Lloyds fires staff and axes bonuses for Libor rigging

Eight workers dismissed for manipulating benchmark interest rate, with cuts to overall bonus pool also expected

The Guardian, Jill Treanor, Monday 29 September 2014

Lloyds Banking Group fires staff for Libor rigging. Photograph: Amer Ghazzal/
Amer Ghazzal/Demotix/Corbis

Lloyds Banking Group has fired eight staff and withheld £3m of bonuses following “unacceptable” actions that led to the bailed out bank being fined for Libor rigging.

The bank also indicated its entire bonus pool could be cut to reflect the £226m of penalties it was forced to pay for manipulating the benchmark interest rate.

Lord Blackwell, the new chairman of the 24% taxpayer owned bank, said: “The board has been clear that it views the actions of those responsible for the misconduct … as being completely unacceptable.”

Lloyds was the seventh bank to be fined for rigging Libor but the first to be punished for depriving the Bank of England of fees it should have received for providing emergency financing during the financial crisis.

Part of the penalty was £7.8m redress to Threadneedle Street for manipulating a separate interest rate – the repo rate – used to calculate the scale of the fees it paid for the Bank’s liquidity scheme to keep down the cost of obtaining money during the credit crisis.

While eight Lloyds staff have been dismissed and lost their bonuses, four more were cleared and allowed back to work.

It is unclear what has happened to the bonuses of 10 bankers who had already left, as Lloyds has no power to claw back the cash. The details of those 10 have been passed to the City regulator, the Financial Conduct Authority.

Among those fired were three of the four unnamed individuals who may have been involved in depriving the central bank of emergency funding fees.

Blackwell appeared to indicate that further cuts could be made to bonuses, saying: “The remuneration committee is tasked with ensuring that the outcome of the disciplinary process and the significant reputational damage and financial cost to the group are fully and fairly reflected in the options considered in relation to other staff bonus payments.”

António Horta-Osório, the Lloyds boss who joined after the offences took place – between 2006 and 2009 – said he was determined the bank should have high levels of integrity.

“Having now taken disciplinary action against those individuals responsible for the totally unacceptable behaviour identified by the regulators’ investigations, the board and the group’s management team are committed to preventing this type of behaviour happening again,” he said.

When the bank was fined, regulators published a string of embarrassing emails and electronic chats, including one remark from a Lloyds employee who quipped when asked about reducing a Libor rate: “Every little helps … It’s like Tescos.” The trader replied: “Absolutely every little helps.”

The fine was imposed by the FCA as well the US department of justice and the US regulator, the Commodities Futures Trading Commission. Mark Carney, governor of the Bank of England, issued a furious response because of the steps taken by traders to reduce the fees that Lloyds, which also owns Bank of Scotland and Halifax, paid for emergency funding.

“Such manipulation is highly reprehensible, clearly unlawful and may amount to criminal conduct on the part of the individuals involved,” Carney said at the time. He also asked the Prudential Regulation Authority, the Bank’s regulation arm, to investigate.

The Serious Fraud Office is investigating a number of firms, including Lloyds, for rigging interest rates and has brought charges against 12 individuals.

Professor Mark Taylor, dean of Warwick Business School, said: “Many will see this as closing the stable door too late, but the fact is that the City has begun to clean up its act and wants to be seen to be doing so.

“We have already seen the setting of Libor passing from a cosy conversation between a few City traders to being professionally managed by NYSE Euronext based on actual market trades, and that has done a great deal to restore confidence and belief in the integrity of the world’s most important financial centre.”

This is the second issue for which Lloyds has taken high-profile action to claw back or withdraw bonuses from staff. In February 2012, it became the first bank to publicly hold back pay from senior staff – including its former boss Eric Daniels – for losses incurred from payment protection insurance misselling.

Lloyds has been fined £4.3m for delaying payouts for customers claiming they were missold PPI and last year was hit with a £28m fine for linking bonuses to sales to such an extent that staff were offered “a grand in your hand” and one employee even sold products to himself, his wife and a colleague to avoid demotion.

The Libor rigging incident, first exposed in 2012 when Barclays was fined £290m, hammered the reputation of the industry and further fines for manipulating the benchmark rate are expected before the end of the year.

Six banks are also facing fines for rigging the £3.5tn a day currency markets and facing pressure from the FCA to settle in eight weeks.

