speed up aid to companies hurt by the global recession and minimize job cuts by manufacturers such as Creative Technology Ltd.
“All the government can do is to ensure that citizens and businesses cope with the recession because it’s not possible to counteract the drop in external demand,” said Chow Penn Nee, an economist at United Overseas Bank Ltd. in Singapore. “The situation may start to improve only in the fourth quarter.”
The Singapore dollar declined as much as 0.3 percent versus the U.S. currency to S$1.5120, according to data compiled by Bloomberg. That was the weakest since Dec. 8. It traded at S$1.5041 as at 9:39 a.m. local time.
The Southeast Asian economy has contracted for three straight quarters, sliding into recession along with Japan, Hong Kong and New Zealand. The likelihood of a sharp rebound in growth “appears low,” Menon told reporters in Singapore today.
Job Losses
The economy grew 1.2 percent last year, less than earlier estimated. A decline of 5 percent this year would be the worst since the nation gained independence in 1965, according to Bloomberg data.
“2009 will definitely be a tough year for Singapore and most of export-oriented Asia,” said Manpreet Gill, a strategist at Barclays Wealth in Singapore. “In Asia, I won’t expect a sharp recovery. It will be a bit more drawn out.”
More than 10,000 people were retrenched last year and a worsening economy may result in job losses tripling in 2009, reaching numbers not seen since the Asian financial crisis a decade ago, the government said this week.
The government said today the nation may experience deflation this year, with consumer prices falling as much as 1 percent or staying unchanged.
Gross domestic product declined an annualized 16.9 percent last quarter from the previous three months, after shrinking a revised 5.1 percent between July and September, the trade ministry said. The contraction in the fourth quarter was worse than a Jan. 2 estimate of 12.5 percent.
Manufacturing
“The economic downturn has spread to all the key sectors of the economy,” Trade Minister Lim Hng Kiang said Jan. 19. “Our manufacturing sector is likely to continue facing a slowdown this year.”
Manufacturing, which accounts for a quarter of the economy, fell a revised 10.7 percent in the three months ended December from a year earlier, and shrank 4.1 percent in 2008, the trade ministry said.
The export-dependent nation has been battered by declining orders for electronics goods and pharmaceuticals from its biggest customers in the U.S. and Europe, as well as emerging markets. Creative Technology, the Singaporean maker of accessories for Apple Inc.’s iPod, said Dec. 31 it eliminated 2,700 jobs or almost half its workforce last fiscal year after demand for its own music players tumbled.
Weak Sentiment
Overseas shipments may drop as much as 11 percent in 2009, the government said today, after a 7.9 percent decline last year that was the worst performance since 2001.
Growth in the services and construction industries slowed. Services dropped 0.1 percent in the fourth quarter from a year earlier, and grew 5 percent last year. Construction gained a revised 14.1 percent, and rose 17.9 percent in 2008.
“Weaker consumer sentiments among Singaporeans have affected the retail sector and the property market,” Trade Minister Lim said. “Retailers and restaurants are seeing slower business as consumers are reining in discretionary spending.”
Singapore’s visitor arrivals and tourism receipts missed government targets last year and the nation expects a “challenging year” for the industry in 2009 as the global recession curtails consumer spending and holiday plans.
Companies such as lender DBS Group Holdings Ltd. and manufacturer Stats Chippac Ltd. are firing workers as demand for goods and services ebb. About 4,800 people were retrenched last quarter, acting Minister for Manpower Gan Kim Yong said Jan. 19.
Government Spending
Credit Suisse Group predicts up to 300,000 positions may be shed by end-2010, compared with the government’s estimate of as many as 30,000 jobs lost this year.
The government may announce as much as S$20 billion ($13 billion) in additional spending tomorrow when it unveils its budget, said Selena Ling, head of treasury research at Oversea- Chinese Banking Corp. in Singapore.
Businesses will get help with rental and wage bills, Prime Minister Lee Hsien Loong said Dec. 31. The government in November said it will extend more loans to local companies and spend S$600 million over the next two years on worker training.
