ISSUE 44
October 2002
 
 
   
    South African Court Rules Prostitution Illegal
UN Report Alleges Violations of Zimbabwe Sanctions
Libya Announces Withdrawal from Arab League
   
    Shiokawa Says Japan Won't Sell Yen to Spur Economy
Shiokawa Says He Wants to Extend Deposit Guarantee
Southwest Pacific Nations Meet - Terrorism on Agenda
Singapore Willing to Pay More for Malaysia Water-PM
South Korea, Chile Reach Free Trade Agreement
   
    EU Proposes New Merger Law, Seeks to Overcome Takeover Defenses
EU Enlargement: Now Who Pays?
Sweden Set to Vote on Joining Euro Next Autumn
   
    Critics Blast Iranian Reform Bills
   
    Supreme Court to Clarify Worker Law
Bush signs emergency spending measure

New Bills Aim to Protect Consumers' Use of Digital Media
Bill Aims at Foreign Web Censorship
Deal Announced on Election Reform - Bill 'Does Justice to the American Voter'
Gartner: IT Spending to Rise 7% in 2003
House Backs New Privacy Rules
Senator McCain Seeks to Overturn Rules on Campaign Finance Law
Supreme Court Debates Government Seizure of Wireless Licenses
Costa Rica Plan to Fight Child Labor
Argentina President Urges Party Unity
Congress Tweaks 527 Law
New Law Will Notify Consumers of 401(k) Lockouts
Canadian Families Moving Away from Traditional Model, Census Figures Show
Education Secretary Urges Standards
Fed's Ferguson Upbeat on Productivity
Ontario Introduces Drinking Water Bill
Bush Signs Election Changes
Feds Release Guidelines for Securing IT
   
    U.N.: Global Economic Growth Slower than Expected Through 2003
U.N. Conference to Discuss Implementation of Kyoto Protocol on Climate Change
A Free Country
 
   
    Kenya Lawyers Boycott to Save Draft Constitution
Congolese Leaders Near Agreement on Power-Sharing Formula
   
    Nepal Cabinet Seeks to Put Off Elections by a Year
Nepal King Won't Hold on to Power - Palace Official
   
    EU Recommends Poland, Hungary, Eight Others for Entry in 2004
EU Sets Date For Historic Union
Latvia's New Era Says New Government Around the Corner
   
    Iran Government: Reopen Poll Center
   
    Leaders Emerge in Ecuadorean Election
Brazil's President-Elect Assembles Team for Rare Peaceful Transition of Power
     
 
   
    Malawi Sacks Top Corruption Fighter
   
    Thailand Gets New Interior, Defence Ministers
Former Head of Chinese Provincial High Court Investigated for Corruption
   
    Blair Promotes Three Pro-Euro Ministers in a Cabinet Reshuffle
   
    Colorado Governor Aide Quits Over E-mail
Backbenchers Urge PM to Amend Ethics Proposal
Government Introduces Proposed Ethics Bill a Day After Solicitor General's Resignation
     
 
   
    Condition Critical as African Doctors Head Overseas
Senegal President: 'Ferry errors'
Namibian Leader Bans Foreign TV Programmes
   
    China's Capital Cleans Up, Bans Spitting
ILO Gives Cambodian Garment Factories Thumbs Up
Asia Faces 'World's Worst' AIDS Epidemic
Asia Airlines' Fragile Recovery Under Threat
Thailand's AIDS Patients File Suit
China Computers Face Virus Epidemic
   
    Europe Teaches Privacy Lessons
   
    Iraq Government Gave $15 Mln to Palestinian Families, Ha'aretz Says
   
    California Governor Ends Information Technology Exemption
Brazil Set for World's Biggest Electronic Election
Aligning IT With Business
Watchdog System Failed in Enron Case, Senate Report Says
E-Commerce Gets Real
Lawmakers Tell FCC's Powell to Enforce E-911 Rules
Microsoft Outlines Integration Plan
Judge Orders Ports Opened
Jimmy Carter to Lead Observer Team in Jamaica Elections
Wearable Computers Are The Wave of the Future, Experts Say
2 Americans Win Nobel for Economics
Using P2P Technology for Content Delivery
E-Commerce Patent Disputes Erupt
'America's Mayor' Tries to Clean up Mexico's Crime
Web Services a Decade Away
Crime Threatening Caribbean Tourism - Financial Pressure in Area's Nations Not Easing
Latin America Starts Internet Registry
     
 
   
    Probe Shows Uganda Tax Authority Deeply Corrupt
   
    Takenaka Says He'll Maintain Stance on Loan Cleanup
Japan to Cut Bad Bank Loans; Investors Skeptical
Australia's Costello Wants to Pay Off Government Debt
   
    Germany to Delay Balancing Budget, Using EU Leeway
European Banks Adrift - Credit Suisse Stems Two Days of Heavy Selling
Tax Cheats Steer Portugal Towards EU Sanctions
European Plan to Stop Tax Evaders Hits Snag
EU's Monti Faces Pressure to Reform After Merger Veto Overruled
EU Leaders Face Pressure to Set Funding for Eastern Expansion
   
    SEC, Spitzer Reach Agreement on Reform
State Pension Fund May Invest Directly in Private-Equity Partnership
Banks get better at assessing risks - Greenspan says financial sector weathered recession well
SEC Chairman Pitt Faces Political Fights Over New Board, Budget
O'Neill Preparing Post-Election Tax Overhaul Proposals for Bush
Internet Sales Tax Push Coming Next Year
   
    Government Size and Taxpayer Cheating
 
   
    South African Workers March to Protest Privatization
   
    Only Eight Find Work Under Japan Government job Hunt Plan
China's Workers - No Longer a Privileged Class
China OKs High-Tech Deals Ahead of President's Visit to U.S.
   
    Electricite de France Workers to Protest Asset Sales
IT Spending Increases Profits
   
    Enron's Ex-CFO Fastow to Surrender and Face Charges, People Say
Enron's Ex-CFO Fastow Surrenders to Federal Agents
SEC Tackles More Corporate Reform Off-Balance Transactions, Pro-Forma Earnings Eyed
     
 

South African Court Rules Prostitution Illegal

A top South African court overturned a lower court judgment Wednesday and ruled that prostitution was illegal. The court also upheld a law criminalizing brothels. The case had been brought to the Constitutional Court by three brothel owners upset by the Pretoria High Court's ruling in July that brothels were illegal. The Pretoria court ruling also struck down South Africa's decades-old prostitution law as discriminatory and unconstitutional. The court said the law contradicted the equality clauses in the constitution. A majority of the Constitutional Court said Wednesday the provision was not discriminatory since it outlawed both male and female prostitution. In a dissenting opinion, five of the court's 11 judges disagreed, saying that because the prostitute was considered the primary offender under the law it reinforced sexual stereotypes and violated the constitution. Since all-race elections brought an end to apartheid in 1994, the government has by and large turned a blind eye toward prostitution. Charges are hardly ever brought against the thousands of prostitutes who openly ply their trade on the streets and brothels which have sprung up in every large town.

From CNN, 9 October 2002

UN Report Alleges Violations of Zimbabwe Sanctions

A Zimbabwean businessman was accused by a U.N. panel on Monday of procuring military equipment from British Aerospace in violation of European sanctions against the southern African nation. The panel, in a report to the U.N. Security Council on the plunder of minerals in the Democratic Republic of the Congo, named businessman John Bredenkamp as a key investor in the Aviation Consultancy Service Company, which represents British Aerospace, Dornier of France and Agusta of Italy in Africa. In discussions with senior Congo officials, the report alleged he offered to mediate sales of British Aerospace military equipment to Congo. But the panel said he procured aircraft parts for Zimbabwe's military, which was propping up the Kinshasa government. ''Mr. Bredenkamp's representatives claimed that his companies observed European Union sanctions on Zimbabwe but British Aerospace spare parts for ZDF Hawk jets were supplied early in 2002 in breach of those sanctions,'' the panel's report said. Among other measures, the European Union, during a violent election campaign last February, prohibited member nations from selling Zimbabwe arms or equipment that ''could be used for internal repression.'' The U.N.-appointed panel also recommended a travel ban and financial restrictions on 54 individuals and 29 companies involved in criminal or illicit plundering in the Congo. Bredenkamp and his mining company Tremalt Ltd., incorporated in the British Virgin Islands, were both on the list. The report accused him of paying $400,000 to the Congo government for copper and cobalt mine concessions over 25 years, worth at least $1 billion. In addition to Bredenkamp the report put on its list Emmerson Dambudzo Mnangagwa, the speaker of the Zimbabwean parliament, and his alleged allies, Gen. Vitalis Zvinavashe Musungwa and retired Gen. Sibusio Moyo. Under Bredenkamp's deal, Tremalt retains 32 percent of the net profits, pays 34 percent to the Congo and 34 percent to Zimbabwe. Subtracted from Zimbabwe's share was military equipment, the report said. The panel described exploitation of the Congo's riches by Rwanda, Uganda and Zimbabwe, who all had troops in the central African nation. In Zimbabwe's case, it said, senior officers enriched themselves under the pretext of arrangements set up to repay Zimbabwe for military services. In many cases bribes were paid to Congo government officials for selling state-owned companies at low cost. More recently the military established new companies, with the knowledge of President Robert Mugabe, to defend its long-term economic interests should troops withdraw, the report said.

From MSNBC, 21 October 2002

Libya Announces Withdrawal from Arab League

Libya has decided to withdraw from the Arab League, Moammar Gadhafi's government announced Thursday. The government gave no reason for the decision. Libyan officials cited the Arab League's inefficiency in dealing with the crises over Iraq and the PalestiniansIn a statement by the Libyan news agency, the Ministry of African Affairs said an official notification had been sent to Arab League headquarters in Cairo, Egypt. Arab League spokesman Hisham Youssef confirmed the 22-nation organization had received the official notice from the Libyans. ''This is not a new idea,'' Youssef said in Cairo. ''It has been raised before but Gadhafi has told the secretary-general that the idea was put on hold.'' The league's secretary-general, Amr Moussa, traveled to Tripoli this month to discourage Gadhafi from withdrawing. An Arab League official said Moussa would go to Tripoli again within days. Egyptian Foreign Minister Ahmed Maher said that under the league's charter, Libya's withdrawal becomes effective only after one year. In Tripoli, Libyan officials said Gadhafi was unhappy with the Arab League's inability to deal with current Arab issues, mainly the standoff between Iraq and the United States and violence between Israelis and the Palestinians. Gadhafi has been critical of an Arab League peace initiative formalized at a summit in Beirut, Lebanon. He urged the ''the Arab street'' to distance itself from ''crippled'' Mideast regimes, and called on the Arab League to cancel the Beirut initiative. The March summit was the first time the Arab world collectively offered Israel recognition, security and ''normal relations'' in exchange for a full withdrawal from Arab lands held since 1967 and a ''just solution'' for Palestinian refugees. Gadhafi has increasingly turned his attention toward Africa in recent years after African countries decided to break the U.N. air embargo imposed on Libya because of the 1988 bombing of an American airliner over Lockerbie, Scotland, that killed 270 people.

From MSNBC, 24 October 2002

 

Shiokawa Says Japan Won't Sell Yen to Spur Economy

Japanese Finance Minister Masajuro Shiokawa said the government shouldn't use a cheaper yen to spur the economy. The currency recouped a loss of as much as 0.4 percent against the dollar as traders bet the government won't sell the yen anytime soon. "I don't support the idea of manipulating foreign exchange rates as a tool to combat deflation," Shiokawa told reporters in Tokyo. "Foreign exchange rates should be left to the movements of the market." The remarks damped speculation Japan may again sell the yen to boost exports. He was speaking after a central bank report showed Japan's biggest manufacturers remained pessimistic for a seventh quarter, underlining concern that an export-led recovery is faltering. "He is saying he won't intervene to get Japan out of its deflationary crisis or boost exports," said Kamal Sharma, a currency strategist at Commerzbank AG. "That's sent the currency flying." The Bank of Japan sold 4 trillion yen ($33 billion) in May and June, a record for one quarter, to weaken the currency. Japan was trying to thwart gains in its currency, which erode the profits the nation's exporters earn on overseas sales. The yen rose as high as 121.70 yen to the dollar from 122.15 after Shiokawa made the comments. The Japanese currency traded at 122.07 yen at 5:18 p.m. Japan time, leaving it up 8 percent versus its U.S. counterpart this year. Vice Finance Minister Haruhiko Kuroda last month suggested one way to boost an export-led recovery was to sell yen "in a massive way." Shiokawa said in July that Japan wants to have its currency at between 125 yen and 130 yen per dollar. Bond Auctions - Shiokawa said he wants Japanese companies to increase trade settlement denominated in the euro and Asian currencies so that they would be less vulnerable to swings in the dollar. Shiokawa also said it's "one option" for the ministry to sell more bonds at maturities of less than 10 years to diversify the government's debt sales and attract more buyers. He said he wants individual investors to buy as much as 10 percent of Japan's government bonds. "In Japan, individuals have a massive amount of financial assets, but they hold about a mere 2 percent of total bonds - there are few countries like this," Shiokawa said.

The Japanese central government's outstanding debt will reach 414 trillion yen in March, equal to about 80 percent of gross domestic product. Japan's individuals have 1,400 trillion yen in financial assets, such as bank deposits, insurance, stocks and bonds. Concern about the lack of investors' appetite for government debt heightened as a 10-year government bond sale last month failed to attract enough bidders for the 1.8 trillion yen of debt on offer. It was the first such failure since competitive price auctions began in 1989, the ministry said. Bad-Loan Purchases - On the issue of dealing with the estimated 52.4 trillion yen in bad loans that burden banks, Shiokawa said Japan needs an institution dedicated to buying bad loans from lenders. Unless Japan has proper institutions to dispose of bad loans, "the injection of public funds into lenders is no more than something like a narcotic drug, which has a temporary effect," Shiokawa said. The institution would then sell those loans in 20 or 30 years and collect debt, he said. Losses resulting from the sales should be shared by banks, the government and others. "The government can't make up for all such losses with taxpayer money," Shiokawa said. "We can't pass burdens to taxpayers alone." It may be possible to reorganize the existing Resolution and Collection Corp., the state-backed agency that buys sour loans from banks, he said. Japanese banks are reluctant to sell bad loans because they aren't offered enough for them by the RCC. The agency paid an average of 12.6 percent of face value for loans in the three months ended Sept. 30, less than it paid in the second quarter, the agency said last week. Shiokawa also said he may ask the Bank of Japan to do more to help spur growth if necessary, though he added he wouldn't make "forceful requests."' He also said Prime Minister Junichiro Koizumi yesterday asked him to propose details of tax cuts for the next fiscal year. The ministry is studying plans to cut taxes on real estate sales, he said.

From Bloomberg-Politics, by Mayumi Otsuma, 1 October 2002

Shiokawa Says He Wants to Extend Deposit Guarantee

Japan should continue to guarantee bank deposits for an extra year, Finance Minister Masajuro Shiokawa said, a step that analysts said could speed the disposal of banks' $427 billion in bad loans. An end to guarantees "should be postponed even by one year, without any conditions," he told reporters. Plans to end unlimited deposit guarantees by April had caused concern that depositors would withdraw money from weaker banks. Extending the guarantees may make it easier for Prime Minister Junichiro Koizumi to speed the disposal of some of the bad loans that have paralyzed the banking system. "It's prudent not to go through with putting ceilings on the insurance," said Frank Packer, an economist at Nikko Salomon Smith Barney. "It will make it easier to do banking reform because you've lowered the probability of there being financial- system problems." Bank shares plunged on worries the appointment of KPMG Financial KK President Takeshi Kimura to bank regulator Heizo Takenaka's bad loan task force means the government will force lenders such as Mizuho Holdings Inc. to cut off their biggest deadbeat borrowers, widening their losses. Kimura has urged Japan to force lenders to boost provisioning and advocated seizing banks with insufficient capital. Mizuho Holdings shares were down 16 percent at the 3 p.m. close of trading in Tokyo. The Topix index of bank shares was down 4.6 percent. Delay - The government had planned to end unlimited guarantees by April to cap its liability in case of bank failures and to promote competition among lenders. It later said it would continue the guarantees for another five months beyond April, and Prime Minister Junichiro Koizumi for the first time today signaled his willingness to consider a longer delay. "Takenaka is now working" on the issue, Koizumi told reporters who asked about a possible year-long delay, "and I'm waiting for his report." Chief Cabinet Secretary Yasuo Fukuda said the government had been discussing an extension of deposit guarantees, and that it would make a decision by the end of the month. A decision will depend on the state of Japan's economy, he said. "The economy is a living thing and decisions must be made depending on those changing conditions," Fukuda said.

From Bloomberg-Politics, by Mayumi Otsuma, Kyoko Shimodoi, Yoshiko Matsushita and Ann Saphir, 3 October 2002

Southwest Pacific Nations Meet - Terrorism on Agenda

Yogyakarta, Indonesia - Foreign ministers from six Pacific nations arrived in Java's ancient royal capital of Yogyakarta on Friday for a day of talks which Indonesia said would tackle the thorny issue of terrorism. Indonesia, hosting the inaugural meeting dubbed the South West Pacific Dialogue, has been criticised as Southeast Asia's weakest link in the war on terror amid growing concerns some of its militants might have forged ties with the al Qaeda network. ''We are neighbours and through this dialogue process we want to develop good neighbourly relations among six countries bordering the southwest rim of the Pacific,'' Indonesia's Foreign Minister Hassan Wirajuda told reporters. Asked if terrorism would be a subject on the agenda, he said: ''Under the heading of political security, we can discuss that of course. This is an important global issue.'' No concrete outcomes are expected from the forum, which groups Indonesia, Australia, the Philippines, Papua New Guinea, New Zealand and newly independent East Timor, but a joint statement will be issued on Saturday. The statement is expected to outline efforts to set up information exchange on people smuggling, money laundering, drug trafficking and security. ''This dialogue is a loose process and the launching of this dialogue does not mean that we create a new regional association. I think as we share borders, we share commons interest and concerns on many issues,'' Wirajuda said. People smuggling has also been a controversial issue in the region, especially between Australia and Indonesia, a vast archipelago favoured by Middle Eastern and Afghan refugees as a jumping off point for Australia.

From MSNBC, 4 October 2002

Singapore Willing to Pay More for Malaysia Water-PM

Kuala Lumpur - Singapore said on Tuesday it was willing to pay more for the water it buys from Malaysia, in a signal to ease the next round of negotiations between the two neighbours over their most troublesome issue. Singapore Prime Minister Goh Chok Tong, during a brief visit to Malaysia, said officials from both sides would meet in Kuala Lumpur on October 16-17 to work out a price which he said should be acceptable to both nations. ''In principle we are not against the revision of the price upwards,'' he told a news conference before meeting his Malaysian counterpart Mahathir Mohamad. ''But there should be a basis for what the price should be,'' he said. Malaysia is contracted to supply 350 million gallons (1.6 billion litres) of water each day to the resource-parched city state under two deals signed in the early 1960s. Singapore pays three Malaysian cents (0.85 cents) for every 1,000 gallons of raw water it gets from Malaysia's Johor state. Malaysia wants 100 times that amount. Goh said he would encourage the officials to do their best to narrow the differences between the two sides. The water disagreement has stalled talks on other bilateral problems, such as the use of Malaysian airspace by Singapore air force fighters and treatment of Malaysians' pensions held by Singapore. Malaysia and Singapore, which separated in 1965 following a brief union after independence from Britain, are close trading partners, but their rivalry also occasionally leads to fierce disputes. Malaysian Foreign Minister Syed Hamid Albar said Mahathir and Goh agreed at their talks that the water problem should be resolved to help move ties forward. ''We can look at a bigger picture for cooperation in all dimensions. At present it is inundated with this issue of water and other outstanding issues,'' he said. Singapore has been campaigning to popularise so-called Newater, recycled from toilets, sinks and other sources. The island hopes to reduce its dependence on the water it pumps from Malaysia with its plan to build a desalination plant by 2005 so that it can use seawater.

From MSNBC, 8 October 2002

South Korea, Chile Reach Free Trade Agreement

Seoul - South Korea said on Thursday it has reached a free trade agreement (FTA) with Chile, the first such pact for the world's 11th largest economy, paving the way for widening tariff-free transactions and globalisation. The deal was particularly significant as Seoul was currently holding similar trade talks with Japan and planned to approach Mexico, Singapore and other Asian nations to agree duty-free trade in the future, a Foreign Ministry official told Reuters. ''It is an important milestone in Korea's economic and foreign policies and a step forward in its globalisation,'' said Song Ki-jae, an economist at the Korea Institute for Industrial Economics and Trade. Overnight the two countries wrapped up week-long meetings in Geneva, the sixth round of talks since they agreed to open trade negotiations in September 1999. ''The FTA with Chile will provide a springboard (for South Korea) to advance into Latin America,'' the ministry said in a prepared statement. ''It will also help accelerate the pace of ongoing talks with Japan and other countries. Under the agreement, Korean exporters of electronics, autos and mobile phones could actively make inroads into Chile and other Latin American countries, although washing machines and refrigerators were excluded from the duty-free list. For example, seven percent duty on imported cars from South Korea will be lifted, sharpening their price competitiveness against products from rival Japan and others. The final agreement is expected to take effect in the first half of 2003 after the two country's parliaments approve the FTA, a ministry official told Reuters. About 66 percent of South Korean exports, including passenger cars, computers and mobile phones, will immediately be exempted from tariffs and the rest over a 10-year period, the ministry said. Frowning Farmers - Local farmers, though, would face an influx of cheaper agricultural imports, including peaches and grapes, pork, chocolate and fruit juice, the official said, but added that imports of Chilean rice, apples and pears would remain taxable. To smooth the path to agreement, South Korea made a concession by withdrawing its demand for Chile to allow Korean companies to invest in the country's financial industry. ''On that point, South Korea and Chile have agreed to resume talks in four years,'' the ministry official said. Financial market showed little reaction to the news of the country's unprecedented FTA. The benchmark KOSPI (.KS11) edged down 0.37 percent to 654.98 points. The won extended gains to 1,228.1 per dollar, mainly due to the yen's climb against the dollar. In 2001, South Korean imports from Chile were worth $700 million on a customs-cleared basis, while exports came to $570 million.

From MSNBC, 24 October 2002

 

EU Proposes New Merger Law, Seeks to Overcome Takeover Defenses

Brussels - The European Commission revived plans for a Europe-wide takeover code that could speed up mergers and acquisitions by breaking the power of minority shareholders, including governments, to block hostile bids. Financial Services Commissioner Frits Bolkestein will now seek backing for the code from national governments and the European Parliament, which last year vetoed an earlier proposal to dismantle barriers to cross-border takeovers. Spurring mergers and acquisitions "is a key element in our drive to make Europe the most competitive economy in the world by 2010," Bolkestein said in an e-mailed statement. Investment bankers and shareholder rights advocates say the European Union needs to catch up with the U.S. - and attract investors to the euro - by rolling back takeover protections for managers of inefficient businesses. Since the single currency's arrival in 1999, some 16,600 European companies worth $2.7 trillion have been acquired, compared with 28,100 companies worth $4.5 trillion in the U.S., Bloomberg data show. In July last year, the parliament rejected a version of the takeover code, partly on concern in Germany and Italy that it wouldn't check the international expansion of French state-owned companies such as power monopoly Electricite de France. Under the proposal announced today by the commission, shareholders with special voting rights couldn't use those powers to block a takeover. That will include governments and families that hold "golden shares." Volkswagen - A bidder that gets 90 percent to 95 percent of a target company's capital or 90 percent of shares tendered would be allowed to "break through" obstacles thrown up by shareholders with special voting rights. That threshold would allow a German regional government to maintain control of Volkswagen AG, Europe's largest carmaker. The state of Lower Saxony owns 18.6 percent of Volkswagen.

From Bloomberg-Politics, by Robert McLeod, 2 October 2002

EU Enlargement: Now Who Pays?

London, England - The Irish vote may have lifted the first barrier but many more roadblocks remain on the road to EU enlargement. The haggling is starting over who will pay for it - at discussions this week in Brussels - hosted by Denmark, who are current holders of the rotating EU presidency. The Danish prime minister Anders Fogh Rasmussen told CNN: "We have some obstacles to overcome ... we must make a decision on the so-called financial package, that is, to reach a conclusion within the EU on a common position which can be presented to the candidate countries in early November concerning budget and agriculture." Farming is at the heart of the debate with countries like Germany, the Netherlands, Britain and Sweden all expressing concern about the amount that will be spent on subsidising the rural economies of east European countries. However, many people believe net contributors to EU funds will benefit over the long term from the enlarged common market. "I think it should be a plus for all of them - if it works. If it doesn't, clearly it will be a burden to some countries, notably Germany and the other EU countries which are net contributors to structural funds," said Lorenzo Codogno from Bank of America. In those circumstances, countries that on balance receive EU money could also suffer. Countries like Spain, Portugal, Greece, and, ironically - the Republic of Ireland itself - because there would be less to go round. For recession-hit Germany, already in trouble for not meeting European criteria for fiscal stability, the all-important factor is by how much agricultural expenditure goes up. Hans Redeker, head of foreign exchange strategy for investment bank BNP Paribas, explained: "If there would be no reform on agricultural policy in the EC, then Germany would have to pay more and the budget deficit would increase further. That could be a quite negative factor in respect of the growth and stability pact." Beyond initial EU membership, comes the eventual goal of euro-zone membership, and there, the debate reaches another level - over one-size-fits-all interest rates. But before that, it is far from certain that the freedom of labour movement permitted by joining the union will not provide huge domestic economic problems in EU states, both new and old.

From CNN, by Tony Campion, 21 October 2002

Sweden Set to Vote on Joining Euro Next Autumn

Sweden is ready to ditch the krona and adopt the euro if voters say "Yes" in a referendum, the country's centre-left leaders revealed yesterday. The executive committee of the Social Democratic Party said the time had come to discuss a date for the vote, as all the conditions for entry into the eurozone had been met. The party, which is led by the Prime Minister, Goran Persson, endorsed the euro on condition that Sweden's economic growth and wage increases were in line with other eurozone countries and that Sweden had room to counter any downturn in the economy. "It is our conclusion that we have all the requirements for fulfilling these conditions," said the finance minister Bosse Ringholm. "Therefore we are now ready for a referendum." A date for a referendum cannot be set until the whole party approves the recommendation and the issue has been debated with other parties in the Riksdag, the 349-seat Swedish parliament. The SDP, which fell short of an overall majority after winning 144 seats in September, usually depends on the anti-euro Left and Green parties for support. Mr. Persson did not campaign on the issue of the euro, but he has made no secret of his desire for Stockholm to sign up. The SDP's leadership group is expected to seek full party approval for recommending entry to the eurozone at its annual conference next month. Sweden, which joined the EU in 1995, Britain and Denmark are the only members of the 15-country EU not to opt in to the euro. Eurosceptics in this Scandinavian nation of 8.9 million people fear that the single currency may threaten sovereignty and the country's enviable social welfare system, but opinion polls suggest that a majority back membership.

FromUK-The Independent-Europe, by James Palmer, 29 October 2002

 

Critics Blast Iranian Reform Bills

Tehran, Iran - Iran's pro-reform government is facing hard-line criticism over two bills it has presented to parliament aimed at strengthening President Mohammad Khatami's authority. Conservative opponents lambasted the bills on Wednesday, which cut to the heart of the Islamic Republic's political structure, giving Khatami the power to remove judiciary and parliamentary officials from office and curtail hardliners' veto over election candidates. They argue the proposed legislation, which has to go through a tortuous procedure before becoming law, is unconstitutional and would pave the way for "counter-revolutionary" elements to run for office. But government spokesman Abdollah Ramazanzadeh on Wednesday insisted the new bills were "fully compatible with the constitution." "There are no reasons for the bills to be rejected as they were prepared after lots of consultation." Ramazanzadeh told the weekly post-cabinet meeting news conference. Khatami presented the bills after growing increasingly frustrated at his failure to introduce more democratic government in Iran despite five years in office and two landslide election wins behind him. The moderate cleric has been particularly annoyed by the closure by conservative judges of more than 80 pro-reform newspapers in the last couple of years and imprisonment of dozens of government supporters, most of them journalists. Reformists expect both bills to be passed easily by Khatami's large majority in the assembly, but they could be blocked when they are sent to the 12-member Guardian Council, which can veto legislation it says violates Islamic law or the constitution. If a deadlock emerges between parliament and the Guardian Council, the bills would be passed to the conservative-dominated Expediency Council and could be subject to intervention by Supreme Leader Ayatollah Ali Khamenei, who has the final say on matters of state. Khatami may attempt to hold a referendum if his efforts fail, and if that were blocked, could carry out the pledge he made in May to resign if he felt the reform process had lost its way, analysts said. They said that could spark a political crisis and possible social unrest in the country of 65 million people.

From CNN-Middle East, 2 October 2002

 

Supreme Court to Clarify Worker Law

Washington - Supreme Court to Clarify When Companies Are Small Enough to Avoid Accommodations for the Disabled - The Supreme Court said Tuesday that it will clarify when some companies are small enough to avoid complying with a law requiring wheelchair ramps and other accommodations for the disabled. An Oregon medical clinic is challenging a ruling that it must follow the law because it has more than 15 employees.At issue is whether company shareholders in this case, four doctors also count as employees.The clinic was sued by an 11-year employee who was fired in 1997. The worker claimed she was discriminated against because of a disability, a debilitating tissue disorder. Deborah Anne Wells was demoted, then pressured to resign because of her illness, her attorney told the court.Wells filed suit under the landmark 1990 Americans with Disabilities Act, which protects people with disabilities from discrimination.Congress exempted small companies from the law. A split appeals court said that the doctor owners were also employees, and that their business does not qualify as a small company.Steven W. Seymour, the attorney for Clackamas Gastroenterology Associates, told the court that the outcome will affect small businesses nationwide."Professional corporations with between 15 and 19 employees are likely to find themselves caught in the gray zone between small and large employer categories," Seymour said in a filing.The Supreme Court heard four cases involving the ADA last year. All four rulings went against the disabled.The case is Clackamas Gastroenterology Associates v. Wells, 01-1435.

From ABC News-Politics, 1 October 2002

Bush signs emergency spending measure

Washington - President Bush signed a measure Monday providing emergency funding to keep the federal government running through Friday. The move likely will have to be repeated, because Congress has not passed the spending bills for the fiscal year that begins Tuesday. "The resolution provides appropriations for continuing projects and activities of the federal government," the president said in a written statement. "It ensures that government operations continue without interruption at their current operating level, creates no new programs, and contains no increases in spending." The president had to sign the emergency measure - called a short-term continuing resolution - to prevent any interruption in government services. The House and Senate passed the measure last week, ensuring funding through Friday. "My administration will continue to work with the Congress to ensure that sound fiscal principles are adhered to as we complete action on the FY 2003 appropriation bills," Bush said. Lawmakers are behind schedule, with only five of the 13 spending bills passed so far in the House and only three in the Senate.