Related Article:

Bank of England blasts Lloyds for rigging bailout funding

'Umbrella Revolution' takes hold in Hong Kong

Yahoo – AFP, Annabel Symington, 29 Sep 2014

Tens of thousands of Hong Kong democracy protesters have paralysed parts of the

city, clashing with police in their campaign for free elections (AFP Photo/Alex Ogle)

Hong Kong (AFP) - Protesters armed with little more than parasols and determination have brought central Hong Kong to a standstill with their demands for full democracy, in a movement that has been dubbed the "umbrella revolution".

The umbrella is fast emerging as the symbol of the demonstrations that since Sunday have paralysed the Asian financial hub -- a quintessential image in a city known for its downpours.

The demonstrations that have brought thousands onto the streets turned violent Sunday evening as police used tear gas and pepper spray against the swelling crowds.

The protesters -- mostly university students and high school pupils who last week boycotted classes in an attempt to pressure Beijing -- were ill-equipped to deal with the sudden violent turn.

They wrapped their eyes in clingfilm or donned goggles, wore paper face masks and cowered behind umbrellas to try to protect themselves from the tear gas and pepper spray.

"The umbrella is probably the most striking symbol of this Hong Kong protest. Our demonstrations used to be so peaceful, even pepper spray was very out of the ordinary," said Claudia Mo, a pro-democracy lawmaker.

"Now that pepper spray has become so common, we’re having to use umbrellas against it."

"The police have very high-quality shields -- we just have our umbrellas."

The phrase "umbrella revolution" was trending on social media Monday, and was also seen scrawled on a banner flung across a pile of upturned barricades and discarded umbrellas than blocked the entrance to a metro station.

Festival atmosphere

After the tear gas had blown away in the early hours of Monday, a festival atmosphere descended on the streets.

In the busy shopping district of Causeway Bay, more than a thousand demonstrators began chanting soft rock songs by the 1980s Hong Kong band "Beyond" after a resident in a tower block started playing the song over loudspeakers.

Protesters defied government calls to go home after chaotic scenes saw riot police

 fire tear gas in running battles with angry crowds in one of the biggest ever challenges

to Beijing's rule of the semi-autonomous city (AFP Photo/Xaume Olleros)

The band's melancholy ballad "Boundless Oceans, Vast Skies" has often been sung by the city's various protest movements who embrace the chorus lyrics: "Still free and independent/Forever singing my own song out loud".

"Everybody knows the lyrics. I'm in my 40s but look at these kids, they know it too," said one man at the protest who gave his surname as Bun.

By Monday morning calm had largely returned to the city's streets, although the usual throng of smartly-dressed commuters was replaced by a sea of dishevelled protesters who had spent the night camped on the streets -- under umbrellas.

Demonstrators sorted rubbish from the previous day into piles for recycling and distributed food and water amongst themselves.

The scenes were reminiscent of the 2011 Occupy Wall Street movement where demonstrators set up generator-powered mobile phone recharging stations, a volunteer-run food tent and even a library.

"The cops, they are the ones who did violent things, attacking people without weapons. It really stimulates our emotions, so as normal people we know we need to do something," said bank worker Maple Leung, 27, who was out Monday distributing food and water to protesters.

The chaos has taken the city by surprise. The Chinese flag atop the Admiralty Centre near the government headquarters was raised upside down Monday morning. As a team climbed onto the roof to correct the mistake, the crowd of demonstrators booed.

Protesters have vowed to remain on the streets until Beijing meets their demands for unfettered elections.

"I'm staying until the end, until we get what we want to get, which is true democracy," said 18-year-old high school student Michael Wan.

Related Articles:

Hong Kong's chief executive calls for protests to end, resisting calls to quit

Tory minister Brooks Newmark resigns from government

BBC News, 27 September 2014

Mr Newmark appealed for the privacy of his family to be "respected at this time"

Related Stories

• Second Tory MP defects to UKIP

Tory MP for Braintree Brooks Newmark has resigned as minister for civil society following Sunday Mirror allegations he shared sexually explicit images of himself with an undercover reporter over social media.

He said in a statement he remained "a loyal supporter of this government".

His resignation comes on the eve of the Conservative party conference.

It was announced hours after fellow Tory MP Mark Reckless said he was quitting the party to join UKIP.

It is alleged the reporter was posing as a young female activist.

A Downing Street spokesman said Prime Minister David Cameron had accepted Mr Newmark's resignation as a minister.

