SEC Door, Spinning Mightily, Smacks Investors

SEC Door, Spinning Mightily, Smacks Investors

The appalling — yet hardly surprising — news that Robert Khuzami, the former enforcement director at the Securities and Exchange Commission, has cashed in his four-year stint for a $5 million-plus salary at Kirkland & Ellis, a prominent Wall Street law firm, is the latest example of the corrupt relationship between money and power in the U.S.

Courtesy of a mostly fawning July 22 New York Times story, we learn that Khuzami orchestrated a frothy auction for himself. Who better than me, Khuzami’s logic must have gone, to provide clients with the government access, connections and insights needed to bill them $1,000 an hour? Read more of this post

Why foreign cars are expensive in China; A BMW 650i sedan can sell for 2 million yuan (US$326,000) in China compared to the original price of US$91,000 in Germany

Why foreign cars are expensive in China

Staff Reporter

2013-08-05

A BMW 650i sedan can sell for 2 million yuan (US$326,000) in China compared to the original price of US$91,000 in Germany.

“Gross margins of imported luxury cars with large engine sizes in China are conspicuously higher than corresponding levels in foreign countries,” an auto importer told the Chinese-language National Business Daily. The hefty profit margin has combined with high taxes leading to the exorbitant retail prices of imported cars. At present, imported vehicles are subject to a 25% tax on the basis of CIF (cost, insurance and freight) prices, 17% value-added tax and a consumption tax ranging from 1%-40% according to the engine size, with models with a engine being subject to the highest 40% rate. As a result, an imported vehicle with a 4.0l engine or larger and CIF price of 1 million yuan (US$163,000) would be subject to taxes totaling 1.43 million yuan (US$233,000). Read more of this post

Whistleblowers pay price even as China vows to fight corruption

Whistleblowers pay price even as China vows to fight corruption

Sun, Aug 4 2013

By Sui-Lee Wee

HUIZHOU, China (Reuters) – Chinese bloggers trying to expose corruption say they are coming under increasing physical and verbal attack over their reports, in what anti-graft activists describe as another blow to efforts to make Chinese officials more accountable. At least six self-styled whistleblowers have been assaulted or harassed in recent months, according to media reports, Internet postings and several of the bloggers who spoke to Reuters. Two unidentified men stabbed blogger Li Jianxin in the face and splashed acid on his back on July 8. Li, now blind in his right eye, remains in hospital in the southern city of Huizhou. The attacks coincide with a government crackdown on activists demanding officials disclose their wealth, underscoring the limits of an anti-corruption push by President Xi Jinping. Read more of this post

Wall St falls out of love with commodities trading; JPMorgan’s exit signals that the boom is over

August 4, 2013 5:56 pm

Wall St falls out of love with commodities trading

By Gregory Meyer in New York and Jack Farchy in London

Blythe Masters was triumphant. TheJPMorgan Chase executive had just sealed a deal that would propel her bank to the top of Wall Street’s commodities league table. JPMorgan paid $1.7bn and assumed $3.3bn in debt to buy the global oil, gas, coal, power and metals businesses of RBS Sempra Commodities, a trading venture. While JPMorgan was strong in commodity derivatives, Sempra was at root a physical house moving molecules through a storage and warehousing network stretching from Baltimore to Singapore. For Ms Masters, head of global commodities, this exposure was critical. Read more of this post

Banks Replacing Enron in Energy Incite Congress as Abuses Abound

Banks Replacing Enron in Energy Incite Congress as Abuses Abound

The U.S. government permitted Wall Street firms to expand in the energy industry a decade ago, when the collapse of Enron Corp. and its army of traders left a void in the market. The results aren’t pretty.

JPMorgan Chase & Co. (JPM) settled Federal Energy Regulatory Commission claims this week that employees engaged in 12 bidding schemes to wrest tens of millions of dollars from power-grid operators. A Barclays Plc (BARC) trader stands accused of bragging he “totally fukked” with a Southwest energy market. Deutsche Bank AG workers, faced with losses on a contract, allegedly altered electricity flows to make it profitable instead. Read more of this post

Oil markets: The danger of distortion

August 4, 2013 4:17 pm

Oil markets: The danger of distortion

By Ajay Makan

Governments are deliberating whether to impose more supervision, writes Ajay Makan

Warped system: oil prices are notoriously hard to track and some companies do not co-operate with the price reporters

As Opec ministers gathered in Vienna in May to discuss the oil market, one man stood out. On the terraces and in the lobbies of the grand hotels favoured by members of the oil producers’ cartel, Jorge Montepeque was holding court. A Guatemalan-born US citizen with a fiery temper and sharp tongue, Mr Montepeque is the architect of the system that now underpins global trade in oil. In Vienna he was his ebullient self, stopping at tables to swap gossip between meetings. But for Mr Montepeque this was no normal Opecgathering. Two weeks earlier the European Commission had swooped on offices across Europe in pursuit of any evidence of price fixing in oil markets. Along with the oil majors BP, Royal Dutch Shell and Statoil, and the Dutch trader Argos Energies, officials raided theCanary Wharf headquarters of Platts – the price reporting agency where Mr Montepeque has worked for decades. The raids earned the oil market comparisons with Libor, the discredited interest rate rigged by some of the world’s biggest banks for years. They came as governments were already weighing direct supervision of the unregulated trade in physical oil. And they have added to fears among some participants that the market is only likely to become more opaque, if traders stop co-operating with price reporting agencies. Read more of this post