From CNN-Politics, 1 October 2002

New Bills Aim to Protect Consumers' Use of Digital Media

Washington - The battle being waged in Washington over copyright in the digital age ratchets up a notch this week as new legislation is introduced aimed at clarifying consumer rights. Rep. Zoe Lofgren, D-San Jose, plans today to introduce the "Digital Choice and Freedom Act," Silicon Valley's response to a host of Hollywood-backed bills tilted in favor of copyright holders. Lofgren's bill would ensure consumers can copy CDs, DVDs and other digital works for personal use, just as they now do with TV shows and audio tapes. "This would not authorize someone taking their digital content and sharing it with a million of their best friends," Lofgren said in an interview Tuesday. Instead of creating new rights for consumers, she said, her bill would ensure that "the rights they have in the analog world, they have in digital." Rep. Rick Boucher, D-Va., plans to introduce similar legislation Thursday. Lawmakers are wrapping up their business for the year within weeks, and neither measure has any chance of making it through Congress by then. Rather, the bills are aimed at staking out the technology industry's position in a festering dispute that could result in congressional action next year. The bills also would amend a 1998 law, the Digital Millennium Copyright Act that makes it a crime to circumvent technological protections built in to copyrighted works. Instead, consumers would be allowed to bypass the technology if the intent is to make a copy for personal use. The legislation will vie with Hollywood-backed proposals, filed by Sen. Ernest Hollings, D-S.C., and Rep. Howard L. Berman, D-Los Angeles, that would embed copy protection into PCs and an array of consumer devices, and allow the music and film industry to use aggressive anti-piracy technologies to thwart unauthorized downloading over the Internet. "The laws that have passed in recent years have imbalanced the historical balance between owners of copyrighted works and users of copyrighted works,'' Boucher said in an interview Tuesday. "The balance has been tilted dramatically in favor of owners at the expense of users."

The film and music industries cast the debate in terms of piracy, arguing that copy protections are needed to ensure people don't download movies and music without compensation to the copyright holders. The tech industry counters that free-flowing downloads of movies, music and other digital works could drive demand for broadband Internet connections, which it hopes would in turn spur innovation and increase sales of new technologies. "If this bill were to pass, it would render ineffective, worthless and useless any protection measure we would have in place to protect a $100 million movie," Jack Valenti, president of the Motion Picture Association of America, said of the Lofgren bill. "You could download a million movies a day, and no penalty for it." Caught in the middle of the debate are consumers, whose "fair use" rights are in limbo. The courts have long upheld consumers' rights to make personal copies of songs, TV shows and other copyrighted works. But the move to digital raises the question of where to draw the line, when near-perfect copies can be easily shared over the Internet with large numbers of other users. "Lofgren's bill aims to restore what Congress thought it was doing - preserving fair use for people who have lawful rights to use stuff," said Paula Samuelson, a law professor at University of California-Berkeley's Boalt Hall School of Law. "The Lofgren bill offers meaningful protections for a number of ordinary activities by consumers that should be lawful under copyright law but about which the law is presently ambiguous." Contact Heather Phillips at hphillips@krwashington.com or (202) 383-6020.

From SiliconValley.com, by Heather Fleming Phillips, 2 October 2002


Bill Aims at Foreign Web Censorship

A new bill designed to fight foreign Web censorship has been introduced in Congress. The legislation, unveiled Wednesday by Rep. Chris Cox, R-Ca., would create an Office of Global Internet Freedom charged with fighting Internet blocking and helping Web users in countries such as China and Syria get around censorship efforts and avoid punishment. The bill also would allocate $50 million each year over the next two years to develop and promote anti-blocking technology. "Just as past governments have banned pamphlets, jammed radios and committed their gravest atrocities out of the range of TV cameras, many governments are attempting to restrict an individual's freedom to receive and exchange information by blocking the Internet," Cox said in a statement. The bill, designed to counter authoritarian governments' efforts to block their citizens from the Internet, would provide technological means to circumvent censorship tools. The legislation's policy statement specifically mentions software, including SafeWeb's Triangle Boy, Peek-a-Booty and DynaWeb, and peer-to-peer network Freenet-China. The bill also would require the submission of a United Nations resolution condemning countries that censor the Web and would require an annual report on nations that abuse Web freedoms. Access to foreign Internet sites has exposed citizens of countries with restrictive governments to a wide range of news and material they were unable to read otherwise. As a result, countries such as China and North Korea have stepped up their censorship efforts. For example, Chinese officials recently arrested a writer who posted information about that country's problems on U.S.-based Web pages, and China's government blocked access to Google and AltaVista last month. Although the amount of money allocated to anti-censorship tools is relatively small, it could spark a proliferation of products designed to circumvent filters both abroad and in the United States. As a result, the bill could create an unintended clash between U.S. efforts to protect children from inappropriate material and attempts to thwart foreign governments from blocking citizen Web access. For example, federal law in the United States currently requires schools to filter content or lose federal funding, but some of the anti-censorship technology could help children get around the blocking. But that debate will likely be put off until next year, if it occurs at all. In the final days of a session, before congressmen return home and turn their efforts to election season, many congressmen introduce bills that cover issues important to the lawmakers and to their constituents-even if they aren't likely to get a hearing. The lawmakers are essentially previewing issues they plan resurrect next year. A similar anti-censorship technology bill is expected in the Senate.

From MSNBC-Technology, by Lisa M. Bowman, 3 October 2002

Deal Announced on Election Reform - Bill 'Does Justice to the American Voter'

Washington - Lawmakers announced a deal Friday on a bill to overhaul the nation's election system, making it, in the words of one Republican, "easier to vote and harder to cheat" and providing $3.9 billion to states to help update equipment and train poll workers. The legislation, expected to win easy approval in both the House and Senate, was prompted by the furor over the disputed 2000 presidential election, when Democrats said thousands of ballots in some Florida counties had been improperly counted or not counted at all. The election was decided when the Supreme Court effectively closed the door to Al Gore's demand for further recounts. "Twenty-three months ago, our nation was thrown into turmoil because we learned a painful reality - that our democracy did not work as well as it should. ... The legislation we present to the Congress today rectifies those wrongs, does justice to the American voter," said Sen. Christopher Dodd, D-Connecticut. The legislation won't affect next month's elections, but the overhaul should be complete by 2004. The measure is billed as the biggest change to the way the nation votes since the 1965 Voting Rights Act. The proposal calls for the creation of a new federal agency, the Election Assistance Commission, to oversee the reforms that states will have to enact. Negotiators reached a compromise last night over competing House and Senate versions of the legislation. Democrats and Republicans differed on several issues, including how stringent voter identification requirements ought to be. On that issue, the deal calls for first-time voters to provide some form of identification, but it does not have to be a photo identification, the lawmakers said.

A utility bill, for example, could be used. Voters who register by mail would also have to provide some form of identification. If there is a question about a voter's identity, the voter would still have the right to cast a provisional ballot, which would count if the person's identity was later cleared. Voters would also have the right to double-check their ballots and fix them if they think they made a mistake. Also, the proposal calls for states to compile a computerized list of registered voters and to ease voting requirements for the disabled. The legislation asserts that every citizen has a right to a "private independent ballot." Currently, blind voters in some states have to relay their choices to other people, who fill out their ballots. The legislation calls for states to develop a voting system that would allow such voters to cast their ballot without assistance. Sen. Christopher "Kit" Bond, R-Missouri, hailed the deal. He waved a picture of a dog that he said had been a registered voter in Missouri. Such mistakes, he said, would be a thing of the past with the changes. He called it a "powerful bill that will make it easier to vote and harder to cheat." The legislation also calls for states to develop uniform and non-discriminatory standards for counting ballots. That very issue was at the heart of the presidential election fiasco in Florida in 2000. Despite new voting machines, Florida was the site of another election mess last month in the Democratic gubernatorial primary, when some machines malfunctioned. The $3.9 billion, which has yet to be approved by Congress, would be dispersed to the states over a three-year period and allow for the purchase of new equipment, training and voter education programs. "Today, the U.S. Congress declares America's independence from hanging chads, butterfly ballots and a broken outdated election system that nearly provoked a constitutional crisis two years ago," said Rep. Steny Hoyer, D-Maryland.

From CNN-Politics, by Kate Snow, 4 October 2002

Gartner: IT Spending to Rise 7% in 2003

Lake Buena Vista, Fla. - Worldwide IT spending is expected to rise 7% in 2003 although significant gains probably won't be seen until the second quarter of next year, according to a report released today by Dataquest Inc. at the Gartner Symposium/ITxpo 2002 conference being held here this week. Spending increases will most likely occur with "shorter-term, less strategic items" such as PCs, low-end servers and infrastructure software "that can help deliver more value out of systems and networks," said George Shiffler, principal analyst for Gartner Dataquest's computing platforms and economics research. Although 47% of respondents said they don't plan to increase IT spending next year, 41% said they do intend to. Overall spending increases will be driven by fixed and mobile telecommunications services, which are expected to rise 7.5% in 2003 to $1.445 trillion as companies continue to focus on core operations and look to reduce their head counts. If telecom services were removed from overall IT spending projections, total IT spending would actually show a 0.5% drop in 2002 instead of the 3.4% gain that San Jose-based Dataquest is projecting. Worldwide spending on hardware and systems is projected to decline 1.3% for this year but rise 4.8% in 2003 to $338.8 billion as the PC market braces for a widely anticipated replacement cycle to occur. Meanwhile, price competition continues in the server market, as companies follow a trend toward buying lower-priced boxes, according to the report. The IT services market is on course to grow 7.1% in 2003 compared to just 2.8% this year. The rise will come about because companies are increasingly leaning toward outsourcing noncore transaction processing functions with an eye towards reducing costs.

From ComputerWorld, by Thomas Hoffman, 7 October 2002

House Backs New Privacy Rules

The U.S. House of Representatives has passed a measure that would require the government to consider how new laws would affect the privacy rights of its citizens. As part of a last-minute flurry of activity before it adjourns for the year, the House voted Monday to require government agencies to determine how new regulations would affect citizens' privacy. Efforts to establish greater privacy protections on the Internet and in the private sector have fallen prey to partisan deadlock, but Georgia Republican Rep. Bob Barr's bill, which would limit how government agencies could use citizens' personal data, has attracted little controversy. </PThe measure encountered no opposition on the sparsely populated House floor and was passed by voice vote 6 minutes after it was taken up. Government agencies would be allowed to collect personal information from citizens but would be required to say how that information would be used. Citizens would have a right to review information collected about them, which could not be used for other purposes. The measure would still have to be approved by the Senate before it becomes law. The bill has drawn support from across the political spectrum amid worries that new security measures put in place after the Sept. 11 attacks could prove too intrusive. Privacy experts told a House subcommittee earlier this year that efforts to combat money laundering and secure air travel could compromise citizens' privacy.

From ZDNet, 8 October 2002

Senator McCain Seeks to Overturn Rules on Campaign Finance Law

Washington - Senator John McCain and his allies filed a lawsuit against the Federal Election Commission and submitted congressional resolutions to overturn the agency's interpretation of a new law governing campaign fund-raising. McCain and three other lawmakers said rules issued by the FEC to enforce the election finance law passed earlier this year would "corrupt" a process that was intended to prevent corporations, labor unions and wealthy individuals from giving unlimited donations to political parties known as "soft money." "A number of commissioners made no secret of their dislike for the law," McCain, an Arizona Republican, said. "They are entitled to their opinion on the merits of the law, but they are not entitled to substitute that opinion for the judgment of Congress." National Republican and Democratic committees raised roughly $500 million in soft money in the 2000 federal elections, races that cost $3 billion overall. After seven years of trying to pass a law to ban soft money, McCain and Democratic Senator Russ Feingold pushed through Congress the first overhaul of election laws since the Watergate scandal in 1972. With its new rules, the FEC created loopholes that will allow political parties to continue to raise and spend soft money and "fly in the face of" the bill's language and the intentions of Congress, McCain said. FEC Chairman David Mason disagreed. "I don't believe what the commission did was corrupt or that any of the individual commissioners are corrupt," he said. "I prefer to have a discussion about the substantive issues involved, not get into labeling or name calling." Other Court Fights - The clash between the campaign finance bill's backers and the FEC is the latest in a battle that began when the legislation was passed in March. Opponents of the law have sued to overturn some provisions, such as restrictions on political advertising by independent groups, which they argue are unconstitutional. The case is expected to go to the U.S. Supreme Court. Today's suit asks the U.S. District Court in Washington to vacate the FEC rules. McCain and Feingold want Congress to pass a resolution that would accomplish the same thing, though they said it was unlikely to come up for a vote before next year. "We are demonstrating our resolve," Feingold, of Wisconsin, said. "We are not going to allow loopholes created by the FEC to set aside seven years of hard work."

At the heart of McCain and Feingold's complaint are regulations approved by the FEC that they say are not provided for in the law. 'Grandfather Clause' - For example, the law says the soft money ban extends to entities "directly or indirectly established, financed, maintained or controlled" by the national political parties. The FEC rules, McCain said, created a "grandfather clause" that would allow the parties to create other organizations that could raise soft money, so long as they were established before the law takes effect Nov. 6. Another point of contention is whether federal politicians may solicit soft money. The law says that solicitation is prohibited. The FEC defined ``solicit'' as "to ask." The lawmakers said that may create a loophole that would let politicians raise soft money by merely suggesting or recommending that donors contribute soft money to state party committees or other organizations that can accept it. "We just want them to uphold the law, not to make up the law," said Representative Christopher Shays, a Connecticut Republican who co-sponsored the law in the House. The FEC approved the rules June 22 on a 5-1 vote. "Obviously, the majority of the commissioners who adopted the regulations believe those regulations are right and appropriate," said FEC spokesman Ron Harris. "We hope and expect Congress and the courts will ultimately come to that conclusion." Public interest groups that lobbied for the bill, such as Common Cause and Democracy 21, are also lining up to help the lawmakers challenge the FEC. "We worked long and hard to see that campaign finance reform passed," said Common Cause President Scott Harshbarger. "We will not let rogue commissioners take an ax to it."

From Bloomberg-Politics, by Glen Justice, 9 October 2002

Supreme Court Debates Government Seizure of Wireless Licenses

Washington - The Supreme Court debated Tuesday whether the government was out of line when it seized unused wireless licenses from a young company that had promised to provide better, cheaper cell phone service. The case is important for consumers because it affects the future of wireless networks in many overcrowded markets. The Federal Communications Commission and NextWave Telecom Inc. have been battling over the airwaves slices since the New York company won them in an auction in 1996, then filed for bankruptcy protection before paying for them. Some justices seemed skeptical of claims that FCC rules allow it to cancel licenses owned by a company that is reorganizing its finances. Justice David H. Souter said the commission let NextWave keep its licenses for months without making payments, then seized and resold them when the commission had buyers willing to pay much higher prices. The Supreme Court's decision is expected to take at least several months. The case involves wireless spectrum in dozens of markets, including Chicago, Los Angeles, New York, Philadelphia, San Francisco, Seattle and Washington. "This has been an unusually big mess," said Howard Shelanski, a law professor at the University of California, Berkeley. "Consumers should be concerned because any available spectrum could bring them lower prices for existing services and new kinds of wireless services." For telecommunications companies and investors, huge amounts of money are on the line. NextWave had agreed to pay $4.7 billion for the frequencies in 1996. The Hawthorne, N.Y.-based company failed to keep up with payments and filed for bankruptcy protection two years later. The FCC sold the licenses last year to Verizon Wireless, VoiceStream Wireless and other companies at a second auction for nearly $16 billion, but an appeals court nullified the second sale. The Supreme Court will decide whether the lower court was right. Paul D. Clement, arguing on behalf of the FCC, said NextWave did not provide services to customers and the government was justified in reclaiming the unused licenses. Donald Verrilli Jr., NextWave's lawyer, said bankruptcy laws protect companies that are reorganizing their finances from having assets seized. NextWave was formed in 1995 and promoted a nationwide cellular calling plan and 10-cent-a-minute service, far cheaper than what was offered by large wireless companies. The company still wants a chance to compete for wireless customers. Rebecca Arbogast, a Washington-based telecommunications analyst for Legg Mason, said the case is being closely followed by the industry, and not just because of the highly coveted licenses at stake. "There's been an element of drama, rising fortunes and falling fortunes, that tracks the industry in general," Arbogast said. "There's a question of who's going to be left holding the bag and who makes out like a bandit." In Tuesday's argument, justices said they were mindful that the outcome of the case could affect other situations in which someone has a government license and encounters financial trouble. Justice Antonin Scalia gave the example of a driver's license being taken from someone whose fines were part of a bankruptcy proceeding. The cases are FCC v. NextWave Personal Communications, 01-653, and Arctic Slope Corp. v. NextWave, 01-657.

From Nando Times-Technology, by Gina Holland, 9 October 2002

Costa Rica Plan to Fight Child Labor

Costa Rica on Tuesday announced an ambitious plan to stamp out child labor nationwide by providing small loans and economic aid to families with children of all ages. Labor Minister Ovidio Pacheco said that 72,000 Costa Rican children between the ages of 5 and 16 have been pressed into the work force illegally by parents desperate for another source of income. He said another 147,000 teens between the ages of 16 and 18 are forced to quit high school and go to work. Costa Rican law prohibits children ages 15 and under from working and restricts 16- to 18-year-olds from working more than six hours a day or from taking overnight shifts. "This has been a problem for many years and it has never been confronted by the state," Pacheco said. "We are going to take it on like never before." While Pacheco refused to discuss how much money will be earmarked for the new plan, he said the government would offer subsides to families with young children and scholarships designed to keep older kids in school. He said some families would even qualify for bonuses allowing them to make home improvements or buy property.

From CNN, 10 October 2002

Argentina President Urges Party Unity

Duhalde wants 'primary without any problems' - Interim Argentine President Edward Duhalde said on Monday it was vital that his Peronist Party set aside internal rifts quickly to ensure primary and presidential elections can take place as planned. Officials said Duhalde met over the weekend with the running mate of his arch rival, former President Carlos Menem, in a bid to smooth over differences and devise a strategy to keep the Peronist presidential primary vote scheduled for December 15. "I think it is urgent that the candidates agree this week to ... (help) guarantee all Peronist candidates can take part in the primary without any problems or difficulties," Duhalde told reporters. He said the Peronist Party primary vote could be delayed "a couple of weeks" if necessary without disrupting the timing of the scheduled March 30 presidential election, but no more than that. Duhalde is not running in the election. Duhalde wants a new electoral board appointed to oversee the Peronist primary vote and guarantee a timetable after a recent court ruling countered his plans to force all parties to hold their primaries in mid-December. A separate ruling is pending on whether Duhalde's decision to bring elections forward by six months to defuse simmering social tensions - a move Congress did not formally back - was constitutional. Analysts and commentators alike say the Peronist Party primary election is likely to determine who will become the next president of Latin America's No. 3 economy, still reeling from a default on the lion's share of $115 billion in public debt and a sharp currency devaluation. Duhalde, named Argentina's fifth leader in two weeks after the elected government was toppled amid riots in late 2001, last week urged lawmakers to endorse the March 30 vote date - which potentially could stave off legal roadblocks. The government is worried that legal problems could hamstring the vote, seen as crucial to help stabilize Argentina as it tries to claw out of a grinding four-year recession and head off growing protests over searing poverty. Ensuring that the election process remains on track also would remove another question mark clouding long-running aid talks with the International Monetary Fund. Duhalde said he hoped to seal a long-elusive IMF aid deal that Argentina desperately needs to buy time to rescue the economy "in the first few days of November." But he and his team are known for overly optimistic forecasts, and analysts say any deal - likely to be essentially a rollover of nearly $15 billion in debt owed to multilateral lenders this year and next - is still several weeks away. The IMF has yet to respond publicly to Argentina's observations on an aid blueprint draft that were sent to fund headquarters in Washington last week. Sticking points include IMF-endorsed demands for a sharp hike in foreign-owned utility tariffs, and tighter fiscal targets. The government also must find a way to ease a freeze on bank accounts imposed to halt a bank run in January, as well as a plan to restructure the crippled financial system.

From CNN, 21 October 2002

Congress Tweaks 527 Law

In an unusual act of comity between campaign finance watchdog groups and some of their onetime foes, Congress passed a law significantly altering federal reporting requirements for stealth political organizations during late-night sessions last week. For the past two weeks reform advocates and several key GOPand Democratic lawmakers secretly hashed out language to fix a number of perceived problems to a campaign finance reform law passed in 2000 that was aimed at shining a light on so-called 527 organizations. President Bush is expected to sign the measure. Reform advocates from Common Cause, Public Citizen and the Campaign Finance Institute hailed the new bipartisan measure sponsored by Sens. Joe Lieberman (D-Conn.) and Kay Bailey Hutchinson (R-Texas) and Reps. Kevin Brady (R-Texas) and Lloyd Doggett (D-Texas) as a way to significantly enhance public disclosure of contributions to and expenditures by 527 political action committees. "A number of obstacles were overcome," said Steve Weissman, associate director for policy at the Campaign Finance Institute. "There was a mutual desire by all these groups to get what we wanted done, and that forced this united approach." Even though he supported the corrections, Doggett, whose previous attempts to reform the bill were thwarted by House Republicans, complained on the House floor that a new law was being passed late in the evening on the night before the House was leaving town to campaign. "It is particularly ironic that this bill, which has not been before any committees of the House or voted upon by any Member of the House of Representatives until tonight and which deals with open government should be brought up in this manner," he said.

The bill is not without critics, who believe it has the potential to gut the original intention of the law. The original reform measure aimed to root out secret PACs taking advantage of Section 527 of the tax code to operate in the shadows while collecting millions in soft money to fund issue ads, phone banks and direct-mail campaigns. The new law would exempt state and local political organizations - as well as the national party committees that already report their activities to a state election board - from having to provide information to the IRS as well. Since the original law was enacted, state and local groups such as the National Conference of State Legislatures have complained that it forces them to disclose their activities to the IRS when they are already required to do so with their state governments. Organizations are exempt from reporting to the IRS only if they focus solely on state or local elections and do not have a federal candidate or officeholder playing "any material role in the organization or raising money for it," according to the bill's language. Those concerned that the measure will actually reduce detection of the stealth PACs fear that such language is hard to define and coordination by elected officials is always difficult to detect and enforce. There is widespread support, however, for several provisions of the new law. Those organizations that file to the IRS must now disclose the date of each contribution and the purpose of each expenditure. The law also aims to improve how the IRS provides information about these groups to the public. It would mandate that organizations file electronic reports to the IRS to make the information available to the public quickly, avoiding the months of delays that currently exist between reporting deadlines and the time the public is able to access the information on the IRS Web site. The bill would also require the IRS to make the data on its Web site available in a searchable and downloadable format. Doggett acknowledged the need to eliminate any duplicative filing but offered only tepid praise for that provision. "I suppose that changing this provision is not a great loss,"he said, "but it is clear that less information will be available than exists under current law there. And in return for that change made, there are some other changes that Ithink are positive ... that will make more accessible the access to information on Web sites."

From Roll Call, by Susan Crabtree, 21 October 2002

New Law Will Notify Consumers of 401(k) Lockouts

Washington - Workers with 401(k) retirement plans are getting a new legal protection next year, a regulation that requires 30 days notice before a company can block access to retirement savings accounts for administrative changes. The Labor Department issued the regulation Monday, to take effect Jan. 26. Congress ordered the rule as part of a corporate accountability law passed this summer. Congress has failed to pass legislation strictly to tighten protections for workers with 401(k) plans. The 30-day notice of blackout periods was about all Republicans and Democrats could agree on, so it was included in the corporate accountability bill that passed. About 40 million Americans have about $1.5 trillion invested in 401(k) plans. Plan administrators who fail to provide the 30-day notice can be fined up to $100 per day per plan participant. Companies are not required to notify the Labor Department of a blackout period. Notices to workers must contain reasons for the blackout period, a description of participants' rights being suspended during the time, the start and end dates and a statement advising participants to evaluate current investments based on their inability to make changes during the blackout period. Those requirements "will create incentives for companies to keep blackouts as brief as possible," said Ann Combs, assistant labor secretary for pension and welfare benefits. Corporate executives also will be barred from selling company stock or exercising options during blackout periods. Details of that requirement will be issued by the Securities and Exchange Commission. The Bush administration publicized the regulations in President Bush's radio address Saturday.

The White House has its eye on the Nov. 5 elections that will determine control of Congress. Bush hopes to deflect Democrats' claims that the economy has worsened during his presidency, and he has done little to help. At least one proponent of stronger consumer protections criticized the White House and Congress, saying much more needs to be done. The White House "is trying to make this into a big deal. This is not a big deal. In fact, this is a red herring," said Karen Friedman, policy director for the Pension Rights Center. "The so-called blackout period is a very small part of the problems that were created in the fallout of Enron and WorldCom." The law in part responded to the predicament of Enron Corp. workers, many of whom lost their retirement savings when the company's stock value plummeted last year. Thousands of workers were barred for weeks from accessing their accounts as the retirement plan changed administrators. The 20,795 participants had about 63 percent of their assets invested in company stock. Under intense pressure from business groups, Congress has done nothing to limit how much company stock that workers can invest in as part of their 401(k) plans. Some Senate Democrats favored imposing limits that would force plan diversification, but an agreement was not reached and the Senate failed to act on any 401(k) legislation. The Republican-controlled House passed a bill that includes a provision to allow workers to receive investment advice from the same companies that manage their 401(k) retirement accounts. Republicans say that would help workers diversify their accounts, but Democrats claim the advice would be tainted by financial conflicts of interest.

From Nando Times-Business, by Leigh Strope, 22 October 2002

Canadian Families Moving Away from Traditional Model, Census Figures Show

Canadians are living in smaller households than in recent decades, according to figures from the nation's 2001 census. The figures announced Tuesday show that America's northern neighbor is moving away from the traditional family model of husband, wife and kids. Households of four or more people comprised about a quarter of all Canadian households in 2001, compared to a third two decades earlier, Statistics Canada said in releasing the census results. The number of households, meanwhile, rose 6.9 percent since 1996 to 11.6 million, indicating couples were having fewer children than in the past, the statistics agency said. Other contributing factors are couples who live longer, creating smaller households after their children move out, and divorce or breakups that create two smaller households, according to the agency. ''The 2001 census showed that there's a continuation in the decline of what used to be called the traditional family - mom, dad and the kids,'' said Pierre Turcotte, a Statistics Canada analyst. In the United States, married couples with children under 18 - the classic nuclear family - made up 23.5 percent of all households in the 2000 census. The U.S. figures showed an increase in the percentage of single-person households and unmarried-couples over previous census results. For the first time, the Canadian statistics agency collected census data on same-sex partnerships. Canada refuses to provide marriage certificates to same-sex couples, though some churches have blessed such unions. More than 34,200 same-sex, common-law couples were counted in the 2001 census, representing 0.5 percent of all Canadian couples and 3 percent of common-law couples.

From MSNBC, 23 October 2002

Education Secretary Urges Standards

Washington - In Letter, Education Secretary Rod Paige Urges Schools to Keep Standards High - Education Secretary Rod Paige this week used a sternly worded letter to warn school districts nationwide not to lower their academic standards, saying those who do are "the enemies of equal justice and equal opportunity." While praising states that are working to implement the "No Child Left Behind" reforms sought by President Bush and passed by Congress, Paige called those resisting the reforms "apologists for failure" and predicted, "they will not succeed." Wednesday's letter, one of several Paige has dispatched over the past few months, was the most strongly worded yet, suggesting that federal officials will keep tabs on states that lower standards so more students can be labeled "proficient." The law singles out schools with high numbers of students whose basic math and reading skills are substandard, but lets states decide what those standards will be. Paige has said that giving a national skills test, the annual National Assessment of Educational Progress, or NAEP, will show which states' standards are low, but the law attaches no penalties to low NAEP scores. Education Department officials have said the public embarrassment of low NAEP scores could urge states to raise their standards. But several state education officials say the new law already punishes states with high standards, forcing them to offer school transfers and expensive tutoring using federal funds that would otherwise go to classrooms. For instance, in Texas, which has 4.1 million students, state officials there have identified only 46 underperforming schools. But Michigan, with only 1.7 million students and higher standards, has 1,513 underperforming schools. "There are states, like Michigan, that don't see that they can comply with it," said Brenda Welburn, executive director of the National Association of State Boards of Education. "It was something that we almost anticipated, because there are such differences in state standards," she said. "We've got one federal law, but we've got 50 state standards." Welburn said she knows of no state officials who are consciously lowering standards, but added, "They certainly are terrified that they're going to lose federal dollars if they can't fully comply with the law. "Ross Wiener, director of policy for The Education Trust, a Washington organization that advocates for urban and minority students, said Paige's letter is a clear signal that the federal government will monitor state standards." States set their standards, and this law says we've got to try ways we haven't before to help kids meet those standards," Wiener said. "The secretary is right in acknowledging it's hard work, it's not going to be easy, but it's important work.

From ABC, 24 October 2002

Fed's Ferguson Upbeat on Productivity

Washington - Federal Reserve Vice Chairman Roger Ferguson on Thursday said he was convinced U.S. worker productivity has trended upward in recent years, echoing a similar sentiment voiced only a day earlier by Fed chief Alan Greenspan. "Let me state right from the outset that I continue to be cautiously optimistic about productivity growth in the United States. Based on my reading of the data and my understanding of numerous business case studies, I believe that trend labor productivity in the United States accelerated in the mid-1990s," Ferguson said in prepared remarks to the London Business School. A text of his remarks was released in Washington. Productivity, or output per worker hour, is a key determinant of long-run economic growth. Productivity measures surged in the mid-1990s after showing slow growth since about 1973, leading some economists to question the permanence of the recent gains. "I tend to believe that future growth will most likely follow the 1960-1973 pattern, and the most recent record of productivity growth reinforces that view," he said. While productivity growth typically declines during an economic recession, such as the one the United States endured in 2001, it instead held up well during the downturn. Ferguson theorized firms were able to squeeze more out of smaller work forces, aided by investments in new, more efficient equipment in recent years. On Wednesday, Greenspan said "it seems reasonable" to conclude the gains seen in the past decade had not yet faltered. Fed policymakers are set to meet on Nov. 6 to mull interest rate policy. While two members of the 12-member policy panel sought lower rates at September's meeting, the rest decided to hold rates steady, citing, in part, "still-robust underlying growth in productivity." After going on an investment binge, particularly in the high-tech sector, in the 1990s, firms have been wary of making new capital investments lately, waiting for the economy to pick up steam and corporate bottom lines to improve. While Ferguson said some sectors of the economy continue to suffer from too much capacity and ailing profitability, he also said that was not the case overall. "In the aggregate, the underlying picture of both corporate profits and capital spending is not as bleak as the experiences of some industries suggest," he said. "Ultimately, if I'm right about the stronger underlying pace of productivity growth, aggregate profits will continue to recover once the sectoral imbalances are eliminated." One the drivers of high-tech investment at the end of the 1990s was the so-called "Y2K bug," a potential glitch in date recognition in older computer systems that companies spent billions to eradicate. While many economists noted the peak in investment coinciding with century date change, Ferguson said many executives also found Y2K investments helpful in increasing efficiency. "The net effect of Y2K on our economy is still very much an unanswered question, and I'd like to see the research community systematically address it," he said. Ferguson also said the high-tech sector, hard-hit by the U.S. downturn, should see better times ahead. "I can't give you an exact date or time, but I will assert that its economic prospects still seem positive over the long run," he said.

From ABC News-Business-Wire, 24 October 2002

Ontario Introduces Drinking Water Bill

Oakville - The Ontario government says the Safe Drinking Water Act it introduced in the legislature on Tuesday afternoon will give people in Ontario the cleanest and safest drinking water in the world. The legislation is a response to the recommendations from the Walkerton Inquiry - the probe by Justice Dennis O'Connor into the water contamination that killed seven people and made thousands sick in May 2000. Ontario Premier Ernie Eves said the bill will require: - licences for all labs, 'a first in Canada'; - a new position of chief drinking water inspector; - annual reports by the government to the legislature; - new standards for water testing, treatment, distribution and quality. Eves also said the government is taking action to protect drinking water sources to prevent contaminants from getting into the system. The Walkerton disaster began when fecal material from a cattle farm got into the town's well water. Critics complained that the bill did not address source contamination. But Ontario Environment Minister Chris Stockwell said O'Connor called for two separate bills, and the government will do that. A bill on water sources could be ready in the spring, he said. "We're married to the O'Connor report," he told CBC Newsworld. Critics also complained the bill did not promise the billions of dollars needed to upgrade Ontario's waterworks. Consumers will pay, Stockwell suggested. Ontario residents today pay much more for monthly cable TV service than they do for water, and water "can kill you," he said. The first part of O'Connor's report made 28 recommendations. Eight have been implemented and 20 more are under way, Eves said. Part two of O'Connor's report contained 93 recommendations. The new legislation will enable the government to implement 50 of them, he said. Twenty have been dealt with, the provincial Ministry of the Environment is working on 13 others, and 10 require federal action. Discussions on those are under way, Eves said. Eves, a Conservative, thanked a New Democrat member of the legislature, Marilyn Churley, who introduced a private member's bill on drinking water. He said she provided a blueprint for the government to follow. In September, Ontario's environmental commissioner criticized the government for failing to keep track of water quality in rural areas.