UKIP defection

Mr Newmark, 56, said: "I have decided to resign as minister for civil society having been notified of a story to be published in a Sunday newspaper.

"I would like to appeal for the privacy of my family to be respected at this time.

"I remain a loyal supporter of this Government as its long term economic plan continues to deliver for the British people."

Mr Newmark, who has been the MP for Braintree since 2005, became minister for civil society in July.

No 10 said later that Rob Wilson, Conservative MP for Reading East, had been appointed as Mr Newmark's replacement as minister for civil society.

Mark Reckless earlier told the UKIP conference he had resigned as an MP, triggering a by-election in Rochester and Strood.

He will seek re-election in his constituency for UKIP.

'Unfaithful' Bishop of Arundel and Brighton resigns

BBC News, 27 September 2014

Bishop Kieran Conry said he had been "unfaithful" to his promises as
a Catholic priest

Related Stories

• Bishop attacks Halloween festival

The Catholic Bishop of Arundel and Brighton has resigned, saying he has brought "shame" on the diocese.

The Rt Rev Kieran Conry, whose diocese covers Sussex and Surrey, said he had been "unfaithful" to his promises as a Catholic priest.

He said his actions "were not illegal and did not involve minors".

He apologised to those "hurt by my actions and then to all of those inside and outside the diocese who will be shocked, hurt and saddened".

He said his resignation would take immediate effect, and he would now take time to consider his future.

Bishop Kieran's statement did not specify in what way he had been "unfaithful" to his promises but it will be read in all Catholic churches over the weekend.

His statement ended: "I am sorry for the shame that I have brought on the diocese and the Church and I ask for your prayers and forgiveness."

Cardinal Vincent Nichols, head of the Catholic Church in England and Wales, said: "This is a sad and painful moment.

"It makes clear that we are always a Church of sinners called to repentance and conversion and in need of God's mercy.

"All involved in this situation are much in my prayers today."

Related Articles:

Pope sacks Paraguay bishop who promoted alleged paedophile priest

Vatican puts ex-envoy under house arrest in sex abuse case

BNP Paribas chairman resigns: company

Yahoo – AFP, 27 Sep 2014

French bank BNP Paribas Managing Director Baudoin Prot gives a press
conference in Paris on February 19, 2009 (AFP/Eric Piermont)

The chairman of BNP Paribas has resigned, some three months after the French bank was hit by a record $8.9 billion fine for violating US sanctions, the bank said.

Baudoin Prot, 63, who has headed the bank since 2011, was stepping down as of December 1 "for personal reasons," the bank said in a statement following a meeting of the board late on Friday.

Prot will be replaced by Jean Lemierre, 64, one of his close advisors and a key figure in negotiating BNP Paribas's settlement with US authorities.

Prot's resignation, which was first reported by a source close to the matter on Tuesday, comes almost three months after the giant French bank pleaded guilty to US criminal charges of violating sanctions on Iran, Sudan and other countries.

Prior to becoming chairman, Prot served as chief executive of BNP Paribas from 2003-2011, the period in which many of the violations of US sanctions law took place.

US officials said BNP Paribas deliberately hid thousands of transactions with Iran, Sudan, Myanmar and Cuba, countries that were sanctioned for terrorism and human rights violations.

The bank agreed to plead guilty to one count of conspiring to violate sanctions, making it the first bank found guilty in a sanctions case.

Prot was not personally questioned by US authorities during the probe, but the difficulty of the settlement negotiations took its toll on the chairman, according to people familiar with the bank.

Related Article:

BNP Paribas bank says senior executive to quit amid US probe

Big four accountants under fire in Holland for poor audit work

DutchNews.nl, Thursday 25 September 2014

(NOS/ANP)

Finance minister Jeroen Dijsselbloem has pledged to get tough on the big four accountancy firms after a damning report from the financial services regulator.

The AFM said on Thursday that all four firms - KPMG, Deloitte, PwC and EY - have done little to improve the quality of their annual report audits since the last inspection in 2010.

The problems are structural and require 'fundamental reforms and a cultural shift,' the AFM said.

In a reaction, Dijsselbloem said 'the checks which accountants are required to carry out by law should be above reproach... It is unacceptable that the quality is not up to standard.'

Measures

In an effort to force the firms to improve, the AFM is planning a series of reforms. Accountancy groups will be required by law to have a supervisory board. Senior officials will have to be vetted by the AFM and the supervision of semi-public bodies such as hospitals and housing corporations will be stepped up.