Measures to help citizens survive the recession may include as much as S$7.5 billion of cash handouts, tax and utility rebates, said Ling at Oversea-Chinese Banking Corp.
“The budget would likely take an aggressive and multi- pronged approach to reduce costs, assist businesses and Singaporeans, and pump-prime the economy while not forgetting medium-term competitiveness,” Ling said. It will “only partially mitigate the economic downturn.”
Singapore is going through its sharpest and deepest recession, which may be the longest in the country’s history, said Ravi Menon, an official at the trade ministry. Gross domestic product may shrink 2 percent to 5 percent this year, the ministry said today.
The Singapore dollar fell after the government cut its economic forecast for the second time in less than three weeks. Finance Minister Tharman Shanmugaratnam will unveil this year’s budget plan tomorrow to speed up aid to companies hurt by the global recession and minimize job cuts by manufacturers such as Creative Technology Ltd.
“All the government can do is to ensure that citizens and businesses cope with the recession because it’s not possible to counteract the drop in external demand,” said Chow Penn Nee, an economist at United Overseas Bank Ltd. in Singapore. “The situation may start to improve only in the fourth quarter.”
The Singapore dollar declined as much as 0.3 percent versus the U.S. currency to S$1.5120, according to data compiled by Bloomberg. That was the weakest since Dec. 8. It traded at S$1.5041 as at 9:39 a.m. local time.
The Southeast Asian economy has contracted for three straight quarters, sliding into recession along with Japan, Hong Kong and New Zealand. The likelihood of a sharp rebound in growth “appears low,” Menon told reporters in Singapore today.
Job Losses
The economy grew 1.2 percent last year, less than earlier estimated. A decline of 5 percent this year would be the worst since the nation gained independence in 1965, according to Bloomberg data.
“2009 will definitely be a tough year for Singapore and most of export-oriented Asia,” said Manpreet Gill, a strategist at Barclays Wealth in Singapore. “In Asia, I won’t expect a sharp recovery. It will be a bit more drawn out.”
More than 10,000 people were retrenched last year and a worsening economy may result in job losses tripling in 2009, reaching numbers not seen since the Asian financial crisis a decade ago, the government said this week.
The government said today the nation may experience deflation this year, with consumer prices falling as much as 1 percent or staying unchanged.
Gross domestic product declined an annualized 16.9 percent last quarter from the previous three months, after shrinking a revised 5.1 percent between July and September, the trade ministry said. The contraction in the fourth quarter was worse than a Jan. 2 estimate of 12.5 percent.
Manufacturing
“The economic downturn has spread to all the key sectors of the economy,” Trade Minister Lim Hng Kiang said Jan. 19. “Our manufacturing sector is likely to continue facing a slowdown this year.”
Manufacturing, which accounts for a quarter of the economy, fell a revised 10.7 percent in the three months ended December from a year earlier, and shrank 4.1 percent in 2008, the trade ministry said.
The export-dependent nation has been battered by declining orders for electronics goods and pharmaceuticals from its biggest customers in the U.S. and Europe, as well as emerging markets. Creative Technology, the Singaporean maker of accessories for Apple Inc.’s iPod, said Dec. 31 it eliminated 2,700 jobs or almost half its workforce last fiscal year after demand for its own music players tumbled.
Weak Sentiment
Overseas shipments may drop as much as 11 percent in 2009, the government said today, after a 7.9 percent decline last year that was the worst performance since 2001.
Growth in the services and construction industries slowed. Services dropped 0.1 percent in the fourth quarter from a year earlier, and grew 5 percent last year. Construction gained a revised 14.1 percent, and rose 17.9 percent in 2008.
“Weaker consumer sentiments among Singaporeans have affected the retail sector and the property market,” Trade Minister Lim said. “Retailers and restaurants are seeing slower business as consumers are reining in discretionary spending.”
Singapore’s visitor arrivals and tourism receipts missed government targets last year and the nation expects a “challenging year” for the industry in 2009 as the global recession curtails consumer spending and holiday plans.
Companies such as lender DBS Group Holdings Ltd. and manufacturer Stats Chippac Ltd. are firing workers as demand for goods and services ebb. About 4,800 people were retrenched last quarter, acting Minister for Manpower Gan Kim Yong said Jan. 19.