From Canada-CBC Newsworld, 29 October 2002

Bush Signs Election Changes

One week before Election Day, President Bush signed legislation Tuesday revamping the nation's voting system and guarding against the kinds of errors that threw his own election into dispute two years ago. "When problems arise in the administration of elections, we have a responsibility to fix them," Mr. Bush said Tuesday as he gathered several Democratic and Republican lawmakers behind him. The measure, which passed Congress overwhelmingly, sets the first federal standards for registration and voting, and authorizes almost $4 billion to buy new voting machines around the country, reports CBS News Correspondent Bob Fuss. "Every registered voter deserves to have confidence that the system is fair and elections are honest, that every vote is recorded and that the rules are consistently applied. The legislation that I sign today will add to the nation's confidence," Mr. Bush said. The ceremony, staged in a White House office-building auditorium, began Mr. Bush's two-day respite from campaigning for GOP House, Senate and gubernatorial candidates in next Tuesday's elections. Under the "Help America Vote Act," states will receive $3.9 billion in federal money over the next three years to replace outdated punch-card and lever voting machines or improve voter education and poll-worker training. The new law's protections against voting error will not affect next week's balloting but are scheduled to be mostly implemented in time for the 2004 congressional and presidential vote, which will most likely include Mr. Bush's re-election bid.

It was Mr. Bush's bitter 2000 Florida recount battle with Democrat Al Gore - with its confusing "butterfly ballots," half-perforated punch ballots and allegations of voter intimidation - that gave rise to the legislation. Mr. Bush's election was ultimately decided by the U.S. Supreme Court. The president made no mention of that Florida debacle in his brief speech. The state, governed by the president's younger brother Jeb, more recently had a rocky Sept. 10 primary. Various problems delayed some vote tallies for a week and polling places did not open on time. The federal government will post civil rights monitors at the polls in several Florida counties next Tuesday. Rep. John Conyers, Jr., dean of the Congressional Black Caucus, accused Mr. Bush even before the ceremony of playing hypocritical games with the issue. Conyers recalled that Mr. Bush vetoed over the summer a $400 million "downpayment" on overhauling the election system. "Without funding this bill is an empty shell and the president's signature is a cruel and empty promise," said Conyers, D-Mich. The House approved election changes late last year and the Senate followed suit in April, but Republican demands for strong anti-fraud provisions stalled reconciliation of the two versions for months. Lawmakers did not send a final bill to Mr. Bush until last Wednesday. "This has been a long marathon, but the finish line is finally in sight and the winner is the American public," said Senate Rules Committee Chairman Chris Dodd, D-Conn. "This landmark legislation will ensure that everyone not only has the right to vote on Election Day, but that their voice is heard." Beginning Jan. 1, first-time voters who registered by mail will be required to provide identification when they show up at the polls. By the 2004 vote, states will be required to provide provisional ballots to voters whose names do not appear on voter rolls.

Those provisional ballots would be counted once valid registration is verified. For 2006 balloting, states will be required to maintain computerized, statewide voter registration lists linked to their driver's license databases. States will also be required to have voting machines that allow voters to confirm the way they marked their ballot - and, if necessary, change their votes - before they are finally cast. Such voting software was tested in one jurisdiction in the 2001 Virginia gubernatorial election. The Century Foundation, which reviewed the results, found that the "lost vote" rate went from between 600-700 votes in the 2000 election to just one vote in 2001, said Tova Andrea Wang, a staffer to the National Commission on Federal Election Reform who later oversaw the foundation's study. "The bill goes a long way toward addressing a lot of the problems, but the extent to which the bill works relies on what the states do because they are given a lot of discretion," said Wang. "A new polling machine is fine and great as long as people know how to use it, and there's no specificity in the legislation on poll-worker training and voter education." Wang and other election experts also worry that discriminatory enforcement of the voter-ID requirements could especially disenfranchise minorities, the poor, immigrants and students. She called the provision "something that may have to be revisited."

From CBS News-Politics, 29 October 2002

Feds Release Guidelines for Securing IT

The federal government on Tuesday released for comment a new set of guidelines for securing computer systems and networks. Although the guidelines are intended for use by government agencies, officials at the National Institute of Standards and Technology are hoping that enterprises will adopt them as well. The guidelines spell out in detail the method that security specialists should use in assessing the overall security, integrity and availability of a system. It also lays out steps for selecting and deploying security controls. Titled "Guidelines for the Security Certification and Accreditation of Federal Information Technology Systems," the document enumerates three separate certification levels for federal systems: Security Certification Level 1 (SCL-1), SCL-2 and SCL-3. The levels are based on the amount of concern for security, confidentiality and availability that network operators have for a particular system. Each level has its own verification techniques, ranging from a checklist-based independent security review and personnel interview for SCL-1 to a system design analysis, regression analysis and penetration testing for SCL-3. NIST is also planning to hold a meeting in early 2003 to consider developing a way to test the technical competence of third parties to conduct the security reviews spelled out in the new guidelines. "This is a very significant step toward making the federal government's computer systems more secure," said Phillip Bond, undersecretary for technology at the Department of Commerce in Washington, which oversees NIST. "It gives agencies a comprehensive, yet flexible way to ensure that their computers are as safe as they should be." The guidelines are open for public comment through Jan. 31, and are available on the NIST Web site.

From eWeek, by Dennis Fisher, 31 October 2002

 

U.N.: Global Economic Growth Slower than Expected Through 2003

Declining U.S. stock prices, economic turmoil in Latin America and uncertainty in the Middle East will delay the global economic recovery until at least the middle of next year, a revised U.N. forecast said. The Global Economic Outlook issued Wednesday predicted economic growth of just 1.7 percent this year and 2.9 percent next year - down from April's forecast of 1.8 percent and 3.2 percent, respectively. It forecast 2.3 percent economic growth in the United States this year and 3.2 percent in 2003. Economists from around the world predicted in April that the global economic recovery would reach full momentum in the second half of this year. But the new report forecasts that peak economic recovery will not occur until around mid-2003. "Not only that, the sustainability of the ongoing recovery remains subject to a number of uncertainties," it said. The rising "geopolitical tensions" in the Middle East are an economic wild card, the decline of U.S. stock prices is of historic dimensions in terms of duration and severity, and the financial crisis in Argentina has spilled into Latin America, the forecast said. Corporate scandals also are increasing in industrialized countries, especially the United States, the forecast said. The Mideast turmoil triggered an increase in oil prices of more than 50 percent from January through September, adding to economic problems in many countries, it said. "These new factors, plus the havoc wreaked by unusually large natural disasters such as floods and drought in a number of economies, have exacerbated the original weaknesses in the world economy," the economists said. "In fact, in mid-2002 these developments almost aborted the tentative recovery." The economists warned that a prolonged continuation of the stock market slide in the United States could push the global recovery to beyond mid-2003.

The Global Economic Outlook is based on submissions by global economists ahead of this week's meeting in Bologna, Italy, of Project LINK, a cooperative, non-governmental research effort coordinated by the U.N. Department of Economic and Social Affairs and the University of Toronto. The economists said the United States will remain the main engine for economic growth "but with not much momentum." "Following the mild recession of 2001, the United States has been on a path of economic recovery, but the strength of the mending process has remained anemic," the report said. Economic recovery in Japan and Western Europe "will remain fragile," with the Japanese economy "dragged down by fiscal and debt difficulties" and European economies constrained by fiscal and monetary policies. In west Asia, economic growth is subject to great uncertainty because of the increased volatility in oil prices and mounting geopolitical tensions, the report said. The biggest drag on the world economy is Latin America, primarily because of an estimated 12 percent contraction in Argentina's economy this year that also has affected Brazil, Paraguay and Uruguay, it said. Concern about Brazil's large debt has been exacerbated by uncertainties about its future government policies, it said. Brazil will hold a runoff presidential election Oct. 27. Nonetheless, the outlook reported that prospects for economic growth remain good in some countries and regions. China remains the top performing economy, with expected growth of 7.7 percent this year and 7.5 percent next year, it said. The economies of the former Soviet Union and Eastern Europe are projected to maintain their recent pace, with 3.4 percent growth this year and 4.0 percent next year. African economies are expected to grow by only 2.7 percent in 2002 - less than the rate at which the population is expanding - but growth will increase to about 4 percent in 2003, mainly because of strengthened domestic economic factors, it said.

From Associated Press, by Edith M. Lederer, 10 October 2002

U.N. Conference to Discuss Implementation of Kyoto Protocol on Climate Change

New Delhi, India - Weather catastrophes around the world show there is little doubt the Earth's climate is changing, the outgoing head of the U.N. Framework Convention on Climate Change warned Wednesday. The Earth is facing a ''worrisome situation, with catastrophes occurring daily, causing enormous damage and making climate change an undeniable reality,'' said Mohamed Elyazghi of Morocco, the outgoing president of the U.N. Convention, at a conference aimed at reducing greenhouse gas emissions and curb global warming. The 10-day U.N. Climate Change Convention is to focus on preparing governments and civilians, especially in developing countries, for the 1997 Kyoto Protocol on climate change, which comes into effect early next year. Government leaders and environmental scientists from around the world were gathering to discuss implementation of the landmark accord, which calls for cuts in carbon emissions. The United Nations says recent climate disasters around the world - from droughts in India to floods throughout Europe - are potent reminders of the expected consequences of global warming. Environmentalists warn rising temperatures will increase the frequency and severity of heat waves and tropical cyclones, while possible shifts in climate patterns could lead to changes in rainfall patterns, leading to more intense floods and droughts. Rules for implementing the accord were concluded last year in Morocco. The convention in New Delhi was to focus on financing for projects to help developing countries adopt climate-friendly technologies for reducing carbon dioxide and other heat-trapping gases. T.R. Baalu, India's minister for environment and forest and the new conference president, said: ''Higher priority should be given to adaptation ... keeping in view that those with the least resources have the least capacity to adapt and are the most vulnerable.'' Baalu said developed countries must take the lead in changing their habits, and those that have signed the protocol are committed to taking steps that reverse the damage. While delegates at the conference worked out the nitty-gritty of speeding up funding to implement the protocol, nongovernment organizations held separate meetings where they criticized the slow pace of achieving emission reduction targets and the lack of funds for developing countries to adopt cleaner technologies. ''We believe the Kyoto protocol is woefully inadequate in curbing emissions, considering the enormity of the problem confronting us,'' said Kate Hampton of Friends of the Earth International. Environmental activists also warned of the dangers of partial solutions to the problem. ''We have to ensure that the Kyoto protocol comes into force, and at the same time work for cleaner technologies. We shouldn't get sidetracked, nor allow the treaty to be watered down,'' said Karla Schoeters of the Climate Action Network, a Brussels-based NGO. So far, 96 countries, including India and the European Union countries, have ratified the Kyoto Protocol, which was negotiated in 1997. Afghanistan became the latest country to ratify on Sept. 19, announced Joke Waller-Hunter, the U.N. conference's executive secretary. The United States has refused to ratify the agreement, saying it will be too costly for industries. U.N. organizers said the convention would be attended by more than 3,000 delegates from the United Nations' 185 member states.

From MSNBC, 23 October 2002

A Free Country

About five years ago, the United Nations set up a high-level process to establish the future shape of communications and information throughout the world. The UN figured that the breakneck speed of the information economy could result not only in vast areas being excluded from the emerging information society, but also in the denial of fundamental consumer and civil rights. So began a long and complex process now called the World Summit on the Information Society (WSIS). Its mandate, in the words of its organisers, is to "develop and foster a clear statement of political will and a concrete plan of action for achieving the goals of the information society, while fully reflecting all the different interests at stake". But whose goals should be reflected? With the UN in firm control of the process, there was a theoretical possibility of consumers, human rights organisations and developing countries having a say about the shape of the information economy. As large corporations moved steadily towards wresting absolute control over the direction of new economies, the emerging UN policy process was widely hailed as an opportunity to achieve a balance in favour of the consumer. Three years later, the UN dropped the ball. Management of the WSIS structure changed from Unesco to the International Telecommunications Union, a consortium of the world's most powerful communications companies. The civil rights organisations, consumer groups and non-government organisations that had been promised a prominent role in the process were promptly excluded. These citizens' groups are planning a legal challenge, claiming that the UN is in violation of its own constitution. For the sake of future freedoms in this crucial area of our lives, perhaps the UN should take note of the protest and regain control over WSIS.

From The Daily Telegraph, 18 October 2002

 

Kenya Lawyers Boycott to Save Draft Constitution

Thousands of lawyers boycotted courts in the Kenyan capital on Wednesday over efforts by President Daniel arap Moi and two top judges to scuttle a draft constitution which limits presidential power. ''Why bother hiring a lawyer when you can buy a judge!'' blazed the sea of placards surrounding Law Society of Kenya (LSK) Chairperson Raychelle Omamo as she spoke at the protest against judicial interference in the constitutional debate. ''We demand that the process to change the law be allowed to go on, and we want dialogue with those opposed to the law at the constitutional conference,'' Omamo told about 2,000 lawyers outside the High Court buildings after a march in Nairobi. Experts reviewing Kenya's constitution unveiled proposals in the new draft late last month that would introduce checks on presidential power and overhaul a judiciary perceived by many as a servant of the government's executive branch. Two of Kenya's top judges filed a suit to prevent public and parliamentary debate on the draft, after trying to stop the constitutional review team from publishing a work which seeks to give parliament more power and reform the judiciary. Critics, who hope a new constitution could be in place before the elections expected in December, say Moi's enormous presidential powers under existing law give his ruling KANU party an unfair advantage over rivals in the upcoming polls. The 78-year-old Moi has dismissed the constitutional draft as flawed and says he plans to set an election under existing laws, even though they bar him from another term in office. The draft constitution provides for a mostly ceremonial president, an executive prime minister, a second house of parliament and a beefed up law-making role for the main chamber. ''Whoever is elected president has no power. Yet the president is the source of power which comes from the people,'' Moi said after the draft was published in newspapers last month. The draft also proposes to scrap Kenya's colonial inheritance of powerful unelected district and provincial commissioners, who are only answerable to the president. The new law is expected to be debated by a constitutional conference at the end October and enacted by parliament before the polls. But if Moi and some top judges have their way, the draft proposal could be shelved altogether. ''Despite what the president says or the legal suit by the judges, we shall go ahead and hold a constitutional conference to debate the proposals,'' the head of the constitutional review team Yash Pal Ghai told Reuters. Moi is one of Africa's longest-serving leaders and nearly the last of the continent's so-called big men. He has publicly said the draft fails to incorporate the views of a majority of Kenyans, including his own. He is faced with a creeping revolt over the new constitution at a time when he is also beset by party wrangling over his choice of successor after wielding power for 24 years.

From MSNBC, 10 October 2002

Congolese Leaders Near Agreement on Power-Sharing Formula

Pretoria, South Africa - The Congolese government and two rebel groups neared agreement Tuesday on a power-sharing arrangement, a mediator and rebel leaders said Tuesday. If approved, the agreement could help lead the war-torn nation toward a transitional governmnent and democratic elections. Such a government could help unify the vast central African nation and end a civil war that has claimed an estimated 2.5 million lives. The Ugandan-backed rebel Congolese Liberation Movement had previously opposed the power sharing plan, but changed its mind Tuesday, officials said. However, negotiators had yet to agree on the degree of power sharing in a transitional government that would rule the country until the election, the rebels said. South African mediators hailed what they called a breakthrough. ''It is the first time that the parties agreed on a transitional arrangement. What remains now, is to refine the details,'' South African envoy Sisa Ngombane was quoting as telling the South African Press Association. Under the proposal, Congolese President Joseph Kabila would remain head of a transitional government with four vice presidents: one from the government, the opposition and each of the two rebel groups. Rebels said their demands for comprehensive power sharing, with joint control of the army, police, diplomats and public companies, would not be discussed until the arrival Thursday of a higher-ranking government delegation. The talks are a continuation of negotiations that broke down in South Africa in April. The war in Congo broke out in August 1998 when Rwanda and Uganda sent thousands of troops to back Congolese rebels seeking to oust then-President Laurent Kabila, Joseph Kabila's father. They accused him of supporting rebels threatening regional security. Zimbabwe, Angola and Namibia sent troops to support Kabila's government. Ngombane said Congolese opposition officials would join the talks Wednesday. They had already agreed in principle to the power-sharing formula.

From MSNBC, 30 October 2002

 

Nepal Cabinet Seeks to Put Off Elections by a Year

Nepal's cabinet asked King Gyanendra on Thursday to delay national elections scheduled for November by a year due to mounting Maoist violence that has killed more than 5,000 people and threatened to derail the vote. ''The cabinet has recommended to the king to order fresh elections on November 19, 2003,'' a senior cabinet minister told Reuters after a four-hour cabinet meeting. He said Prime Minister Sher Bahadur Deuba was expected to meet the king on Thursday and convey the cabinet decision. ''We hope a royal order will be issued today or tomorrow,'' he added. The king's approval is seen as a formality under the country's constitutional monarchy, although it is not guaranteed. Analysts said King Gyanendra could immediately endorse the cabinet recommendation or consult constitutional experts and political parties first. It is the first time such a cabinet recommendation has been made and Nepal's 1990 constitution was ambiguous on the proposal, they said. Officials said the king had begun meeting political parties before announcing his decision on the cabinet request. It was not known if a decision would be announced on Thursday, they said. Key parties urged Deuba on Sunday to defer the November 13 poll, saying the security situation was risky because rebels had vowed to disrupt the vote. A Defence Ministry statement said troops killed 12 insurgents in separate gun battles across the kingdom on Wednesday. ''We have recommended the delay until when the security situation in the country improves,'' Information and Communications Minister Jayaprakash Prasad Gupta told Reuters. Guerrilla Threat - Deuba dissolved the parliament in May and ordered elections for November, 18 months ahead of schedule, amid a row over the extension of a state of emergency giving sweeping powers to soldiers to crush the revolt. Maoist rebels fighting for one-party communist rule in the world's only Hindu kingdom have said they would derail the vote and had announced a three-day nationwide shutdown during the first round of voting in November. Rebel strike calls are generally observed as much out of fear of violent reprisal as support for the closure. More than 5,000 people, most of them guerrillas, have been killed in the six-year revolt -- more than 3,000 since peace talks broke down last November. The Election Commission said last week voting would be held over six phases and two months so security forces could move across the mountainous country to protect voters and candidates. The rebels have stepped up their campaign since emergency rule ended on August 28 and have set off a string of small bomb blasts in the capital, Kathmandu, as well as several big attacks on remote security posts. More than 100,000 members of the security forces are fighting the guerrillas, who draw their inspiration from late Chinese revolutionary communist leader Mao Zedong. The revolt has slowed aid-dependent development projects, hit tourism that accounts for four percent of gross domestic product and threatened the stability of the tiny nation wedged between Asian giants China and India.

From MSNBC, 3 October 2002

Nepal King Won't Hold on to Power - Palace Official

Nepal's King Gyanendra does not intend to hold on to power beyond a five-day deadline he has set for the formation of an interim government after dismissing the prime minister, a palace official said on Sunday. ''His Majesty has to form a new government. He has no intention of keeping executive power with himself. It is not a coup,'' the official, who spoke on condition of anonymity, told Reuters. The king would go ahead and form an interim government and hand over power even if political parties refused to nominate candidates for such an administration by Wednesday, when the deadline expired, the official added. ''Anyway a situation where we don't have a government is only for five days and after that there will be a government. It will be in charge of executive power and security as well,'' the official said. A palace spokesman said he had no information on the king's plans beyond Friday's announcement. ''What his majesty has said in his announcement is quite clear,'' he said. The king assumed executive power after sacking Prime Minister Sher Bahadur Deuba who had said threats by Maoist rebels to sabotage elections set for November were too grave to allow voting and had sought a year's delay. The insurgency has claimed at least 5,000 lives since 1996. Some 3,000 of them have died since last November after the rebels walked out of peace talks and stepped up attacks. The king's decision has been branded by mainstream political parties as unconstitutional and undemocratic. The parties, plagued by bitter leadership rivalries, are struggling to forge a common strategy in response to the king's action. They are yet to react to the king's appeal to nominate candidates, who will not contest elections, to form an interim administration which will be responsible for security and hold elections. ''The timeframe for the new government has been clearly set,'' the palace official said. ''The ball is now in the court of the political parties. They have to decide if they want to cooperate and take the train on the right track.'' ''If they don't his majesty will anyway go ahead and appoint an interim government within six or seven days of his announcement (on Friday).'' The official said the king stepped in and dismissed Deuba as the prime minister sought to extend his stay in power without holding elections in November. He said the king asked Deuba to resign so that it would allow the formation of a national government of all parties. But Deuba refused to quit, forcing the king's hand. When asked by Reuters what the king had conveyed to him ahead of his dismissal, Deuba said: ''I was told many things even before yesterday, but I did not resign.'' The palace official said Deuba lost his right to be in power after he recommended the postponement of the election as the country's constitution stipulated elections must be held within six months of parliament being dissolved. Deuba had said his sacking by the king was undemocratic and unconstitutional.

From MSNBC, 6 October 2002

 

EU Recommends Poland, Hungary, Eight Others for Entry in 2004

Brussels - The European Commission recommended adding 10 countries led by Poland, Hungary and the Czech Republic to the European Union in 2004, seeking to overcome the final obstacles to the EU's biggest expansion ever. More than a decade after the fall of communism, the commission said the 10 have the economic strength and political stability needed to compete with Western businesses and, further down the line, adopt the EU's common currency, the euro. Many hurdles remain. Irish voters could reject the treaty that makes enlargement possible, and EU and Eastern leaders need to bridge their differences over farming and regional development subsidies. Solutions to these "major challenges" will "let us work with our central, eastern and southern European neighbors to reach the goal of creating a united, democratic Europe," Enlargement Commissioner Guenter Verheugen told the European Parliament. Slovakia, Slovenia, Lithuania, Latvia, Estonia and the Mediterranean islands of Cyprus and Malta also won the commission's endorsement as expected. Bulgaria and Romania may be ready by 2007, the EU's executive arm said. The commission said it will publish another report on the Eastern countries' progress six months before the entry date - questioning the precise timing of what Verheugen called "the most difficult project in EU history." Entry Timing - Verheugen, in keeping with prior EU promises, said the EU's goal is to bring in the new countries in time for the parliament's elections in June 2004, not necessarily in January of that year. Turkey, an EU "candidate" since 1999, won't be ready to start talks until it makes more progress on democracy and human rights, Verheugen said. The commission will step up financial aid to Turkey in 2004, he said. Eastern European leaders were already looking past today's report to an Oct. 19 referendum on the EU's enlargement treaty in Ireland, the only country yet to ratify it. Irish voters shot the treaty down in a first referendum last year.

The treaty, negotiated in Nice, France, in December 2000, makes the EU fit to expand by increasing the size of the Brussels-based commission and reallocating the votes in the parliament. Irish backers of the referendum are gaining ground, with public opinion running 44 percent to 22 percent in favor with 27 percent undecided, according to a poll commissioned by Citigroup Inc. 'No Plan B' A second veto would "create a situation of uncertainty, disarray," commission spokesman Jonathan Faull said. "All sorts of political developments which nobody can predict today might occur. There is no Plan B." Enlargement will add to the EU 74 million citizens from a region that overthrew Soviet domination in 1989, formed market economies and attracted billions of dollars in investment from companies such as Volkswagen AG. "Capital inflows would accelerate in the region if everybody could be sure that we are in," said Laszlo Kishonti, who helps manage 100 billion forint ($402 million) in stocks and bonds at K&H Investment Fund in Budapest. Attention now turns to agriculture and Eastern European countries' share of the EU's 96 billion-euro ($94 billion) budget, the two most difficult policy areas that were left unresolved until the end of the year. Poland is spearheading opposition to EU plans to deny new members full access to the EU's farm-support programs for a decade after they get in. EU governments plan to settle their differences on farm aid by a summit in Brussels on Oct. 24, leaving six weeks to negotiate the farm-aid package with Eastern Europe before a Dec. 12 summit in Copenhagen to conclude the talks. It will take another year for the new and current members to ratify the membership treaties.

From Bloomberg-Politics, by James G. Neuger, 9 October 2002

EU Sets Date For Historic Union

Brussels, Belgium - The European Commission has recommended in an historic move that 10 mostly poor ex-communist countries join the European Union in two years' time. Thirteen years after the fall of the Berlin Wall the nations - Poland, Hungary, the Czech Republic, Slovenia, Slovakia, Latvia, Estonia, Lithuania, Malta and Cyprus - have been deemed ready to compete inside the EU's single market from 2004 following often painful economic and social reforms. Bulgaria and Romania have been give a date of 2007, but Turkey has been left out until the country establishes a better human rights record, though the report recognised its work towards abolishing the death penalty and improved Kurdish rights. But CNN's European Political Editor Robin Oakley said what "should be a joyous moment... getting together in a huge reunification" is tinged with imminent squabbles over crucial reform plans such as agriculture subsidies. "It is going to get sour because they have left the nitty gritty, for example agriculture reform, to the end," he said. Some candidate countries are unhappy with the amount of farming subsidies being offered in comparison to existing members, while current members such as France and Ireland, are reluctant to give up much of their subsidies. EU Enlargement Commissioner Guenter Verheugen is due to present the enlargement report to the European Parliament after the full commission approves it later on Wednesday. Reuters news agency reported the commission said in a draft copy: "The historic and political arguments in favour of enlargement are compelling. "It will also produce substantial economic benefits." Enlargement is also anticipated to cement democracy, the rule of law and respect for human rights as well as open up the fast-growing region to EU investors and consumers, the documents adds. Enlargement could create a potential market of 490 million people - "the potential for a great economic power," Oakley adds. The enlargement proposal is to go forward for debate in Brussels on October 24-25 with a final decision to be made at a summit in Copenhagen in December. Possible obstacles to the signing of the proposal include an Irish referendum on enlargement on October 19. It is the second time the Irish government will have gone to the electorate in the hope of securing a "yes" vote. Last June they voted "no" by 54 percent to 46 percent. Ireland, which is one of the few countries to hold a referendum on the issue of enlargement, has benefited from subsidies since it joined the EU, but its people appear fearful that a larger union will dilute the country's neutrality and reduce its subsidies.

From CNN, 9 October 2002

Latvia's New Era Says New Government Around the Corner

Latvia's New Era, which won last weekend's general election, said on Wednesday talks with three other centre-right parties could lead to a new majority coalition to take the ex-communist state into NATO and the European Union. ''That is entirely possible, and we are waiting for a formal approval by the boards of the parties tomorrow,'' New Era spokesman Peteris Vinkelis told Reuters. A broad centre-right coalition would help ensure Western market reforms are kept firmly on course in the small Baltic state, which regained independence in 1991. Liberal newcomer New Era won Saturday's general election with 23.9 percent support of the vote, giving it 26 members in the 100-seat unicameral parliament, preliminary results show. The party aims to be at the centre of a broad majority coalition government with its leader, former central banker Einars Repse, at the helm to further pro-business policies as the country continues reforms ahead of EU membership in 2004. The European Commission recommended on Wednesday that Latvia and nine other candidate countries should join the EU. In an annual progress report the Commission said, among other things, Latvia still needed to strengthen its administration, improve its procurement system, implement new Commercial Code and further liberalise its telecoms system to gain EU entry. New era approaches three parties - New Era has approached Christian democrats Latvia's First Party, the centrist Farmers and Greens alliance, and the right-wing For Fatherland and Freedom to try to form a majority of 55 seats in the parliament, or Saeima, Vinkelis said. The coalition would meet opposition in three-time premier Andris Skele's conservative People's Party with 21 seats and the leftist For Human Rights in a United Latvia with 24 seats, according to the preliminary results. Vinkelis said New Era would meet with the People's Party on Friday but downplayed the party's chances for becoming part of a new government. ''A large number voted against the current government and the People's Party was the largest party in it,'' Vinkelis said. Repse and Skele clashed in a heated run-up to the elections, which centred on corruption and sleaze at all levels of Latvian society. Many voters were dissatisfied after a decade of exhausting reforms and voted for a new set of leaders to wrap up the last stage of Latvia's ''return to Europe.'' Repse has lashed out at friends and foes alike for what he sees as an inefficient and corrupt state system drowning in red tape. In his campaign he stressed the need for lean government and tax cuts to keep Latvia moving forward. Prime Minister Andris Berzins' Latvia's Way was the big loser in Saturday's election as the party failed to get the five percent of votes required for entry to parliament.

From MSNBC, 9 October 2002

 

Iran Government: Reopen Poll Center

Controversial survey led to closing last month - The Iranian government called Wednesday for the reopening of a banned polling institute and cast doubt on spying allegations made against the head of the organization. The National Institute for Research and Opinion Polls was closed last month after publishing a survey showing nearly three-quarters of Iranians favored resuming talks with arch-foe the United States. The issue has pitted moderate President Mohammad Khatami's government against the hard-line, conservative judiciary at a time when Khatami is seeking to boost his authority in the Islamic Republic. "The government hopes the ban on the polling center will be removed as soon as possible," government spokesman Abdollah Ramazanzadeh told a news conference. Any suggestion of talks with Washington is highly sensitive in Iran. The U.S. cut ties with Tehran after radical students seized the U.S. embassy in 1979, and Washington this year labeled Iran a part of an "axis of evil." A statement from the Justice Department Monday accused the head of the polling center, Behrouz Geranpayeh, of espionage and said he had secretly sold information to foreign embassies and had contact with international news agencies. Ramazanzadeh countered that, if Geranpayeh had been engaged in spying, the Intelligence Ministry would have reported it, but this had not happened. He criticized the judiciary for disclosing the allegations before trial. "The measures taken show they are following other goals." Geranpayeh was imprisoned awaiting trial last week after his bail was set at $250,000. Reformist parliamentarians have rushed to the polling center's defense, insisting that the survey on U.S. ties was commissioned by them and was accurate. The government has described the polling center as "one of the most credible in the country." Khatami's government has frequently clashed in recent years with the hard-line judiciary, which falls under the supervision of Supreme Leader Ayatollah Ali Khamenei. Despite Khatami's drive to improve freedom of expression, conservative courts have shut down more than 80 liberal newspapers and jailed dozens of outspoken reformists in the past two years, often in closed trials without a jury.

From CNN, 24 October 2002

 

Leaders Emerge in Ecuadorean Election

Gutierrez, Noboa top early count of presidential vote - Two political novices appeared headed for a runoff in Ecuador's presidential election, after voters showed their impatience with leaders who have been unable to scrub out the poverty and corruption that have plagued their country for years. With 53 percent of the votes counted, Lucio Gutierrez, 45, a dismissed army colonel, led with 19 percent of the vote. Banana magnate Alvaro Noboa, 51, Ecuador's richest businessman, was close behind with 17.6 percent. Still, Ecuadoreans were not excited about either candidate. Turnout on Sunday was 66 percent - extremely low in a country where voting is mandatory and absenteeism is punishable by fine. The turnout was also an all-time low since democracy was restored in 1979 after a decade of dictatorship. Noboa set the tone of what will likely be his campaign for the runoff when he accused Gutierrez of having the support of a communist party. "I am going to tell the Ecuadorean people that they have two choices: the communism that Lucio Gutierrez represents ... and jobs, health and economic reactivation, which I represent," he said at a news conference. Gutierrez is an admirer of Fidel Castro and Venezuela's leftist President Hugo Chavez, and led a coup in 2000 that ousted an unpopular president. He described himself as center-left and said he hoped Ecuadoreans would let him show them what he stands for before judging him unfairly. He said that if elected he planned to encourage foreign investment by cracking down on the corruption that has scared away foreign investors. Gutierrez said it was significant that he and Noboa were not professional politicians. "It is a sign that the Ecuadorean people are tired of the same politicians of always," he said. "Who is responsible for the country that we have? We have one of the most corrupt, unjust countries, with the greatest inequalities and greatest migration, in Latin America and the world.

