THE MIAMI HERALD
MiamiHerald.com
INTERNATIONAL EDITION
BUSINESS BRIEFS
FRIDAY, NOVEMBER 26, 2010
3B
Euro will survive debt crisis: Merkel
• NEW ZEALAND
BY MELISSA EDDY AND JUERGEN BAETZ Associated Press
AP
EFFORTS: Pike River Coal chief executive Peter Whittall has said the company was determined to recover the remains of 29 men who were declared dead after two explosions deep underground.
Mine recovery could take months From Miami Herald Wire Service
Officials say it could take weeks or months before the bodies of the victims of New Zealand’s mining disaster are recovered. Pike River Coal chief executive Peter Whittall said Thursday the company was determined to recover the remains of 29 men who were declared dead after two explosions deep underground. But there are still very high levels of potentially explosive gases in the mine that have made it too dangerous for anyone to enter since the first blast last Friday. Whittall said various options were being considered to make the mine safe but it could take weeks. • COST OF WAR SUDAN TO LOSE $50 BILLION IF WAR RETURNS A group of think tanks says in a new report that Sudan could lose at least $52.1 billion over 10 years if the country’s north and southern regions go to war again. The report says this is a conservative estimate of possible conflict that may occur after a January independence referendum for Southern Sudan is concluded. The figure does not include the human cost of north and south Sudan going back to the battlefield after five years of relative peace. The report is based on recognized models used to calculate the economic cost of war as well as World Bank and International Monetary Fund figures for Sudan.
limits and threaten the euro’s existence. Axel Weber, the head of Germany’s central bank and a leading rate-setter at the European Central Bank, said European nations would be willing to boost the emergency fund by as much as ¤100 billion ($133 billion) to fully cover the total public debt load of Greece, Ireland, Portugal and Spain. The four countries’ debt load totals a little more than 1 trillion, and Weber said about ¤925 billion are already guaranteed — adding up the ¤110 billion Greek loan package, the 750 billion fund and the government bonds bought by the ECB — leaving only a gap of about ¤100 billion. “It’s not the euro that is in danger, it’s the fiscal policy in some member states that got out of hand,” Weber
said. “The euro is one of the world’s most stable currencies,” he added. A spokesman for the EU’s Monetary Affairs Commissioner Olli Rehn, however, said there were no discussions to boost Europe’s emergency fund. “The financial backstops are in place and they are well and substantially funded,” said Amadeu Altafaj Tardio. The leaders of Germany and France, the eurozone’s twin economic engines, were discussing the European debt crisis in a telephone call later Thursday. In the markets, investors continued to put pressure on Portugal and Spain, keeping their borrowing costs near euro-record highs. That reflects market uncertainty about the countries’ ability to pay off debts amid an economic downturn — and
fears that they will also need massive bailouts. Markets demand a higher return on bonds issued by countries seen as a risky investment. “Uncertainty has got a firm grip on the market, that much is clear,” said Filipe Silva, a debt manager at Portugal’s Banco Carregosa. “Comments by [European leaders] aren’t giving the market any sense of direction.” Silva said there was a clear trend toward pulling investments out of the eurozone’s weaker economies. The head of the European Union’s bailout fund, Klaus Regling, also defended the integrity of the eurozone. “No country will voluntarily give up the euro — for weaker countries that would be economic suicide, likewise for the stronger countries,” Regling said in Germany’s Bild newspaper Thursday.