Government Spending
Credit Suisse Group predicts up to 300,000 positions may be shed by end-2010, compared with the government’s estimate of as many as 30,000 jobs lost this year.
The government may announce as much as S$20 billion ($13 billion) in additional spending tomorrow when it unveils its budget, said Selena Ling, head of treasury research at Oversea- Chinese Banking Corp. in Singapore.
Businesses will get help with rental and wage bills, Prime Minister Lee Hsien Loong said Dec. 31. The government in November said it will extend more loans to local companies and spend S$600 million over the next two years on worker training.
Measures to help citizens survive the recession may include as much as S$7.5 billion of cash handouts, tax and utility rebates, said Ling at Oversea-Chinese Banking Corp.
“The budget would likely take an aggressive and multi- pronged approach to reduce costs, assist businesses and Singaporeans, and pump-prime the economy while not forgetting medium-term competitiveness,” Ling said. It will “only partially mitigate the economic downturn.”
Monday, January 19, 2009
HSBC, Asian Banks Slump as RBS Loss Stoke Concerns
Jan. 20 (Bloomberg) -- HSBC Holdings Plc led banking shares lower in Asia after Royal Bank of Scotland Group Plc flagged the biggest loss in British history, fueling concerns among investors that the industry crisis is deepening.
HSBC, Europe’s largest bank, lost as much as 8.8 percent and traded at HK$58.10 in Hong Kong at 11:22 a.m., the lowest since October 1998. An index tracking 84 Japanese lenders fell 3 percent in Tokyo. Banks in Australia and Korea also declined.
RBS tumbled 67 percent in London yesterday after saying it may post a full-year loss of as much as 28 billion pounds ($40 billion). The U.K. government is stepping up an industry bailout, less than a week after Bank of America Corp. received a $138 billion rescue and Citigroup Inc. announced plans to split in two.
“The RBS forecast has hit already fragile sentiment,” said Nader Naeimi, a Sydney-based senior investment strategist at AMP Capital Investors, which manages about $85 billion. “It brings back all the doubts about more writedowns.”
Mizuho Financial Group Inc., Japan’s second-largest bank, fell 5.8 percent at the 11 a.m. break in Tokyo. National Australia Bank Ltd., the country’s biggest by assets, slipped 6 percent at 2:23 p.m. in Sydney. KB Financial Group Inc., which controls South Korea’s biggest bank, dropped 4.8 percent in Seoul, the lowest since Jan. 2. Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, slid 5.5 percent in Hong Kong.
‘Jitters Remain’
The decision by U.K. Prime Minister Gordon Brown to start a second-round, 100 billion-pound bailout shifted focus toward the problems still lingering in the banking system. As RBS investors braced for a full nationalization of the Edinburgh-based bank, Brown said yesterday he is “angry” banks are rationing credit.
“The financial crisis is not over yet and market jitters remain as banks’ asset quality worsens in slowing economies,” said Kim Young Il, head of equities at Korea Investment Trust Management Co. in Seoul, which manages the equivalent of $6.2 billion. “The attention is now on whether this signals a second round of financial crisis.”
London-based HSBC yesterday said it’s one of the world’s most “strongly capitalized” lenders and it “cannot envisage circumstances” where it would need government support. The statement came after shareholder Knight Vinke Asset Management LLC joined CSLA Asia-Pacific Markets, Morgan Stanley and Goldman Sachs Group Inc. in saying HSBC may need to sell stock to help plug a widening capital shortfall.
Goldman Sachs analyst Roy Ramos predicts HSBC’s Hong Kong shares will fall to HK$49. That’s below the price just before Aug. 14, 1998, when the Hong Kong government bought stock in HSBC and other companies on the benchmark Hang Seng Index to fend off an attack on the local currency.
Japan Injection Plan
Japan’s government said in December it plans to inject as much as 12 trillion yen ($133 billion) into the nation’s banks to boost their finances and stimulate lending to companies. Sapporo Hokuyo Holdings Inc., a Japanese bank holding company based in the north of the country, said it is considering applying for public funds yesterday to bolster capital.