According to the NRC, KPMG is the worst performer of the big four in the Netherlands. Of the 10 audits which the AFM looked at, seven were branded 'insufficient' - which means the books were signed off without the accountant being certain they were accurate.

Four out of 10 PwC and Deloitte audits failed to make the grade as did three carried out by EY.

Related Articles:

KPMG Nederland overhauls partner bonuses, supervisory board

Tesco must change culture and reinvent brand, new boss tells employees - New

AstraZeneca shares fall as Obama thwarts tax inversion deals

Pfizer pursuit of UK pharmaceutical less likely after president closes loophole allowing takeovers in lower tax regimes

The Guardian, Sean Farrell, Tuesday 23 September 2014

Pfizer’s failed bid to buy AstraZeneca was seen as a classic tax inversion
deal. Photograph: Christopher Furlong/Getty Images

Shares in AstraZeneca and other potential takeover targets for US companies fell after the Obama administration announced measures to thwart tax-driven acquisitions of foreign companies.

AstraZeneca was the subject of an acrimonious takeover approach by Pfizer earlier this year. The US company targeted AstraZeneca partly to move its headquarters to Britain and exploit the UK’s lower corporation tax rate. AstraZeneca rejected Pfizer’s overtures but the US firm kept its options open to make a second approach.

Moving headquarters for tax reasons, known as a “tax inversion”, has proved politically contentious in the US as companies have lined up to find takeovers in lower tax regimes, particularly the UK and Ireland. The US rate of corporate tax is 35% whereas the UK, under reductions ordered by the chancellor, charges 21%, falling to 20% next year.

Pfizer’s approach for AstraZeneca raised the political heat in the US over inversions, which are seen as largely artificial manoeuvres that leave day-to-day operations unchanged. The tactic became a test of White House resolve after Burger King agreed to buy smaller Canadian fast-food chain Tim Hortons last month to shift its headquarters to Canada. 

 

After failing to agree legislation with Congress, the Obama administration said on Monday that companies would no longer escape tax on US earnings by using internal loans, dividends and share swaps to restructure under foreign ownership. The changes will not apply to completed deals but are intended to deter further attempts to use what Jack Lew, the Treasury secretary, called an “unfair loophole”.

AstraZeneca shares fell more than 5% as investors decided the White House’s move had made a further Pfizer bid less likely. Shares in Shire Pharmaceutical, which has agreed to be bought by AbbVie of the US, fell more than 6%. Smith & Nephew, also the subject of US bid speculation, fell 3%. Intercontinental Hotels, which has faced pressure from a hedge fund to agree to a tax inversion deal, dropped 1.7%.

The Obama administration also hopes its measures will make it more difficult for US multinationals to avoid tax by parking earnings abroad without relocating their headquarters. Apple and Amazon have faced criticism for booking billions of dollars of revenues in overseas jurisdictions.

Heirs to Rockefeller oil fortune divest from fossil fuels over climate change

Heirs to Standard Oil fortune join campaign that will withdraw a total of $50bn from fossil fuels, including from tar sands funds

US will not commit to climate change aid for poor nations

theguardian.com, Suzanne Goldenberg in New York, Monday 22 September 2014

Peter O’Neill, head of the Rockefeller family and great-great-grandson of John D Rockefeller,
along with Neva Rockefeller Goodwin (second from the right_, great-granddaughter of
 of John D. Rockefeller, and Stephen B Heintz, president of the Rockefeller Brothers
Fund. Photograph: Brendan McDermid/Reuters

The heirs to the fabled Rockefeller oil fortune withdrew their funds from fossil fuel investments on Monday, lending a symbolic boost to a $50bn divestment campaign ahead of a United Nations summit on climate change.

The former vice-president, Al Gore, will present the divestment commitments to world leaders, making the case that investments in oil and coal have an uncertain future.

With Monday’s announcement, more than 800 global investors – including foundations such as the Rockefeller Brothers, religious groups, healthcare organisations, cities and universities – have pledged to withdraw a total of $50bn from fossil fuel investments over the next five years.

The Rockefeller Brothers Fund controls about $860m in assets, said Beth Dorsey, the chief executive of the Wallace Global Fund and the Divest-Invest movement, which has led the divestment campaign. About 7% are invested in fossil fuels.