BERLIN — The 16-nation euro currency will survive the debt crisis, Germany’s Chancellor Angela Merkel vowed Thursday, and a senior central banker said the European Union would be willing to increase its $1 trillion bailout fund if necessary. As Merkel spoke, the euro wallowed near two-month lows against the dollar. Some analysts predicted it would drop further as other heavily indebted countries, like Portugal and Spain, risk following Greece and Ireland in needing massive bailouts. The euro was down 0.3 percent Thursday at $1.3297 — from a recent high of $1.4244 on Nov. 4. “I’m more confident than this spring that the European Union will emerge strengthened from the current challenges,” Merkel told business leaders in Berlin, referring to May’s ¤110 billion ($146 billion) bailout of Greece by the EU and the International Monetary Fund. She said the crisis has strengthened the eurozone, leading EU leaders to agree on new rules for a tougher growth and stability pact, and bringing into operation the ¤ 750 billion ($1 trillion) emergency fund. “We now have a mechanism of collective solidarity for the euro,” she said. “And we all are ready, including Germany, to say that we now need a permanent crisis mechanism to protect the euro,” Merkel added. Experts say that while rescuing Greece, Ireland or even Portugal is manageable for the EU’s emergency fund, JOHN MACDOUGALL/AFP-GETTY IMAGES bailing out Spain — whose POSITIVE: ‘I’m more confident than this spring that the European Union will economy is five times larger emerge strengthened from the current challenges,’ Merkel said referring to May’s than any of the other three $146 billion bailout of Greece by the EU and the International Monetary Fund. countries — would test its
• TRADING HARBINGER SELLS SHARES IN NEW YORK TIMES
Japan turns to Australia for rare earths
Harbinger Capital, the large hedge fund run by the embattled manager Philip Falcone, has sold off a significant chunk of its stake in The New York Times, bringing its ownership in the newspaper company down to about 2.6 percent. The fund sold a block of 7 million shares at $8.13 a share for a total of about $57 million on Monday, according to a securities filing. In late 2007 and early 2008, Harbinger bought about 20 percent of the company’s Class A shares at more than double what it sold the shares for this week. Before the sale, Harbinger was the company’s secondlargest shareholder, behind the mutual fund company T. Rowe Price Associates, with a 7.4 percent stake.
BY HIROKO TABUCHI
• PLANE CRASH GULF OIL SPILL RECOVERY EXEC DEAD IN CRASH A spokeswoman for energy giant BP says an executive helping to guide recovery from the Gulf of Mexico oil spill died with two others when a small plane crashed in waters off the Florida Panhandle. BP spokeswoman Hejdi Feick said that 58-year-old James Patrick Black was among the dead. He was the director of operations for BP’s Gulf Coast Restoration Organization, the business unit put together for recovery from April’s Deepwater Horizon rig explosion and massive oil spill capped last July. • DRUGS DEA TO BAN CHEMICALS IN SYNTHETIC MARIJUANA Reacting to what it called complaints from law enforcement and a surge in medical emergencies, the Drug Enforcement Administration said that it would ban several chemicals used to make so-called synthetic marijuana products, which resemble herbs or potpourri but mimic the effects of the drug when smoked. In a notice published in the Federal Register, the agency said it would use its emergency powers to bar possession and sale of five synthetic cannaboids whose effects mirror that of tetrahydrocannabinol, or THC, which gives marijuana its potency. • COSTA RICA COURT ANNULS CANADIAN MINE CONCESSION A Costa Rican court has canceled a concession allowing the affiliate of a Canadian mining company to build a contested open-pit gold mine in the Central American nation. Industrias Infinito’s project had once been considered a national priority, but environmentalists argued it violated environmental laws and encroached on the protected habitat of the great green macaw. Opponents of the mine also alleged the concession was obtained irregularly. • BOEING FOREIGN DEBRIS PROBABLY SPARKED 787 FIRE Boeing says some kind of foreign debris probably caused the electrical fire on board one of its 787s earlier this month. The airplane maker says it still doesn’t know what the impact will be on the first delivery. Another delay is widely expected. Boeing says it will take a few more weeks to revise the schedule. Boeing says it simulated key aspects of the fire in a laboratory, and is fixing the design.