The moment has arrived to tell those politicians who do not understand the true concept of democracy: Enough." Easing fears of violent protests, two other leading contenders conceded defeat. Several had said before the vote that the ballot might be rigged, but monitors said they had no evidence of that. Former President Rodrigo Borja, a center-left social democrat, and Xavier Neira, candidate of the right-wing Social Christians, both conceded. That left moderate leftist Leon Roldos, who had 15.87 percent, but his chances of making the runoff appeared slim. The remaining votes were divided among six candidates. A second round between the two top vote-getters takes place if no candidate receives 50 percent. The result made allegations of possible vote rigging moot. Several candidates had alleged that Borja conspired with former President Leon Febres Cordero to ensure that Borja would win the presidency and Febres Cordero, one of the nation's most powerful politicians, would become president of Congress. At least 30 percent of Ecuadoreans were undecided how to vote just days before the election, a reflection of their disenchantment with politicians after years of political and economic turmoil. It was the closest election since democracy was restored in 1979. The campaigns of all the presidential candidates revolved around vague plans to combat widespread corruption and poverty. Ecuador's 20-year-old democracy has suffered trying times in recent years. Since 1996 the country, slightly smaller than Nevada, has had five presidents. Two of them were driven from office in the midst of political and economic upheaval.

From CNN, 21 October 2002

Brazil's President-Elect Assembles Team for Rare Peaceful Transition of Power

Brasilia - Calling it a ''singular moment,'' Brazil's president-elect began to assemble his team Tuesday for the transition of power to Brazil's first elected leftist government. But Luiz Inacio Lula da Silva, the landslide winner of Sunday's election runoff, gave no clues about who will serve in his government. He said, however, the transition team would not include future Cabinet ministers. 'We did that to separate the transition process from the assembling of the government,'' Silva said. ''That will be done later, by me.'' Silva said the transition team would be headed by Antonio Palocci, his former campaign manager, who has close ties to financial markets. Silva, a poor farmer's son who rose to command a labor union, garnered 61 percent of the vote on Sunday, while government candidate Jose Serra got 39 percent. Brazil's economy was the main issue in the election. Silva capitalized on dissatisfaction with President Fernando Henrique Cardoso's free-market reforms, which curbed runaway inflation but left the economy stagnant and millions of Brazilians in poverty or jobless. Silva, 57, known by his nickname ''Lula,'' takes office Jan. 1. He praised Cardoso for his offer to ''put the government practically at our disposal,'' a contrast to previous changeovers of regime. Silva recalled that the last leftist president, Joao Goulart, took office when Janio Quadros resigned in 1961. Goulart was deposed two years later by a military coup. In the past half century, only once has a democratically elected leader handed over power peacefully to his successor. ''This is a singular moment in Latin American history,'' Silva said. ''The lesson will endure forever.'' Silva's main concern is to have funds available for his "Zero Hunger" program, aide Jose Graziano Silva said. The president-elect said stamping out hunger was the top priority for his government next year, at an estimated cost of around $1.6 billion (6 billion reals) a year. About 10 million of Brazil's 175 million people live in absolute misery, Graziano Silva said. He added that the government would not simply hand out food; rather, it would invest funds to boost farm production.

From MSNBC, 29 October 2002

 
 

Malawi Sacks Top Corruption Fighter

Blantyre - Malawi has sacked the head of an anti-corruption team which was investigating allegations of government corruption on the grounds he was not familiar enough with the law, officials said on Wednesday. Sources within the country's Anti-Corruption Bureau said the government was trying to stop Gilton Chiwaula from probing too deep within its ranks. Chiwaula was previously acccountant-general and chairman of the regional Southern African Forum Against Corruption. An MP responsible for public appointments was unable to explain why Chiwaula was appointed if he had not been suitable. The anti-corruption bureau is currently investigating the sale of almost 70,000 metric tones of grain by the government. Critics say the sale was dubious and exacerbated food shortages which have led the country to accept aid from the UN World Food Programme. The International Monetary Fund has said Malawi's anti-corruption campaign needs to resolve the case to win credibility. The bureau, largely funded by the British government, has come under fire for its failure to conclude corruption cases involving high profile politicians quickly. Henry Mussa, the chairman of the parliamentary public appointments committee, confirmed Chiwaula's dismissal. ''It pleased His Excellency, President Bakili Muluzi, to replace Chiwaula with (Supreme Court Judge Michael) Mtegha, who has high legal and judicial knowledge and can ably deal with corruption cases,'' Mussa told Reuters. Contacted for comment, Chiwaula said he had just heard about the development on the radio and could not yet comment.

From MSNBC, 24 October 2002

 

Thailand Gets New Interior, Defence Ministers

Thai Prime Minister Thaksin Shinawatra appointed new ministers of interior and defence in a cabinet reshuffle on Thursday that left untouched key economic portfolios, a government spokesman said. In the reshuffle, the second since Thaksin's government took office last year and part of the biggest restructuring of the administration in recent years, the total number of ministries was boosted to 20 from 14. Spokesman Yongyut Tiyapairat told a news conference that Interior Minister Purachai Piumsombun, whose hallmark was a controversial moral crusade, had been transferred to the Ministry of Justice. He was replaced by current Transport Minister Wanmuhamadnoor Matha. Purachai's ''social order'' campaign led to a crackdown on Bangkok nightspots, which raised concerns over possible damage to the country's lucrative tourism industry. Analysts said the new interior minister was unlikely to back off on the social order campaign which has proved popular with middle class Thais. Deputy Prime Minister and Defence Minister Chavalit Yongchaiyudh lost his defence portfolio, but remains deputy premier. He was replaced by Thammarak Isarangura, a minister attached to the prime minister's office. No explanation was given for Chavalit's departure from the defence post, but it had been rumoured that Chavalit was seeking to semi-retire. Key economic ministers were unaffected. However, Industry Minister Suriya Jungrungreangkit, who was given the transport portfolio, was replaced by Somsak Thepsutin, a minister in the prime minister's office. The six new ministries established were energy, culture, sports and youth, natural resources and environment, information technology and communications, and social development and human security. The addition of the six ministries has not increased the number of cabinet ministers, which still remains at 36.

From MSNBC, 3 October 2002

Former Head of Chinese Provincial High Court Investigated for Corruption

Beijing - The former chief justice of southern China's Guangdong province is being investigated for accepting massive bribes, a Communist Party newspaper reported Wednesday. Party investigators say Mai Chongkai also used his influence to help his son's business get large bank loans, the People's Daily said. The party has publicized such investigations of high-level officials in efforts to counter widespread complaints that party figures use their status to evade the law. Mai and his son are accused of collecting $1.4 million in bribes between 1989 and 1998, the report said. It said Mai also was accused of living a ''morally degenerate'' life, but gave no details. Mai could be expelled from the Communist Party, and may face prosecution. The discipline commission on Wednesday refused to comment on the case, as did judicial and provincial officials in Guangdong and the Supreme People's Court.

From MSNBC, 23 October 2002

 

Blair Promotes Three Pro-Euro Ministers in a Cabinet Reshuffle

London - Prime Minister Tony Blair promoted ministers who favor British membership of the euro in a cabinet reshuffle, the second such reorganization this year forced on him by a minister's resignation. Charles Clarke, chairman of the ruling Labour Party will replace Estelle Morris, who quit last night as education secretary over flaws in exam grading and school standards. She was the second cabinet member to quit over public services in six months. John Reid, formerly Northern Ireland secretary replaces Clarke; Reid's place is taken by Welsh Secretary Paul Murphy, and Peter Hain leaves his post as Europe minister to oversee Wales, his first cabinet-level job. Britain remains outside the currency shared by 12 other EU countries and will only enter when ministers are convinced it's in the U.K.'s economic interest and voters endorse it in a referendum. Clarke, Murphy and Hain are associated with the Britain in Europe lobby group, which campaigns for U.K. membership. "The Prime Minister believes he has the ministers in place to do the job," said Tom Kelly, a spokesman for Blair. The government's decision on the euro is due by June, and polls show most voters are opposed. An NOP Ltd. poll last month showed that 60 percent of voters questioned earlier in September said they would oppose joining the euro; 26 percent said they'd vote "yes." Hain and Clarke have often spoken out in favor of the euro. In February, Hain told a French newspaper that he expects a euro referendum next year. Clarke last December said the political case for the euro is "very strong" and said a referendum should be held whatever the economic case. Converts vs. Skeptics - Pro-euro members of the government are balanced by Chancellor Gordon Brown and his supporters.

The finance minister has called his own stance on the euro "considered and cautious" and last month said boosting public services would take priority over pushing for membership. The prime minister has won two elections and maintained an opinion poll lead over the opposition Conservative Party on the strength of his promises to improve public services like schools, hospitals and transport. Opposition politicians had called on Morris to quit, an attack aimed at undermining the foundations of Blair's political platform. "The government is not succeeding, that's what this is about," said Conservative leader Iain Duncan Smith. In April, Blair announced the first increase in taxes on wages in 20 years to increase spending on services. Government expenditure will rise to 511 billion pounds ($791 billion) from 418 billion over the next three years. Public Services - Then in May, Stephen Byers resigned as transport secretary over his handling of the country's rail network. Britain has suffered three fatal crashes in three years, the collapse of Railtrack Plc and an increasing number of delayed and canceled trains. Morris's departure adds to Blair's domestic political woes. Ministers are trying to avert a national strike by firefighters, due to start next week, in protest at the government's refusal to grant a pay rise of almost 40 percent. Rail unions have hinted a strike may spread to London's subway and the railway network. While Blair's Labour Party remains ahead of the Conservatives in opinion polls, the prime minister has said that failure to deliver improved public services will mean voters would be justified in ousting him at the next election, due by June 2006. There are also economic threats to Blair's popularity. Forecasters, including Ernst & Young LLP, have said that U.K. economic growth is falling behind government targets, crimping his tax revenue and raising the prospect of more borrowing next year. So far, the government has played down the prospect of more tax increases.

From Bloomberg-Politics, by James Kirkup, 24 October 2002

 

Colorado Governor Aide Quits Over E-mail

Treasurer of Colorado Governor's Re-Election Campaign Quits Over E-Mail Ridiculing Immigrants - The treasurer for Gov. Bill Owens' re-election campaign resigned after distributing an e-mail that ridicules immigrants. Bob Adams said Tuesday he received the e-mail at his home from an old high school classmate, found it humorous and forwarded it to three other people. The e-mail includes a poem about immigrants buying up property with welfare money and displacing white people. "I thought it was humorous the way it was written," Adams said. "I didn't see anything offensive about it, and I forwarded it on to folks. "One stanza reads: "We have a hobby it's called breeding/Welfare pay for baby feeding. "Adams said he offered to resign after getting calls from news media about the e-mail. Sean Tonner, campaign manager for the 51-year-old Republican governor, said he accepted the resignation. "It's unfortunate. It was a serious lapse of judgment that he forwarded it," Tonner said. "It definitely was insensitive and inappropriate. "Adams said he resigned because "I don't have time for this. ... I signed up to be volunteer treasurer, not to be in politics. I've gone all my life without my name in the paper. I don't need to start now." Glenn Baham, president of Colorado Black Republicans, said he received the e-mail and found it shocking. "I was very, very offended," Baham said. "I couldn't believe it." Last month, another Colorado politician, Republican Congressman Tom Tancredo, drew criticism when he demanded immigration officials deport a family of illegal immigrants after a high school honor student in the family spoke publicly about his struggle to pay for college. On The Net: Bill Owens campaign: http://www.owens2002.net/

From ABC News-Politics, 9 October 2002

Backbenchers Urge PM to Amend Ethics Proposal

Ottawa - Backbench Liberals are pressuring the prime minister to alter parts of his new ethics package. Jean Chrétien's new ethics code, expected to be introduced next week, will apply to all members of Parliament. But some MPs are upset with a proposal that requires their spouses to disclose their financial affairs and business dealings. The MPs insist they shouldn't be held to the same disclosure rules as cabinet ministers. Liberal MP Roger Galloway says the prime minister's problems aren't with backbenchers. "All of these ethical questions that have been raised involve only cabinet ministers. As everyone well knows, members of Parliament couldn't influence a contract in this place if they wanted to," said Galloway. There have been a series of controversial government contracts recently. Liberal MP Steve Mahoney says anyone who tried to use their position as an MP to influence a contract or policy would quickly be exposed. "We live in a government that lives and dies with brown envelopes sliding under doors. You would do that kind of thing at your own peril," said Mahoney. Other Liberals don't like the idea that backbench MPs would have to report to a new ethics commissioner, while cabinet ministers' conduct would be overseen by an ethics counsellor who reports only to the prime minister. "What's good for the goose is good for the gander," says Liberal MP Jim Karygiannis. He says the prime minister, members of cabinet and backbenchers should be held to the same standards. The prime minister says he will consider any amendments MPs want to make. "We will be flexible about changes. You know, I like to have a debate," said the PM.

From Canada-CBC Newsworld, 10 October 2002

Government Introduces Proposed Ethics Bill a Day After Solicitor General's Resignation

Toronto - A day after an ethics controversy forced a Cabinet minister to resign, Canada's government proposed creating tougher guidelines for members of Parliament and a new ethics watchdog. The draft legislation introduced Wednesday in the House of Commons fulfills some of the promises first made by Prime Minister Jean Chretien when he was campaigning in the 1993 election that brought him to power. Opposition leaders said the proposals were too weak. The measures now go through the parliamentary process of committee review and debate. Chretien's government has been rocked by allegations of cronyism and fraud. Solicitor General Lawrence MacAulay, the nation's top security official, resigned Tuesday over allegations he lobbied for government money for a college headed by his brother. In May, Chretien dropped Defense Minister Art Eggleton from the Cabinet after a government ethics counselor found that Eggleton violated ethics guidelines by giving a contract worth $24,000 to a woman he once dated to compile a 14-page report on post-traumatic stress disorder in the military. Earlier, a government audit revealed mishandling of contracts worth about $1 million. Opposition critics have complained for years about a lack of effective governmental ethics monitoring, citing in particular the existence of an ethics counselor who reports only to the prime minister. Under the plan proposed Wednesday, a new ethics commissioner would report on any wrongdoing by Parliament members to the legislature. The prime minister would make a final decision on what action to take. The draft proposal also includes a new code of conduct for members of Parliament, along with changes to the Lobbyist Registration Act to prevent groups and interests from exercising undue influence. MacAulay's resignation came four days after Chretien's ethics counselor accused him of violating ethics guidelines in lobbying for government money for a Prince Edward Island college headed by his brother. MacAulay also was the focus of controversy over a contract issued in May 2001 by his department for about $65,000 to a friend's firm. In his letter of resignation, MacAulay denied he did anything wrong. Chretien agreed but still accepted the resignation. Chretien, who has led his Liberal Party to three straight election victories, has announced he will step down in February 2004.

From MSNBC, 24 October 2002

 
 

Condition Critical as African Doctors Head Overseas

Johannesburg, South Africa - Britain plans to bring in doctors from South Africa to help alleviate hospital waiting lists. Sikiniwe Khumalo tends to 40 patients during a single shift as a nurse at the Helen Joseph Hospital here. That's too many, she says, for her to offer more than basic medical care, and certainly too many to remember all their names. Mrs. Khumalo's workload is typical of medical personnel here and around Africa, where HIV/AIDS and malnutrition have given doctors and nurses more than they can handle. Despite this need, however, in a few months, Khumalo, a single mother of two, will pack her bags and leave the country of her birth for England, where she will have a take-home pay three times her salary in South Africa. And friends who have already left say in Britain, she will care for only six patients at a time. "Basically, it's the money," she says. "I can't make payments here. I've been working for 15 years, but I think I'm not getting the salary I deserve." Khumalo is not alone. South Africa is experiencing a huge drain on health professionals, many of whom, like Khumalo, are leaving the country for places such as Britain, America, and Australia where pay is higher and working conditions are better. This comes at a time when the country's already overloaded health system struggles to deal with the increasing burden of AIDS. But overworked and underpaid doctors and nurses are looking for alternatives. They are often helped by international recruiting agencies that many African governments accuse of poaching their much-needed medical staff. Many already abroad - No one knows exactly how many of South Africa's medical professionals, whose training in the country's medical schools is highly respected worldwide, have left the country, since few tell the government they are leaving. But the South African Medical Association estimates that at least 3,500 of its 26,000 practicing doctors are living abroad. The country's minister of health says that from 1995 to 1999, more than 2,500 nurses applied to have their qualifications verified, which is usually required for nurses to move abroad.

Surveys show that the outward flow is likely only to increase. Nearly 10 percent of doctors surveyed by the South African Medical Journal said they may leave within the next five years, and 1 in 3 new doctors doing their required one-year community service said they plan to emigrate. "Students sit around and talk about where they want to go when they leave the country," says Christiaan Burger, a medical student at the University of Pretoria and spokesman for a student group protesting the planned addition of an extra year's internship. Mr. Burger and others say that this extra year of service will push more doctors to leave. South Africa has called on wealthy governments to stop recruiting their medical professionals. "There is a strong feeling that it is cynical on the part of countries that are better resourced to rely on a constant stream of migrants from countries that pay less," says Jo-Ann Collinge, a spokeswoman for the South Africa's Department of Health. "There should not be a systematic draining from developing countries." The Commonwealth, a body of 54 former British colonies and territories, has addressed the issue of poaching. Some countries have agreed not to recruit staff directly from the developing world. Britain, however, is currently trying to relieve long waiting lists at hospitals by bringing in doctors from abroad on a temporary basis. Because the United States does not have a nationalized health system, the US government cannot prohibit US hospitals and universities from recruiting overseas. Private companies continue to recruit heavily in African countries by advertising in medical journals and even offering rewards for doctors and nurses who provide the names of their colleagues. Even if such practices were banned, there is little that could be done to stop professionals such as Khumalo from approaching placement companies on their own.

Homegrown reasons - Medical groups in South Africa say the country needs to address the homegrown reasons - which have to do with more than just pay - that are pushing medical professionals to leave. Neurologist James Temlett worked for 25 years as a doctor at Johannesburg General Hospital and as a medical professor at the nearby University of Witswatersrand. A month ago, he left for Australia, where he now splits his time between a university and a hospital in Adelaide. Dr. Temlett says he left largely out of disgust with South Africa's HIV/AIDS policies and the government's refusal to recognize the scope of the AIDS pandemic. The government has opposed the use of antiretrovirals for AIDS patients in public hospitals and clinics, citing concerns about cost and the drugs' effectiveness. "Out of the 40 patients I would see during a shift, two-thirds of them - sometimes even as high as three-quarters - were suffering from HIV-related diseases," he says. "It's certainly a crime against humanity not to recognize the scope of the problem.... It's tremendously demoralizing [for] the staff." Despite its struggles to keep its medical staff, South Africa's situation is not nearly as severe as the situation of many of its neighbors. There are only 400 registered doctors left in all of Zambia, and many of Zimbabwe's medical professionals have left recently because of the increasingly unstable political situation there. At one main hospital in Bulawayo, Zimbabwe's second-largest city, three of the hospital's four surgeons left the country this year. In Kenya's Daily Nation newspaper, the director of medical services said that Kenya has only 600 practicing dentists, an of average 1 for every 69,000 patients. "The issue of the migration of doctors is an international issue," says Dr. Kgosi Letlape, chair of the South African Medical Association. "The problem has become very widespread. The problem is that being a doctor is no longer economically attractive. Even successful countries are having a hard time training enough doctors."

From Christian Science Monitor-Africa, by Nicole Itano, 1 October 2002

Senegal President: 'Ferry errors'

The president of Senegal has admitted "many, many mistakes" were made that led to the sinking of a state-run ferry that killed more than 1,000 people. Abdoulaye Wade said on Tuesday he believed the sinking -- reported to be Africa's deadliest ferry disaster - resulted from human negligence. "There will be prosecutions, of course," he said. Wade also said that the government intends to compensate the families of victims, "adopt" their children and provide for their education. The ferry La Joola flipped over Thursday in the Atlantic off Gambia. The government has said the death toll is expected to be 1,034, but Wade said apparently infants and children under eight years old had not been counted and the toll could go higher. The ferry was built to carry 550 passengers. Only 65 people are confirmed to have survived. Wade acknowledged that the ship, which was run by the navy, was not meant to be operated on the open sea, but was supposed to have remained on a lake. The accident happened at about 11 p.m. on Thursday as the ship ran into a storm on its way from Casamance to Dakar. Fishermen and villagers prepared to bury bodies on Tuesday, as scores of corpses washed towards the shore. Hundreds more victims remain where they died, inside the ferry. Divers said decay after five days in the 30 centigrade (85 Fahrenheit) Atlantic waters made removal of intact victims impossible. Many of the victims survived for hours in the overturned ship, said rescue divers who described scenes of horror in air pockets that had kept the vessel afloat. The first fishermen to reach the ferry, fully four hours after the accident, spoke of survivors inside fighting for their lives. "There were people screaming or hitting on windows" when fishermen arrived, said el Ali, head diver at a Dakar scuba centre who led the search. "When I dove in, I saw bodies everywhere," many huddled near air pockets, The Associated Press reported el Ali, whose 16-diver team took about 17 hours to arrive by boat from Dakar, as saying. "We saw bodies floating by the hundreds, the hundreds, the hundreds." About 150 military personnel, fishermen and rescue divers from Senegal, neighbouring Gambia and former colonial power France took part in the recovery. Gambian and Senegalese authorities said they had retrieved more than 360 bodies from inside the ferry, before decomposition made recovery of intact victims impossible. "I want to use this opportunity to tell the families that I'm sorry we couldn't bring everyone out," El Ali said in Dakar, breaking into sobs. With Senegalese still scanning photos and lists of the dead for what at times were entire missing families, angry questions built over why the disaster happened.

From CNN-Africa, by Charlayne Hunter-Gault, 1 October 2002

Namibian Leader Bans Foreign TV Programmes

Namibia's president, Sam Nujoma, ordered the state television company to stop broadcasting foreign programmes yesterday, only days after he published a list of farms to be confiscated from their foreign owners. The move was seen as an indication of his continued support for Zimbabwe's President, Robert Mugabe, and will give already nervous investors in southern Africa further cause for concern. Mr. Nujoma wants to expropriate farms owned by foreigners for the resettlement of landless Namibians. Among the farms listed are 91 owned by South Africans and 99 by German nationals. The rest are owned by Americans, Dutch and British nationals. Until its independence in 1990, Namibia was occupied by Germany and then by South Africa. Mr. Nujoma's ruling Swapo party also tabled an amendment in parliament aimed at stopping foreigners from buying farmland. The President, like Mr. Mugabe, has also repeatedly threatened to expel gays and lesbians and to ban homosexual tourists. Now he has declared that foreign films are exerting a "bad influence" on young people. This week he ordered the state broadcaster to start showing local films that portrayed Namibia in a "positive light". The first victims were the American soap opera The Bold and the Beautiful and the science fiction mini-series Dune, which was replaced by a programme on the recent ruling party congress. The Namibian Broadcasting Corporation (NBC) immediately began revising the schedule and staff were forced to pull old tapes off the shelves to fill airtime. Thousands of callers jammed the station's switchboard demanding an explanation for why some of their favourite programmes had suddenly been dropped. The President has already banned government departments from advertising in the privately-owned Press, which he said had spread lies about his administration. Mr Nujoma is in his third term as President, having changed a law that restricts presidents to two five-year terms. He has also fired his pro-reform Prime Minister, Hage Geingob - who was seen as an obvious candidate for president. The move was seen as part of Mr. Nujoma's plans to consolidate his power base before his term ends in 2004. At the Earth Summit in Johannesburg last month, Mr. Nujoma spoke up in support of Mr. Mugabe. Addressing the summit, he accused the British Prime Minister, Tony Blair, of creating chaos in Zimbabwe by refusing to support Mr. Mugabe's seizures of farms from white Zimbabweans.

From The Independent, by Basildon Peta, 3 October 2002

 

China's Capital Cleans Up, Bans Spitting

The Beijing city government banned spitting in public and littering on Tuesday as part of a campaign to spruce up the capital, which plays host to a Communist Party congress next month and the Olympics in 2008. Regulations issued by city hall on National Day also call for anyone posting unauthorised leaflets or advertisements be fined 1,000 yuan ($120), the official Xinhua news agency said. ''Spitting or throwing any waste on the ground of public areas are banned as well, offenders may be fined 20 yuan to 50 yuan,'' Xinhua said. The regulations were ''to ensure that the capital city is clean and in good order,'' it said. Spitting in public is a common practice in most of China, where it is regarded as a natural and necessary bodily function despite sporadic campaigns to discourage it. China has pledged to invest billions of dollars in preparations for the 2008 Olympics, which include a massive construction binge, an environmental clean-up, and a campaign to teach taxi drivers English. City authorities are also cracking down on crime and cleaning up streets ahead of the congress that starts on November 8 and where top leaders are expected to retire. ($1-8.277 Yuan)

From MSNBC, 1 October 2002

ILO Gives Cambodian Garment Factories Thumbs Up

The International Labour Organisation (ILO) gave working conditions in Cambodia's garment factories a relatively clean bill of health on Wednesday, saying there was scant evidence of forced or child labour. ''We note with satisfaction that...forced labour and child labour are not matters of concern in the factories surveyed,'' the Geneva-based ILO said in a report on labour conditions in the impoverished southeast Asian nation's clothing factories. Cambodia, slowly recovering from three decades of civil war which ended four years ago, relies heavily on the garment industry, nurtured by a three-year quota arrangement with the United States, for its overall economic development. Under the terms of the deal, Cambodia has to show that conditions in its 200-plus garment factories, which employ around 175,000 mainly female workers, meet acceptable international labour standards in order to qualify for the quota. Cambodia's garment exports totalled around $1 billion last year - three quarters of all export value. Even after a slowdown following the September 11 attacks on the United States, this figure is expected to hold up for 2002. While expressing overall approval, the ILO said it had found a limited number of cases of sexual harassment and violation of trade union rights. It added it was worried about frequent cases of workers being paid incorrect wages and being made to work overtime. For its report, the fourth in a series surveying the industry, the ILO surveyed 65 garment factories employing some 76,000 workers, of whom nearly 90 percent were women.

From MSNBC, 2 October 2002

Asia Faces 'World's Worst' AIDS Epidemic

Kuala Lumpur, Malaysia - Asia is at risk of facing the world's worst AIDS epidemic if urgent preventative measures are not taken, a U.N. official has warned. "The epidemic in Asia threatens to become the largest in the world," Dr Peter Piot, Executive Director of UNAIDS told business leaders at the World Economic Forum's (WEF) East Asia Economic Summit. "With more than half the world's population, the region must treat AIDS as an issue of regional urgency. The question is no longer whether Asia will have a major epidemic, but rather how massive it will be," he warned. There are currently 6.6 million people who are HIV positive in the Asian region, while the world's worst affected region, Africa, has over 28 million people living with HIV/AIDS. Piot called on businesses to help halt the spread of AIDS in Asia through workplace education, non-discriminatory health policies and the establishment of healthcare systems. Localized epidemics - "It is a question of good economic sense," Piot said. "By protecting their employees from HIV and caring for those who are infected, businesses minimize the loss of skilled workers and managers, and boost their long-term productivity." While many countries in Asia have yet to show high overall rates of HIV infections, localized epidemics in several countries have been a cause for concern for health officials. In the first half of 2001, China experienced a 67 percent increase in reported HIV infections, with epidemics occurring among injecting drug users in at least seven provinces. In China's central Henan province, up to 500,000 peasants are also believed to be infected with the HIV virus - or are already dying from AIDS - after they gave blood in a government-sponsored blood-for-money program, according to reports. It is estimated at least one million people in China have been infected with HIV. India has the largest number of people living with HIV/AIDS in Asia, with 3.97 million infected.

From CNN, 7 October 2002

Asia Airlines' Fragile Recovery Under Threat

Sydney, Australia - Asia's battered airline industry is starting to show signs of recovery following the twin hits of the Asian economic crisis and the September 11 terrorist attacks. But any return to health is likely to be short-lived should there be a war with Iraq, analysts warn. A renewed reluctance for air travel, combined with a possible further hike in oil prices, will provide an unwelcome double-whammy for airlines.
In addition, hostilities with Iraq would hasten the restructuring process already underway amongst airlines if they are to survive a Gulf confrontation and its aftermath. Analysts at the Center for Asia Pacific Aviation say a second major shock to the airline industry in little over a year would "upset the still fragile balance achieved by airlines still struggling after September 11". In a just-released report on the impact of a war with Iraq, the analysts say the Asia Pacific airline market has shown some resilience compared with Europe and North America. But an invasion of Iraq will "set the region back on what is proving a prolonged recovery from the 1997-98 financial crisis". While the aftermath of September 11 had forced most airlines to become leaner and meaner, the capacity for many of them to pursue further such measures is now limited. But it is not all bad news for some Asia Pacific airlines. The reports says a war with Iraq would create an impetus for greater intra-Asian trade and travel, a move which will favor "value airlines which can exploit the new regional alignments". Also, the "inherent and growing strength of intra-regional trade" should mean Asian carriers will not suffer to the same extent as their European and American counterparts. But the successful airlines in the new environment will be "those which are able to make the most effective strategic moves in the next few months". Qantas, Air NZ tie-up - Two key regional airlines expected to announce major realignments soon are Australia's Qantas and Air New Zealand. A deal between Qantas and major Pacific competitor Air New Zealand is imminent with Qantas likely to take an equity stake in the NZ airline, now reluctantly controlled by the New Zealand government.

This link-up should lead to cost savings and revenue hikes for both airlines, as well as remove a competitive risk for both. A research note on Qantas released this week by Deutsche Bank says both companies could gain significant value if they can align their schedules and capacity in areas where their networks currently overlap. In particular, both airlines are believed to be losing money on the heavily-trafficked trans-Tasman routes between Australia and New Zealand. But an alliance could see this situation turned profitable for both without a need to hike airfares, Deutsche says. The broking house has now upgraded Qantas to a "buy", putting it on an equal investment footing with Hong Kong's Cathay Pacific and Singapore Airlines. Airlines are also beginning to put pressure on airports to review their charging structures. Airport charges - The International Air Transport Association (IATA) has cited the "disparity" between strong airport profits and struggling airline returns. IATA director general Giovanni Bisignani told a meeting in Tokyo this week that the airlines need to review their partnership with the airports. "If one of the partners in a partnership is losing his shirt while the other is counting his money, it is no longer a partnership," Bisignani said. He asked airport managements to explain "what you are doing to make yourselves more efficient; to reduce your costs and your charges to airlines while at the same time improving the services you offer." He said airlines were paying over $15 billion to airports and air traffic service providers annually for their international services alone, accounting for nearly 10 percent of airline operating costs. "I don't accept the pricing policies of our suppliers who basically operate as monopolies. Airlines and their customers cannot pay for airport inefficiencies," he said.