But the Rockefellers’ decision to cut their ties with oil lends the divestment campaign huge symbolic importance because of their family history. The divestment move also helps bring a campaign launched by scrappy activists on college campuses into the financial mainstream.

But for oil, there may not have been a Rockefeller fortune. John and William Rockefeller were the co-founders of the Standard Oil Company, which at the time operated the world’s biggest refineries, and overtime spawned Exxon, Amoco and Chevron.

Now, after a year of deliberations, the descendants of those original Rockefellers had decided the time had come to move away from oil.

“John D Rockefeller, the founder of Standard Oil, moved America out of whale oil and into petroleum,” Stephen Heintz, president of the Rockefeller Brothers Fund, said in a statement. “We are quite convinced that if he were alive today, as an astute businessman looking out to the future, he would be moving out of fossil fuels and investing in clean, renewable energy.”

In addition to the Rockefellers, the World Council of Churches, which represents some 590 million people in 150 countries – also pulled its investments from fossil fuels on Monday. The move represented a turning point for a movement which began by demanding that universities purge their financial holdings of ties to the fossil fuel industry.

About 30 cities have also chosen to divest, including Santa Monica and Seattle.

“When you have the Rockefellers and the World Council of Churches and institutions with global reach coming together and divesting, then this movement which began just three short years ago has really reached a significant turning point,” Dorsey said.

In that time, supporters such as Archbishop Desmond Tutu have framed divestment from fossil fuels as a moral imperative – like the anti-apartheid movement of a generation ago.

“Climate change is the human rights challenge of our time. We can no longer continue feeding our addiction to fossil fuels as if there is no tomorrow, for there will be no tomorrow,” Tutu said in a video address.

The Rockefeller Brothers Fund over the years has been a big supporter of environmental causes, including to campaign groups opposed to fracking and the Keystone XL pipeline, which made for an awkward fit at times with its continued investment in oil and gas. The family plans to first divest from tar sands commitments.

A number of universities have also started to cut their ties with fossil fuel – with Stanford University dropping coal holdings from its $18bn endowment.

But divestment remains a hard sell. The University of California system said last week it would continue to hold on to fossil fuels. Harvard University has also resisted pressure from faculty and students to divest – although Yale has said it will look into whether renewable energy offers a better bet in the long run.

“In the last great divestment campaign, Harvard said no before it said yes. I think it’s just a matter of time,” Dorsey said. “Unlike with the anti-apartheid movement, this is not just an ethical issue. There is a powerful financial reason as well.”

One of the wealthiest men in the U.S., Warren Buffett said Monday that

 he would double his renewable energy investments. Video screenshot: 

Georgetown University/YouTube

Related Articles:

Warren Buffett Ready to Increase Renewable Energy Investment to $30 Billion

"Recalibration of Free Choice"–  Mar 3, 2012 (Kryon Channelling by Lee Caroll) - (Subjects: (Old) Souls, Midpoint on 21-12-2012, Shift of Human Consciousness, Black & White vs. Color, 1 - Spirituality (Religions) shifting, Loose a Pope “soon”, 2 - Humans will change react to drama, 3 - Civilizations/Population on Earth,  4 - Alternate energy sources (Geothermal, Tidal (Paddle wheels), Wind), 5 – Financials Institutes/concepts will change (Integrity – Ethical) , 6 - News/Media/TV to change, 7 – Big Pharmaceutical company will collapse “soon”, (Keep people sick), (Integrity – Ethical)  8 – Wars will be over on Earth, Global Unity, … etc.) - (Text version)

“…  4 - Energy (again)

The natural resources of the planet are finite and will not support the continuation of what you've been doing. We've been saying this for a decade. Watch for increased science and increased funding for alternate ways of creating electricity (finally). Watch for the very companies who have the most to lose being the ones who fund it. It is the beginning of a full realization that a change of thinking is at hand. You can take things from Gaia that are energy, instead of physical resources. We speak yet again about geothermal, about tidal, about wind. Again, we plead with you not to over-engineer this. For one of the things that Human Beings do in a technological age is to over-engineer simple things. Look at nuclear - the most over-engineered and expensive steam engine in existence!

Your current ideas of capturing energy from tidal and wave motion don't have to be technical marvels. Think paddle wheel on a pier with waves, which will create energy in both directions [waves coming and going] tied to a generator that can power dozens of neighborhoods, not full cities. Think simple and decentralize the idea of utilities. The same goes for wind and geothermal. Think of utilities for groups of homes in a cluster. You won't have a grid failure if there is no grid. This is the way of the future, and you'll be more inclined to have it sooner than later if you do this, and it won't cost as much.

