July 6, 2022

GlaxoSmithKline Is Investigated in China

A spokesman in London said that GlaxoSmithKline was unaware of the nature of the investigation but that the company’s executives were cooperating.

Two weeks ago, the company fired the head of its research and development staff in Shanghai for misrepresenting data in a scientific paper he helped to write.

Also two weeks ago, The Wall Street Journal reported that a whistle-blower had sent information to GlaxoSmithKline’s board claiming that for years the sales staff in China had engaged in the “widespread bribery of doctors to prescribe drugs.”

The company said on Monday that it had thoroughly investigated the accusations made by the whistle-blower and concluded this year that there was no evidence of bribery or corruption.

Glaxo has said in regulatory filings that the Justice Department and the Securities and Exchange Commission contacted it as early as 2010 about possible violations of the Foreign Corrupt Practices Act in its overseas operations, including China. The company referred to the contacts as “discussions,” rather than an investigation, and said on Monday that they were continuing.

The troubles at the company, also known as GSK, are the latest example of a growing number of multinational corporations coping with bribery and corruption accusations in China, where offering cash bribes and kickbacks is widespread. Several American companies have been prosecuted in recent years in the United States under the Foreign Corrupt Practices Act, which forbids bribing foreign government officials.

The Chinese police made their announcement over the weekend. The public security bureau in the city of Changsha, in central China’s Hunan province, posted a brief statement online announcing an investigation into senior managers at GSK China for economic crimes.

“It is still unclear what is the precise nature of their investigation,” Simon Steel, a company spokesman, said on Monday. “We will cooperate.”

Over the weekend, the Chinese police also detained GlaxoSmithKline managers in Shanghai, Beijing and Changsha, according to Monday’s edition of The South China Morning Post, which is published in Hong Kong.

Glaxo is one of the world’s biggest drug companies. It has both manufacturing and research and development facilities in China, with about 5,000 employees.

Although China accounts for a small share of the company’s global revenue, it is one of the fastest-growing markets. In 2012, the company’s revenue in China rose 17 percent, to nearly $1.2 billion, from 2011, according to the company’s annual report.

Article source: http://www.nytimes.com/2013/07/02/business/global/glaxosmithkline-under-investigation-by-chinese-authorities.html?partner=rss&emc=rss

Fair Game: Dell Shareholders Look Hard at Takeover Effort

That’s what more and more Dell shareholders appear to believe about the $13.65 per-share price proposed on Feb. 5 by Mr. Dell and Silver Lake Partners, a technology investment firm. Initial objectors to the buyout have been joined by additional shareholders concerned about getting a fair shake.

The issue of fairness is a hazard of management-led buyouts, of course. Are insiders, who have an enormous information advantage owing to their deep knowledge of a company’s operations, trying to get control of an enterprise when its shares are perhaps temporarily depressed? Over the last year, Dell’s stock has lost 19 percent of its value.

Some investors wonder if Mr. Dell, who owns 14 percent of the shares outstanding, might have a hot new product on the drawing board that has the potential to make the company a highflier again.

Neither management nor Mr. Dell is saying much of anything about the company’s prospects. Last Tuesday, when Dell announced mixed earnings for the year, the company declined to make any projections for coming quarters on the conference call with investors and analysts. Its chief financial officer cited the pending deal as the reason no outlook was given.

As is the case with all insider deals, there’s great potential for outside shareholders to be treated unfairly. Making the deal even more problematic, Dell’s shareholders have little data upon which to assess its price. Dell’s regulatory filings say that the $13.65 per-share price is the result of extensive “bids and arms-length negotiations” between Silver Lake and the special committee of Dell’s board beginning in late October 2012.

Still, there’s no mention of how the $13.65 per-share offer stacks up against the company’s long-term enterprise value, an assessment of future earnings potential that is a typical measure in a takeover. Instead, the offer by Mr. Dell and Silver Lake seems based on the company’s recent stock price. Their $24.4 billion deal represents a 37 percent premium to the stock’s average price over the previous three months, they say.

Meanwhile, Southeastern Asset Management, one of Dell’s largest outside shareholders, estimates that the company is worth $23.72 a share, almost 75 percent more than the buyers are offering. Southeastern has come to that conclusion using publicly available information, however, because that’s all it has access to.

