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Glaxo Chief Executive Addresses China Probe

July 24, 2013 by Leave a Comment

The remarks, made during a conference call on the company’s second-quarter earnings, were the most extensive Mr. Witty has made about the scandal that his company is facing in China, where authorities have accused executives of using travel agencies to funnel illegal payments to doctors and government officials.

“I am very personally disappointed with these allegations that have been made,” Mr. Witty told reporters. “Clearly they are shameful allegations if they are true.”

He revealed few new details about the investigation, but said that the company was working with the Chinese government and that it has “opened up channels” with the British and United States governments. The company disclosed in 2010 that the United States was investigating Glaxo for possible violations of its overseas anti-bribery laws.

Mr. Witty said the ongoing Chinese investigation was likely to affect sales in the country but said it was too early to know specifics. “We continue to see the country as a key place for further investment,” he said.

The company posted second-quarter net income of 1.05 billion pounds, or $1.67 billion, on revenue of 6.62 billion pounds. That was a decrease from net of 1.24 billion pounds in the same quarter a year ago, but sales were up from 6.46 billion pounds last year.

Mr. Witty also sought to distance the company’s London headquarters from the scandal, saying that the central office “knew nothing” about the alleged fraud and that the executives accused of wrongdoing operated outside the company’s normal surveillance systems.

Since taking over as chief executive in 2008, Mr. Witty has tried to promote the company as a leader in ethical and transparent behavior. In 2012, Glaxo agreed to pay a fine of $3 billion to settle charges in the United States that it had improperly promoted its antidepressants and failed to report safety data about the diabetes drug Avandia

“To be crystal clear, we have zero tolerance for this kind of behavior,” Mr. Witty said. “I can assure you we are absolutely committed to rooting out corruption and we are also absolutely committed to getting to the bottom of what has happened here.”

The company’s response to the crisis has evolved considerably since reports of bribery first surfaced a few weeks ago. Glaxo officials initially stood by statements that the company had not engaged in wrongdoing, saying it had investigated the claims and found them to be without merit.

But it changed its tone after Chinese investigators raided company offices, detained four executives and went public with unusual detail about the practices they had uncovered. Mr. Witty dispatched top management to China to meet with investigators, and he acknowledged that some of the executives there may have broken the law.

Meanwhile, the inquiry has expanded to include other pharmaceutical companies. On Tuesday, AstraZeneca said some of its employees had been questioned in Shanghai, and Merck and Roche acknowledged over the weekend that they had used the same small travel agency that has been implicated in the Glaxo investigation.

Article source: http://www.nytimes.com/2013/07/25/business/global/glaxo-chief-executive-addresses-china-probe.html?partner=rss&emc=rss

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Bits Blog: Apple Releases Some Data on Government Requests

June 17, 2013 by Leave a Comment

A sign outside of Apple's headquarters in Cupertino, Calif. The company said Sunday that it does not store data related to customers’ location, map searches or search requests “in any identifiable form,” meaning it likely stores the data without linking it to a named individual.Marcio Jose Sanchez/Associated Press A sign outside of Apple’s headquarters in Cupertino, Calif. The company said Sunday that it does not store data related to customers’ location, map searches or search requests “in any identifiable form,” meaning it likely stores the data without linking it to a named individual.

Amid reports that technology companies cooperated with the United States government’s surveillance efforts, Apple has maintained that it does not provide the government with unfettered access to its servers. On Monday, the company released some numbers and information about its online services to try to prove it.

In a statement on its Web site, Apple said that from December 2012 through May 2013, it received between 4,000 and 5,000 requests from American law enforcement agencies for customer data. Among those requests, government officials asked for information about roughly 10,000 accounts or devices, Apple said.

Apple said the requests came from federal, state and local authorities regarding both national security matters and criminal investigations. It said the most common types of request came from police investigations of robberies and other crimes, searches for missing children, attempts to prevent a suicide or searches for people with Alzheimer’s disease.

Apple also published details about its online communication services, iMessage and FaceTime. It said it chooses not to store the content of exchanges between customers on these services, and therefore it does not hand over this type of data to law enforcement agencies. Furthermore, it said, those conversations are encrypted, so nobody but the sender and the receiver can see them.