Japanese banks including Mitsubishi UFJ Financial Group Inc. face larger potential losses on domestic shareholdings than from toxic U.S. mortgage securities, said analyst Kristine Li.
“Relative to RBS, the foreign exposure of Japan’s largest banks is not so deadly,” said Li, a Tokyo-based analyst at KBC Securities in Tokyo. “For Japanese banks the big, big issue is the equity market. That’s the big killer.”
Mitsubishi UFJ, Japan’s largest bank, said this month it will book 288 billion yen in charges on stock market investments in the quarter that ended Dec. 31, threatening to cause the lender’s first loss.
HSBC, Europe’s largest bank, lost as much as 8.8 percent and traded at HK$58.10 in Hong Kong at 11:22 a.m., the lowest since October 1998. An index tracking 84 Japanese lenders fell 3 percent in Tokyo. Banks in Australia and Korea also declined.
RBS tumbled 67 percent in London yesterday after saying it may post a full-year loss of as much as 28 billion pounds ($40 billion). The U.K. government is stepping up an industry bailout, less than a week after Bank of America Corp. received a $138 billion rescue and Citigroup Inc. announced plans to split in two.
“The RBS forecast has hit already fragile sentiment,” said Nader Naeimi, a Sydney-based senior investment strategist at AMP Capital Investors, which manages about $85 billion. “It brings back all the doubts about more writedowns.”
Mizuho Financial Group Inc., Japan’s second-largest bank, fell 5.8 percent at the 11 a.m. break in Tokyo. National Australia Bank Ltd., the country’s biggest by assets, slipped 6 percent at 2:23 p.m. in Sydney. KB Financial Group Inc., which controls South Korea’s biggest bank, dropped 4.8 percent in Seoul, the lowest since Jan. 2. Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, slid 5.5 percent in Hong Kong.
‘Jitters Remain’
The decision by U.K. Prime Minister Gordon Brown to start a second-round, 100 billion-pound bailout shifted focus toward the problems still lingering in the banking system. As RBS investors braced for a full nationalization of the Edinburgh-based bank, Brown said yesterday he is “angry” banks are rationing credit.
“The financial crisis is not over yet and market jitters remain as banks’ asset quality worsens in slowing economies,” said Kim Young Il, head of equities at Korea Investment Trust Management Co. in Seoul, which manages the equivalent of $6.2 billion. “The attention is now on whether this signals a second round of financial crisis.”
London-based HSBC yesterday said it’s one of the world’s most “strongly capitalized” lenders and it “cannot envisage circumstances” where it would need government support. The statement came after shareholder Knight Vinke Asset Management LLC joined CSLA Asia-Pacific Markets, Morgan Stanley and Goldman Sachs Group Inc. in saying HSBC may need to sell stock to help plug a widening capital shortfall.
Goldman Sachs analyst Roy Ramos predicts HSBC’s Hong Kong shares will fall to HK$49. That’s below the price just before Aug. 14, 1998, when the Hong Kong government bought stock in HSBC and other companies on the benchmark Hang Seng Index to fend off an attack on the local currency.
Japan Injection Plan
Japan’s government said in December it plans to inject as much as 12 trillion yen ($133 billion) into the nation’s banks to boost their finances and stimulate lending to companies. Sapporo Hokuyo Holdings Inc., a Japanese bank holding company based in the north of the country, said it is considering applying for public funds yesterday to bolster capital.
Japanese banks including Mitsubishi UFJ Financial Group Inc. face larger potential losses on domestic shareholdings than from toxic U.S. mortgage securities, said analyst Kristine Li.
“Relative to RBS, the foreign exposure of Japan’s largest banks is not so deadly,” said Li, a Tokyo-based analyst at KBC Securities in Tokyo. “For Japanese banks the big, big issue is the equity market. That’s the big killer.”
Mitsubishi UFJ, Japan’s largest bank, said this month it will book 288 billion yen in charges on stock market investments in the quarter that ended Dec. 31, threatening to cause the lender’s first loss.
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