Naturally, both of these parties have a vested interest in getting their price in the deal. Mr. Dell and his group want to pay as little as possible, while long-suffering outside owners hope for more.

Trying to remedy this unsatisfying situation, an uninvolved investor organization has made an excellent suggestion: an independent, peer-reviewed analysis of Dell’s enterprise value should be done on behalf of its outside shareholders. Based on the same information Dell’s management has, such an assessment would assure investors that they are being bought out at a fair value.

This idea comes from the Shareholder Forum, a nonpartisan, independent creator of programs devised to provide the kind of information investors need to make astute decisions. The Forum, overseen by Gary Lutin, a former investment banker at Lutin Company, suggests hiring a qualified expert to analyze the company’s operations. This would be similar to the so-called fairness opinions provided to shareholders in takeovers by outsiders. The analysis would be subject to confidentiality when necessary and would be reviewed by recognized analysts, academics and other investment professionals.

On Feb. 14, Mr. Lutin sent a letter to Mr. Dell and Alex Mandl, chairman of the special committee of Dell’s board charged with ensuring the deal’s fairness to all shareholders. In the letter, Mr. Lutin asked that the company support the independent analysis and provide assistance in its preparation.

Mr. Lutin said he had assumed that the board committee and Mr. Dell would want to support this project. “Shareholders have a very well-established right to any information relevant to their investment decisions under Delaware law,” Mr. Lutin said last week. “They also have the right to expect management to be responsible for addressing those interests.”

But last week, Mr. Lutin said that lawyers representing Mr. Mandl and his committee told him they would not be supporting the independent analysis.

Article source: http://www.nytimes.com/2013/02/24/business/dell-shareholders-look-hard-at-takeover-effort.html?partner=rss&emc=rss

DealBook: Former UBS Executives Are Grilled Over Libor

Marcel Rohner, former chief of UBS, leaving a parliamentary hearing in London on Thursday. I did the best I could, he told lawmakers.Tal Cohen/European Pressphoto AgencyMarcel Rohner, former chief of UBS, leaving a parliamentary hearing in London on Thursday. “I did the best I could,” he told lawmakers.

LONDON – Several former senior executives at UBS were labeled on Thursday as negligent and incompetent for failing to detect illegal activity that led the Swiss bank to pay a $1.5 billion fine to global regulators.

On the second day of hearings at the British Parliament related to the recent rate-rigging scandal, Marcel Rohner, the former chief executive of UBS, and a number of former heads of the firm’s investment bank were grilled over whether they were aware that around 40 people had altered major benchmark interest rates for financial gain.

The executives, who no longer work at the Swiss bank, denied any knowledge about the illegal activity, and said they had only found out about the investigations into the firm conducted by the United States Justice Department, the United States Commodity Futures Trading Commission and international authorities late last year.

“What we have heard are appalling mistakes that can only be described as gross negligence and incompetence,” Andrew Tyrie, a politician who leads Parliament’s commission on banking standards that is investigating wrongdoing at the firms operating in London. “The level of ignorance seems staggering to the point of incredulity.”

UBS agreed to pay the multibillion-dollar fine in late 2012 to settle allegations that some of its traders altered the London interbank offered rate, or Libor, and the euro interbank offered rate, or Euribor, to increase their own profits. The benchmark rates underpin trillions of dollars of financial products, including mortgages, worldwide.

Some UBS senior managers also tweaked the bank’s submissions to present the Swiss bank in a better financial position than it actually was, according to regulatory filings.

Libor Explained

Mr. Rohner, who led UBS from 2007 to 2009. a period when the bank wrote down around $50 billion of sophisticated credit products, said he was embarrassed and ashamed by the misconduct related to Libor.

“I did the best I could,” said Mr. Rohner, who appeared taken aback by the angry questions from the British politicians, who repeatedly called his actions incompetent and negligent.

The former UBS chief executive said the firm’s operations had become too complex before the financial crisis, which had made it difficult to keep track of potential illegal activity by some of its employees.