“Apple has always placed a priority on protecting our customers’ personal data, and we don’t collect or maintain a mountain of personal details about our customers in the first place,” the company said in the statement.

Apple said it also does not store data related to customers’ location, map searches or search requests “in any identifiable form,” meaning it likely stores the data without linking it to a named individual.

Article source: http://bits.blogs.nytimes.com/2013/06/17/apple-releases-some-data-on-government-requests/?partner=rss&emc=rss

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Some Savers in Cyprus May Lose 60 Percent

March 30, 2013 by Leave a Comment

LONDON — Big-ticket savers at the Bank of Cyprus may be forced to accept losses on their deposits that exceed 60 percent in order to keep the stricken bank afloat, bankers briefed on the negotiations said on Friday.

The more sizable haircut, coming soon after the imposition of tough capital controls, is the latest and perhaps most profound reminder of the financial punishment being visited upon this small island economy as it struggles to comply with the conditions that Europe is demanding of it before it gets a desperately needed 10 billion euro loan.

Europe has demanded that large depositors in the country’s two largest banks — Bank of Cyprus and Laiki Bank — accept across-the-board losses in order to pay for the 17 billion bailout.

Over the past week, government officials have been saying that depositor losses would not exceed 40 percent — even though bankers and lawyers involved in the negotiations have been warning for some time that the final figure would need to be higher if the bank was to re emerge as a viable entity.

Under the terms of the transaction, large depositors would have 77.5 percent of their savings turned into different forms of equity, with the rest remaining as a frozen, non-interest-bearing deposit that they would be able to access in the future.

If the bank does well, depositors would be able to sell their stock. But even in the best case, in which the bank thrives on the back of a quickly recovering economy — a long shot most economists believe — the loss is likely to exceed 60 percent and could well be much more than that.

Lawyers and bankers who have analyzed the transaction believe the ultimate loss to the depositor could be anywhere between 60 and 77.5 percent.

There has been no official announcement of the deal and, given the political sensitivities involved, there could be further changes in the coming days. But news of the terms is already rocketing through Cyprus.

How much of a loss uninsured depositors with accounts of more than 100,000 euros at the bank would have to bear has become a hotly disputed topic in the past two weeks, pitting Cyprus’s creditors — the European Commission, the European Central Bank and in particular the International Monetary Fund, known widely as the troika — against the Cyprus government.

In the past week, as it has become evident that the country’s 18-billion-euro economy was going to enter a tailspin after the controversial move to impose capital controls and freeze bank deposits equal to one half the size of the country’s economic output, it has become increasingly clear that the bank would need a much larger capital cushion if it is to survive the next year.

Projections of an economic slump of 3 percent that were once seen as a worst case now seem wildly optimistic, with most economists expecting the economy to plunge between 5 and 10 percent this year.

While many of the Bank of Cyprus’ largest depositors are wealthy Russians, numerous Cypriot businesses and wealthy individuals also had significant amounts of capital in the bank. Economists believe that wiping out such a large amount of savings will be devastating — not just on the economy but on Cyprus’s future as a center for financial services.

Article source: http://www.nytimes.com/2013/03/30/business/global/some-savers-in-cyprus-may-lose-60-percent.html?partner=rss&emc=rss

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3 Walmart Suppliers Made Goods in Bangladesh Factory

December 6, 2012 by Leave a Comment

The documents — photographed by a Bangladeshi labor organizer after the fire and made available to The New York Times — include an internal production report from mid-September showing that 5 of the factory’s 14 production lines were devoted to making apparel for Walmart.

In a related matter, two officials who attended a meeting held in Bangladesh in 2011 to discuss factory safety in the garment industry said on Wednesday that the Walmart official there played the lead role in blocking an effort to have global retailers pay more for apparel to help Bangladesh factories improve their electrical and fire safety.

Ineke Zeldenrust, international coordinator for the Clean Clothes Campaign, an anti-sweatshop group based in Amsterdam, said Walmart was the company that “most strongly advocated this position.”

The meeting was held in April 2011 in Dhaka, the country’s capital, and brought together global retailers, Bangladeshi factory owners, government officials and nongovernment organizations after several apparel factory fires in Bangladesh had killed dozens of workers the previous winter.