From CNN-Asia, by Grant Holloway, 9 October 2002

Thailand's AIDS Patients File Suit

Health Activists, AIDS Patients in Thailand File Suit to Dislodge Bristol-Myers Patent on HIV Drug - Wanting cheaper treatment for Thailand's estimated 1 million HIV/AIDS sufferers, people with the disease and consumer activists on Wednesday filed a lawsuit to invalidate a drug patent held here by U.S. pharmaceutical giant Bristol-Myers Squibb. Three AIDS sufferers and the local Foundation for Consumers filed a suit in the Central Intellectual Property Court which claims the patent on the drug Videx EC should be withdrawn. If they win their suit, other companies could produce generic versions for the drug more cheaply. The plaintiffs argue that Videx is not the company's innovation, but merely a combination of an antacid and the active ingredient didanosine for which the company holds no patent. Bristol-Myers developed Videx after licensing didanosine from the U.S. National Institute of Health. It claims Videx can be patented because it increases the drug's effectiveness by including a buffering agent. The company did not have a representative in court, and its executives in Thailand did not return calls seeking comment. A Bristol-Myers spokesman in the United States said last week that the company was committed to providing drugs to fight AIDS at an affordable price in the developing world. Kamol Uppakaew, a plaintiff in the case, said it was well-known that antacids should be taken with didanosine in order to reduce stomach acidity and help the body absorb the drug. "It's just general knowledge," said Kamol, who is also a leader of the Thai Network for People Living with HIV/AIDS. Health activists around the world have been seeking to reduce the price of HIV medicines, saying the high prices discriminate against the poor. Drug companies have trimmed prices, but they generally oppose steep cuts, saying they need to recover the high costs of research and development. Last week, activists in Thailand won a minor legal victory when the Central Intellectual Property Court ruled invalid part of the Videx patent. The court's ruling that Bristol-Myers' patent covers only pills containing between 5 and 100 milligrams of didanosine also know as ddI paved the way for other drug makers to market pills with dosages above 100 milligrams.

From ABC News-Business-Wire, 9 October 2002

China Computers Face Virus Epidemic

Four out of five computers in China, the world's largest computer and Internet market, have been affected by computer viruses, according to a report in the official state news service, China Daily. The results of the six-week survey conducted by the National Computer Virus Emergency Response Centre showed that the problem was worsening by the year, highlighting the Chinese computer market's vulnerability to infection. "Only 16 percent of computer users we sampled this year reported they were free from any virus attack, while last year nearly one in three users said they suffered no computer infections," the newspaper quoted the researcher's chief engineer, Zhang Jian, as saying. The Internet had this year usurped software, such as floppy disks, as the main source of computer viruses. The center reported that computer viruses now represented a major threat to network security, as more and more people - many not virus-conscious - used the internet. Half of the infected machines had suffered data losses, problems browsing the Web, or other damage, the China Daily said. Computer viruses are small programmes often sent via e-mail or hidden in other software. Once inside a computer, they can do malicious tasks like erase data or reproduce and send copies to other machines over the Internet. The good news - Despite the marked increase in virus attacks, a recent worm called "Bugbear" - which records keystrokes, increasing vulnerability to hacking attacks - appeared not to have affected many systems in China, the newspaper said. Only a small percentage of Chinese have access to computers and the Internet, but with a population of nearly 1.3 billion, the absolute numbers are still huge. China added 12 million new Internet users in the first six months of this year, pushing its total to more than 45 million, official data showed.

From CNN, 10 October 2002

 

Europe Teaches Privacy Lessons

Commentary - Pushed by supporters as a model for the U.S., Europe's tough Internet privacy regulations have come under fire - from surprising sources. The recent European Union-sponsored Data Protection Conference on privacy heard reports from businesses, media outlets, trade unions and four EU nations that demonstrated why the United States should not follow Europe's pro-regulation path in protecting Internet privacy. Ever since the EU's data protection directive took effect in 1998, pro-regulation privacy advocates have been trying to convince the United States and the rest of the world to adopt the European model. Under the directive, e-mail addresses and other personal data can be disclosed or transferred to third parties only with the individual's explicit consent. Now that the model has been operational for a few years, the excessive costs of strong privacy regulations are apparent, but privacy worries remain high. This has led to criticism from some unexpected places. Indeed, it came as a surprise when Austria, Finland, Sweden, and the United Kingdom--countries not generally critical of government intervention - told the European Commission (EC) that there needs to be "a better balance" between individual privacy and the free flow of information. These countries highlighted many problems with the directive, including "complex and burdensome" procedural requirements and "resource-intensive" consumer data access rules that add "little to the protection of individuals' rights." The European Publishers' Council (EPC), a group of media organizations, agreed. "It is not uncommon for data access requests to involve two-to-five days' work of several people," the EPC said, adding that in some cases the request is "a fishing exercise to establish whether any claim for damages might be assembled."

Conference organizers received numerous submissions detailing the undue costs to consumers and businesses of strict privacy regulations. These include the cost of having to notify someone when their business card information is entered into a database or, as the Information Security Forum intoned, the high fees for the new bureaucratic "empire of advisors" on privacy matters. But perhaps the most significant costs affecting everyone are the barriers to trade that Europe's regulations create. For instance, the German industry group Bundesverband der Deutschen Industrie explained that "procedures for the transfer of personal data to both EU and non-EU countries often cause too much effort" and "business transactions occasionally break down because of the high requirements placed on this transfer in both cases." U.S. firms have long complained of these problems, but now that EU organizations and the governments of Austria, Finland, Sweden and the U.K. are weighing in, perhaps the European Council will listen. It's important to realize that regulation-induced trade barriers exist even as companies make strong efforts to meet privacy requirements. And as the German group mentions, it's a problem within the EU market too. That's unfortunate because one of the purposes of the directive was to harmonize European privacy laws. Instead, the patchwork of legislation seems to have grown, even upsetting trade unions. The Statstjänstemannaförbundet (ST), a Swedish union of civil servants, recounted how the directive created difficulties in handling insurance issues for its members. Obtaining "consent" to use member information under the directive is "scarcely feasible," they insisted. The ST also cited serious concerns about freedom of expression. Strong privacy rules restrict freedom of expression because they restrict the communication of facts - and the EU is learning firsthand what that means.

According to the European Newspaper Publishers' Association, "data protection legislation has decreased the flow of information to the public. The police and other public authorities have relied upon the data protection principles as an excuse not to make public information that was previously made publicly available or passed on to the press." With all these problems and costs, it's becoming clear that mandated privacy protection in Europe isn't satisfying anyone. According to a study last year by the Europe-based Consumers International nonprofit organization, self-regulated U.S. Web sites were better at protecting privacy than their government-regulated European counterparts. Despite - or maybe because of - EU information rules, many businesses are not complying with the privacy laws. Perhaps that's why a recent EU poll showed that European consumers are afraid that their personal data will be misused when they buy products or services online. Protecting privacy is important, but information exchange is also a necessary part of a thriving economy and a properly functioning democracy. The lesson that U.S. lawmakers should take from the EU's experience is that overly strict data regulations will waste resources, reduce commerce and suppress freedom of speech while providing few true privacy gains. Instead, the U.S. should continue to allow consumers to decide their own level of privacy protection by using privacy-protecting technologies and by voting with their wallets. That is the best path to privacy solutions. Sonia Arrison bioSonia Arrison is director of the Center for Technology Studies at the California-based Pacific Research Institute. She can be reached at sarrison@pacificresearch.org.

From ZDNet, by Sonia Arrison, 23 October 2002

 

Iraq Government Gave $15 Mln to Palestinian Families, Ha'aretz Says

Jerusalem - The Iraqi government has given about $15 million to families of Palestinians killed or injured in clashes with Israelis in the past two years, Israel's Ha'aretz newspaper cited a captured Palestinian as telling the Shin Bet security service. Families of people killed received checks of $10,000 and wounded people received amounts of $500 or $1,000 depending on the severity of the injury, Ha'aretz cited Rakad Salim, the secretary general of the pro-Iraq Arab Liberation Front in the West Bank, as telling Shin Bet. Salim was arrested last week. Relatives of suicide bombers have been among those who received checks transferred from Iraq via a Jordanian bank, Ha'aretz cited the Shin Bet report as saying. Salim, who told Shin Bet he had connections to Iraq President Saddam Hussein's Ba'ath party, said the Palestinian Authority was involved in the transfer of the funds, Ha'aretz reported. Iraq intends to increase its involvement in attacks on Israelis, Ha'aretz cited unidentified officials in Israel's security service as saying.

From Bloomberg-Politics, by Andrew Hobbs, 9 October 2002

 

California Governor Ends Information Technology Exemption

Gov. Gray Davis on Monday signed legislation ending an exemption for the state's information technology purchases from California's conflict-of-interest laws. Similar bills have passed the Legislature before, only to be vetoed by Davis and former Gov. Pete Wilson. But this time Davis was prompted to agree after state consultant Logicon Inc., a reseller of Oracle software, became part of a $95 million deal state auditors projected in April would have cost California about $41 million in losses before the contract was rescinded. In 1998, Sen. Steve Peace, D-El Cajon, tried to pass a similar bill that would have prohibited a vendor whose bid is found to have violated a conflict-of-interest provision from bidding on these contracts for six months to two years. But Wilson vetoed the bill. Davis vetoed Peace's 1999 attempt, on the grounds it would unduly restrict flexibility in procuring the state's computer hardware, software and technical services by discouraging state and vendor interaction.

From Nando Times-Technology, 1 October 2002

Brazil Set for World's Biggest Electronic Election

Electronic ballot boxes may need to be ferried eight hours up river and powered by a car battery for Brazil's elections but the speed of the result is still likely to put the 2000 presidential poll in the United States to shame. Brazil will hold the world's biggest electronic election on Sunday as 115 million voters vote on 406,000 computerized urns, from the metropolis of Sao Paulo to the steamy Amazon jungle. Paulo Cesar Bhering Camarao, technology director at the Supreme Electoral Tribunal, or TSE, expects at least 70 percent of the vote to be counted four hours after the ballots close and 90 percent by the end of Sunday night. "We expect to have the definitive results the next day, on Monday, but don't ask me what time," he said, adding that collecting votes from an area the size of the continental United States was bound to mean some unforeseen glitches. "You can say simply, the electronic urn has come to end once and for all the possibility of fraud and corruption in the register and counting of votes," Camarao said. It should be a far cry from the wrangle over votes in the 2000 U.S. election, which left the superpower without a new president for 36 days.Almost two million people will help in the election in the world's fourth most populous democracy. The task of distributing the urns, which are the size of a supermarket checkout till, to 335,000 sites will be a challenge. "There is a voting station in the state of Rondonia which is eight hours by boat upstream in a place that doesn't have electricity," said TSE spokesman Newton Franklin Almeida. "So the urn goes there already primed, along with a car battery. "Brazil first used electronic voting in 1996 in bigger state capitals and municipalities. The cost of this election totaled 413 million reais ($114 million).

No Worries - Although some watchdogs and technical experts say the urn cannot be 100 percent foolproof and does not stop pre-election skulduggery like vote buying, they are unable to find a flaw. "For us it has not been a reason for worry," Eduardo Capobianco, president of the Brazilian chapter of watchdog Transparency International. "It's pretty modern and it gives the process more speed and trustworthiness. "Not even the police discovery of several bogus urns in Brasilia has shaken trust in the system, although it prompted one presidential hopeful to accuse another of vote-rigging. Voters will cast ballots for a federal deputy, state deputy, two senators, a state governor, and a president. Each of the 18,880 candidates in Brazil's 26 states and Federal District are identified by a number which they have been drumming into voters' heads. Presidential and gubernatorial candidates take the two-digit number which identifies their party. For example, left-wing Workers' Party presidential candidate Luiz Inacio Lula da Silva is 13, a number which may prove lucky if he can turn his big lead into a win in his fourth run for president. It gets tricky after that with senators identified by three numbers, federal deputies by four and state deputies by five. This means a vote for a candidate in each category means a string of at least 25 key punches on the electronic urn - perhaps a tall order if you are among 15 million Brazilians who cannot read or write in this vast country of 170 million people. "The electoral court has two tips: the voter should learn how to vote beforehand. And he should take the numbers of his candidates with him so he does not forget them," Camarao said. The voter casts a ballot by punching in numbers on buttons set out like a telephone. The candidate's photograph and details then appear on a screen and the voter can correct or confirm the choice. The voter can abstain by pushing a white button labeled "blank." The blind feel their way with Braille on the buttons. To make sure people get it right, the tribunal has run television spots for months explaining how the urn works. In one, a fisherman fixing a net in front of his hut tells voters that it is easier for them to write down their numbers than trying to remember them. The tribunal's Web site www.tse.gov.br has a simulated urn where you can chose between fictitious candidates like Carmen Miranda and novelist Machado de Assis.

From ABC News-World-Wire, by Nicholas Winning, 2 October 2002

Aligning IT With Business

Mercury Interactive Corp. earlier this week outlined a new Business Technology Optimization (BTO) initiative intended to help IT better align its operations with business goals. The application testing and management provider, as part of its BTO effort, introduced the first tool in a new suite that will help bridge the gap between lines of business and IT operations. Measuring the performance of business applications and presenting performance data in a meaningful way to line-of-business managers has long been a challenge for IT. Most management tools deliver metrics that describe server utilization, CPU usage and the like, but few link those metrics to business goals or show the impact of performance problems or outages on the bottom line. "The language IT speaks to measure the quality of an automated process is different from that used by the business," said John Bruggeman, vice president of marketing for Mercury Interactive in Sunnyvale, Calif. "The Line of Business (LOB) wants to measure quality by 'how many more orders can I process, how much cheaper is it to process an order, how many orders can I process concurrently,' and so on. The technologists enable them to measure: is the application available, is the network bandwidth enough, is the application secure, is the database accessible." In fact, in a Mercury Interactive study conducted by Forrester Research of Cambridge, Mass., only 25 percent of IT executives at Fortune 500 companies surveyed said that their organizations did very well at defining and measuring the IT performance of automated business processes against service levels that matter to business. The study, just released this week, at the same time found that 51 percent plan to transform IT into a service-driven or business-centric model over the next two years.

From eWeek, by Paula Musich, 3 October 2002

Watchdog System Failed in Enron Case, Senate Report Says

Washington - The federal market watchdog failed to discover and prevent the massive accounting failure at Enron Corp., as did Wall Street's informal system of policing corporations, a Senate panel said Monday. The Senate Governmental Affairs Committee, which has investigated the role of the Securities and Exchange Commission and industry watchdogs in the energy-trading company's stunning collapse since early summer, said oversight must be tighter. It said the failures could be pinned on financial analysts, credit-rating agencies and auditors, as well as the SEC. The report came as House Democrats criticized the SEC's reported rejection, amid Republican and industry opposition, of pension fund director John Biggs to head a new independent board to oversee the accounting industry. "We strongly urge you to resist bowing to pressure to reject a candidate due to industry opposition," wrote House Minority Leader Dick Gephardt, D-Mo., and other Democrats to SEC Chairman Harvey Pitt. Biggs is chairman and chief executive of TIAA-CREF, a teachers' pension fund that is one of the nation's largest. The Senate committee has received some 2,500 pages of documents under subpoena from the White House related to contacts with Enron officials. But it did not address that issue, a potential political embarrassment for President Bush, in its lengthy report. Committee spokeswoman Leslie Phillips said recently that staff investigators were continuing to examine the documents. The new report said the SEC staffers failed to review Enron's earlier financial reports filed with the agency. Had they done so, it said, "they would have had an opportunity to uncover some of the problems with the company's financial practices that appear to have been signaled in those documents." In addition, the report noted, the regulatory agency made earlier decisions allowing Enron to engage in certain accounting practices and exempting the energy-trading company from some federal requirements.

"The leeway afforded Enron by these determinations in certain cases appears in fact to have been abused by the company in ways that ultimately played a role in Enron's collapse," the report said. In a statement Monday, Pitt said the SEC will carefully study the report, which he said "details the bitter aftermath of the over-exuberance of the 1990s" in the bullish stock market. "Under my leadership, we are already well engaged in taking important steps to improve corporate disclosure and enforce securities laws without delay," Pitt said. He said he appreciated the committee's having noted in the report that the SEC needs additional staff and updated technology to monitor companies. Houston-based Enron slid into one of the biggest corporate bankruptcies in U.S. history last December, toppled by a complex web of thousands of partnerships used to hide some $1 billion in debt from the SEC and shareholders. Its failure, which decimated the retirement savings of thousands of employees and hurt individual investors and pension funds nationwide, became the first in a series of big company scandals that shook public confidence in the stock market and the integrity of corporate America. Last week, the Justice Department charged Andrew Fastow, Enron's former chief financial officer and the alleged mastermind behind the partnerships, with fraud and conspiracy. His attorney said Fastow, the most prominent Enron figure targeted by federal prosecutors to date, was just following orders from top company executives. The Senate report, released by Governmental Affairs chairman Joseph Lieberman, D-Conn., also cited the oversight failure of Wall Street analysts - many of whom continued to issue bullish "buy" recommendations for Enron even as its stock slid last year. Many of the analysts' brokerage firms did investment-banking business for Enron, a built-in conflict of interest cited by the committee and other critics. In addition, the report said, Wall Street credit-rating agencies such as Standard & Poor's and Moody's Investors Service failed to ask probing questions about Enron's financial condition, as did Enron's directors and the company's longtime auditor, Arthur Andersen LLP. "These failings call into question the basic assumptions on which our financial regulatory framework is built," the report said. Andersen was convicted in June of obstruction of justice for destroying thousands of Enron audit documents.

From Nando Times-Business, by Marcy Gordon, 7 October 2002

E-Commerce Gets Real

New York - Looks like dot-com investors weren't the only ones with a bad case of irrational exuberance. Back in the day, giddy researchers at International Data Corp. predicted that e-commerce sales would top $1 trillion by 2003. For 2004, Forrester Research said U.S. consumers would plunk down $3.2 trillion on the Web. Throw in shoppers from Asia, Eastern and Western Europe, Africa, the Middle East and Latin America - and the take would be nearly $6.5 trillion. How could you call it unrealistic when it would only mean that every man, woman and child on the planet would have to spend just $1,000? So it should come as no surprise that there's going to be an earnings shortfall on the e-commerce front. Amazon.com (nasdaq: AMZN - news - people ) and eBay (nasdaq: EBAY - news - people ), the two powerhouses of Internet retailing, did just under $3.9 billion in total sales last year. But that doesn't mean that e-tailing isn't making serious headway. As the stories in this package show, Web retailers are forging ties with mainstream finance, beefing up their infrastructure and providing a much-needed lift to shippers. We could hit our numbers yet.

From Forbes, 8 October 2002

Lawmakers Tell FCC's Powell to Enforce E-911 Rules

Washington - Key Senate members said further delay in the rollout of location-based wireless 911 service is unacceptable, a pronouncement that comes as Cingular Wireless L.L.C. and AT&T Wireless Services Inc. back away from the technology fix they were considering and as federal regulators mull fines for non-compliance. "We cannot allow for continued waivers to stand in the way of increased safety for cell-phone carriers," said Sen. Conrad Burns, ranking member of the Senate communications subcommittee, in a statement. On Monday, Burns and Sen. Daniel Inouye (D-Hawaii) sent a letter to Federal Communications Commission Chairman Michael Powell directing the agency to move aggressively to enforce compliance with enhanced 911 rules. "Some companies have been moving forward and making changes to allow for better 911 location introduction on cell phones, but we must implement this critical technology across the board," said Burns. RCR Wireless News this week reported that Cingular suspended shipments of Enhanced Observed Time Difference of Arrival technology because of concerns about whether it can meet federal guidelines and that e AT&T is evaluating alternative E-911 solutions. Both are GSM carriers. T-Mobile USA, a third GSM mobile phone operator, said E-OTD technology works and that it is on track to meet interim FCC benchmarks next year.

From RCR Wireless News, 8 October 2002

Microsoft Outlines Integration Plan

At its MEC 2002 conference in Anaheim, Calif., Tuesday, Microsoft Corp. announced a new server product that essentially segues the company into an integration provider role. With the release of Content Management Server 2002, which gives business users the ability to publish directly from Word to a Web site and to federate content, as well as providing deep integration with Visual Studio .Net, the company also officially announced its plans for providing integration and business process automation functionalities. Code-named Jupiter, the plan calls for the integration and componentization of Microsoft's e-business servers. Content Management Server will be integrated with Microsoft BizTalk Server and Commerce Server to enable users to leverage their inherent technologies, including Visual Studio .Net, Windows application server and Office. Microsoft's vision for Jupiter is essentially one of providing integration and business process automation in an overriding architecture. The idea is that by componentizing its e-business products internally, Microsoft will be able to provide customers with a set of integration and business process automation tools that they can customize based on their needs. There are four core design features for Jupiter. The first is giving users the ability to create and extend business processes in and outside their organizations. The second theme is interoperability, or enabling companies to integrate third-party applications and platforms and provide support for Web services, so new applications built using XML will be easy to integrate. The third theme is integration, providing a single set of workflow tools. And the fourth is componentization for flexibility in designing e-business platforms. Jupiter is scheduled to be released in two phases, the first focused on business processes and integration and available in the second half of 2003. The second phase will add commerce and content management functionality and will be released the first quarter of 2004.

From eWeek, by Renee Boucher Ferguson, 9 October 2002

Judge Orders Ports Opened

New York - Work to resume Wednesday evening, following judge's mandate; hearing set for next week. The West Coast ports are slated to reopen Wednesday evening after a federal judge ordered a temporary restraining order to end a labor dispute that has choked U.S.-Asian trade and cost the struggling U.S. economy an estimated $2 billion a day. President Bush had sought a court order to force operators of 29 ports from Seattle to San Diego to reopen to dockworkers, who earlier accused management of being in cahoots with the government. Following the Justice Department request, U.S. District Judge William Alsup in San Francisco ordered both sides back to work temporarily while also requiring them to appear at an injunction hearing one week from Wednesday. "The lockout is over as of now, at least for the duration of this order," Judge Alsup said. Tuesday's temporary restraining order lasts until 5 p.m. on October 17, a day after the hearing. It is likely that the week the ports are open before Wednesday's hearing would count as part of the Taft-Hartley 80-day cooling-off period, a legal source close to the case told CNNfn. Judge Alsup also warned the union not to engage in the slowdowns that management has accused it of. The Pacific Maritime Association (PMA), the management group that represents major shipping lines and terminal operators that locked out the union, had estimated that it could reopen the ports within one shift after any court order, or as soon as Wednesday. Pickets were being pulled from the docks, and orders for workers began going in as soon as the judge made his order. TAFT-HARTLEY'S ROLE IN PORT DISPUTES - Richard Mead, president of ILWU Local 10 in San Francisco, expected work to resume around 7 p.m. PT Wednesday at the docks in his area. Meanwhile, about 200 ships remained anchored off the coast waiting to load or unload cargo. Millions of dollars of fruits and vegetables are rotting while waiting to be shipped. The lockout has disrupted the flow of parts needed for assembly lines and could make it tough for retailers to stock shelves as the holiday shopping season approaches. When ports reopen, questions will remain about when containers of goods and foods, automobiles and bulk items such as grain, coal and forest products will be able to start flowing again at a normal pace. PMA CEO Joseph Miniace estimated that it will take at least six weeks to work through the freight backlog, assuming union members work at normal levels of productivity. But he said it was uncertain that such "normal" productivity levels will be achieved. Bush steps in The president's invocation of the Taft-Hartley Act, last used by President Jimmy Carter, had been expected.

A panel he appointed said Tuesday it had "no confidence" that the two parties would resolve the dispute "within a reasonable time." "This dispute between management and labor cannot be allowed to further harm the economy, and force thousands of working Americans from their jobs," Bush said in remarks just before 4 p.m. ET outside the White House. Moments before Bush announced that he was requesting the 80-day stay, the dockworkers' union agreed to return to work Wednesday under a 30-day contract extension, a move that management said is "nothing but a band-aid on a serious wound." The invocation of the Taft-Hartley Act "was something we had hoped to avoid but was clearly something (management) wanted," said Steve Stallone, president of the International Longshore and Warehouse Union. The PMA, meanwhile, said Bush "acted in the best interests of the country, the economy and our national security." A group that speaks for the nation's retailers praised Bush's move, which comes amid criticism that the president has focused too much on Iraq at the expense of the economy. "We hope that the courts act promptly and grant the president's request for an injunction," Tracy Mullin, CEO of the National Retail Federation said in a statement. A New York Times/CBS News poll published Monday showed that Americans want Bush to spend more time on an economy whose recovery has proven stubborn. The stock market, which has been falling for six straight weeks, rose Tuesday as news of the Bush intervention leaked out. Retail stocks Wal-Mart (WMT: Research, Estimates), Home Depot (HD: Research, Estimates) and Target (TGT: Research, Estimates) all rallied. Bush's move risks alienating labor unions, which traditionally vote for Democrats, four weeks before mid-term elections will determine control of Congress. The International Longshore and Warehouse Union said the president's move favors port operators. "Taft-Hartley fits in with their bargaining strategy," Lindsay McLaughlin, legislative director for the ILWU told CNNfn's Money & Markets. He said the union would comply. PMA had accused the International Longshore and Warehouse Union of waging work slowdowns, which management said amounted to union requests to have a "strike with pay."

From CNN-Politics, 8 October 2002

Jimmy Carter to Lead Observer Team in Jamaica Elections

Kingston, Jamaica - Former President Jimmy Carter will lead an international delegation to observe Jamaica's tightly contested upcoming general elections, the Carter Center said Tuesday. Carter arrives Oct. 14, two days before Jamaicans cast ballots in islandwide races muddied by a surge of violence between supporters of the governing People's National Party and the opposition Jamaica Labor Party. The 55-member delegation will include observers from 16 countries, including former Costa Rica President Miguel Angel Rodriguez. Carter, who observed Jamaica's 1997 elections, will join other observers monitoring polling stations and ballot counting on election day. ''Jamaicans have voiced a clear commitment to an open electoral process, and we are optimistic this will be another proud moment in Jamaica's history,'' Carter said. Recent polls give a slight edge to the People's National Party to defeat the Labor Party and win an unprecedented fourth term.

From MSNBC, 9 October 2002

Wearable Computers Are The Wave of the Future, Experts Say

Say you're so hooked to your mouse, keyboard and computer monitor you can hardly tear yourself away from your terminal. You don't have to. You can wear your computer. Thad Starner, a computer science professor at Georgia Tech, has been walking around with his for nearly a decade. "Most people who stand in line at the airport are just waiting there, bored. I'm writing the next chapter of my book or reading e-mail," Starner said Tuesday at the International Symposium on Wearable Computers at the University of Washington. Starner's gear, which costs about $4,500, includes a micro-optical monitor hooked to his glasses, a cell phone-shaped keyboard he straps to the back of one hand and a small black bag that holds a 1 1/2-pound computer. "We're going through another computer revolution," said Starner, who, as a student, founded the Massachusetts Institute of Technology's Wearable Computing Project in 1993 and is now part owner of Charmed Technology Wireless Eyewear, based in Santa Monica, Calif. "Just like the change from the mainframe to the minicomputer and ... the minicomputer to the PC, we're going to have a switch to wearable, which is going to completely change the way people think about computing." Microvision, Inc., based in Bothell northeast of Seattle, markets a personal display system called Nomad. It's a headset with a two-dimensional display window that hangs in front of one eye. The company has sold 70 of the devices - which can be connected to other computer systems - since they went on the market early this year. Surgeons are beginning to use it during image-guided operations like hip replacements. Normally, they'd have to turn their heads to watch a television monitor showing them where they're supposed to cut. When they wear a Nomad, the images they need to see are right in front of their eyes, superimposed on the patient. Some small-plane pilots use the Nomad as a way to keep their eyes on the sky and their gauges at the same time. "They're retailing at $10,000, which obviously you and I can't buy," Microvision spokesman Matt Nichols said. "But with volume, you've got a product where the components are only $40 or $50." The sixth annual symposium, sponsored by the Institute of Electrical and Electronics Engineers, runs through Thursday. Tuesday's lineup included a fashion show where models showed off MP3-wired jackets, arm-mounted keyboards, jackets that monitor your heart rate and various head-mounted display systems. Some concepts aren't yet ready for the marketplace, but to wearable computer gurus, ideas can be as exciting as products. With the cell phones, personal digital assistants and global positioning system-driven gadgets beginning to proliferate, it's only a matter of time before they all get sewn into clothing. "Wearable computing is inevitable," said Mark Billinghurst, director of the Human Interface Technology Laboratory in New Zealand.

From Nando Times-Technology, by Elizabeth M. Gillespie, October 2002

2 Americans Win Nobel for Economics

Stockholm, Sweden - 2 Americans Win Economics Nobel for Using Psychological Research, Lab Experiments in Analysis - Two Americans won the Nobel prize for economics on Wednesday for pioneering the use of psychological and experimental economics in decision-making to make markets safer. It was the third year in a row that Americans have taken the prize. Daniel Kahneman, 68, a U.S. and Israeli citizen based at Princeton University in New Jersey and Vernon L. Smith, 75, of George Mason University in Fairfax, Va., will share the $1 million prize. Of the 51 people who have received the prize, 34 have been from the United States. Their research has paved the way for scientists to rely less on observation of actual economies in decision-making and more on controlled laboratory experiments. Kahneman has integrated insights from psychology into economics, "especially concerning human judgment and decision-making under uncertainty," the Royal Swedish Academy of Sciences said in its citation. His experiments in probability theory showed a shortsightedness in interpreting data that could explain large fluctuations on financial markets and other phenomena that elude existing models, the academy said. Smith laid the foundation for the field of experimental economics. His theories have proven that markets don't necessarily have to have a large number of buyers and sellers to operate efficiently. The academy singled out his use of "wind-tunnel tests," where trials of new, alternative market designs are done in the laboratory before being implemented. That could be useful, for example, in deciding whether to deregulate electric companies or privatize public monopolies, the citation said. Smith "established laboratory experiments as a tool in empirical economic analysis, especially in the study of alternative market mechanisms," according to the academy. He is the second George Mason faculty member to be awarded the economics prize. In 1986, James M. Buchanan Jr. received the prize for his work on public choice theory. Wednesday's announcement of the economics prize was the second Nobel of the day.

