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Oct 18

UPDATE 1-Olympus scandal highlights board inadequacies in Japan


* Olympus case takes shine off recent steps to improve governanceBy Nathan LayneTOKYO, Oct 18 (Reuters) - The scandal at Olympus Corp triggered by accusations of improper payments has put a spotlight on what critics say is a key weakness of Japanese-style management: the lack of strong independent oversight on most boards.Japanese boards are typically stacked with insiders, and Olympus, a camera and medical equipment maker whose chief executive was abruptly dismissed last week, is no exception.Twelve of Olympus’ 15 board members are company executives, and one of its three outside directors failed to pass a test of independence set by top proxy voting firms.This structure, while common among Japanese companies, appears to have left the Olympus board vulnerable to groupthink when dissension and rigorous debate were needed most.”You have so many insiders, very few independent members and none of them is really in a position to challenge the decision-making of long-standing members of the board,” said Robert McCormick, chief policy officer at proxy advisory firm Glass Lewis & Co. “I think the CEO kind of came into that.”A spokesman for Olympus said its board of directors was functioning well.Former Olympus CEO Michael Woodford has told media he believes he was sacked for questioning about $680 million in payments to financial advisers in the purchase of Britain’s medical equipment firm Gyrus in 2008, or one-third of the transaction price, and $600 million in goodwill impairment after other small acquisitions in Japan.Olympus says that Woodford was dismissed because of a clash of management styles and that it has carried out proper accounting and disclosure for the acquisitions.SHARES PLUNGEBut the relentless slide in the share price — it has lost 43 percent in the past three sessions — suggests investors are not satisfied with the company’s explanation and generally lack confidence in management.Chairman Tsuyoshi Kikukawa, who replaced Woodford as CEO, told the Nikkei newspaper on Tuesday that the Gyrus-related payment was closer to 30 billion yen ($391 million) and said losses at the domestic companies it acquired represented lapses in judgment on his part.But to some critics Kikukawa’s comments may only reinforce the notion that there have been few checks on his authority and may not silence criticism of the payments, which at 30 billion yen were still unusually high for an acquisition of that size.The lack of independent directors supervising management is one of the key factors behind Japan’s No. 36 ranking out of 39 countries on corporate governance in the latest survey by research firm GMI .Other propagators of poor governance include cross-shareholdings with business partners and a tendency for executives to hang on wielding influence in advisory posts even after they’ve retired from the board.The Olympus case may give the impression that governance is moving backwards, despite a series of steps aimed at improving the situation in recent years, including the Tokyo Stock Exchange’s requirement from this year that all companies have at least one independent director or auditor.”This is a negative step for corporate governance in Japan,” said Jamie Allen, secretary general of the Asian Corporate Governance Association based in Hong Kong.”There had been some hope that Japanese companies would take on not just outside directors but outside managers and that corporate cultures in Japan would be more open and international.”

Posted 7 months ago

39 notes

UPDATE, 1Olympus, scandal, highlights, board, inadequacies, in, Japan,

Oct 14

No final decision yet on Bahrain arms sale - U.S.


WASHINGTON Oct 14 (Reuters) - The United States held out the possibility on Friday it may not sell $53 million in arms to Bahrain, saying it had not made a final decision to transfer the materiel and human rights would weigh in its assessment.The Pentagon on Sept. 14 notified Congress of its intent to sell more than 44 armored Humvees and 300 TOW missiles to Bahrain, whose crackdown on a popular uprising this year has prompted some U.S. lawmakers to oppose the sale.”This is a notification about future intent,” U.S. State Department spokeswoman Victoria Nuland told reporters. “We will continue to take human rights into consideration as we make future decisions about this.”Senator Ron Wyden and Representative James McGovern, both Democrats, have introduced resolutions in Congress to prevent the sale “until meaningful steps are taken to improve human rights” there.As the so-called “Arab spring” swept authoritarian governments from power in Egypt, Tunisia and Libya, Bahrain’s Shi’ite majority turned up the political heat in the island country.The Sunni ruling family in the Gulf Arab state has put down the pro-democracy uprising with the help of neighboring Saudi Arabia and of the United Arab Emirates.Many Shi’ite areas are witnessing almost nightly clashes with police. Opposition groups say heavy-handed police tactics are worsening tension on the street.About 30 people, mainly Shi’ites, died when the protest movement erupted in February, but ongoing clashes and deaths in police custody have taken the total past 40, according to the Bahrain Center for Human Rights.”Proceeding with the announced arms sale to Bahrain without modification under the current circumstances weakens U.S. credibility at a critical time of political transition in the Middle East,” Republican Senator Marco Rubio wrote Secretary off State Hillary Clinton in a letter on Thursday.It is relatively rare for U.S. lawmakers to oppose such arms sales because they are typically vetted with Congress before they become public.Prime contractors for the arms sale would be AM GeneralRaytheon Co , according to the Defense Security Cooperation Agency, the part of the Pentagon that oversees foreign arms sales.