Water

We've told you that one of the greatest natural resources of the planet, which is going to shift and change and be mysterious to you, is fresh water. It's going to be the next gold, dear ones. So, we have also given you some hints and examples and again we plead: Even before the potentials of running out of it, learn how to desalinate water in real time without heat. It's there, it's doable, and some already have it in the lab. This will create inexpensive fresh water for the planet. 

There is a change of attitude that is starting to occur. Slowly you're starting to see it and the only thing getting in the way of it are those companies with the big money who currently have the old system. That's starting to change as well. For the big money always wants to invest in what it knows is coming next, but it wants to create what is coming next within the framework of what it has "on the shelf." What is on the shelf is oil, coal, dams, and non-renewable resource usage. It hasn't changed much in the last 100 years, has it? Now you will see a change of free choice. You're going to see decisions made in the boardrooms that would have curled the toes of those two generations ago. Now "the worst thing they could do" might become "the best thing they could do." That, dear ones, is a change of free choice concept. When the thinkers of tomorrow see options that were never options before, that is a shift. That was number four. ….”

Retailer Tesco suspends executives after profit error

Yahoo – AFP, Ben Perry, 22 Sep 2014

Following preliminary investigations into its UK food business, Tesco said it believes

 that guidance regarding group profits for the six months to August 23 "was overstated

by an estimated £250 million" (AFP Photo/Leon Neal)

London (AFP) - The new head of Britain's biggest retailer Tesco has suspended four senior executives and launched an independent investigation after the troubled supermarket revealed Monday it had massively overestimated profits.

Following initial investigations into its UK food business, Tesco said its profit for the six months to August 23 "was overstated by an estimated £250 million ($408 million, 318 million euros)". The company did not specify which profit indicator this referred to.

It has previously forecast its half-year trading profit at £1.1 billion.

Monday's shock announcements sent 

Tesco's share price sliding almost 12 percent

 in early deals (AFP Photo/Paul Ellis)

Monday's shock announcements sent Tesco's share price sliding almost 12 percent in early deals.

And the stock finished down 11.59 percent at 203 pence on London's benchmark FTSE 100 index, which sank 0.94 percent to close at 6,773.63 points.

"We have uncovered a serious issue and have responded accordingly," Tesco's new chief executive Dave Lewis said in a statement issued by the company, which is the world's third-biggest supermarket group after France's Carrefour and global leader, US retailer Wal-Mart.

"The chairman and I have acted quickly to establish a comprehensive independent investigation," said Lewis, who took the helm at the start of September in a bid to turnaround Tesco, which has now issued a third profit warning in just nine weeks.

"The board, my colleagues, our customers and I expect Tesco to operate with integrity and transparency and we will take decisive action as the results of the investigation become clear."

Lewis later told reporters that Tesco had "asked four people to step aside so we can be sure we do the fullest and frankest investigation".

A spokesman confirmed that the four were "senior executives" at the group but refused to say if UK managing director Chris Bush was among the quartet despite Lewis announcing also that Robin Terrell had been appointed to lead the UK business.

Earnings delayed

Tesco said it would now publish its interim earnings on October 23, three weeks later than had been planned in the wake of the probe being carried out by accountancy firm Deloitte, which will work closely alongside Freshfields, the supermarket's outside legal advisers.

The announcement is a fresh blow for Tesco, which in August issued profit warnings and slashed its shareholder dividend by 75 percent, blaming challenging trade and high investment costs.

“The new chief executive's baptism of fire continues as Tesco adds a profit warning to a profit warning," said Richard J Hunter, head of equities at Hargreaves Lansdown Stockbrokers.

"A combination of an overstatement of income and an understatement of costs has led to a material shortfall to the previously announced profit figure. Whilst this does not come close to jeopardising overall profitability, it follows last month's announcement when the market had assumed that, at least, the bad news was out in the open and being dealt with."

Intense competition

Tesco, which is facing intense competition in Britain from German-owned discount retailers, had announced in July that outsider and Unilever executive Lewis would replace Philip Clarke.

Lewis' predecessor had shocked financial markets at the start of 2012 when he oversaw the supermarket's first profits warning in 20 years.