The parliamentary hearing focused on speculation at the beginning of the financial crisis that highlighted banks’ so-called low-balling of rates. The practice involved submitting lower rates used in setting Libor in an effort to portray the firms in strong financial health despite a severe cut in lending between global financial institutions.

Mr. Rohner and three former chiefs of UBS’s investment bank, Huw Jenkins, Alex-Wilmot-Sitwell and Jerker Johansson, all denied being aware of the rate submissions in 2007 and 2008, when the bank raised billions of dollars of new capital to shore up its own finances.

“I had the responsibility to actively seek out information about things that concerned me,” Mr. Johansson, who ran UBS’s investment bank from 2008 to 2009, told the British parliamentary hearing on Thursday. “I failed to recognize this Libor issue as being one of these issues.”

Yet British politicians refused to believe that senior executives at the Swiss bank did not know about the Libor submissions at a time when the financial markets had been focused on the short-term financing problems of the world’s largest banks.

“You are stretching belief to its limit to get us to believe that you were completely unaware,” Andrew Love, a British politician on the parliamentary committee, told the former UBS executives .

The hearing also questioned several current and former senior members of the Financial Services Authority, Britain’s financial regulator, over their actions that led to the multibillion-dollar fine against UBS, the largest financial penalty so far levied against a bank in the continuing Libor investigation.

Hector Sants, the British regulator’s former chief executive, who is set to join Barclays as head of compliance, said banks should be more proactive in detecting potential illegal behavior, and called for greater oversight of global banks that operate in London. Barclays agreed to a $450 million settlement with global authorities last year related to the Libor investigation.

British regulators said that only nine out of the 40 individuals involved in the UBS rate-rigging scandal had worked in the country’s financial services industry, and that authorities were continuing to investigate a number of firms and individuals connected to the rate-rigging scandal.

“This is not the end of the Libor story,” said Tracey McDermott, director of enforcement and financial crime at the Financial Services Authority.

Article source: http://dealbook.nytimes.com/2013/01/10/former-ubs-executives-are-grilled-over-libor/?partner=rss&emc=rss

DealBook: Santander to Sell Stake in U.S. Auto Financing Group

Spain’s Grupo Santander, the euro zone’s largest bank by market capitalization, announced a $1.15 billion deal on Friday to sell a 35 percent stake in its automotive financing unit in the United States to a group of private equity investors, as it looks to shore up its balance sheet.

Under the terms of the agreement, Kohlberg Kravis Roberts, Centerbridge Partners and Warburg Pincus will invest a combined $1 billion for a 25 percent share in Santander Consumer USA. Dundon DFS will pay $150 million for a 10 percent stake in Santander Consumer USA.

“Following the transaction, Santander will realize a capital gain of approximately $1 billion,” the bank, which is based in Madrid, said in a statement. “The capital gain will be fully allocated to reinforce the group’s balance sheet.”

According to regulatory filings, Santander’s core tier-1 ratio – a crucial indicator of a bank’s overall financial health — stood at 7.1 percent in 2010.

Santander, which will retain a majority stake in its United States consumer financing division, went on an acquisition binge during the financial crisis.

In 2008, the Spanish bank bought the Philadelphia-based Sovereign Bancorp for $1.9 billion. That followed other global deals, including the acquisition of Britain’s Alliance Leicester for $1.9 billion and Brazil’s Banco Real for $1 billion.

Yet the deteriorating economic situation in its home market has begun to take its toll. According to the European Union, more than one in five of all Spaniards is unemployed.

That has hit Santander’s domestic operations as people struggle to meet their mortgage payments and companies can not meet their debt obligations. In the first half of 2011, the bank’s net profit fell to $5 billion, a 21 percent drop compared with the same period last year.

The automotive financing group in the United States has been a point of strength for Santander. The unit, based in Fort Worth, Tex., has been rapidly expanded its financing operations across the country, and reported an annual net profit of $455 million last year.

Deutsche Bank and Barclays Capital advised Warburg Pincus, K.K.R., Centerbridge Partners on the deal.

Article source: http://dealbook.nytimes.com/2011/10/21/santander-to-sell-stake-in-u-s-auto-financing-group/?partner=rss&emc=rss