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New York Times Service
TOKYO — Less than a week after China resumed exports of crucial industrial minerals to Japan, a top Japanese trading company has announced a deal to reduce reliance on Beijing for mineral supplies. The Tokyo-based company, Sojitz, said it had signed a $250 million procurement deal with an Australian mining company and warned that the outlook for stable shipments from the Chinese mainland remained far from certain. The deal is the latest effort by Japan to diversify its sources of the minerals, known as rare earths, which are vital to the production of a wide range of high-technology products. Sojitz, the top Japanese trader in rare earths, said it had forged a deal with the Australian mining company Lynas to start shipping 3,000 tons a year of the minerals from a new mine, Mount Weld, beginning late next year. Sojitz and Lynas, based in Sydney, aim to increase shipments to more than
9,000 tons a year by early 2013, Satoshi Mizui, a senior vice president at Sojitz, said in Tokyo. “Of the various rare earth development projects around the world, Mount Weld has the potential to be first to begin operations,” Mizui said. “With this deal, we aim to secure a stable supply of rare earths to Japan.” Sojitz will invest as much as $250 million in Lynas, which is preparing to open the Mount Weld mine in the state of Western Australia, Mizui said. The investment will be used by Lynas to expand capacity at Mount Weld, and Sojitz may acquire a direct stake in the mine in the future, he said. China now produces 95 percent of the world’s rare earths, and half of its exports of the minerals go to Japan — about 25,000 tons a year. But for two months beginning in mid-September, Beijing blocked Japan-bound shipments of the minerals after a dispute over islands controlled by Japan but claimed by China. In the dispute, Japanese
coast guard vessels intercepted a Chinese trawler and detained its captain off the disputed islands, which is between the two countries. Japan released the captain two weeks later, after protests from Beijing. Beijing resumed exports of rare earths to Japan late last week, with customs agents not only processing the paperwork for shipments but also allowing dockworkers to load containers of the minerals onto ships bound for Japan. The Japanese trade minister, Akihiro Ohata, on Wednesday confirmed the resumption of exports, saying two shipments had left China for Japan. Still, the halt has raised worries about an overdependence on China for products that are crucial for some of the most important Japanese industries, including automobiles, flat-screen televisions, computers and smart phones, as well as oil refining and wind turbines. Some industry executives also worry that China may further cut its quotas for
rare earths as Beijing seeks to save deposits for its own fast-growing industries. China is also clamping down on a black market in rare earth production and supply that has sprung up in response to growing global demand. Beijing cut its export quotas for rare earths 40 percent this year, to 30,300 tons. No more than 4,000 tons of that quota remains unfilled this year, which means shipments could stop again soon and not resume until quotas have been issued for 2011. Executives at Sojitz said that despite the resumption in exports from China, the company felt the need to forge links with other suppliers. Hiroshi Katano, manager of the section overseeing rare earths trading at Sojitz, said that the export resumption had been slow and tentative. Sojitz has not yet received word that its own shipments have left Chinese ports, he said. “The outlook for stable rare earth supplies from China remains uncertain,” Katano said. “We still feel it is imperative to develop other sources.”
Madoff trustee sues UBS, seeks $2 billion BY THOMAS KAPLAN
New York Times Service
The trustee charged with trying to recover money for the victims of Bernard L. Madoff’s huge Ponzi scheme has sued the Swiss bank UBS and its affiliates, accusing it of enabling the fraud. The complaint, filed in federal bankruptcy court in Manhattan, N.Y., is seeking to recover at least $2 billion. UBS sponsored and administered several international feeder funds related to Madoff’s investment company. The complaint contends that UBS’s participation allowed for more than $1 billion to be funneled to Madoff — even as the bank knew a fraud was afoot and took steps to protect itself against liability if Madoff’s firm went under. UBS and its affiliates “chose to enable Madoff’s
fraud for their own gain,” netting more than $80 million in fees by administering the feeder funds Luxalpha and Groupement Financier. The bank’s involvement provided the funds a “facade of legitimacy,” according to the complaint. “The ‘fees’ they received in their various roles were nothing more than îfees’ for looking the other way, and lending their prestigious name to legitimize and attract money” to the Ponzi scheme, the complaint said. In a statement, a spokeswoman for UBS, Kelly Smith, called the allegations “completely unfounded and without merit” and said the bank would take all necessary steps to demonstrate that. “We regret that the trustee filed this unwarranted complaint,” Smith said.
The lawsuit is the latest legal action by the trustee, Irving H. Picard, who has so far filed some 20 complaints seeking to recover billions for the victims of Madoff’s $65 billion fraud. As of Sept. 30, Picard had recovered a total of $1.5 billion for the victims. The so-called clawback suit against UBS and its affiliates is expected to be followed by several similar actions in the coming weeks. Picard faces a deadline next month to initiate legal proceedings seeking to recover money. On the criminal side, two of Madoff’s former employees, including his onetime personal secretary, were indicted last week on fraud and conspiracy charges related to the Ponzi scheme, bringing to eight the number of people
charged in the case. Madoff himself is serving a 150-year sentence in federal prison. The complaint contends that UBS and the other defendants are liable for at least $2 billion, including redemptions, fees earned and compensatory and punitive damages. It alleges 23 counts of fraud and breaches of fiduciary duty against the defendants. The complaint has been placed under seal, but Picard released a redacted version on Wednesday. It focuses on Luxalpha and Groupement Financier, which together withdrew nearly $800 million in the 90 days before Madoff’s firm, Bernard L. Madoff Investment Securities, filed for bankruptcy, compared with withdrawals totaling $1.1 billion in the previous six years.
11/26/2010 3:38:59 AM