The chemistry award went to John B. Fenn of the United States, Koichi Tanaka of Japan and Kurt Wuethrich of Switzerland for inventing techniques used to identify and analyze proteins that have revolutionized the search for new medicines. Last year, three Americans won the economics prize for advances in ways to analyze markets that can be applied to both developing and advanced economies. George A. Akerlof of the University of California at Berkeley, A. Michael Spence of Stanford University and Joseph E. Stiglitz of Columbia University were cited "for their analyses of markets with asymmetric information," referring to the fact that some market players have better information than others. In 2000, the economics prize went to James J. Heckman and Daniel L. McFadden of the United States for their work in developing theories to help analyze labor data and how people make work and travel decisions. Past awards have recognized research on topics ranging from poverty and famine to how multinational corporations reap profits, and theories on how people choose jobs and the welfare losses caused by environmental catastrophes. The medicine, physics, chemistry, literature and peace prizes were established in the will of Alfred Nobel, the Swedish industrialist and inventor of dynamite, and were first awarded in 1901.The Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel was established separately in 1968 by the Swedish central bank but is grouped with the other awards. It was first awarded in 1969.The physics winners were announced Tuesday, a day after the awarding of the medicine prize. The literature prize winner will be revealed Thursday and the peace prize on Friday in Oslo, Norway. The prizes are presented to the winners Dec. 10, the anniversary of Nobel's death in 1896.On the Net: Nobel site: http://www.nobel.seSmith: http://www.gmu.edu/departments/economics/facultybios/smith.htmlKahneman: http://www.princeton.edu/ 7/8psych/PsychSite/fac kahneman.html

From ABC News-Business-Wire, 9 October 2002

Using P2P Technology for Content Delivery

Jibe Inc. is aiming to use the advantages offered by peer-to-peer technology-including little or no hardware or monthly usage costs-in its new content delivery network software. The Tampa, Fla., company on Monday released EdgeBurst Delivery System 1.0, which officials said will offer significant improvements in performance, scale and cost over more traditional hardware-based cache or streaming servers. According to CEO Neal Ater, the convergence of expanding broadband connectivity, compression technology such as mp4, and greater encryption and other security for digital content has opened the door for peer-based content delivery for such uses as training and corporate communications. It will reduce bandwidth costs while speeding up rich media downloads, giving enterprises a "TV-quality standard of user experience," said Jibe President Greg Schmitzer. At the core of EdgeBurst, which is compatible with popular media players such as RealNetwork Inc.'s RealPlayer, Microsoft Corp.'s Windows Media Player and Apple Computer Inc.'s QuickTime, is MediaScout, a Web-based centralized server component that gives the administrator control over the content delivery network. It provides a user interface into the peer network, controls user access to content, tracks content locations and gives users search results, company officials said. FuseBox is a development kit that enables enterprises to integrate the system into their content and management software. It comes with integration points, custom Web site tags and application program interfaces. EdgeBurst enables content items to be downloaded from other EdgeBurst clients simultaneously, which increases download speeds, the company said. EdgeBurst also enables users to view video playback during a multi-source download. Key to the EdgeBurst Delivery System are its security features, which include encryption of all messaging between peers or between peers and the administrator, and all content is secured using Secure Sockets Layer encryption. Patent-pending hashing algorithms are used to verify the content, and another feature, PeerCommand, enables the system to be centrally managed using digital certificates. The system can either be hosted by the enterprise or by Jibe, Ater said. Pricing for the EdgeBurst Delivery System starts at $50,000 for up to 5,000 users/subscribers.

From EWeek, by Jeffrey Burt, 21 October 2002

E-Commerce Patent Disputes Erupt

Can, and should, anyone own patents on the fundamental technologies behind e-commerce? Those questions have come up before, and often did so during the heyday of the dot-coms. Then, owning patents for the computer-to-computer transaction methods that enabled electronic shopping was a central part of how e-commerce companies competed. Now, there is a new set of legal disputes over what parts of e-commerce processes can be protected by patents. Lawsuits brought by Chicago-based divine, inc., a provider of software-driven and managed enterprise services, charge that several e-commerce companies have breached its patents. There could be more legal machinations implied, and some sources tell PC Magazine that the disputes could quickly extend to any site doing e-commerce. In a stock-for-stock merger in October of last year, divine acquired Open Market, Inc.-a high-flying company during the dot-com boom that fell on hard times during the dot-com downturn. In conjunction with that merger, Divine acquired Open Market's patents, several of which pertain to business practices used in conducting e-commerce, and the specific technologies used while carrying out e-commerce transactions. Open Market was often cited during the dot-com boom as the owner of patents on online shopping carts and online credit-card transactions. One of the central patents Divine acquired when it absorbed Open Market is titled "Network sales system," and can be viewed at the United States Patent and Trademark Office Web site by doing patent number search for 5715314.According to one source-who requested anonymity-at an e-commerce company named in one of the patent lawsuits from Divine, the Network sales system patent is central to Divine's legal position. The source claimed that the rights on e-commerce processes that Divine is citing in its suits are broad enough that "they claim a patent on e-commerce, and their various claims couldn't get more general than they are. "PC Magazine contacted several of the e-commerce providers served with suits from Divine (a number of the cases are on the docket of the U.S. Northern District Court in Illinois), but officials at the companies declined to speak on the record due to ongoing litigation.

Rich Nawracaj, associate general counsel for Divine, confirms that Divine has served Abed.com, Allwall.com (which acquired Art.com), Bellacor.com, FTD.com, Ethnicgrocer.com, and wine.com with suits related to the Network sales system patent. A visit to the Patent Office's Web site does yield more information about the patent. The first part of the text of the concentrates on actions that, it could be argued, are not only currently carried out at nearly every e-commerce site in existence, but were carried out on EDI architectures and other networks before Web-based commerce existed." A network-based sales system includes at least one buyer computer for operation by a user desiring to buy a product, at least one merchant computer, and at least one payment computer," reads the patent. "The buyer computer, the merchant computer, and the payment computer are interconnected by a computer network. The buyer computer is programmed to receive a user request for purchasing a product, and to cause a payment message to be sent to the payment computer that comprises a product identifier identifying the product." The text of the patent goes on to describe secure transactions that, arguably, might occur on the back-end of nearly any e-commerce site's system. "The payment computer is programmed to receive the payment message, to cause an access message to be created that comprises the product identifier and an access message authenticator based on a cryptographic key, and to cause the access message to be sent to the merchant computer," the patent continues. "The merchant computer is programmed to receive the access message, to verify the access message authenticator to ensure that the access message authenticator was created using the cryptographic key, and to cause the product to be sent to the user desiring to buy the product." What is Divine's response to charges that the Network Sales System might be open-ended enough that it could apply to almost anyone doing e-commerce? "When issued, a patent and its claims are presumed to be valid," says Divine's Nawracaj. "That is one of the basic tenets of the U.S. Patent and Trademark Office and of its policies and procedures. Generally speaking, we don't comment on our interpretation of particular claims." Nawracaj also stresses that the Network Sales System patent is not the only one in the Divine's patent portfolio.

"Among our patents in our portfolio are what we consider the legacy Open Market patents, telephony patents, and a patent we have on Internet searching technology. All these patents are subject to our pursuit efforts." Nawracaj says that when Divine encounters what it believes to be patent infringement, the company is frequently willing to discuss terms of a settlement in lieu of litigation. "When we approach these companies initially, we conduct due diligence with respect to what we can observe on their Web site and compare those facts to the claims of the patent," he says. "When we come to a point where we believe that our patent is infringed, we approach the company and notify them. We invite them to discuss with us the issues involving the infringement, and specifically any kind of technology they may have under their Web sites that we cannot see." The terms of settlements can and have been reached in this fashion, according to Nawracaj. Divine has settled one of its e-commerce lawsuits, which Nawracaj confirms was focused on the Network sales system patent, with FTD.com. The disputes between Divine and e-commerce companies conjure up previous philosophical debates over e-commerce patents. As battles over patents took off at a furious rate during the dot-com era, many players in the e-commerce space called for patent reform, arguing that there was rampant territorial behavior going on. For example, Amazon.com Jeff Bezos posted an open letter on the Web in March of 2000-just before the fortunes of many dot-com companies plummeted-calling for legislation to reform software and e-commerce patents. The letter called for fewer patents, shorter lives for patents, and higher quality patents. Amazon.com itself, though, became involved in several disputes over patents, including a high-profile dispute with BarnesandNoble.com over a patent pertaining to one-click online shopping. Stanford law professor and cyberspace pundit Lawrence Lessig has also been very vocal in opposing many kinds of Internet-related patents, as he was in a 1999 keynote address, transcribed on the Web, where he said, "we have entered a time when the code of our time can be written such that people who own intellectual property have the power-through law and through this code-to close off, to stop, to own an idea, and to make criminal, or at least extremely difficult, any use of that idea beyond the owner's permission."

From Nando Times-Business, by Sebastian Rupley, 22 October 2002

'America's Mayor' Tries to Clean up Mexico's Crime

Mexico City - Former New York Mayor Rudolph Giuliani is about to face what observers say is his biggest crime-fighting challenge yet: bringing law and order to a place where its disregard is a way of life. Mr. Giuliani's consulting firm signed a $4.3 million contract with Mexico City earlier this month to advise local police on his acclaimed crime-fighting techniques. Giuliani's "zero tolerance" policy has been credited for reducing New York City crime by 57 percent. Mayors are eagerly adopting similar policies in cities such as Baltimore and Los Angeles, and Giuliani's firm is talking with several European cities about consultation. But as his team starts work tomorrow (Giuliani will fly in next month), the Giuliani vision will be tested for the first time in the developing world and in a city where the police, not just the criminals, can be the biggest obstacle to safe streets. Giuliani argues that Mexico City and the Big Apple aren't so far apart when it comes to fighting crime. "There are differences ... but I'm not sure those differences are relevant to crime reduction," Mr. Giuliani said last week. Mexico City residents disagree. Take the case of Matt Blackburn, a journalist who moved from Idaho to Mexico City earlier this year. Within weeks, he was flying back home, stunned from two successive muggings. But Mr. Blackburn was assaulted by the cops, not the robbers. Policemen abducted him in their patrol car, he says, and robbed and dumped him in one of Mexico City's many slums. Only 3 percent of Mexicans have confidence in the police. "The difference is, in the US, people aspire to be law-abiding citizens," says Mario Arroyo, a researcher at the International Center for Safety Studies in Mexico City. "Here in Mexico, respect goes to those who evade the law." At red lights, cars edge forward seeking gaps in the traffic. Few people pay their taxes, giving Mexico one of the lowest collection rates in the world.

This lawlessness clashes with Giuliani's law-and-order gospel, which holds that the smallest disorder, such as a broken window, can stain society and lead to a downward spiral of antisocial behavior. Zero tolerance has police cracking down on graffiti and traffic violations. Jose Antonio Ortega, secretary for crime issues at COPARMEX, an organization that represents businesses, takes an optimistic view. "If we can change our mentality to one of 'the perpetrator pays,' " he says, "that will be a huge gain for the country." Likewise, police chief Marcelo Ebrard says he wants to make crime "more expensive" for perpetrators. Echoing Giuliani, Mr. Ortega argues that Mexico's worst menace today - its kidnappers - could have been stopped back when they were small-time crooks. Today, Mexico is second only to war-torn Colombia in number of kidnappings. Zero tolerance also includes environmental actions like cleaning the city and creating venues where people feel safe after dark. A foundation led by billionaire Carlos Slim is cleaning up the decrepit historical city center, which becomes dark and crime-ridden at night. But social trends in Mexico are not favorable. While Giuliani benefited from the Wall Street boom and an aging New York City population, Mexico's economy is struggling. And those under age 21 make up over half of the population. Ortega has little patience for this "economic fatalism." He says crime can be defeated with a mix of cultural and organizational changes. For several years he has espoused Giuliani's policies as the key, especially to reforming the police department. Ortega hopes Giuliani's advice will professionalize the management of the police department. "We need commitment, accountability, crime-fighting objectives, and an ongoing evaluation," he says. "What we have now is complete disorder." Others go further, warning that unless the police department is revamped first, zero tolerance will only increase opportunities for crooked policemen to abuse and shake down citizens. "The police is the biggest offender," says Arroyo. In changing the New York police, Commissioner William Bratton held his district heads accountable for their success in fighting crime, querying them regularly on performance. He relied heavily on statistics, using computers to analyze crime data and send forces where they were most needed. The trouble in Mexico is that crime statistics are incomplete. Most crimes go unreported, because victims dread the hours of waiting and the endless paperwork involved. With little prospect of justice being done, only 7 percent of assault victims bother to report the crime to the police. Still, even a flawed system of accountability could be crucial to free the Mexican police force from the grip of a tightly knit group of officers known as the "brotherhood." It is this brotherhood which for the past 20 years has stood in the way of modern crime fighting.

It controls most of the department's operations and takes a cut of policemen's bribes. Ordinary policemen spend up to $40 a week on various favors that are controlled by the brotherhood. They pay to avoid dangerous assignments and bear expenses for uniforms, weapons, vehicle repairs, and even for official paperwork. "If I don't pay, they'll still give me a uniform," explains "Chris," a motorcycle agent who spoke on condition of anonymity. "But it'll be two sizes too small." With an income of just $280 per month, agents seek bribes to supplement their pay. Chris says with an embarrassed grin that he reaches $1,000 per month. Whereas Giuliani was able to release many older, possibly corrupt officers, Mexican regulations require proof of violations. But a system of performance-based promotions could do the same job, albeit more slowly. Giuliani will most likely recommend a salary raise, and improved recruitment, and training practices. Currently, entry requirements are flimsy, attracting recruits with no more than primary education. "The police is seen as the profession of last resort," says Carlos Tornero, police chief in the town of Queretaro. "When I walk down the street, people swear or make jokes about me," says Chris. Raising salaries would send a message that policemen are valued, regaining respect and attracting better recruits. Better education is another necessity. During his police academy training, Chris didn't even learn how to shoot. In a recent, highly publicized retraining of his motorcycle unit, "all we did was play football for four months," he says. "The higher officers don't want better-trained subordinates, because they're harder to abuse," he says. It would be impossible to apply zero tolerance overnight, but Mr. Ebrard has already started little by little. His policemen now enforce traffic rules on the main thoroughfare of Insurgentes - no small feat in Mexico City. The program has reduced traffic jams, and some hope it could show people the benefits of driving by the rules. Ortega defies the naysayers who say it can't be done. "Either we make a drastic change," he says. "or else we're fried."

From Christian Science Monitor-Americas, by Alexander Hanrath, 22 October 2002

Web Services a Decade Away

The ultimate promise of Web services--delivering software as a service - is at least a decade away from being fulfilled, according to a report from IDC. In the report, released Thursday, the market researcher said that Web services are proving their worth as corporations adopt the concept and plug disparate systems together, but that the changeover still has years to go to reach its high-water mark. IDC's report echoes what chief information officers have been saying for months: CIOs are hedging their bets amid multiple standards and looking for more agreement on key issues such as security--the underpinning of Web services. Microsoft, Sun Microsystems and numerous other companies are pitching their notions of Web services as a way convince customers to buy from a single technology provider. But tight IT budgets mean that Web services are being used merely as integration tools, said IDC, noting that "most of the Web services vision is just pure speculation." IDC argues that delivering software as a service will require a lot of components and applications that don't yet exist. In addition, "the sharing of components and data required by the Web services vision will raise a number of difficult business, legal and contractual issues," said IDC. For Web services to work as imagined, IDC said, technology hurdles must be the first challenges overcome, but businesses also will have to change the way they view software and intellectual property rights. Proponents of the Web services vision also face work in the areas of security, standards and privacy.

From ZDNet, by Larry Dignan, 24 October 2002

Crime Threatening Caribbean Tourism - Financial Pressure in Area's Nations Not Easing

Freeport, Bahamas - Crime and the scruffy surroundings of resort areas are hampering Caribbean tourist officials' efforts to make more money in hard times by enticing visitors out of their hotels. The problem, say local politicians, is not confined to the violent island of Jamaica, which has one of the highest murder rates in the world, but is evident across the Caribbean, a popular winter vacation destination for Americans and Europeans. Officials say minor crimes like pick-pocketing, and harassment of visitors can have a devastating effect on tourism throughout the region. They cite harassment on beaches for the Bahamas losing its edge over other destinations. "Why would a visitor want to leave a clean, safe, all-inclusive resort to be exposed to filth and rip-offs? How many times have we seen dead animals in the streets on the way to resorts?" Bahamas Prime Minister Perry Christie said at this week's Caribbean Tourism Conference. "A band of no-good young fellows does not have the right in our countries to cause the nationals to suffer," he said. "A priority must be placed on stamping out criminal behavior." For much of the Caribbean, tourism accounts for more than 50 percent of the economy, and up to 90 percent on smaller islands. It is the largest foreign exchange earner for the region and the largest employer, with more than 1 million Caribbean people working in the sector. But the islands have been hammered by economic weakness that began in 2001 and the severe drop in travel after that year's September 11 attacks on the United States. The financial pressure has so far shown no sign of easing, with soft hotel bookings and flight reservations ahead of the important winter travel season. It has also left some tourism ministers and travel agents worrying quietly about rising crime.

Crime statistics are often hard to come by, as many of the region's governments do not readily disclose figures. Anecdotal evidence highlights incidents during 2001 such as a series of rapes in St. Lucia and a shooting in St. Thomas in the U.S. Virgin Islands, that left a U.S. teen-ager paralyzed. This year, Guyana has fallen prey to a spate of shootouts and murders while Barbados has seen an upsurge in break-ins. Country's crime hurts region's tourism - Economic sluggishness and rising unemployment has often been linked to increases in crime, which in turn discourages tourists from visiting not only the country in question but the whole region. "In the context of people traveling globally, they are not distinguishing in any great detail between a country here and a country there in this region," Christie said. Violence and crime rates are indeed a consideration for tourists when choosing destinations, agents said. A business study from the Karma Center for Knowledge and Research in Marketing at Canada's McGill University found the rate of crime was the main concern for tourists considering Caribbean destinations. And that research was done in 1998 -- a robust period for the Caribbean travel industry with strong bookings, high occupancy rates and frequent flights. Some travel agents played down the problem. "There's no question it's been an issue," said Richard Kahn, a New York travel agent attending the conference. "When it happens, the impact is on that destination and then it trickles down throughout the Caribbean as well. Thankfully, it's not an issue right now." Other agents echoed Kahn, saying violent crime is not now a high-level concern for Caribbean destinations. They also brushed off a string of murders in Jamaica before the election earlier this month, saying they did not affect tourist areas. Tourism officials are more focused on pick-pocketing and general harassment, said Bahamas Tourism Minister Obie Wilchcombe. St. Vincent and the Grenadines has set up a special police unit to patrol the hotel areas. "We do not pretend that we don't have a problem with harassment and crime," said Vera Ann Berreton, director of tourism at the country's tourism and culture ministry.

From CNN, 29 October 2002

Latin America Starts Internet Registry

Latin America and Caribbean Take Over Responsibility For Managing Their Internet Addresses - Latin America and the Caribbean took over responsibility for managing their own Internet addresses Wednesday, with the formal establishment of a regional Internet registry. The move hands over duties for administration and registration of Internet addresses from a U.S.-based nonprofit organization, American Registry for Internet Numbers, or ARIN. The new group, Latin American and Caribbean Internet Protocol Address Regional Registry, known as LACNIC, will be based in Uruguay's capital, Montevideo. The Internet's key oversight body, the Internet Corporation for Assigned Names and Numbers, or ICANN, signed off on LACNIC's formal establishment at a meeting in Shanghai. That followed months of work training LACNIC's staff and transferring Internet address data base records LACNIC is just the fourth regional internet registry, after groups managing addresses for Asia, North America and Europe.

From ABC News-Business-Wire, 30 October 2002

 
 

Probe Shows Uganda Tax Authority Deeply Corrupt

Kampala - Officials at Uganda's tax collection agency have been diverting state money into their bank accounts and helping businesses evade millions of dollars worth of taxes, investigators say. An inquiry into the Uganda Revenue Authority (URA) launched by the Finance Ministry in March following a public outcry has found corruption and inefficiency at every level, the head of the investigation said. Analysts say the probe, originally meant to last for three months, is a major step in efforts to clean up Uganda's image as one of the most corrupt states in the world. ''All of you belong in jail,'' Justice Julia Sebutinde told URA officials attending a recent public meeting of the Finance Ministry's investigative body. ''If I had anything to do with it, I would throw all of you in jail and begin afresh.'' In recent months, the inquiry has found evidence of junior officers owning multi-million shilling mansions, office messengers owning clearing firms and officials abetting tax evasion scams worth billions of shillings. Justice Sebutinde, who previously oversaw inquiries into the police and defence ministries, told the probe commission the URA was riddled with corruption. ''Our suspicions have been confirmed. There is laxity, incompetence and most probably fraud. You have been abetting tax evasion,'' Sebutinde said, addressing URA officials. The Finance Ministry hopes the clean-up will improve revenue collection, which has held steady at around 11 percent of gross domestic product for five years, well below the sub-Saharan average of 16 percent. This has led to over-dependence on donors for budgetary support. Donors finance slightly more than 50 percent of Uganda's state budget, including all development funds. Independent newspaper editor Charles Onyango-Obbo told Reuters the revelations were just ''the tip of the iceberg.'' ''The truth is that anything up to 50 percent of companies do not pay tax - and how will you find those?'' He said many Ugandans feared that officials suspected of corruption ''were politically backed and could get away with anything.'' But he added: ''In the last few years a critical mass of auditors has been created and are one step ahead of the thieves, so we expect cleaner business practices in the future.'' In addition, parliament passed a new leadership code in April which compels civil servants to declare their personal wealth. Inspector General of Government Jotham Tumwesigye said the code would have considerable impact once in effect. ''The Leadership Code comes into effect next month,'' he told Reuters. ''Officials will then forfeit any assets they have concealed and will lose their jobs...this probe will prove very helpful in our work.'' ($1-1,850 Uganda shillings)

From MSNBC, 31 October 2002

 

Takenaka Says He'll Maintain Stance on Loan Cleanup

Tokyo - Heizo Takenaka, Japan's top banking regulator, said he won't back down from a bad-loan plan that could push some companies into bankruptcy, snubbing opponents in the ruling party who want a more gradual approach. Takenaka, who wants to accelerate disposal of more than $420 billion of bad loans and maintains that "no company is too big to fail," said he has Prime Minister Junichiro Koizumi's backing. The academic-turned-minister's proposals are seen by some members of the Liberal Democratic Party as "too sudden," said Finance Minister Masajuro Shiokawa. The clash between the ruling party and Takenaka, appointed after his predecessor balked at declaring banks in need of rescue, may derail efforts to revive an economy hurt by three recessions in a decade. The conflict may test Koizumi's resolve to stand by a plan that would cause hardships for the banks and for companies that support some ruling party politicians. "There's a great deal of skepticism they won't choose a hard landing, and I think it's justified," said Thomas O'Malley, a senior portfolio manager at Barclays Global Investors, which oversees about $750 billion. Shares of Mizuho Holdings Inc., the world's biggest bank by assets, fell 6.9 percent to 163,000 yen and Japan's six other largest lenders also closed lower on the Tokyo Stock Exchange. Contributions - Takenaka, an economics professor brought into government by Koizumi last year, will be taking on a party, which lawmaker Yuriko Koike said in 1998, counted the construction and banking industries among its biggest contributors. Major banks "have been giving contributions to the LDP for years," said Shigenori Okazaki, chief political analyst at UBS Warburg (Japan) Ltd. "There's just no way the LDP and its coalition parties can accept such measures at this time, a few days before by-elections." Japanese voters will elect some parliamentary representatives on Oct. 27. Ruling party lawmakers are concerned Takenaka will force banks to boost provisions, eroding bank capital enough to require taxpayer-funded bailout of banks for the third time in four years. Ending the Mirage - "Takenaka is trying to end the mirage that these sort of banks are going concerns," said Nick Demopoulos, the head of London sales trading at WestLB Panmure Ltd. in the U.K. "LDP leaders prefer to continue to perpetuate this myth and not rock the boat, not realizing that it is sinking."

The standoff between the regulators and politicians may prevent Japan from fixing its banks after a total of 9.3 trillion yen ($75 billion) of public money in 1998 and 1999 bailouts failed to make bad loans go away. "The shocking delay in bad loan and economic recovery plan from Japan reflects very badly on Japanese policy making bodies, said Chua Soon Hock, chief executive at Asia Genesis Asset Management Pte. in Singapore. "If there were Nobel Prizes for weak and bad policy making," Japan's policy makers would share them. Japan's seven biggest banks booked a combined loss of 4.07 trillion yen in the year to March as failed companies, such as Mycal Corp. and Aoki Corp. defaulted on debt. Banks had made loans to large retailers and construction companies during the bubble years of the 1980s. Radical - Hideyuki Aizawa, the head of the Liberal Democratic Party's anti-deflation panel, yesterday described Takenaka's draft plan as "radical." Still, Shiokawa, who was briefed yesterday by Takenaka, said Japan "eventually" will have to take steps the top bank regulator has proposed. He also said banks haven't been stringent enough in assessing the quality of their loans and weigh future tax credits too heavily when calculating capital. Deferred tax assets - the right to reduce future tax payments for current losses - accounted for about half of the top category of capital at Japan's seven biggest lenders as of March 31, according to a central bank report. The tax credit on loan write-offs and provisioning can be carried for five years as part of bank capital. Takenaka's plan will cut that period to one year or a maximum of 10 percent of the top tier of capital, the Nihon Keizai newspaper said, without citing anyone. Capital - Capital-adequacy ratios, a measure of bank capital relative to the amount of risk-adjusted assets, at each of Japan's four biggest lenders would fall to less than the international minimums if such changes are made now, according to report by ING Securities (Japan) Ltd. Takenaka said regulators will release a final plan on bad- loan disposals as part of a larger package of government policies designed to help the economy by the end of the month. "We can gain more support by devising a plan that not only focuses on the loan disposals, but also one is unified with industry policies," Takenaka told parliament. "I will make efforts to come up with a plan that includes safety net measures and reflects the views of Cabinet members."

From Bloomberg-Politics, by Mikako Nakajima and Taizo Hirose, 23 October 2002

Japan to Cut Bad Bank Loans; Investors Skeptical

Japan said it will force its biggest banks to cut bad loans, stopping short of measures that may have led the government to seize the lenders. Mizuho Holdings Inc. and other banks, burdened by $420 billion in bad loans, must tighten scrutiny of borrowers and will be subject to inspections, Financial Services Minister Heizo Takenaka said. Prime Minister Junichiro Koizumi also unveiled 1 trillion yen ($8 billion) of tax cuts and an agency to prop up indebted companies. Takenaka was forced to water down an original plan after politicians said it would harm the economy, analysts said. Japan, the world's second-biggest economy, is trying to mop up bad loans while also reinflating prices that haven't risen since 1998. "The government is taking the `no pain, no gain' slogan literally," said Joji Maki, who helps manage 430 billion yen at Baring Asset Management (Japan) Ltd. "They won't gain anything because they are just not doing enough to restore any kind of health in the banking system." The bad-loan plan was set to be released last week. It was delayed after objections from senior officials of the Liberal Democratic Party and other members of the ruling coalition. Japan has previously set a target of halving bad loans by 2005. Japan's seven biggest banks said they'll do their "utmost" to enact the FSA's proposals, though they asked to be given sufficient time to make the changes. The agency also needs to take more time to consider the impact of the plan on banks, depositors, shareholders and the broader economy, the lenders said in a faxed statement. Tax Credits - Under Takenaka's proposal, Japan will review the usage of tax credits as part of bank's capital. Unlike an earlier draft, which gave banks until March 2004 to reduce such credits, a deadline wasn't included. Such a move could have left banks short of capital and forced a third bailout in five years. "It backs off from taking the ultimate step of cutting banks' capital down to size, which would require a capital injection by the government, cleaning them out and refloating them," said Marshal Gittler, senior currency strategist at Deutsche Bank AG in Tokyo. Regulators will next month release an "action plan" detailing the steps they will take to get Japan's banks to meet requirements set out in Takenaka's plan.

It will ask banks to reassess their loans by March 31 using a "discount cashflow model" that evaluates borrowers based on their ability to generate cash from operations, Takenaka told reporters. Bank of Japan - The plan to cut taxes and tackle dud credits came as the Bank of Japan said it would boost monthly bond purchases by a fifth, a cash transfer designed to keep the world's second-biggest economy from falling into its fourth recession in a decade. Some investors were skeptical it can revive growth after the Nikkei 225 Stock Average fell to 19-year lows five times this month. As part of the package unveiled today, Koizumi said he would create an agency to prop up indebted companies. Clearly the reason they are setting this new agency is all about not allowing companies to go bankrupt," said Fiachra MacCana, a director at WestLB Securities Pacific Ltd. "This was one of their last chances to do anything, and I think they haven't done much." Last Chance - Banks got into financial difficulty when Japan's real-estate bubble burst in the early 1990s, causing commercial property values - used as collateral by many companies - to fall by about 70 percent. Stalled economic growth and falling prices have also generated more bad loans than banks can write off. Japan's seven biggest banks had combined losses of 4.07 trillion yen in the year to March as companies such as Mycal Corp. and Aoki Corp. defaulted on debt. Banks made loans to large retailers and construction companies during the asset inflation in land and stock prices of the late 1980s and early 1990s. Meantime, unemployment is at 5.4 percent, just below a record high. In the first nine months of the year, 14,501 companies went bust - an average of 53 a day. The bankruptcy in August of golf course operator Chisan Co. was the second-biggest this year with 320.7 billion yen in debt. Bad debts have contributed to a six-year slide in lending, starving companies of the credit they need to invest and hire more workers. Today's plan will probably fail to clean up bad loans, a step that is needed to free banks to lend again, some investors said. "It's unexciting, unconvincing, just like most Japanese packages are," said Russell Harrop, a fund manager at EN Asset Management in London, a hedge fund that manages $75 million in Japanese stocks. "The $8 billion tax cut is less than 0.2 percent of GDP." Hayami - The Bank of Japan said today it would buy 1.2 trillion yen in bonds outright each month. It tripled the size of such purchases in four steps since last August, after cutting interest rates to zero in March 2001. Bank of Japan Governor Masaru Hayami has already encouraged the government to act on bad loans by saying the central bank would buy stock from lenders. "The BOJ's decision today can be considered a sign that the central bank and the government will work closely together to tackle the problems," said Koji Fukaya, chief analyst at Bank of Tokyo-Mitsubishi.

From Bloomberg-Politics, by Taizo Hirose, Mikako Nakajima, Kazu Hirano and Mariko Iwasaki, 30 October 2002

Australia's Costello Wants to Pay Off Government Debt

Melbourne - Treasurer Peter Costello said he wants to pay off Australia's debt within four years, raising the prospect the nation will be the first in the industrialized world to shut a government bond market. The government wants to sell its remaining 50.1 percent stake in Telstra Corp., worth about A$30 billion ($16.7 billion), and use the proceeds to pay debt. Costello, who today released a discussion paper and called for public submission on the future of the bond market, said his preference is to use budget surpluses to retire the national debt. The proposal is opposed by investors and traders, whose ranks have been thinned as the government debt market shrank to about A$62 billion from A$106 billion in 1997. Closing the market would disrupt corporate debt sales and make it harder for the government to borrow money in the future to finance a budget deficit during a recession or war, opponents say. "I don't agree that it's financially optimal for the government to have zero debt on its books -- that is a political argument rather than a sound economic one," said Warren Bird, who manages A$34 billion in cash and fixed interest at Colonial First State Investment Ltd. "There is nothing wrong with debt funding capital spending or other projects that benefit future generations." Costello said he opposed using the proceeds of the Telstra sale to buy stocks and other assets because that might give the government influence over the market and leave it with losses if stocks fell. "If we have the capacity to eliminate debt, that's what we'll do," Costello told reporters in Melbourne. "You'll have to persuade us that there are very strong reasons if you want us to adopt the policy of keeping securities out there even though they weren't needed for financing purposes."

Investors argue it will be harder to price corporate bonds without a comparison to risk-free debt and will be difficult to revive the government bond market when needed. "You need a bond market to price other financial instruments like futures and interest rate swaps," said Kevin Talbot, who helps manage A$12 billion of bonds at AMP Henderson Global Investors and is a member of a committee of investors and bankers advising the government. There's "no way" capital markets will be as efficient if the government market is closed, he said. `Dead Duck' - While the government called for public submissions on the future of the bond market, some investors said they aren't holding out hope of changing Costello's mind. "It looks like a dead duck," said Ross Gustafson, who helps manage A$2.6 billion at Tyndall Investment Management. "The analysis of the report seems to have been pre-empted by Costello's blatant statements that he doesn't support maintenance of a government bond market." Bonds have risen since Prime Minister John Howard won office in March 1996, pledging to reduce the nation's debt. The yield on the benchmark 10-year bond, the 6.5 percent bond maturing in May 2013, fell 8 basis points to 5.64 percent at the 4:30 p.m. close of trade in Sydney. When Howard took office, the 10-year bond was yielding about 8.90 percent. Short-Sighted - Some countries are going the other way. Singapore, which runs budget surpluses, has still built up a S$56.5 billion ($32 billion) bond market to provide a risk-free investment for money managers and a benchmark to price corporate bonds, according to the central bank's website. Australia's A$120 billion corporate and state-government bond market is about twice the size of the government bond market. "The key issue for the financial system is that there needs to be a default-risk free yield curve," said Colonial's Bird. While bank-bills may fill that role, "the simplest way to ensure this is to have a liquid Commonwealth bond market."