That sparked a £1.0-billion turnaround plan to refresh its supermarket stores, but the group revealed in April that annual profits fell for the second year in a row.

Tesco has struggled in recent years in Britain, as recession-weary shoppers have turned to German-owned discount retail groups Aldi and Lidl.

Discount chains boomed during the downturn as consumers tightened their belts to save cash, and remain popular despite the economy's steady recovery this year.

Tesco's profits have been weighed down also by fierce competition from its traditional supermarket rivals comprising Wal-Mart division Asda, Sainsbury's and Morrisons.

Tesco's latest revelations dragged down the supermarket sector, with shares in Sainsbury's falling 1.93 percent to close at 278.80 pence and Morrisons losing 1.65 percent to 179 pence.

Britain's biggest retailer has also suffered abroad in recent times, causing it close its failed US division Fresh & Easy and to exit from Japan over the past couple of years.

Related Articles:

Tesco loses £2bn in value as profit overstatement investigation begins

China's major retailers lose shoppers

People shop at Walmart supercenter in Fuzhou, July 8.
(File photo/CNS)

G20 countries agree to exchange tax information to stamp out evasion

Meeting of G20 finance ministers in Australia endorses plan to automatically exchange information on a reciprocal basis by end of 2018

theguardian.com, Bridie Jabour, Sunday 21 September 2014

International Monetary Fund (IMF) managing director Christine Lagarde and
 Australia’s treasurer Joe Hockey before the main meeting of the G20 finance
ministers. Photograph: Reuters

G20 countries have agreed to start automatically exchanging tax information in an effort to erode global tax evasion.

The communique from the finance ministers’ meeting in Australia at the weekend endorsed a plan to automatically exchange the information on a reciprocal basis by the end of 2018.

The ministers called on all financial centres to make the commitment by the time of the global forum meeting in Berlin at the end of October and to support efforts to monitor global implementation of the new standard.

“We support further coordination and collaboration by our tax authorities on their compliance activities on entities and individuals involved in cross-border tax arrangements,” the communique said.

The meeting in Cairns also discussed the potential impact on the global economy of the Ebola outbreak in west Africa. The Australian treasurer, Joe Hockey, confirmed the economic risks of the outbreak had been discussed.

The International Monetary Fund has estimated measures put in place by the group will expand the global economy by 1.8%, just shy of the target of 2%.

“Of course there are events that could derail [the growth targets],” Hockey told reporters on Sunday. “We need to be ambitious, we need to give people hope that tomorrow and the years beyond are going to be better than today. We have to.

“As global finance ministers it is easy to be caught in the slipstream of negativity, to be caught in the slipstream of looking at a glass as being half full, or rather half empty. The views vary but the bottomline is we can’t be pessimistic about the future.”

The agreement on measures to lift growth was 90% complete but by the time the G20 leaders met in Brisbane in November there would be ‘concrete outcomes’, he said.

Hockey said the president of the World Bank, Jim Yong-kim, made “significant” contributions to the discussion about Ebola.

“There was a discussion about a number of other geopolitical risks as well. Having said that, we believe that the fundamentals of the world economy are good and we are trying to use the levers that we have to make them better,” Hockey said.

If the 1.8% growth rate is achieved it would add $2 trillion to the world’s economy within four years.

The managing director of the IMF, Christine Lagarde, said the two areas key to reaching a 2% target were the labour market and infrastructure. She said the 1.8% was taking the G20 “very close” to its objective.

“Is that to say mission accomplished? No. Clearly because there will be more needed – from 1.8 to 2% is a bit of a journey,” she said.

Related Articles:

OECD proposes curbs to corporate tax avoidance

G20 finance chiefs aim to 'change destiny of global economy'

Delegates prepare to hear the opening remarks at the G20 Finance Ministers

 and Central Bank Governors Meeting in Cairns on September 20, 2014

(AFP Photo/William West)

India's jet-set tycoons crash to earth

Yahoo – AFP, Aditya Phatak, 21 Sep 2014

Force India-Mercedes Team Principal Vijay Mallya watches the big screen during a

 practice session of Formula One's Indian Grand Prix, at the Buddh International circuit

in Greater Noida, on October 28, 2011 (AFP Photo/Prakash Singh)

They were famed for their jet-set lifestyles and the names of their companies were emblazoned on airplanes, Formula One cars and the shirtfronts of cricket teams.