Posted 7 months ago

131 notes

No, final, decision, yet, on, Bahrain, arms, sale, US,

Oct 13

UPDATE 2-Canada trade deficit rises but GDP growth seen


* Trade surplus with the United States narrowsBy David LjunggrenOTTAWA, Oct 13 (Reuters) - Canada’s trade deficit rose slightly in August as imports advanced at a faster rate than exports but analysts said the underlying trend was encouraging and should help the Canadian economy return to growth in the third quarter.The deficit rose to C$622 million ($610 million) in August from a C$539 million shortfall in July, Statistics Canada said on Thursday. The statistics agency revised the July figure down sharply from the C$753 million it initially reported.Overall exports rose by 0.5 percent from July, while imports were up by 0.7 percent, further evidence that the economy is recovering from high oil prices earlier this year and from the impact of the Japanese earthquake and tsunami.”We expect net exports to contribute to growth in the third quarter. This is consistent with our view that economic growth will pick up modestly in the second half of this year,” said TD Securities strategist David Tulk.Canada’s economy shrank by an annualized 0.4 percent in the second quarter as exports provided a significant drag.Exports in August grew on higher shipments of machinery and equipment, industrial goods and materials. Prices were up 1.6 percent, while volumes declined by 1.1 percent.Imports rose by 0.7 percent, pushed up by a 2.5 percent increase in machinery and equipment and a 2.3 percent advance in automotive products. Imports of energy products dropped 13.6 percent on a 25.3 percent plunge in crude petroleum prices.”Net trade looks set to add heavily to (gross domestic product) growth in the third quarter (by roughly 2 percentage points) after subtracting a whopping 5.6 percentage points from the second quarter result,” said Doug Porter and Jennifer Lee of BMO Capital Markets.The Canadian dollar, which had already slipped from Wednesday’s three-week high of C$1.0135, or 98.67 U.S. cents, was trading at 1.022, or 97.83 U.S. cents, at 9:50 a.m. (1350 GMT).Exports to the United States, by far Canada’s top trade partner, fell by 2.3 percent, while imports were up 2.0 percent. The bilateral trade surplus slipped to C$2.54 billion from C$3.65 billion in July.Peter Hall, chief economist at Export Development Canada, said he was encouraged by the fact that July’s gains had not proven to be temporary. Export growth in real terms in July was 4.9 percent, while it fell by only 1.1 percent in August.”Most of what we got in July is sticking around and I think that’s very positive news,” he told Reuters.

Posted 7 months ago

51 notes

UPDATE, 2Canada, trade, deficit, rises, but, GDP, growth, seen,

Oct 13

UPDATE 1-Google-backed Xunlei pulls IPO


In June, Xunlei had filed for an initial public offering of up to $200 million and had seen pricing its American Depositary Shares at $14-$16 each.The company, which makes software to increase download speeds, had expected to list its shares on Nasdaq under the symbol “XNET.” Xunlei planned to use proceeds from the offering to invest in technology, infrastructure and product development and to acquire digital media content, according to its IPO prospectus.Sean Shenglong Zou, Xunlei’s co-founder, is the company’s biggest shareholder with a 27.5 percent stake, while Google owns 2.8 percent of the shares.

Posted 7 months ago

34 notes

UPDATE, 1Googlebacked, Xunlei, pulls, IPO,

Oct 12

UPDATE 1-EBay CEO positive in face of weak economy


EBay will spend more on marketing next year, after recently lifting marketing spending for the first time in several years, the CEO added.EBay has been adding employees this year and plans to keep hiring, Donahoe also said.”We shouldn’t talk ourselves into a weak holiday season,” Donahoe told Reuters.

Posted 7 months ago

17 notes

UPDATE, 1EBay, CEO, positive, in, face, of, weak, economy,

Oct 12

Florida says more work needed in foreclosure talks


* New round of talks to be held in Washington on ThursdayBy Kevin GrayMIAMI, Oct 12 (Reuters) - Florida’s attorney general dismissed media reports that a final settlement is imminent in multi-state negotiations over alleged foreclosure abuses by U.S. banks.Florida Attorney General Pam Bondi also said states that have pulled out of the negotiations should return to bolster any deal. Federal, state and bank officials are expected to hold another round of negotiations in Washington on Thursday.”I read this morning that we’re settling this tomorrow. I doubt that’s going to happen,” Bondi said, speaking on Wednesday during an event in Miami.”We still have states that aren’t on board yet. We’re trying to bring in some people who left the table.”Negotiations toward a settlement have been going on for months, with penalties on the banks of up to $20 billion being discussed. A settlement would free up a backlog of foreclosures weighing on housing markets and dragging on economic growth.Banks, including Bank of America Corp , JPMorgan Chase & Co , Wells Fargo & Co and Citigroup Inc are seeking to maximize their legal immunity. Investor worries about banks’ financial liability have helped send bank shares falling this year.Last month, the state of California pulled out of the negotiations, with the state’s attorney general saying the talks had failed to provide enough relief for homeowners and released the banks from too many legal claims.New York abandoned the negotiations in August expressing similar concerns.”The main thing I want to focus on is bringing everybody back to the table,” Bondi said. “That right now is the most important thing.”Whether we agree or disagree, we all have to stay at the table or we’re never going to get anything done.”The banks are accused of dealing with a deluge of mortgage defaults that began in 2008 by cutting legal corners and unlawfully rushing through foreclosure paperwork.The claims include allegations of “robo-signing” in which lenders’ employees or outside contractors produced and signed reams of foreclosure documents without fully understanding their content.A settlement with all 50 states and federal authorities could help the banks move beyond the legal fallout that has dogged them since the height of the financial crisis.The talks have been bogged down by disagreement over the banks’ legal exposure.Sources close to the negotiations have told Reuters a settlement is possible without all states signing on. Even if a state chooses not to sign on to a final deal, its homeowners could still benefit, the sources said.Details over the size of any penalties and how that money would be divvied up have not yet been worked out, people familiar with the talks said.”We’re doing our best to resolve this,” Bondi said.

Posted 7 months ago

121 notes

Florida, says, more, work, needed, in, foreclosure, talks,