From Bloomberg-Politics, by Hamish Risk, 30 October 2002

 

Germany to Delay Balancing Budget, Using EU Leeway

German Chancellor Gerhard Schroeder's government, reversing a campaign pledge to balance the budget by 2004, announced plans to spread deficit cuts over a further two years to avoid strangling a faltering economy. The European Commission last week postponed a deadline for balanced budgets by two years to 2006 for the dozen countries that share the euro. Germany's Social Democratic Party and Green Party leaders, in talks to form a government after winning last week's election, said they won't raise taxes to fill budget gaps. "There will be no tax increases in Germany," the SPD's parliamentary leader, Franz Muentefering, told reporters after the first round of coalition negotiations. "We won't seek to enforce a delay of the European Union balanced-budget deadline but should conditions warrant, we will surely make use of it." Europe's largest economy barely grew in the first two quarters, hindering the government's efforts to meet European budget requirements. Unemployment rose to a three-year high in August. Finance Minister Hans Eichel yesterday cut his forecast for economic growth in 2003 by a percentage point to 1.5 percent. Countries that adopted Europe's single currency are committed to keeping their budget deficits below 3 percent of gross domestic product, a rule devised to protect the euro. Spending Cuts - Germany is struggling to keep within that limit this year as the faltering economic recovery erodes tax revenue and pushes up the cost of welfare benefits for the unemployed, who numbered 4.1 million last month. The government last week raised its estimate for this year's deficit to 2.9 percent of GDP from 2.5 percent. SPD and Green Party leaders meeting last night agreed to cut spending, remove tax breaks and lower subsidies to cover a budget gap of 25 billion euros ($24.7 billion) in 2002 and 2003. European Central Bank chief economist Otmar Issing said in New York that the government should abandon its pledge to balance the budget by 2004, describing it as "neither feasible not advisable." The government predicts economic growth will remain at 1.5 percent in 2004, compared with its previous forecast of 2.5 percent, and sees the annual rate of expansion at 2 percent in 2005 and 2006. Coalition negotiations, attended by Schroeder and Eichel, will resume Tuesday at 11 a.m. Berlin time and are scheduled to conclude Oct. 15. Schroeder and his cabinet may take their oaths of office on Oct. 22.

From Bloomberg-Politics, by Andreas Cremer, 1 October 2002

European Banks Adrift - Credit Suisse Stems Two Days of Heavy Selling

London - Europe's leading banks were sharply lower in volatile trading on Friday with concerns over bad loans growing as economic evidence continues to show the recovery is wobbling in Europe. Further worries over the impact of the falling stock markets on profits are also taking hold, bank stocks analysts said. The German stock market dropped 36 percent in the third quarter - under-performing the rest of Europe and the 17.6 percent drop in the S&P 500 stocks. The poor performance on Friday capped a rough week in the sector - the downturn in U.S. banks ($BKX: news, chart, profile) on warnings this week were also adding to the pressure. Japanese banks were also weaker. See more "The worries about credit risk and bad debts continue. We've had a very negative move across the board," said Andrei Ilyin, industry analyst at Normura Securities in London. Credit Suisse Group (CSR: news, chart, profile) bore the weight of the selling for much of Friday. The bank denied it's planning a capital increase, issuing a statement late in the day in an effort to stem a near 25 percent decline in its shares over the past two days amid talk of a potential need to raise more funds from investors. The bank, Switzerland's second largest, said it was "not aware of any objective reasons" for the drop in its shares on Thursday and Friday in unusually heavy volumes." The group's present capital resources remain adequate, and as stated before, no capital increase of the group is planned." Shares were down 11 percent after the statement, off earlier lows that took the stock down as much as 15 percent down. The New York-listed shares were down 80 cents, or 5 percent, at $15.36. The statement didn't entirely clear the air for investors on the bank, Ilyin said. "They haven't said anything new.

The question is what happens to their capital resources if the market were to take a more negative turn. The stock market is trying to determine what happens with that," he said. Deflation worries in Germany more broadly, European wholesale bank stocks have been under pressure as hopes for a recovery taking hold in the second half of the year crumble, particularly in Germany where some economists have begun to raise the specter of deflation ."There are concerns about the impact that falling equity markets will have on balance sheets as well as the impact that a softer economy will have on bad debt provisions," said Robbie Kelleher, strategist at Davy Stockbrokers in Dublin. Switzerland - unusually - has not been immune from the Continental downturn this year. National airline SwissAir sought protection from creditors late last year as the global travel downturn after Sept. 11 pushed the debt-strapped airline to the edge. Martin Ebner's fall from grace has also shaken up the country's staid corporate culture. Shares of Swiss rival UBS (UBS: news, chart, profile) were down as much as 7 percent on Friday. In France, BNP Paribas (BNPQY: news, chart, profile) was down as much as 10 percent. In Germany, shares of Deutsche Bank (DB: news, chart, profile) (DE:804010: news, chart, profile) were down as much as 9 percent. Commerzbank (CRZBY: news, chart, profile) was down as much as 10 percent. In the U.K., shares of Barclays (UK:BARC: news, chart, profile) were down 5.5 percent; shares of HSBC (HBC: news, chart, profile) were down 0.6 percent.

The European bank sector is down over 42 percent since its peak in January 2001, as measured by the FTSE Eurotop Banks 300 index, a drop of more than $575 billion in value. CS: Voting with their feet - CS Group warned on Wednesday of an operating loss for the third quarter and said it pumped 2 billion Swiss francs ($1.35 billion) into its Winterthur insurance unit, on the heels of a 1.7 billion SFr injection earlier this year. It also warned of an operating loss in investment banking unit, Credit Suisse First Boston, surprising many in the market after a round of cost-cutting in the business. See more "Investors are voting with their feet to get out of this stock," said one London dealer in CS Group shares ahead of the statement. Credit rating agency Standard & Poor's warned this week it may downgrade the bank's debt following the Winterthur capital injection. French broker BNP Paribas said the stock was likely depressed on Thursday by rumors that Swiss investor Martin Ebner's BZ Group may sell the reminder of shares it owns in CS Group. As of the end of June, BZ held less than 5 percent of CS Group, BNP noted. However, BZ Group on Thursday said in a statement that it wouldn't be pressured by creditor banks into selling the CS shares, BNP said. Analysts at Goldman Sachs on Thursday downgraded Deutsche Bank, citing concerns for bad debt provisioning into 2003 for Europe's wholesale banks. See more Dealers said rumors of a profit warning at Deutsche Bank was also appearing to pressure the shares on Friday. The downturn in M&A activity and other securities businesses has impacted the investment banks; Goldman Sachs (GS: news, chart, profile) proved an exception as its August quarter topped the expectations. Analysts attributed Goldman's pass on the weak quarter to an outsized trading gain. Emily Church is London bureau chief of CBS.MarketWatch.com.

From CBS Marketwatch, by Emily Church, 4 October 2002

Tax Cheats Steer Portugal Towards EU Sanctions

Lisbon - Behind a wall of impunity as strong as its hilltop castles, Portugal has billions of euros in uncollected taxes, more than enough to stave off European Union budget deficit sanctions that moved closer to reality last week.Prime Minister Jose Manuel Durao Barroso has vowed to wage ''war without truce'' against rampant tax fraud. But critics say they still see no serious effort against the fraudsters, be they society's rich elite or the local corner shop owner. Portugal has five billion euros ($4.91 billion) in tax payments being contested in its swamped court system alone, the Finance Ministry says. That is more than the 3.3 billion euros needed to close next year's budget deficit. ''There is no guts here in the sense of straightening out the books so things will change,'' said Luis Saldanha Sanches, a professor of tax law at the University of Lisbon. These days, Portugal needs all the taxes it can collect. The European Commission, the executive arm of the European Union, is weighing a report it got last week from EU finance officials on the 2001 budget deficit, which breached an EU limit. The report will help determine whether Portugal will be the first member of the 15-nation EU to be punished for busting its deficit limits. Portugal, one of the European Union's poorest members, faces the prospect of hefty fines. Jose Albano Santos, an economist at the Technical University of Lisbon, estimated that unpaid taxes could total nine percent of economic output in the nation of 10 million people. That would have been about 11 billion euros last year, or well above the shortfall of 4.1 percent of gross domestic product that has prompted the EU punishment proceedings. The six-month-old centre-right government also faces growing protests and strikes - including one by kindergarten teachers on Tuesday - as it raises taxes and squeezes government workers' pay and benefits.

The proposed 2003 budget released last week calls for a 5.1 percent hike in tax revenue next year, partly by adjusting income tax brackets. ''Fraud and tax evasion are reaching levels that are socially and economically unsustainable,'' Joao Proenca, secretary-general of the UGT labour federation, said on Tuesday. He told a news conference the spending blueprint focussed too heavily on tax increases and not enough on fighting fraud. Leaky System - The government has its work cut out to patch a leaky tax system, where inspectors last year had to pay for petrol and bus tickets out of their own pockets. A 2001 study by the Organisation for Economic Cooperation and Development (OECD) said Portugal suffered from a ''longstanding history of poor compliance'' with tax laws. Estimates cited by the OECD said 24 to 30 percent of the economy was off the books and thus invisible to the taxman. While just five of the biggest firms paid 28 percent of corporate income taxes in 1998, a third of the quarter-million companies paid no taxes because they reported losses. Executives are unrepentant about their skimpy tax returns. Two wealthy soccer club investors, for example, have told magazine interviewers that they paid little or no income taxes in years past. Most grocers, news stands, cafes and garages rarely offer receipts, which would let a sale be traced by the government. When a Reuters reporter recently asked the operator of a Lisbon auto parts store for a sales receipt, the answer was: ''You'll have to pay more, if you pay the tax.'' The result, besides billions in lost revenues, is a distorted system. Some taxpayers, such as workers whose taxes are deducted from their wages, have no choice but to pay. Others, such as small business owners and professionals, may choose to cheat. They are helped by some of the strictest banking secrecy laws in Europe. Vasco Valdez, the government's tax chief, said Portugal had the legal tools to fight fraud and was advancing with a cross-referencing data system to help track spending and property ownership. The next budget has a provision that hikes a yearly fee on all companies as a kind of basic tax payment.

From MSNBC, 8 October 2002

European Plan to Stop Tax Evaders Hits Snag

Brussels, Belgium - A European Union initiative to crack down on tax dodgers was in jeopardy Tuesday following Britain's insistence that Switzerland crack open its cherished bank secrecy. Britain's Chancellor of the Exchequer, Gordon Brown, said the Swiss refusal to report on people who may be guilty of tax evasion "potentially allows loopholes to develop in other issues," such as money laundering and terrorist financing. "I believe there is a worldwide movement for exchange of information," Brown said on the sidelines of a meeting of EU finance ministers. "I do not believe Switzerland should continue to isolate itself." Swiss President and Finance Minister Kaspar Villiger rejected the "cliche" that banking secrecy protects criminals or terrorists. At issue is a long-debated EU plan to collect taxes on the income its citizens earn on savings and investments outside their home country. Under Swiss law, tax evasion as such is not considered a crime, and so foreigners who don't tell their tax authorities about income earned from Swiss accounts are still protected. Other EU countries that agreed only reluctantly to the initial plan said they would back out if no deal is reached. "If we don't make progress with the Swiss, then Austria will not accept the EU legislation," said Austrian Finance Minister Karl-Heinz Grasser. Luxembourg, Austria and Belgium insisted when the plan was adopted in 2000 that if they were going to loosen their bank secrecy laws, non-EU countries like Switzerland and the United States would have to agree on "equivalent measures" before it could take effect. A deadline was set for the end of this year, when the 15 EU countries will have to unanimously decide whether their conditions have been met. The plan requires each of the 15 EU countries, after a seven-year transition period, to have in place a system that would allow authorities in a depositor's home country to keep track of interest earned abroad - and levy taxes. Switzerland has offered instead to withhold taxes on interest and dividend payments to EU residents and turn the money over to the appropriate country, but without identifying the depositors. Villiger said even that would hurt the Swiss financial center - the Swiss Bankers Association said abolishing banking secrecy would put 20,000 jobs at risk - and have to be approved by a referendum. Brown rejected that offer, saying the tax could be lower than what the depositor would be subject to at home. He has pushed Bolkestein to draw up a list of possible sanctions the EU could impose on Switzerland if a deal for automatic exchange of information is not reached. Bolkestein insisted Switzerland was never expected to adopt the same measures as the EU. "Equivalent is not equal to equal," he said. Negotiations with Washington have been less contentious but plagued by mixed signals, according to EU officials. Brown said the United States had accepted the idea in principle, but Grasser said he was told the Bush administration preferred to work out a deal with each EU country, which would make meeting the December deadline impossible.

From Nando Times-Business, by Paul Geitner, 8 October 2002

EU's Monti Faces Pressure to Reform After Merger Veto Overruled

Brussels - European Competition Commissioner Mario Monti is facing growing pressure to overhaul the way regulators evaluate mergers after Europe's top appeals court overturned a second of his rulings in four months. The European Court of First Instance cited errors and an infringement of company rights in reversing Monti's veto of Schneider Electric SA's 7 billion-euro ($6.8 billion) purchase of Legrand SA. Monti faces another test Friday, when the court rules on his rejection of Tetra Laval SA's takeover of Sidel SA. "If the Tetra Laval decision is overturned as well, parties will be asking how much reliability can we have in the European Commission," said Martin Coleman, an antitrust lawyer at Norton Rose in London. The commission has blocked takeovers worth $200 billion during the past three years. European leaders including French President Jacques Chirac and German Chancellor Gerhard Schroeder, along with companies such as General Electric Co., have complained that antitrust regulation in Europe lacks independent oversight, is inflexible, and relies too much on evidence from competitors. Stung by criticism after it blocked General Electric's $47 billion bid for Honeywell International Inc. last year, the commission launched a review of its 12-year-old rules on takeovers and joint ventures. It will announce the results of the review following the final ruling on Tetra Laval. Monti suffered his first reversal in June when the court threw out his 1999 rejection of MyTravel Group Plc's 850 million- pound ($1.3 billion) bid for First Choice Holidays Plc. "Prior to the MyTravel judgement, less care was taken than should have been done, but the commission's antitrust department seems now to have recognized that the hurdle they have to jump to block a deal is higher," said Trevor Soames, an antitrust lawyer at Howrey Simon Arnold & White in Brussels. Conflict of Interest? In its review, the commission's competition department is re- examining how it gathers evidence, the role of economic analysis and the rights of merging companies. "The question this latest veto raises is, do those proposals go far enough or do we need to go a step further?" said Coleman.

Critics say Monti's review fails to address what they see as a fundamental flaw in the European process: the commission's power to decide on its own whether to halt a merger. In the U.S., agencies such as the Justice Department and Federal Trade Commission have to prove their cases in court before deals are blocked. In all, the commission has prohibited 22 of the 2,047 deals assessed since European Union merger-control rules came into effect in 1990. Another 80 companies have scrapped mergers during the antitrust review, often to head off a veto. 'Errors and Omissions' - Monti lost the last two cases that were ruled on by the Court of First Instance. His rejection of Tetra Laval's 1.7 billion-euro takeover of Sidel will be the third veto to face court scrutiny since Monti became competition commissioner in September 1999. Monti defended the commission's procedures, saying through a spokeswoman that there is no "widespread call for changing the system." He'll consider the ruling in drafting plans to update the commission's methods, spokeswoman Amelia Torres said. As overseer of the EU's 15-nation common market, the commission can block or force changes to mergers of companies with combined global sales of 5 billion euros, even if the companies aren't based in Europe. In Europe, once the commission has ruled, companies can appeal to the Court of First Instance. The court last year introduced a fast-track system for selected cases which cuts appeals to about 10 months from years. Critics say this is still too long for mergers to be put back together. "The court is mapping out the ground for the future as to how a deal could be resurrected," said Martin Baker, an antitrust lawyer at Taylor Wessing in London. The commission's economic analysis in the Schneider case was "vitiated by errors and omissions" in a "serious infringement" of the company's rights, the court's president, Bo Vesterdorf, said. "This judgment therefore annuls the prohibition decision." The commission said it has yet to decide whether to appeal - only on points of law, not the facts of the case - to the European Court of Justice. It has two months to decide. The commission was ordered to pay Schneider's costs.

From Bloomberg-Politics, by Robert McLeod, 22 October 2002

EU Leaders Face Pressure to Set Funding for Eastern Expansion

Brussels - European Union leaders face pressure to resolve disputes over money at a summit starting today, or risk jeopardizing plans to take in Poland and nine other countries in 2004 and create the world's largest trading bloc. Squabbles over how to fund regional and farm aid may rouse opposition in countries hoping to join, EU Enlargement Commissioner Guenter Verheugen said. France opposes cuts in farm subsidies while Germany is tired of footing the bill. "The enlargement process shouldn't be held hostage," Verheugen told the European Parliament before a two-day summit in Brussels. "Access to the union is not a diktat. It must be a mutual agreement based on mutual confidence." The entry of 10 mainly Eastern European, former communist, countries will put further strain on Western European governments now struggling with the slowest economic growth in a decade. Most contentious are farm-support programs that consume almost half the EU's 98 billion-euro ($97 billion) budget. The summit starts at 7:30 p.m. today and is due to end Friday at 6 p.m. The meeting may drag on through Saturday, said Danish Minister of Refugees, Immigrants and Integration Bertel Haarder, whose government will host the meeting. Current EU members are concerned that any arrangement for enlargement could set a precedent for how much they pay and receive once the EU's budget comes up for review in 2006. The EU needs a subsidies formula to sell to Eastern European leaders in time to wind up the talks at a Dec. 12 summit in Copenhagen. Expansion will stretch the EU's eastern border to Russia and create a market of 450 million consumers, bigger than the North American Free Trade Agreement that groups the U.S., Mexico and Canada. Popular Support - "As marriage has to be built on love, enlargement has to be built on popular support," Denmark's Haarder told the parliament in Strasbourg, France. "We don't want minor issues to stop this process in its tracks."

Haarder said the cost of enlargement will be only 0.1 percent of the EU's economic production, or one tenth of the amount Germany paid to incorporate East Germany after the fall of the Berlin Wall. The 10 planning to join in 2004 are Poland, Hungary, the Czech Republic, Slovakia, Slovenia, Lithuania, Latvia, Estonia and the Mediterranean islands of Cyprus and Malta. Bulgaria and Romania may be ready by 2007, the European Commission says. The commission said yesterday that 57 percent of people in the 10 frontrunners would support joining the EU in a referendum. Support was highest in Hungary, at 74 percent. Only 53 percent of Poles and 51 percent of Czechs said they would vote yes. Least enthusiastic were Latvia and Malta, with support for EU membership at 42 percent. Production - Eastern European economic production per person is 39 percent of the EU average. Only one region, the Prague metropolitan area, beats the EU, with per-capita output at 122 percent of the average. Negotiations on industrial subsidies hit a roadblock last week when the Netherlands demanded that the Czech Republic move faster to curtail support for steelmakers, Austria complained about Czech bank aid, and Spain objected to Slovakia's aid to a Volkswagen AG plant. With their prime ministers in a caretaker role after the collapse of their governments, the Netherlands and Austria are in a political vacuum that may hold up the talks. To tackle the biggest costs, the Brussels-based commission, the EU's executive agency, proposes starting out new members with a quarter of their farm-aid entitlement and denying them full payments until 2013. Poland, with 40 million people the largest EU hopeful, is leading the opposition to that proposal. The country owes a fifth of its jobs to agriculture and has more dairy cows than the current 15 EU members combined. Ease Concern - The gradual introduction is designed to ease concern in Germany, the Netherlands, Sweden and Austria that the costs could balloon out of control. France, the biggest recipient of farm aid, is worried that it will suffer most from any cutbacks. French President Jacques Chirac sparked a last-minute argument Tuesday, saying that the annual British refund from the EU is no longer justified. The U.K. said existing EU agreements mean the rebate can't be changed. "We can't let it all fall apart because of 3 euros a head" in cost to EU citizens, commission President Romano Prodi said.

From Bloomberg-Politics, by Adrian Cox, 24 October 2002

 

SEC, Spitzer Reach Agreement on Reform

New York - The Securities and Exchange Commission, the New York State Attorney General and other market regulators on Thursday said they had reached an agreement for the speedy and coordinated conclusion of probes into Wall Street firms on analyst and IPO practices. The SEC reached the agreement with New York State's attorney general, Eliot Spitzer, as well as NASD, the New York Stock Exchange and other state securities regulators represented by the North American Securities Administrators Association. In a statement, the regulators said that they will endeavor within the next few weeks to formulate a common plan to address conflict-of-interest and other issues pertaining to Wall Street research analysts and allocations of initial public offerings. The plan would be used as a "template" to structure settlements with the companies currently under investigation and would provide a basis for proposing industry-wide rules, the regulators said. The regulators said that they intend to present their proposed resolution to the companies under investigation, and that they would give the companies a brief opportunity to work out and enter into final settlements. "The SEC, in conjunction with the New York Attorney General, the SROs, and NASAA, looks forward to moving quickly to a comprehensive resolution of these important matters," SEC chairman Harvey Pitt said in the statement.

From ABC News-Business-Wire, 3 October 2002

State Pension Fund May Invest Directly in Private-Equity Partnership

New York - Kohlberg Kravis Roberts, the biggest U.S. buyout company, may sell a stake in itself to the Washington State Investment Board, a person familiar with the matter said. The Washington Pension Fund, which manages about $50 billion for state employees, is in "specific discussions about a potential proprietary investment" with the company controlled by Henry Kravis and George Roberts, said Gary Bruebaker, the fund's chief investment officer. He declined to say whether the fund, which has made investments with Kohlberg Kravis for 20 years, would buy a stake in the partnership. The Wall Street Journal reported that the Oregon Investment Council was also negotiating an investment. The newspaper said the talks with the two state funds involved an investment of about $1 billion for a minority stake. Private-equity companies are seeking to sell stakes to pension funds partly to ensure a steady stream of capital. Pension funds are making such investments to increase control over how their money is spent and to secure a bigger share of profits as returns from stocks and bonds of publicly owned companies have fallen. "I believe by the end of the year I will be given direction" by the board about whether to proceed with the investment, said Bruebaker. "We have more due diligence to do." Molly Morse, a spokeswoman for Kohlberg Kravis, declined to comment. The proposed investment was the subject of a closed-door meeting at the Washington investment board's offices in Olympia yesterday attended by Kolhberg Kravis partners George Roberts, Michael Michelson and Scott Nuttall. Roberts is a co-founder of the company with Kravis and Jerome Kohlberg, who left in the 1990s. It would be the first time the Washington board has invested directly in a private-equity general partnership. Washington has 14.9 percent, or about $7.5 billion, invested in private equity. It has goal of investing up to 17 percent of its assets in private equity. Washington state made buyout history two years ago by committing $1.5 billion to Kohlberg Kravis's latest fund, a $5.1 billion pool called the 2001 Millennium Fund. It was the biggest single stake ever from an investor in a buyout fund. Kohlberg Kravis, started in 1976 by three former Bear Stearns investment bankers, completed the biggest leveraged buyout in 1989 with the $31.4 billion purchase of RJR Nabisco. As of the end of 2001, that transaction has earned an annual return of just 0.2 percent for investors.

From Seattle (WA) Times-Business, by Hui-yong Yu, 4 October 2002

Banks get better at assessing risks - Greenspan says financial sector weathered recession well

Phoenix - American bankers are getting better at assessing and diversifying the risks their creditors pose, Federal Reserve Chairman Alan Greenspan said Monday. In remarks to the American Bankers Association, Greenspan made no comments about the course of the economy or about monetary policy. Two weeks ago, the Federal Open Market Committee held interest rates steady while warning of renewed threats to the recovery. While many companies got overextended with debt and some found themselves in bankruptcy, the damage didn't extend to the banking system, largely because banks are able to securitize the risks and spread them around the economy, according to the nation's top financial regulator. "Banks appear to have effectively used such instruments to shift a significant part of the risk from their corporate loan portfolios to insurance firms here and abroad, to foreign banks, to pension funds, to hedge and venture funds, and to other organizations with diffuse long-term liabilities or no liabilities at all," he said in prepared remarks made available in Washington. "Banks in this country remain quite healthy," despite high rates of bankruptcy, loan charge-offs, bond defaults and equity losses, he said. Greenspan said bankers obeyed the warnings from the 1997 and 1998 financial crises in Asia and Russia and began to raise their credit standards and manage portfolios to limit their exposure.

From CBS Marketwatch, by Rex Nutting, 7 October 2002

SEC Chairman Pitt Faces Political Fights Over New Board, Budget

Securities and Exchange Commission Chairman Harvey Pitt faces a deepening political rift in his agency over who should lead a new accounting oversight board as an Oct. 28 deadline to appoint the panel approaches, people familiar with the matter said. Democratic SEC Commissioners Harvey Goldschmid and Roel Campos back TIAA-CREF Chairman John Biggs to head the panel, the people said. Pitt and two other Republicans on the commission are looking at other candidates, including William Webster, former chief of the Federal Bureau of Investigation and the Central Intelligence Agency, the people said. The sparring comes as Pitt tries to clean up after accounting scandals at Enron Corp. and WorldCom Inc. with a smaller budget increase than the one authorized by Congress. With elections two weeks away, Democrats may point to the deadlock on the accounting board and President George W. Bush's refusal to support the congressional budget increase for the SEC as examples of Republican foot-dragging on reforms, people say. Republicans "had claimed the mantle of corporate reformers" by supporting new regulation of the accounting industry, said Barbara Roper, director of investor protection at the Consumer Federation of America. "Now with their bungling of the accounting oversight board and the SEC funding, they've tossed it aside." Pitt didn't respond to an email request for comment. SEC spokesman Brian Gross declined to comment on the politics surrounding the agency. Lower Budget - Congress last week left Washington until after the elections without voting on a 2003 budget.

The Bush administration said last week it would seek $568 million for the SEC instead of the $776 million authorized in the corporate reform bill passed in July. Michael Clampitt, president of the SEC employees union, said the administration's budget decision will "resonate" with investors. "A lot of people are relying on the SEC to straighten out this mess and $750 million straightens out this mess a whole lot quicker than $550 million will," said Clampitt, an attorney in the SEC's corporation finance division. The budget stalemate in Congress has left the SEC operating on last fiscal year's budget levels, said Gross, the commission spokesman. The agency is conducting a record number of investigations. Failure to approve a new spending plan "raises serious questions about the funding of the new accounting oversight board," he said. Congress created the accounting board to tighten oversight of corporate financial practices. Pitt said his original goal was for the SEC to pick the panel unanimously by the end of September, a month ahead of the legislative timetable. That target date was missed when the SEC's first choice, former Federal Reserve Chairman Paul Volcker, turned down the job. Another candidate, Biggs -- head of the largest teachers' pension fund -- received a tentative offer to lead the board and accepted. He began working to select the other four board members, before Pitt backed away from his candidacy, people familiar with the matter said. Pitt has denied Biggs was offered the job. Snipers, Iraq - Representative Barney Frank, a Massachusetts Democrat on the House Financial Services Committee, said he suspects Republicans may delay the appointments in hopes of winning majorities in the House and Senate, and then have the SEC put in a less reform- minded chairman. "I'm afraid they will punt and wait a week," Frank said. "If Biggs doesn't get it, whoever does is going to be the third choice at best." Some Republicans said they doubt the membership of a board for policing accountants carries much interest for voters.

"At a time when we are worried about snipers and Iraq and homeland security and bombings in Bali and the condition of the economy generally, to be concerned whether this board is going to be properly organized is not something that is going to get much traction," said Peter Wallison, a former White House counsel for President Ronald Reagan. Jim Jordan, political director of the Democratic Senatorial Campaign Committee, said his party will emphasize themes related to the SEC budget and accounting disputes, if not those issues specifically. Democrats will raise "the broader issues of retirement security, fairness of the markets, and Republican coziness with big business" during the final two weeks of the election campaign, he said. Still in Running - The sparring comes as U.S. stocks have lost $2.36 trillion since Nov. 8, 2001, the day Enron first restated its earnings, spurring voters to focus on the health of the economy, corporate accounting scandals and conflicts of interest in Wall Street firms' stock recommendations. Some money managers say political disputes on accounting oversight feed investor cynicism. "A lot of investors are numb; they feel the whole game is rigged against them," said Jon Brorson, who helps manage $320 billion at Northern Trust Corp. "Investors will say `here's one more reason the little guy can't win."' Speaking to reporters Wednesday, Pitt said Biggs is still in the running for the chairmanship of the accounting board and that he expects the SEC to meet the Oct. 28 deadline. He also couched his earlier prediction of a unanimous vote. "My hope is that we can do this unanimously," Pitt said. "But I don't know until we take a vote what we'll get." Paul Atkins, one of three Republicans on the SEC along with Pitt and Cynthia Glassman, said the commission doesn't see the accounting board as a partisan issue. "This is a political town and things get made partisan, but huge majorities in Congress passed this bill and the president signed it," Atkins said.

From Bloomberg-Politics, by Robert Schmidt and Vicky Stamas, 21 October 2002

O'Neill Preparing Post-Election Tax Overhaul Proposals for Bush

Washington - Treasury Secretary Paul O'Neill, once pegged as the Cabinet member most likely to depart after the Nov. 5 elections, is making plans for a post-election administration effort to overhaul the nation's tax system. More than 100 Treasury Department experts are compiling a list of possible changes to the 9,500-page U.S. tax code, from simplifying regulations on savings bond sales to scrapping income taxes in favor of consumption or value-added taxes. O'Neill, who as chief executive officer of Alcoa Inc. in the 1990s called for an end to the corporate income tax, said President George W. Bush will decide whether he wants to tinker with the code or propose the most radical change in the tax laws since Ronald Reagan's presidency. "I'm going to send the boss a package soon," O'Neill said in an interview. "We're giving him a diagnosis: What is it that causes complexity, what is it that could let people stop paying for professional advice to do their taxes, and are there ways to make sure people pay their fair share with more certainty." The Tax Reform Act of 1986 curbed tax shelters, lowered taxes companies pay, and brought capital gains under the same rate as earned and unearned income. It also eliminated a number of exemptions and lowered the number of individual tax rates. Bush will have detailed options in front of him on how to go beyond that, said Pamela Olson, Treasury's assistant secretary for tax policy. "We are looking at all the options for tax reform," Olson said in a separate interview. "Some are small repairs and simplifications, others are larger ideas for the long term." Lobbying Campaign - The 1986 revisions were contentious and passed a Democratic House of Representatives and Republican Senate only after a lengthy Reagan administration lobbying campaign. O'Neill said he's planning for much the same kind of effort. The Treasury secretary has visited 18 states over the past two months, building support for a simpler tax system. "I'm getting plenty of reinforcement," he said. O'Neill cites conversations with workers and managers at companies ranging from a Paccar Inc.