According to the minutes of the meeting, which were made available to The Times, Sridevi Kalavakolanu, a Walmart director of ethical sourcing, along with an official from another major apparel retailer, noted that the proposed improvements in electrical and fire safety would involve as many as 4,500 factories and would be “in most cases” a “very extensive and costly modification.”

“It is not financially feasible for the brands to make such investments,” the minutes said.

Kevin Gardner, a Walmart spokesman, said the company official’s remarks in Bangladesh were “out of context.”

“Walmart has been advocating for improved fire safety with the Bangladeshi government, with industry groups and with suppliers,” he said, adding that the company has helped develop and establish programs to increase fire prevention.

Ms. Zeldenrust said, “Everyone recognized that fire safety was a serious problem and it was a high time to act on it, and Walmart’s position had a very negative impact.” She added, “It gives manufacturers the excuse they’re looking for to say, ‘We’re not to blame.’ ”

Scott Nova, the executive director of the Worker Rights Consortium, a factory monitoring group based in Washington, was also at the meeting. He said that upgrading the factories’ safety would cost a small fraction of what Walmart and other retailers pay for the clothing they import from Bangladesh each year.

Bloomberg News first reported details of the Dhaka meeting on Wednesday.

Walmart has indirectly acknowledged that the factory, Tazreen Fashions, outside Dhaka, was producing some of its apparel, saying in a statement that a supplier had “subcontracted work to this factory without authorization and in direct violation of our policies.” In that statement, issued two days after the Nov. 24 fire, Walmart said, “We have terminated the relationship with that supplier.” Walmart has declined to name the supplier.

After Walmart was shown some of the documents from the factory on Wednesday, Mr. Gardner replied in an e-mail. “As we’ve said, the Tazreen factory was de-authorized months ago,” he wrote. “We don’t comment on specific supplier relationships.”

The photographed documents from the factory indicate that three suppliers — the International Direct Group, Success Apparel and Topson Downs — used the factory to make shirts, shorts and pajamas for Walmart. One document, written in July, provides product descriptions from Success Apparel for Walmart’s Faded Glory house-brand shorts. A photo taken inside the factory after the fire showed a pair of Faded Glory shorts.

The documents indicate that Success Apparel often worked through Simco, a Bangladeshi garment maker.

Mr. Nova of the Worker Rights Consortium said the documents raised questions about Walmart’s statements after the fire.

“It was not a single rogue supplier as Walmart has claimed — there were several different U.S. suppliers working for Walmart in that factory,” Mr. Nova said. “It stretches credulity to think that Walmart, famous for its tight control over its global supply chain, didn’t know about this.”

Mr. Nova works closely with the Bangladesh Center for Worker Solidarity and made the factory documents available.

Investigators also found apparel made for Sears and Disney inside the factory after the fire. Both companies said suppliers had given orders to the factory without their knowledge and authorization.

Mr. Gardner said accredited outside auditors had periodically inspected the factory on Walmart’s behalf. A May 2011 audit gave the factory an “orange” rating, meaning that there were “higher-risk violations” and that it would be re-audited within six months. If a factory gets three orange ratings over two years, it loses Walmart’s approval.

A follow-up audit in August 2011 for Walmart gave Tazreen an improved “yellow” rating, meaning “medium-risk violations.”


Article source: http://www.nytimes.com/2012/12/06/world/asia/3-walmart-suppliers-made-goods-in-bangladeshi-factory-where-112-died-in-fire.html?partner=rss&emc=rss

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You’re the Boss Blog: Putting the S.B.A. Into Perspective

September 14, 2012 by Leave a Comment

Searching for Capital

A broker assesses the small-business lending market.

In this political season, there will be a lot of dialogue about the Small Business Administration as a possible solution to the small-business lending crisis in America. As two examples, the S.B.A.’s administrator, Karen Mills, spoke recently at the Democratic National Convention and Robb Mandelbaum wrote a post for this blog about the effect a Romney administration might have on the S.B.A. budget.

And that’s an important conversation to have. But it’s also important to keep something in mind about the S.B.A.: it is actually a very small part of overall small-business lending in America. This is easy to forget when government officials and politicians are hiding behind S.B.A. programs and stats, using them as benchmark for the state of small-business lending and implicitly suggesting that the S.B.A. can solve all small-business problems.