Korea’s major accounting firms are engaged in a cutthroat battle to attract more corporate clients given that most of their current contracts with some of the leading Korean conglomerates are scheduled to expire next year

2013-08-04 18:20

Accounting firms vying for survival

By Na Jeong-ju
The nation’s major accounting firms are engaged in a cutthroat battle to attract more corporate clients given that most of their current contracts with some of the leading Korean conglomerates are scheduled to expire next year. Industry sources say that more than 500 companies, including Samsung, POSCO, Doosan, CJ and KB, will decide on whether to renew their current accounting contracts with the same firms or find different accounting firms for fresh contracts. The planned implementation of new accounting standards is making the competition even fiercer. Read more of this post

Baby Formula Brands Admit Possible Price Violation; Mead Johnson is the largest baby formula company in China with a 14% market share; Beingmate ranked second with a 10% share, followed by Danone’s 9.2%

Baby Formula Brands Admit Possible Price Violation, Xinhua Says

By Bloomberg News – Aug 4, 2013

Infant-formula companies being probed in China have broadly admitted that their resale prices may have violated rules, the official Xinhua News Agency reported, citing an official in the National Development Reform Commission. The official, Xu Kunlin, head of the regulatory body’s pricing supervision department, didn’t name the dairy companies who admitted to price violations, according to the news report. Mead Johnson Nutrition Co. (MJN), Danone, Nestle SA (NESN), Abbott Laboratories (ABT), Royal FrieslandCampina NV and domestic manufacturer Biostime International Holdings Ltd (1112) were being probed on pricing, the official People’s Daily reported on July 2. The investigation offered a window into how government scrutiny in China can create obstacles for overseas companies expanding there. Read more of this post

Toyota’s $37 Billion Cash Pile Means Turning Point for Abenomics; Auto Maker pulled off the unlikely feat of nearly doubling profit while selling fewer cars

Toyota’s $37 Billion Cash Pile Means Turning Point for Abenomics

Prime Minister Shinzo Abe has been urging Japan’s companies to spend their growing piles of money to bolster the country’s economy. Toyota Motor Corp. (7203), with cash swelling to about $37 billion, is beginning to comply. The carmaker said on Aug. 2 that net income almost doubled to 562.2 billion yen ($5.7 billion) last quarter — more than General Motors Co. (GM) and Volkswagen AG (VOW) combined — as U.S. sales rose and the weaker yen boosted overseas profit. Cash and marketable securities rose 11 percent and totaled the most of any non-bank in Japan, according to data compiled by Bloomberg. Read more of this post

Is Japan’s Beer Market Set to Fizz on Abenomics?

August 5, 2013, 9:22 AM

Is Japan’s Beer Market Set to Fizz on Abenomics?

Top of Form

By Hiroyuki Kachi

Japan’s long-stagnant beer market may have finally started picking up in the wake of Prime Minister Shinzo Abe’s pro-growth economic policies, known as “Abenomics.” But it’s hard to be sure just yet, given that shipments actually fell in the first half of 2013. The first true test of whether Abenomics is putting a head of foam on the beer industry will be when figures for the peak beer-drinking month of July come out Aug. 12. From January to June, overall beer shipments for Japan’s five top brewers declined 0.9% from a year earlier. Shipments have languished more than 20% off their 1994 peak as the population ages and consumer demand has diversified. Still, the country’s two biggest brewers, Asahi Group Holdings 2502.TO -0.90% andKirin Holdings Co. 2503.TO -0.26%, last week reported solid operating profit gains for the first six months of the year. But most of the gains were attributable to the weaker yen, which lifted the value of their overseas operations. Weak beer sales at home failed to put any extra fizz in their bottom lines. Read more of this post

Billions are being spent to pack business-class seats with engineering innovations and fancy features.