Kenworth truck plant in Seattle to the Louisville Slugger baseball bat factory in Kentucky. "There's a whole lot of people who don't like this abomination of a tax code, and I'm one of them," he told a Chamber of Commerce gathering in Scottsdale, Arizona. "It's 9,500 pages of absolute gibberish, and as I go around the country, people are upfront about telling me it's a mess." Elections Matter -O'Neill said the outcome of the congressional elections will help shape the kind of tax plan that Bush eventually proposes and may determine how easy it will be to pass. Democrats control the Senate by one vote, while Republicans hold the House. All tax bills must originate in the House Ways and Means Committee. "It would be easiest to get things done if we can get 51 percent in both houses of Congress," he said. Bush administration critics say the effort will fail if the president chooses options that tilt the tax code in favor of big business or wealthy taxpayers. "We don't really need to go back to a tax-motivated economy, with people putting up office buildings that nobody wants, people investing in things that don't make any economic sense, because the tax code favors it," said Robert McIntyre, the director of Citizens for Tax Justice, a labor-funded research institute in Washington. Other Priorities - Many of the changes will appeal to both Republicans and Democrats, O'Neill predicted. "I don't happen to believe that the truth is a partisan issue," he said. "The more that we can talk to the American people about the true dimensions of these issues, the more we're going to be able to have support for changes that will make the tax code better, simpler, fairer and more understandable." O'Neill's other priorities for the post-election period include establishment of Bush's Millennium Challenge Account, a program that ties a $5 billion increase in foreign aid spending to recipient countries' economic policies; a plan to simplify the process of working through debt defaults by emerging markets; and continued work on stopping money laundering and terrorist financing. He's also advising Bush on how to revive the struggling economy. Gross domestic product grew just 1.3 percent in the second quarter, and only a fourth of 48 economists surveyed by Bloomberg News share O'Neill's forecast of growth of 3 percent to 3.5 percent from October to December.

No Fiscal Recommendations - While the president has suggested he'd consider another package of tax cuts and spending to boost growth, O'Neill said his travels have convinced him it's not needed now. "If I thought there was a need for some (fiscal) policy initiative, I'd say `Hey, Mr. President, my brain and what I've put into it tells me we need to do X, Y, or Z,"' he said. That O'Neill is even planning to run the Treasury Department for the remainder of Bush's first term is a surprise to some who predicted the midterm elections would herald his exit. In 21 months at Treasury, his comments on the dollar have roiled currency markets, sent Brazilian bonds lower, angered members of Congress and generated criticism that the Bush administration lacked economic leadership. "His critics say he's too frank, too direct," Republican Representative Jim Leach said in introducing O'Neill at a Rotary Club speech in Cedar Rapids, Iowa. "In a year and a half or so in office, the secretary has made some enemies." Honor of the Job - Unapologetic about his style, O'Neill has admitted there are downsides to his job. He told Arizonans how his wife, Nancy, had lamented she had seen him for only four days in six weeks. On being introduced in New Hampshire as the nation's 73rd Treasury secretary, he said, "Actually, I'm the 72nd - and once is enough." Still, the Treasury secretary has curbed his tendency to speak off the cuff, for the most part sticking to his prepared message and declining all comment on the dollar. And he's become extremely visible, making regular appearances on television news programs and touring the country to promote the administration's economic record and stump for Republican candidates. "You need to send people to Washington who agree with our ideas," he told a Connecticut audience. For O'Neill so far, the "honor" of a Cabinet seat has outweighed the costs, and some government officials have said the only reason he'd leave is a request from Bush. In the interview, O'Neill suggested he'll do whatever the president wants. "As long as I'm here, however long that turns out to be," he said, "I'm going to live up to that idea that I'm not wasting my time and I'm not doing anything that I'm not proud to do."

From Bloomberg-Politics, by Simon Kennedy and Brendan Murray, 25 October 2002

Internet Sales Tax Push Coming Next Year

Washington - The day may be rapidly coming when O.C. Tanner and thousands of other businesses large and small are going to have to decide how to collect taxes on the online sale of their products. O.C. Tanner, a privately held Salt Lake City-based that produces jewelry and other products primiarily for employee award programs, participated in a pilot program that could herald the future of sales tax collection for many business. It's one of just a few businesses to do so. The pilot project was sponsored by states that want to extend sales tax collection obligations on all sales, especially Internet-based transactions. As part of that effort, states are working with vendors to develop systems to simplify tax collection. Tanner, which made the medals for the 2002 Olympic medals, used a remote transaction server operated by Taxware International Inc. to process sales taxes on a special Web site selling Olympic-related merchandise. Brad Lemke, lead developer in O.C. Tanner's e-commerce section, liked the system. But because the pilot was limited to just four states, Lemke is uncertain whether remote transaction servers can handle the much greater transaction load generated by the firm's main retail systems. "I would certainly have to be convinced that it would perform well," he said. Uncertainty is the key word. While states are rapidly moving ahead to streamline sales tax collections and open the door for mandatory sales tax collections, businesses such as Tanner and Wal-Mart Stores Inc. have many questions about how these systems will ultimately perform. Wal-Mart isn't likely to use a remote transaction server to automate sales. "The last thing we need to do is overload the telecommunications industry with trying to tie duplicate number of telephone lines into every register for tax rate calculations," said Robert Jenner, director of sales and use tax compliance at Wal-Mart. But the retail giant is interested in an alternative plan by the states that would "certify" a company's in-house tax systems as complying with state rules. Businesses whose systems meet certain performance and accuracy levels would be freed from expensive tax audits. But those standards haven't been set. Dave Bullington, a Wal-Mart vice president, said the simplification effort is "extremely important" among retailers that now face a daunting mix of rules and sudden tax rate changes that leave them little time to adjust their systems. The states actively involved in streamlining sales taxes will meet Nov. 12 in Chicago to ratify an agreement for state-by-state approval of sales tax simplification plans. Some 20 to 30 states are expected to pursue legislation, and as soon as proponents get 10 states representing 20% of the U.S. population to simplify tax rules, they may seek congressional approval as early as next year for mandatory sales tax collections nationwide, said Diane Hardt, a Wisconsin tax official and co-chairman of the Streamlined Sales Tax Project. From The states also plan to seek a new technology pilot to help address some of the issues raised by retailers. Although there were three vendors in the first pilot, only Taxware, in Salem, Mass., and its subcontractor, Hewlett-Packard Co., got a pilot up and running. Hardt expects vendors to have more success in attracting businesses to participate in future pilots if more than four states participate. In the meantime, the group hopes to develop a "full-fledged" system for remote collections and certification standards for in-house systems.

From ComputerWorld, by Patrick Thibodeau, 25 October 2002

 

Government Size and Taxpayer Cheating

"Tax cheating becomes more acceptable to citizens as government grows." Economists have long recognized the critical role that citizens' trust in each other and their institutions plays in influencing economic performance. In high-trust societies, individuals need to spend fewer resources to protect themselves from being exploited in economic transactions. But the importance of trust also extends to the relationship between citizens and their government, in the sense that voluntary compliance with tax laws facilitates a large government buy may be eroded as the tax burden gets larger. In Trust in Public Finance (NBER Working Paper No. 9187), NBER Research Associate Joel Slemrod uses data on trust and trustworthiness taken from the 1990 World Values Survey to investigate the relationship across countries between the size of government and the extent of tax cheating. He finds that there is less tax cheating in countries that exhibit more trustworthiness among citizens. However, holding constant the level of such trustworthiness, tax cheating becomes more acceptable to citizens as government grows. Although a trusting citizenry allows a government to grow, the tax burden needed to sustain a bigger government erodes taxpayers' willingness to comply with the tax laws. Slemrod further finds that there is more economic prosperity and more government involvement in more trusting societies. He also uncovers a positive association between the size of the government and prosperity, at least until the level of government spending reaches 31 to 38 percent of GDP. Beyond that, the effect of the government's size is negative.

From NBER "Digest", National Bureau of Economic Research, by Les Picker, 24 October 2002

 

 

 
 

South African Workers March to Protest Privatization

Blowing whistles and singing protest songs, tens of thousands of workers across South Africa marched Tuesday in a nationwide strike protesting the government's privatization plans. Unions said the first day of the two-day strike was a resounding success. Government and business leaders, however, said few people were absent from work, and most business continued as normal. The strike was called by the Congress of South African Trade Unions, the country's largest union group, which said government plans to sell off state-owned businesses would cause more poverty in a country already hard-hit by unemployment. "We must defend the rights of the ordinary worker," Materene Wu-Mapemi, a COSATU leader, told a crowd of thousands at a public square in downtown Johannesburg. "If there is privatization, your rights will be taken away." Some sat in the branches of trees to listen. Simultaneous rallies were held in other cities throughout the country. COSATU said at least 180,000 people participated in marches around the country, and about 60 percent of workers joined the strike. It said the mining industry was nearly shut down with 80 percent absenteeism. However, The South African Chamber of Business estimated only a 15 percent absenteeism rate across the country. The Chamber of Mines said only 20 percent of mine workers were absent and most mines continued operating as normal. The government said only 5 percent of employees in the four largest state-owned companies observed the strike. The future of those companies was the union's top concern in calling the strike. Police, public health workers and most teachers also went to work, the government said. In Johannesburg, workers marched with voices raised and fists clenched, carrying banners reading: "It's Expensive to be Poor. Stop Privatization Now" and "Create Decent Jobs." Organizers estimated the crowd at 60,000. Police estimated it at 2,500. The strike led to the suspension of the public bus service in parts of the center of the country, and about 2,000 workers marched on Parliament in Cape Town. COSATU President Willie Madisha told the Cape Town protesters they were marching against unemployment, poverty and hunger. "This is the beginning of the long struggle against privatization," he said, according to the South African Press Association. The government says privatization plans are intended to streamline the unwieldy state-run economy inherited from the apartheid era government and attract foreign investment, spurring new jobs. COSATU is currently part of the African National Congress-dominated ruling coalition, despite its opposition to the government's economic program. The South African Communist Party, which also supports the strike, is the other member of the governing alliance. Opposition officials have called the unions two-faced for refusing to leave a government they sharply disagree with. Marchers said they voted in the ANC but that the march was designed to make the ruling party listen. "Privatization does not save the poor, it makes the poor poorer," said Morris Mtshali, 31.

From CNN, 2 October 2002

 

Only Eight Find Work Under Japan Government job Hunt Plan

Only eight people have found work under a Japanese government subsidy plan to help workers laid off in corporate restructuring find new jobs, the Yomiuri Shimbun newspaper said on Sunday. Efforts by Japanese businesses to trim payrolls have caused many job losses, with the unemployment rate at 5.4 percent in August - just a shade below last December's 5.5 percent post-war high. Those figures prompted the Labour Ministry to set up a subsidy system last December under which the government would fork out up to 300,000 yen ($2,451) per person in placement agency fees to help restructured workers find new jobs. But there was a catch - the fees would only be paid if the worker found a new job within a week, a tall order in Japan's tight labour market. As a result, only four companies took advantage of the scheme between December 2001 and August this year, informed sources were quoted as telling the Yomiuri newspaper. A mere eight workers found new jobs. The ministry had expected 1,500 people to use the scheme between December and March, and 4,400 to use it during the 2002 fiscal year, which ends on March 31, 2003. To run the scheme, it had appropriated 1.3 billion yen for the current fiscal year. A Labour Ministry official quoted by the Yomiuri said the one-week re-employment limit had been set because the system aimed to help workers find new jobs ''as quickly as possible.'' ''Besides, if it takes more than seven working days from dismissal to re-employment, the worker becomes eligible for unemployment insurance,'' the official was quoted as saying. Government officials were not immediately available for comment, but the ministry official quoted by the Yomiuri said the government was well aware the system was not being used and would look into methods to change this.

From MSNBC, 6 October 2002

China's Workers - No Longer a Privileged Class

As state-owned enterprises become private, workers increasingly face layoffs and poor working conditions - When Wang Lijun lost two coworkers on the job - one who fell to his death while cleaning train windows and another who died from exhaustion - he decided it was time to speak up. Rounding up 16 of his workmates at the Harbin Railway Bureau in the northern Heilongjiang Province, Mr. Wang organized a peaceful protest against 17-hour shifts and dangerous work conditions - and promptly lost his job. That was 20 months ago. Today, he is still out of work and deep in a prolonged lawsuit against the state-run Harbin Railway Bureau. "It is probably hopeless," the sinewy Wang says defiantly, "But I am taking my case to the Supreme Court." For more than 80 years, China's Communist Party considered itself the vanguard of the proletariat, its 80 million state employees guaranteed jobs for life and a cradle-to-grave welfare system. But as the country's socialist market economy has evolved into a bosses' paradise in just a decade, workers like Wang are no longer treated like a privileged caste. "The workers are not protected anymore," says Australian researcher Anita Unger, author of the new book "China's Workers Under Assault." "And things are getting worse." According to the government, at least 24 million workers have been fired from their jobs in state-owned enterprises, which are quickly been transformed into private enterprises as the state sells off its shares. The situation may only get worse, some workers say, if President Jiang Zemin has his way at the 16th Communist Party's Congress in November.

Mr. Jiang wants party members to agree to admit capitalists into its ranks under the rubric of his new political theory - "Three Representatives" or "San Ge Dai Biao" - which offers a rationale for China's economic transition. But some workers fear that such a move would further distance the party from their interests. "As long as party officials all support each other, how will things for the workers change for the better?" says Wang. A decade ago, a visitor to any state-owned factory or shop would have found half the work force playing cards or attending a political meeting - if not absent on a statutory two-hour lunch break. Then, long overtime was mostly a feature of export sweatshops rather than state-owned enterprises. The most vulnerable workers were migrants from the villages employed in foreign invested factories making shoes, toys, and clothing. But as state-owned enterprises become private, poor working conditions and sudden layoffs are increasingly common, analysts say. "Even state workers are now on short term work contracts. This means they are often not fired exactly, the contracts are just not renewed," Dr. Unger says. "Each time, there is a change of ownership at a state-owned enterprise, there are massive layoffs and then the new employers often prefer migrant workers." The International Labor Organization estimates that Chinese workers have five times as many accidents in the workplace as US workers, although activists say this figure is too conservative. Independent unions are illegal in China, and although state workers can appeal to the official state-run trade union, they often receive little help.

"The trade unions are not as assertive as people would like them to be - in the 1980s they were a lot more important," Unger explains. As a result, workers - especially state workers, who tend to be much more aware of their rights - are increasingly taking their complaints to the courts. Their cases usually revolve around pay, unfair dismissal, or injury. China's workers are entitled to a maximum 44-hour working week with at least one day off. However, "China's labor laws are quite simple," says Mr. Ye Yunhua of the Legal Assistance Center of the Legal Research Institute at Qinghua University in Beijing. "They protect workers from overtime, but they do not stipulate what should be done in case of injury or overwork." "Labor lawyers want to see better laws so these poor workers and their families can be compensated," says Mr. Apo Leong, executive director of Asia Monitor Resource Centre, a Hong Kong-based NGO helping to defend workers. Wang first appealed the loss of his job to the Ministry of Railways in Beijing, but soon found himself in bigger trouble. "I told them our bosses are breaking labor laws to put more money into their own pockets," he says. "They said they would help, but when I got home the police came for me." For 23 days, Wang says, the police kept him in jail and beat him, trying to extract a confession until the official "Worker's Daily" ran a story on his plight. Wang then took his case to the Beijing Intermediate Court. Because he couldn't afford lawyers, he appealed to a legal-aid service run by students at Qinghua University. The Beijing Intermediate Court ruled against Wang this summer. He is now appealing to China's Supreme Court, hoping to set a legal precedent and ensure that China's rudimentary labor laws apply to railway workers too. "I am disappointed but I am not giving up," he says.

From Christian Science Monitor-Asia Pacific, by Jasper Becker, 21 October 2002

China OKs High-Tech Deals Ahead of President's Visit to U.S.

New York - China approved a raft of multimillion deals with American and European businesses Monday, primarily in the telecommunications sector, a day ahead of the Chinese president's visit to the United States. Motorola, Ericsson, Lucent Technologies and Nortel Networks announced agreements with China United Telecommunications Corp., also known as China Unicom, to improve its cellular phone network. Exxon Mobil said it had signed deals to expand its joint ventures' energy operations. Motorola's global telecom unit said it had signed contracts totaling $446 million for the deployment of a CDMA 1X system, a higher-speed cellular communications network. China Unicom is also giving Sweden-based Ericsson deals worth more than $150 million for improvements to its some of its existing telecommunications network. The contracts call for Ericsson to upgrade existing cdmaOne networks to CDMA 1X. Nortel Networks said its joint venture in China, Guangdong Nortel Telecommunications, had signed a series of contracts worth $280 million to supply China Unicom with digital wireless network infrastructure equipment. The Nortel Networks Univity CDMA 1X equipment will be used to expand China Unicom's network capacity in the provinces of Zhejiang, Shandong, Heilongjiang, Henan, and Jiangxi, and in Chongqing municipality. These expansions are expected to be complete within one year. And Lucent Technologies said China Unicom had awarded it the second phase of a wireless telecommunications contract worth "hundreds of millions of dollars." Under the agreement, Lucent will provide CDMA 1X equipment technology for high-speed wireless data services such as e-mail and Internet access. Also Monday, China Petroleum and Chemical Corp. and Exxon Mobil Corp.'s Chinese subsidiary signed an agreement to move forward with joint ventures under development in the coastal provinces of Fujian and Guangdong. China Petroleum and Chemical Corp. is also known as Sinopec. Sinopec is a division of state-owned China Petroleum Corp., mainland China's largest integrated petroleum and petrochemical company. In Fujian, Exxon Mobil has been working with Saudi Aramco and Fujian Petrochemical Co. Ltd., a joint venture between Sinopec and the Fujian provincial government, to develop a refinery and petrochemical complex. In Guangdong, the two companies have been evaluating a joint venture that will invest in and expand an existing refinery and petrochemical facilities now owned by Sinopec. In trading on the New York Stock Exchange, Motorola advanced 4 cents to $7.81; Nortel rose 15 cents to 78 cents; Lucent rose 5 cents to 73 cents and China Unicom's U.S. shares increased 18 cents to $6.53. Exxon Mobil closed unchanged at $36.00. Ericsson, whose U.S. shares are traded on the Nasdaq Stock Market, climbed 7 cents to 69 cents.

From Nando Times-Technology, 22 October 2002

 

Electricite de France Workers to Protest Asset Sales

Electricite de France and Gaz de France workers are leading a demonstration today against government plans to sell stakes in state-controlled companies, saying their jobs and benefits are at risk. France's largest labor union expects 60,000 power and gas employees to march through Paris, the biggest rally by energy workers in almost two decades. Employees of Air France SA, the national railways and other state-run companies will join in. Prime Minister Jean-Pierre Raffarin's center-right government needs the asset sales to raise funds. Labor unions are worried a partial privatization will put their benefits, higher pensions and job security at risk. "We want a debate," said Pierre Ducrocq, national secretary for power and gas workers at the CFDT labor union. The demonstration will be led by the power and gas sections of France's five main labor unions, the CGT, CFDT, FO, CFTC and CGC. Protesters say they are worried that the government's plan to turn 56-year-old Electricite de France into a corporation will mean fewer benefits and want to protect the pensions of the industry's 295,000 employees. Workers in the energy industry don't retire, they become "inactive," which entitles them to 75 percent of their salary. They can also get perks such as museum visits, sailing holidays and vacation homes at a fraction of the regular price. No Gas, Power Shortages Workers have started gathering at Place de la Nation in eastern Paris and union representatives are scheduled to meet Finance Minister Francis Mer at 10 a.m. The march toward the Opera is scheduled to begin at about noon. There are no plans to interrupt power or gas service during the protest, said Michel Clerc, a spokesman for the CGT union. Prime Minister Raffarin said in his inaugural speech to parliament in July that he wanted the state to withdraw from competitive industries, such as energy, air travel and telecommunications. The planned sale of Electricite de France may also be Europe's largest-ever initial stock offering. The utility is worth an estimated 40 billion euros ($39 billion). "Why sell a stake in EDF, given that EDF perfectly delivers the service for which it was put in place," namely distributing electricity throughout France at the lowest possible cost, Marc Blondel, head of the FO union, said in an interview on France Inter radio. The CGT labor union at France Telecom SA, Europe's No. 2 phone company, is encouraging employees to join the march and said it expects some 200 people to participate around Paris. Ground workers at Air France, Europe's third-largest airline, have asked their members to "mobilize and participate actively" in the demonstrations to protest the government's plan to reduce its holding to about 20 percent from 56 percent. Some 50 flights have been canceled at Paris's Charles de Gaulle and Orly airports, LCI television said.

From Bloomberg-Politics, by Nicolas Johnson, 3 October 2002

IT Spending Increases Profits

Companies that spend above the average amount on IT can make up to 36 per cent more profit than their techno-phobic competitors, according to the latest research. A study of almost 1,000 European companies conducted by Gartner and commissioned by BT Ignite has revealed what researchers call the "strongest evidence to date of a link between investment in information and communications technology (ICT) and profit". Organizations that had large ICT budgets generated on average 2.4 per cent more profit than those that invested below the European average. The average profit of organizations that spent heavily on ICT was 9.1 per cent, compared to 6.7 per cent for organizations that failed to make a significant financial commitment. One quarter of organizations that invested major sums in ICT made a profit of between 10 and 20 per cent. Although investment was the most influential factor in delivering improved financial performance, Gartner's analysts warn that IT spend must be balanced. Investing in a single area such as CRM, ecommerce, ERP, knowledge management or supply chain management did not generate significant benefits in terms of overall company performance, the research found. Despite the impact on profitability revealed by the survey, reducing cost was still seen by the respondents as the most important criteria when it comes to justifying investment in IT. The research also showed that although judicious IT spend can be a huge boost to a company's bottom line, 'softer' factors such as company culture and the alignment of employee reward structures to the achievement of customer satisfaction goals are much more significant in overall financial performance. John Simcox, vice president of Gartner said: "We have identified that organizations that have taken specific positive action to ensure that their employees are fully aligned with their customer satisfaction goals are seeing business benefits through increased profitability. However the biggest drivers to improved corporate performance are down to the organization having the right culture and a willingness to invest across all parts of the business." During June and July 2002, Gartner interviewed 973 executives and senior managers across eight countries (Belgium, France, Germany, Ireland, Spain, Sweden, the Netherlands and the United Kingdom) working in a variety of vertical markets.

From ZDNet, By Graham Hayday 10 October 2002

 

Enron's Ex-CFO Fastow to Surrender and Face Charges, People Say

Houston - Enron Corp. former Chief Financial Officer Andrew Fastow plans to surrender in Houston as soon as tomorrow to FBI agents to face charges related to the energy trader's collapse, people familiar with the case said. Fastow will be taken to the federal courthouse where prosecutors from the Justice Department's Enron Task Force will charge him, the people said. Fastow created and ran partnerships for the bankrupt energy trader that were used to hide $1 billion in losses. He is to be charged in a criminal complaint with defrauding shareholders through a secret agreement in which Enron would protect his LJM partnership from losses, the New York Times reported, citing unidentified people involved in the case. His arrest advances the Bush administration's efforts to prosecute a number of unrelated corporate fraud cases that came to light after Enron's December bankruptcy. Since then, the government has charged executives at Adelphia Communications Corp. and WorldCom Inc. with fraud. Fastow is "the big trophy on the corporate accounting side," said Jacob Frenkel, a former Securities and Exchange Commission enforcement lawyer. Fastow's lawyer, John Keker, didn't return messages left at his law firm, Keker & Van Nest, in San Francisco. Gordon Andrew, Fastow's spokesman, declined to comment on the case. In August, former Enron executive Michael Kopper pleaded guilty to fraud and money-laundering conspiracies, and implicated Fastow in a scheme to defraud investors. Fastow's ability to work out a plea agreement with prosecutors likely depends in part on how much information he can give prosecutors investigating Enron former Chairman Kenneth Lay and former Chief Executive Jeffrey Skilling. Deception - In July, President George W. Bush established a team to fight financial crime. Since then, the Justice Department has opened more than 100 investigations into suspected corporate fraud and charged more than 150 people. More than 45 defendants have been convicted or intend to plead guilty, Bush announced last week. On July 30, Bush signed a bill that makes securities fraud a crime that carries a maximum of 25 years in prison, and increases penalties for other financial crimes. Chief executives will have to vouch for their companies' financial statements and may be subject to jail and fines if they knowingly deceive. Fastow made more than $30 million from investments in the partnerships while Kopper and his domestic partner, William Dodson, made more than $10 million, according to a report in February by a special committee of Enron's board.

Prosecuting Executives - At the same time Kopper's plea was announced, the Securities and Exchange Commission filed a civil lawsuit alleging that Kopper, Fastow and others "used complex structures, straw men, hidden payments and secret loans" to create the appearance that three partnerships they controlled were independent of Enron. The deception enabled Enron to move the partnerships off its balance sheet and improve its financial results so it looked more attractive to securities analysts and credit-rating companies, the SEC suit said. Kopper's settlement with the SEC includes a lifetime ban on serving as a corporate officer or director. The Enron case brought the downfall of the company's accounting firm when Arthur Andersen LLP was convicted in June of obstructing justice by destroying Enron documents. That conviction barred the firm from performing audits. WorldCom, Adelphia - In the WorldCom case, former controller David Myers pleaded guilty to charges he participated in a multibillion-dollar accounting fraud that drove the company into the biggest bankruptcy in U.S. history. Myers is accused of plotting with WorldCom's former chief financial officer, Scott Sullivan, to hide more than $7 billion in expenses by manipulating the books of the second-largest long- distance phone company. Prosecutors will use Myers to help build a case against Sullivan and other former officials of the company, lawyers familiar with the case said. The ultimate target, attorneys following the case say, is former WorldCom Chairman Bernard Ebbers. In the Adelphia case, founder John J. Rigas, two of his sons and two other former company executives were indicted last month on federal charges of defrauding the cable-television operator of more than $2.5 billion. Authorities said Rigas, Adelphia's ex-chairman, and sons Timothy, who was chief financial officer, and Michael, former vice president for operations, hid more than $2 billion in debt and looted company funds to pay for personal expenses, including stock and luxury apartments. When they were arrested in July, the government said the Rigases treated Adelphia like their "personal piggy bank."

From Bloomberg-Politics, by Anna Marie Stolley, 1 October 2002

Enron's Ex-CFO Fastow Surrenders to Federal Agents

Houston - Andrew Fastow, whose financial wizardry helped propel Enron Corp. into the front rank of American companies, surrendered to the FBI in Houston to face charges he masterminded a fraud that cost investors billions of dollars and led to the energy trader's collapse. A stern-faced Fastow, accompanied by his lawyer, declined to comment as he passed scores of reporters to enter FBI headquarters. Justice Department prosecutors will accuse Enron's former chief financial officer of conducting secret trades with partnerships he controlled that were designed to inflate Enron's profits, people familiar with the case said. Fastow was in his mid-30s when he created and ran partnerships for the bankrupt energy trader that brought him more than $30 million and hid $1 billion in losses, a report for the company's board of directors has charged. His arrest may signal trouble for former Chief Executive Jeffrey Skilling, lawyers following the case said. "If Andy Fastow does not want to become the Enron record holder for the longest jail term, he will need to provide meaningful and substantial cooperation for a case against Skilling," said Jacob Frenkel, a former Securities and Exchange enforcement lawyer. The Justice Department planned to outline the charges against Fastow at a news conference in Washington and the defendant is due to appear in federal court later today. Fastow, who will turn 41 in December, was ousted as chief financial officer a year ago after Enron revealed that two partnerships he controlled, LJM Cayman and LJM2 Co-Investment, cost the company millions of dollars. Kopper Plea - Enron will "continue to cooperate with all the investigations into the past," company spokesman Mark Palmer said. Former Enron executive Michael Kopper pleaded guilty in August to fraud and money-laundering conspiracies and implicated Fastow in the scheme.

The government is trying to seize some of Fastow's assets, including an almost-completed house in the posh River Oaks section of Houston. The 8,700-square-foot home, with four bedrooms and six fireplaces, is on the market for $4.2 million, the Houston Chronicle reported. Enron, once the seventh largest company in the U.S., sought Chapter 11 bankruptcy protection Dec. 2 after restating more than $586 million in revenue. Fastow earned a bachelor's degree in Chinese and economics from Tufts University in 1983. There, he met his future wife, Lea Weingarten of Houston, whose family owned an 87-store grocery chain and a local real estate firm. Joining Enron - In 1986, Fastow received an MBA from Northwestern University and took a job with Continental Bank Corp. in Chicago as a senior director in the asset securitization division where he helped the bank bundle loans and sell them to investors. Fastow joined Enron Capital in 1990, forming a friendship with Skilling, who'd recently signed on with the company from consulting firm McKinsey & Co. In 1996, Fastow was named head of Enron's retail energy group and spearheaded the company's push into the newly deregulated electricity markets. At the time Kopper's plea was announced, the Securities and Exchange Commission filed a civil lawsuit alleging that Kopper, Fastow and others "used complex structures, straw men, hidden payments and secret loans" to create the appearance that three partnerships they controlled were independent of Enron. The deception enabled Enron to move the partnerships off its balance sheet and improve its financial results so it looked more attractive to securities analysts and credit-rating companies, the SEC suit said. Kopper's settlement with the SEC includes a lifetime ban on serving as a corporate officer or director.

From Bloomberg-Politics, by Anna Marie Stolley, 2 October 2002

SEC Tackles More Corporate Reform Off-Balance Transactions, Pro-Forma Earnings Eyed

Washington - The Securities and Exchange Commission will address more corporate reform-related rulemaking Wednesday as it considers stricter financial reporting rules to prevent companies from inflating their profits and hiding losses. Specifically, the SEC is looking at new disclosure rules for off-balance sheet transactions and potentially limiting the use of controversial pro-forma earnings statements. The SEC is charged with implementing dozens of new rules over the next six months to restore investor confidence and curb the abuses of Corporate America. The rulemaking is required under the Sarbanes-Oxley Act of 2002, the sweeping business-reform legislation signed into law last July after the spate of corporate scandals roiled the U.S. stock market. Hidden transactions - At the open meeting Wednesday, the commission is set to propose that companies tell shareholders in quarterly and annual reports any off-balance arrangements and other relationships that might impact its financial condition. Off-balance sheet financing arrangements sparked Enron's collapse and are at the heart of the federal investigation into the once high-flying energy trader. The rule would require companies to disclose estimates of contractual obligations due in short- or long-term and an estimate of any contingent liabilities in either a table or text format. The disclosure would appear in the "Management's Discussion and Analysis" section of securities filings. Pro-forma data - The SEC will also focus on pro-forma financial information, a reporting method popularized by technology and Internet companies, who use the data to often highlight positive information in press releases. The commission will recommend that if companies choose to use pro-forma information in press releases, they must also show financial results based on generally accepted accounting principles, or GAAP.

While issuing pro-forma financial statements in earnings releases isn't illegal under securities laws, critics contend they can create a deceptive picture of a company's finances because the results aren't required to follow accounting rules. This year companies such as Yahoo and 3Com have said they would abandon the use of pro-forma financial reporting to supplement GAAP results. Meanwhile, the National Investor Relations Institute and Financial Executives International have urged companies to put GAAP results ahead of pro-forma data in press releases. In general, pro-forma figures exclude certain one-time charges and expenses that affect net income. "Pro-forma financial results aren't prepared using GAAP and they may not convey a true and accurate picture of a company's financial well-being," according to the SEC. Last December the SEC pledged to punish companies that distribute misleading pro-forma earnings releases and warned investors to be skeptical of them. In its first-ever pro-forma reporting case earlier this year, the SEC charged that Trump Hotels & Casino Resorts failed to mention an unusual one-time gain of $17.4 million, which helped the company top Wall Street's earnings expectations in the third quarter of 1999. Trump Hotels, headed by real estate mogul Donald Trump, consented to the cease-and-desist order without admitting or denying the commission's finding. Blackout periods - Another rule proposal on Wednesday's agenda would ban executive officers and directors from selling or purchasing their company's stock during pension plan blackout periods. Companies would also have to provide notice of any black out periods to its employees and the SEC. Wednesday's meeting is the latest in a series of rulemakings designed to combine existing SEC regulations with those mandated by the Sarbanes-Oxley Act. Leticia Williams is a reporter for CBS.MarketWatch.com in Washington. Matt Andrejczak is a reporter for CBS.MarketWatch.com in Washington.

From CBS Marketwatch, by Leticia Williams & Matt Andrejczak, 29 October 2002