The numbers are clear. There are 318,396 loans currently being managed by the S.B.A. Meanwhile, there are 17,249,884 small-business loans on the books of banks insured by the Federal Deposit Insurance Corporation. By this measure, the Small Business Administration. administers 1.85 percent of all small-business loans. The S.B.A.’s impact is greater if you compare the loans by dollar volume. The S.B.A. has a little more than $79 billion of loans on its books, compared to the more than $646 billion dollars of small-business loans held by those banks. That’s 12.23 percent.

But even this overstates the power of the S.B.A. Keep in mind that the F.D.I.C. numbers don’t reflect the tens of billions of dollars that are lent out by alternative private lenders — such as factors and  merchant cash-advance lenders — to small businesses. There is no data available for those loans.

Let me be clear, I am a proponent of the Small Business Administration. I believe it’s a good program and that it does important work. This post is not intended to be critical of the S.B.A. or to take a political position. It is meant to say that when we hear politicians talk about changes they intend to make in the Small Business Administration, they are only scratching the surface. If the S.B.A. makes progress, that’s great — but the problems are bigger than the S.B.A.

When it comes to solving the puzzle of improving access to capital for small-business owners, the S.B.A. may be a piece of the puzzle — but it is only a piece. And we should all think about it that way.

Ami Kassar founded MultiFunding, which is based near Philadelphia and helps small businesses find the right sources of financing for their companies.

Article source: http://boss.blogs.nytimes.com/2012/09/14/putting-the-s-b-a-into-perspective/?partner=rss&emc=rss

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Digicel’s Denis O’Brien Helps Rebuild Haiti

January 7, 2012 by Leave a Comment

Denis O’Brien, an impatient Irish billionaire who tends to make his points with a few choice profanities, is determined to change all that.

On a recent sunny morning, he presided over the opening of the 50th school that his vast telecommunications company, Digicel, has rebuilt since the quake struck in 2010 — and then he promptly pledged to build another 80 schools by 2014.

His intention is not, however, to be a one-man force for change. With a skill for what he calls “frying feet,” he has sweet-talked, cajoled, harangued, nagged, strong-armed and shamed government officials, international financiers and business leaders into doing more to rebuild Haiti.

“It’s all about project management,” Mr. O’Brien, 53, said in an interview at Digicel’s offices here. “Everyone’s on hand for the photo op, but where are the 100 houses that were promised after the cameras are gone? I’m the guy who’s going to count them.”

In the process, he has become de facto ambassador for an emerging business-centered approach to the redevelopment of this disaster-prone nation, which has so long relied on the work of nonprofit groups and aid agencies that it is known as the Republic of N.G.O.’s, or nongovernmental organizations.

“We’ve seen the growth of the N.G.O. community here for the last 20 years, and many of them do good work and there is a demand and a need for that work,” said Lionel Delatour, a business consultant and lobbyist whose brothers have served as government ministers. “But N.G.O.’s do not pay taxes, and when they bring their supplies and cars and other goods into the country, they do not pay customs duties.”

Digicel, on the other hand, is the country’s largest employer and taxpayer. The privately held company has invested $600 million in Haiti, making it by far the country’s largest foreign investor ever, and it has democratized communications with its strategy of selling low-price cellphones and services to the masses.

Mr. O’Brien has profited extensively from Haiti, which is Digicel’s largest market and accounts for roughly one-third of its 11.1 million subscribers.

“There is something that is two-way about this relationship,” Mr. Delatour said. “It is not only a story of what Digicel and Mr. O’Brien have done for Haiti, but also what Haiti has done for Digicel and Mr. O’Brien.”

For his part, Mr. O’Brien does not like to hear his work on behalf of the country or Digicel’s largess there described as corporate social responsibility. “If you make money in a poor country, you can’t just take it and disappear,” he said. “It would be bad business.”

Thus, Digicel unveiled plans in November to invest $45 million in a new 173-room hotel next door to its offices, to be run by Marriott. That announcement came at a forum sponsored by the Inter-American Development Bank that drew 500 business people from 29 countries.

It was kicked off by a ribbon-cutting at a new industrial park in Caracol whose first tenant will be Sae-A, a Korean apparel manufacturer with extensive experience in Latin America. It is building a plant that plans to employ 20,000 and, unlike the low-wage apparel manufacturing operations that spawned vast urban slums, incorporate housing developments and other infrastructure.

