August 6, 2020

Postal Service Predicts Record Loss for 2012

“We continue to see steady declines, unfortunately, in first-class mail, which is our most profitable product,” the postmaster general, Patrick R. Donahoe, said at a board meeting in Washington on Tuesday. “We have to build tomorrow’s postal service based on revenue and volume projections as we look forward. We can’t look backward.”

The amount of mail delivered by the Postal Service will probably fall about 6 percent in fiscal 2012, exceeding the drop of about 2 percent a year earlier, said its chief financial officer, Joseph Corbett. Revenue is expected to decline to $64 billion in 2012, from $65.7 billion in 2011, he said.

Mail volumes have dropped more than 20 percent in the last five years, hurt by the recession and the increasing use of electronic communications. The service, which is supposed to support itself financially, is closing post offices and processing plants, cutting jobs and promoting the mailing of letters and packages.

The Postal Service, which also said it might run out of cash by next September, posted a 2011 net loss of $5.1 billion in the year ended Sept. 30 after a $5.5 billion benefits payment was delayed into fiscal 2012. The loss in 2010, when the agency made a benefits payment equal to the deferred one, was $8.5 billion.

The loss forecast for 2012 assumes that the agency will not make any of the $5.6 billion in retiree health payments coming due, Mr. Corbett said in a conference call with reporters.

In September, Congress delayed the benefits payment deadline until Friday. If that remains in place, the Postal Service will default on the payment, Mr. Corbett said.

The Senate Homeland Security and Governmental Affairs Committee last week approved a bill intended to help the service remain solvent and to lengthen the payment schedule to its retiree health benefits fund.

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Michael Woodford Accuses Olympus of Wrongdoing

The executive, Michael C. Woodford, on Monday delivered a dossier of what he called “condemning” evidence on Olympus to Britain’s Serious Fraud Office in London.

Mr. Woodford, 51, said he had confronted the Olympus chairman, Tsuyoshi Kikukawa, in Tokyo last week with a report he had commissioned from the accounting firm PricewaterhouseCoopers.

The report, he said, raised questions about almost $700 million Olympus had paid to financial advisers over the acquisition of a British medical technology company in 2008.

The PricewaterhouseCoopers report says that improper conduct could not be ruled out.

Mr. Woodford said that he had demanded Mr. Kikukawa’s resignation, only to have the chairman convene a board meeting in Tokyo on Friday in which Mr. Woodford, the only non-Japanese executive among the 15 directors, was fired. Mr. Woodford said the entire board had known about the PricewaterhouseCoopers report but had not taken action.

“Olympus needs a complete and utter forensics accounting,” Mr. Woodford said Monday during a telephone interview from London. “I’d be delighted to return and put in a new management structure,” he said. “But with or without me, the board should all go.”

Olympus denied any wrongdoing and declined to make Mr. Kikukawa available for an interview.

Mr. Woodford, a 30-year Olympus veteran, had been president since April and had been given the chief executive’s post only in September.

Separate from the transaction covered in the PricewaterhouseCoopers report, Mr. Woodford said he had also made inquiries into Olympus’s acquisition in 2008 of three small Japanese companies unrelated to Olympus’s core businesses for almost $600 million. Those investments, which were not covered in the accounting firm’s report, were written down to only a quarter of their value within the same fiscal year, he said.

In all, Mr. Woodford said, the transactions he is questioning resulted in the destruction of $1.3 billion in shareholder value at Olympus, a maker of cameras and medical equipment. The transactions, he said, occurred under Mr. Kikukawa, who preceded him as chief executive before becoming chairman.

“To be that incompetent is difficult to imagine, which suggests that there is something more sinister going on,” Mr. Woodford said.

Yoshiaki Yamada, a spokesman in Tokyo for Olympus, maintained Monday that Mr. Woodford had been stripped of his title because his leadership style had created “a big gap” with the rest of management, which was “inhibiting decision-making.”

“All of our mergers and acquisitions have been carried out with proper accounting, and through appropriate procedures and processes,” Mr. Yamada said.

He could not confirm a report, by Reuters, that Olympus was considering legal action against Mr. Woodford for disclosing confidential company information to the news media. Mr. Woodford’s allegations were first reported by The Financial Times.

Since Mr. Woodford’s dismissal on Friday, Olympus has lost more than $3 billion in market capitalization. The stock sank 22 percent in Tokyo on Monday after losing 18 percent on Friday, when the company fired Mr. Woodford.

Mr. Woodford said the transactions first came to his attention in late July, when an article in the Japanese finance magazine Facta raised questions about Olympus’s acquisition of the three Japanese companies. But when Mr. Woodford asked Mr. Kikukawa about the article over lunch in early August, he said the chairman told him it was “a domestic situation” that the Briton need not worry about.

Two weeks ago, Mr. Woodford said he commissioned PricewaterhouseCoopers to examine the 2008 purchase of the British medical technology firm, Gyrus. Mr. Woodford said he sent a copy of the accounting firm’s report to Mr. Kikukawa last week, along with a letter in which Mr. Woodford called the transactions “shameful” and called for the resignations of the chairman and two other executives.

He said he also sent the report to all members of the Olympus board and suggested to Mr. Kikukawa that they meet Friday to discuss “where we go from here.”

But on Friday morning, Mr. Kikukawa held an emergency board meeting, where Mr. Woodford said he was not allowed to speak. His dismissal came despite Olympus’s public praise of Mr. Woodford this year for his turnaround of its European arm.