But now the debt-laden empires of three of India's best-known tycoons -- Vijay Mallya, Subrata Roy and T. Venkattram Reddy -- are crumbling before their eyes, downfalls that observers say stem from a climate of weak regulation and deference to conspicuous wealth.

"All too often, the banks are dazzled by the halo of personal fortunes," said Vishwas Utagi, a veteran campaigner for banking regulation.

India's Sahara group's chairman Subrata Roy (C),

 surrounded by bodyguards, leaves the Securities

 and Exchange Board of India head office in

 Mumbai, on April 10, 2013 (AFP Photo/

Punit Paranjpe)

Some of India's most successful businesses, such as the family-run Tata and Reliance conglomerates, have been led for years by men with little appetite for publicity and who prefer to operate in the shadows.

But Kingfisher boss Mallya and Sahara supremo Roy came to epitomise a new breed of tycoon, unafraid of trumpeting their achievements when they started making a name for themselves in the early 2000s.

Mallya -- the self-styled "King of Good Times" -- became something of an icon as he turned the United Breweries Group which he inherited from his father into one of the world's largest spirit makers.

As his core business flourished, Mallya branched out by launching the Kingfisher airline, named after his company's best-known beer. His profile rose further when he acquired a stake in the Force India F1 team and ownership of the Royal Challengers Bangalore cricket team.

Selling hotels for bail

But as the Indian economy began to slow sharply at the turn of the decade, with the aviation industry becoming one of the sectors to be worst hit, Mallya's fortunes nosedived too.

After selling the liquor business to Diageo in a bid to shore up his airline, Mallya looked on helplessly as Kingfisher continued to haemorrhagecash. The airline never took to the skies again after a pilots' strike over unpaid wages in 2012.

Having run out of patience over Mallya's failure to clear debts said to be in excess of $60 million, the United Bank of India this month declared him a "wilful defaulter", making it nigh impossible to access fresh loans.

While Mallya is fighting to keep his properties from creditors, Roy is trying to sell his portfolio of luxury hotels -- including New York's Plaza Hotel and the Grosvenor House in London -- to raise the $1.6 billion he needs to secure bail from Delhi's Tihar Prison.

While he has several media interests, including a Hindi TV channel and newspaper, Roy's profile was heightened by his co-ownership with Mallya of Force India and involvement in cricket.

T. Venkattram Reddy, seen during Farnborough

 Air Show, in England, on July 19, 2006 (AFP

Photo/Leon Neal)

As well as sponsoring the national side, Sahara set up a Pune-based franchise to enter the glitzy Indian Premier League (IPL).

The team's expulsion from the IPL at the end of last year's tournament in a dispute over finances hinted that all was not well.

Things dramatically worsened in March when Roy was detained after failing to meet a demand by regulators to pay back millions of small savers the $3.2 billion that Sahara raised via an illegal bond scheme.

Palatial splendour

While Roy owns homes modelled on the White House and Buckingham Palace, Reddy's penchant is for luxury cars with a fleet which reportedly included a Rolls Royce Phantom.

He also couldn't resist the glamour of the IPL, buying the Deccan Chargers franchise before it went bust in 2012.

While Roy's fortune was self-made, Reddy and his brother T. Vinayak Ravi Reddy inherited the ownership of the Deccan Chronicle from their father.

The Hyderabad newspaper's prestige enabled them to draw loans for riskier ventures including a chain of bookstores and a chartered jet company.

Even if the cricket team is no longer sucking money, the Reddys are struggling to keep the wolf from the door and lenders have already seized several of their properties.

Tamal Bandyopadhyay, author of a book on Sahara, said a weak regulatory framework enabled tycoons to build up debts that should never have been allowed.

The back of the Grosvenor House hotel in London, pictured on September 30,

2003 (AFP Photo/Joshua Roberts)

"Mallya is a case of over-stretching and over-leveraging, while Roy is the case of exploiting regulatory arbitrage or the loopholes in regulation," Bandyopadhyay told AFP.

Utagi, a retired bank worker who is vice president of the All India Bank Employees' Association, said there were too many "pliable people" in the industry who face little comeback if money they lend is not repaid.

"When it comes to credit appraisals for corporates, the rules are more often honoured in the breach than the observance," he said.

Bandyopadhyay said the ambitions of Indian tycoons were rarely held in check as they were "surrounded by sycophants".

"That makes it very difficult for them to stay in touch with reality," he added.

Related Article:

Anti-corruption forces China's banks to review big client credibility