Just last month, Heineken, the Dutch brewing concern, increased to 95 percent from 23 percent its stake in Brasserie Nationale d’Haiti, a Haitian brewery and bottler, saying it saw greater political and economic stability in the country.

Then there are commitments from the 60-odd members of the Haiti Action Network of the Clinton Global Initiative, or C.G.I., which include installing solar panels, increasing energy supplies, refurbishing homes and providing job training.

Mr. O’Brien is charged with overseeing their progress on behalf of former President Bill Clinton, and so after the school opening, he headed to the Hotel Montana to grill the network’s members, as he does 10 times a year.

Article source: http://feeds.nytimes.com/click.phdo?i=6de82d41b0a2ec7d95942acc39e50d1d

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Carmakers and White House Haggling Over Mileage Rules

July 4, 2011 by Leave a Comment

Depending on the stringency of the standard, the deal could also reduce global warming emissions by millions of tons a year and cut oil imports by billions of barrels over the life of the program, cornerstones of President Obama’s energy policy.

The administration is proposing regulations that will require new American cars and trucks to attain an average of as much as 56.2 miles per gallon by 2025, roughly double the current level. That would require increases in fuel efficiency of nearly 5 percent a year from 2017 to 2025.

The standard would put domestic vehicle fuel efficiency on a par with that in Europe, China and Japan, saving consumers billions of dollars at the pump and creating for the first time a truly global automobile market.

The automakers say the standard is technically achievable. But they warn that it will cost billions of dollars to develop the vehicles, and they express doubt that consumers will accept the smaller, lighter — and in some cases, more expensive — cars that result.

“We can build these vehicles,” said Gloria Bergquist, vice president for public affairs at the Alliance of Automobile Manufacturers, the leading industry lobby in Washington. “The question is, will consumers buy them?”

The talks have heated up and will continue through the summer, with the proposed new standard expected in September and completed early next year after public hearings.

The auto companies are asking the government to phase in the standard gradually, to allow credits for using certain technologies and fuels and to include a review period that could lower the target if it proves too costly, industry and government officials said. They are also seeking assurances that the government will help build the charging stations needed for electric and plug-in hybrid-electric vehicles, which will help to meet the new standard.

A senior administration official, insisting on anonymity because the negotiations were continuing, said the 56.2 m.p.g. goal represented the government’s opening bid, and might not be the final figure. The official said there was still some disagreement within the government, and the final outlines are far from certain.

The United States has the world’s most lenient vehicle emissions and mileage standards, lagging as much as 10 m.p.g. behind the rest of the world. Europe is expected to reach about 60 m.p.g. by 2020.

The official added that arriving at a new mileage rule was particularly difficult because the auto industry has not yet fully recovered from the recession and the government was trying to force technological change more than a decade in the future.

On that, industry and government agree.

“It is very challenging,” Mark Reuss, president of General Motors North America, said of the 56.2 m.p.g. goal at a press event in Detroit last week. “But it’s up to us as engineers to provide high value to the customer and support the environment.”

The auto companies and the government are returning to a familiar battleground, which the industry dominated for three decades beginning in the 1970s, using its clout on Capitol Hill and within the federal bureaucracy to keep fuel economy standards low. But two years ago, when Chrysler and General Motors were clinging to life and the rest of the industry was slumping, carmakers agreed to aggressive new nationwide fuel economy standards covering the years 2012 to 2016. That deal, announced by President Obama in May 2009 as a dozen auto executives looked on, raises the domestic car and light truck fleet fuel economy to 35.5 miles per gallon by 2016.

Now, the government wants to extend that mandate nine years, but is confronting a much healthier and feistier industry.

The lobbying is already in full swing. The auto companies are seeking a standard at the lower end of the range proposed by the government, citing studies that say that meeting the stiffer regulation will add thousands of dollars to the cost of a new vehicle and require a significant downsizing of vehicles in all classes.

They also want certainty that there will be a single national standard and that California will not be permitted to pursue a tougher standard on its own.

Bill Vlasic contributed reporting from Detroit.

Article source: http://feeds.nytimes.com/click.phdo?i=31b4d22647e0318006247ca8c1416c37

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