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Rescue Aid to Greece Delayed as Pressure Rises for Reforms

Meeting in Luxembourg, the finance ministers made it clear that Greece was now unlikely to receive 8 billion euros ($10.6 billion) before November.

Greece has said it could default on its debt within weeks without the aid — an outcome with potentially disastrous consequences for the euro zone. But on Monday, finance ministers served notice that they intended to push Greece further.

“Full compliance with the agreed conditions is necessary for Greece to receive the funds Greece needs,” said Olli Rehn, the European commissioner for economic and monetary affairs. “A credible push for structural reforms and privatization are essential.”

“It is very likely there will need to be new measures,” Mr. Rehn added, although he said that those might be for aid to be given in 2012 since time was short.

Jean-Claude Juncker, president of the euro zone finance ministers, suggested that the issue of private sector involvement in a deal struck in July on Greek debt might be reopened. He said revisions were being discussed, but refused to say whether this could mean increased losses for private investors.

There was some good news with an agreement to allow Finland to receive collateral for loans to the Greeks, removing an obstacle to a second bailout for Greece agreed to in principle in July. No other nation is expected to request the same arrangements because of the conditions that make them costly, Mr. Juncker said.

Meanwhile Belgium’s finance minister, Didier Reynders, sought to calm fears about the fate of the Franco-Belgian financial group Dexia amid concerns about its exposure to Greek debt and reports that the bank could be broken up.

Dexia called an emergency board meeting late Monday after a 10 percent drop in its share price, and a warning from the credit agency Moody’s that Dexia’s main operating businesses were on review for a downgrade.

That highlighted the impact of the announcement from Athens on Sunday that Greece’s 2011 budget deficit was projected to be 8.5 percent of gross domestic product, down from a forecast of 10.5 percent last year but shy of the 7.6 percent target set by international lenders.

Doubts about Greece’s ability to push through harsh structural changes have led to tense discussions with officials from the so-called troika of international lenders — the European Commission, the European Central Bank and the International Monetary Fund.

Representatives of those institutions, now visiting Athens, have yet to make a recommendation to release the money.

Evangelos Venizelos, the Greek finance minister, said his country was taking “all the necessary difficult measures in order to fulfill its obligations towards its institutional partners.”

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In Her First Week at the I.M.F., a New Leader Stresses Diversity and Respect

On Tuesday, she met at the fund’s headquarters in Washington with employees still shaken by the abrupt resignation of her predecessor, Dominique Strauss-Kahn, after he was charged with the sexual assault of a hotel maid. On Friday, she holds her first board meeting to consider another round of emergency financing for Greece.

“I thought it was necessary to come back to D.C. very promptly simply because there are so many issues to address,” Ms. Lagarde said by way of introduction at her first official news conference. “It cannot wait for another summer holiday. Here I am, and for good.”

When Ms. Lagarde last met with reporters here, during the fund’s annual spring meetings, she made a point of speaking mostly in French. On Wednesday, settling into her new international role, she spoke in English even when addressed in French.

She mostly dodged questions about Greece, saying that she would not prefigure Friday’s meeting, but she did provide a measure of her thinking on the fund’s mission and priorities.

Mr. Strauss-Kahn, a member of the Socialist Party in France, expanded the fund’s focus on financial stability to include broader goals like reduced unemployment. He argued that the benefits of prosperity did not necessarily flow to the broader populace.

Ms. Lagarde, by contrast, is a political conservative. She said that she needed time to study the fund’s policies before offering her own opinions. But she sounded a note of caution, saying that she supported a move toward “comprehensive” measures of efficacy, but that the fund “should not become a specialized boutique to reduce unemployment.”

The fund was created by the United States and its allies after World War II as a lender of last resort for troubled governments. Since that time it has always been run by a European, though the United States maintains effective control.

Ms. Lagarde campaigned to replace Mr. Strauss-Kahn largely on the strength of Europe’s determination to maintain that leadership. But her victory required the support of emerging economies, who want to play a larger role. Ms. Lagarde indicated Wednesday that she was likely to expand the number of her deputies to four from three to make room for the elevation of a Chinese official at the fund, Min Zhu.

Ms. Lagarde also said during her campaign that a female executive would be an advantage for the fund, reducing what she described as the testosterone level.

Mr. Strauss-Kahn was allowed to remain atop the fund after the disclosure of an affair in 2008 with a subordinate, a decision that some considered a mistake.

A number of women have come forward in recent months to describe the fund as a problematic workplace, where some superiors felt free to press subordinates for dates and little effort was made to prevent or to punish sexual harassment. Officials at the fund have disputed their characterizations, and a group of several hundred female employees signed a public letter defending the fund as a workplace.

On Wednesday, Ms. Lagarde said that increasing the diversity of the fund’s staff would be a priority. “Together with diversity comes respect for everybody,” Ms. Lagarde said, “and it’s been the case in the past that people have been respected and I will make sure that they continue to be respected no matter what their differences are.”

The fund has made a number of recent changes to improve its workplace culture, including instituting a more restrictive policy on relationships with subordinates. Ms. Lagarde’s contract includes a new injunction, “You shall strive to avoid even the appearance of impropriety.” And Ms. Lagarde noted Wednesday that she would soon attend a new ethics program now required for all employees.

She will make $467,940 in her new job, plus a stipend of $83,760, all of it untaxed.

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