August 3, 2013

The Race to Build a Better Business Class

By JAD MOUAWAD

IN a confidential test lab in a remote office park near the Frankfurt airport, a small Lufthansa team holed up for five years, refining one of the German airline’s most closely guarded secrets. They called it the V concept. Six feet six inches long and almost two feet wide, the V concept is the German carrier’s latest weapon in the fierce competition among global airlines. It is designed to withstand shocks 16 times the force of gravity and comes with a cozy padded footrest. It is a new business-class seat, and if you are traveling round trip from Frankfurt to New York, it can be yours for about $5,000. “Business class is where competition really is serious,” says Björn Bosler, the airline’s manager for passenger experience design, business and premium, who led Lufthansa’s team of dozens of seat designers and engineers. Bob Lange, senior vice president, head of market and product strategy at Airbus, the European plane maker, agrees: “There’s an arms race going on among carriers.” Billions are being spent on research and development, architects, industrial designers and even yacht designers to pack seats with engineering innovations and fancy features. Just fabricating a single business-class seat can cost up to $80,000; custom-made first-class models run $250,000 to $500,000. Read more of this post

Damned lies and statistics: Fraud generates RMB300bn (US$48.9 billion) a year in China

Damned lies and statistics: Fraud generates RMB300bn a year in China

Weng Lu-yi and Staff Reporter

2013-08-04

Which industry is the most profitable in China? The answer is neither the financial sector nor real estate, but the cheating industry. The money earned through fraudulent means exceeds 300 billion yuan (US$48.9 billion) a year. In 2008, police cracked down on two illegal pyramid schemes in Hebei who swindled funds in excess of 100 million yuan (US$16.3m). In the same year, authorities in Shandong province also busted an illegal pyramid scheme involving tens of thousands of people across 20 provinces. The company had ended up defrauding victims out of 890 million yuan (US$145m) in total. Read more of this post

China Policy Lender Reprimands Bankers for Playing Golf during work hours

China Policy Lender Reprimands Bankers for Playing Golf

China Development Bank Corp., the world’s largest policy lender, reprimanded bankers for playing golf during work hours as the Communist Party cracks down on extravagance by officials and state-owned company executives.

The lender investigated the issue after receiving tips from the public, according to an article by the Communist Party’s official People’s Daily newspaper that was posted to China Development Bank’s website. The bankers involved have been “solemnly criticized,” it said. Read more of this post

South Africa’s Post-Apartheid Failure in Shantytowns

South Africa’s Post-Apartheid Failure in Shantytowns

Cecily Ghall speaks with pride about the neat, whitewashed two-room shack she built in an acquaintance’s backyard using scrap wooden planks and asbestos plates. It’s warm and — important in the midst of a wet South African winter — dry, she says. But it isn’t hers. Ghall, 47, has waited for a government-provided home since 2008, when she and her daughter Deonie, then 13, moved to Kurland Village, a predominantly mixed-race settlement of about 2,000 residents. Less than 10 miles (16 kilometers) away is Plettenberg Bay, a seaside resort where homes selling for more than 15 million rand ($1.5 million) are common. “I don’t know how they decide who gets a house,” said Ghall, who works part-time as a domestic servant. “I’ve been on the waiting list all this time, but I never hear anything. In the meantime, I have to live in someone’s backyard and I can get kicked out at any time.” Read more of this post

Japan has not learnt the lessons of its lost decade

August 1, 2013 4:20 pm

Japan has not learnt the lessons of its lost decade

By Peter Tasker

Success is more likely if monetary and fiscal policy pull together, writes Peter Tasker

Debate is heating up in Tokyo about the advisability of increasing Japan’s consumption tax. Which should come first – economic growth or fiscal reconstruction? The prime minister must decide in a matter of weeks. I’m sitting in a Roppongi bar discussing the subject with a knowledgeable Japanese bureaucrat. “It’s essential to raise taxes,” he says, cradling a well-aged Islay malt. “If we don’t, investors will lose confidence and our bond market will collapse.” “Aren’t you risking a serious recession?” I asked. He replied: “A temporary blip, maybe. But the strengthening of public finances will be good for future growth.” The year was 1997. The Asian crisis was already in full swing. Japan’s own banking system was on the brink of collapse. Yet officials had convinced the prime minister of the day, the popular and dynamic Ryutaro Hashimoto, that raising taxes on consumers was a priority. Read more of this post

Indonesia’s consumer and natural resources boom falters

Last updated: August 2, 2013 12:53 pm

Indonesia’s consumer and natural resources boom falters

By Ben Bland in Jakarta

Mitra Adiperkasa, the retail group that operates Burger King, Zara and a host of other international food and fashion brands in Indonesia, has ridden the wave of middle-class consumption that transformed Southeast Asia’s biggest economy into one of the world’s hottest emerging markets. But the group is scaling back its expansion plans and capital expenditure next year, for the first time since 2009, as Indonesian companies contend with problems including rising inflation and slowing Chinese growth. “The main challenge for us is rising costs,” says Fetty Kwartati, head of investor relations at Mitra Adiperkasa, with salary and rental expenses increasing more quickly than sales. The company plans to open 60,000-70,000 square metres of new space next year, down from 90,000 square metres this year. Read more of this post

Unrated bond issues double in Europe

August 1, 2013 5:11 pm

Unrated bond issues double in Europe

By Christopher Thompson

The number of European companies without investment ratings tapping capital markets for funding has doubled as investors throw caution to the wind in their hunt for yield.

Bond issuance by unrated companies -–or those without investment ratings which measure credit quality – has totalled about €108bn since the beginning of 2010, driven by yield-hungry investors, low interest rates and a dearth of bank finance, according to research by Fitch. Read more of this post