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Uproar in France on Foreign Bank Accounts Deepens

April 4, 2013 by Leave a Comment

Adding to the president’s difficulties was the revelation on Thursday that a close friend and the co-treasurer of his 2012 election campaign invested in offshore businesses in the Cayman Islands, a well-known tax haven.

The name of Mr. Hollande’s treasurer, Jean-Jacques Augier, appeared on a list of names of investors in two Cayman Islands funds that was leaked to the Washington-based International Consortium of Investigative Journalists.

In an interview with Le Monde, Mr. Augier — a publisher and former classmate of Mr. Hollande’s at the elite École Nationale d’Administration — declared that there was nothing illegal about his Cayman investments, which date to 2005 and 2009, conceding only that “maybe I lacked a bit of caution.”

Mr. Augier denied that he had hidden any income or done anything “incompatible” with the exercise of French presidential power.

At a news conference on Thursday evening in Morocco, Mr. Hollande said that “I knew nothing of these activities, these investments,” and that “if they don’t conform to the fiscal law” he would ask the appropriate authorities to act. He emphasized that the accounts of his campaign were clean.

The right in France, still stung by Mr. Hollande’s presidential victory last May, has leapt with glee on the revelations, suggesting that the Socialist government has not kept Mr. Hollande’s promises to be clean, exemplary and transparent, a supposed contrast to the administration of President Nicolas Sarkozy, who is being investigated for abuses in the financing of his 2007 campaign.

Mr. Hollande has promised to crack down on tax cheats and compel France’s wealthy to pay more in taxes, even though the economy is stagnant and unemployment is hitting record levels.

Given those promises, Mr. Hollande’s real troubles circle around the case of his former budget minister, Jérôme Cahuzac, who stepped down less than a month ago after the Paris prosecutor’s office said it was investigating him for probable tax fraud. Accusations against Mr. Cahuzac surfaced in early December after an investigative Web site, Mediapart, obtained an audio recording that it said was of Mr. Cahuzac and that suggested he had held an account with the Swiss bank UBS for roughly a decade.

Mr. Cahuzac denied the existence of any such account for months — even when confronted by Mr. Hollande himself and his direct boss, Finance Minister Pierre Moscovici. Mr. Cahuzac also denied having the accounts in appearances in Parliament and in the news media. But on Tuesday, he admitted that he had secret bank accounts worth at least 600,000 euros, about $770,000, in Switzerland and Singapore.

With Mr. Hollande on a state visit to Morocco on Thursday, his cabinet ministers were left to respond to reports that the Élysée Palace had been discreetly informed in December by the French intelligence service, the D.C.R.I., of its suspicions that Mr. Cahuzac might indeed have secret accounts.

Manuel Valls, who as interior minister oversees the intelligence service, forcefully denied the reports, saying: “There was no note from the D.C.R.I.” about Mr. Cahuzac. The president’s office also denied speculation that perhaps the intelligence service had passed its concerns to the president’s office in an informal, unsigned note.

Mr. Cahuzac’s former boss, Mr. Moscovici, has come under particularly sharp criticism in the case. In an interview on Thursday in Strasbourg, he spoke emotionally of what he described as an “unforgivable” and personal betrayal.

“I’m the one to whom he lied the most — not once, not 10 times, but much more often,” Mr. Moscovici said. “He told me he had nothing to do with that matter, with enormous energy.”

Mr. Moscovici dismissed the criticisms and suspicions that he might have known of the secret accounts and failed to act, and he said he hoped the uproar would be short-lived.

“I did everything I had to,” Mr. Moscovici said. “I was always proactive in following this case with the powers I had. And I was transparent with justice and the police. No one could say I tried to block any case.”

Mr. Moscovici said he was just an “intermediate target” — the real one being Mr. Hollande, who is being pressured by some in his party to reshuffle his government early.

A government reshuffle would make sense to change policy direction, not simply to respond to public criticism, but “the president controls the clocks,” Mr. Moscovici said.

“Anything can happen in politics,” he said. “It’s very disagreeable to be used as a target when you did everything you could and the only mistake you made was to be victim of a liar who was a colleague and a friend.”

Article source: http://www.nytimes.com/2013/04/05/world/europe/uproar-in-france-on-foreign-bank-accounts-deepens.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Detroit Budget Crisis May Lead to Outside Manager

December 24, 2011 by Leave a Comment

Then came the revelation that Detroit is poised to run out of money by April and fall deep into debt by June. Now a place that had seemed to be finding its balance is reeling once more.

A formal state review of Detroit’s books — a step that could lead to the appointment of an outside emergency manager to take over the city’s finances — was announced this week. City leaders are conducting urgent meetings with labor union leaders and financial consultants in a race to cut costs and head off further intervention.

The possibility that an outside manager could come in — one who would have broader than ever powers under a rewritten state law — has stirred new concerns among financial ratings agencies and business leaders who have fresh investments in the city. City government, meanwhile, is finding itself forced to re-examine services it provides — including buses, health care and street lighting — and shed what it can no longer afford.

The crisis could not have come at a worse time.

“This state is starting to come back, the economy is starting to come back, and as long as you are out there promoting all this negativity, it’s no good for any of us,” Mayor Dave Bing said in an interview. “You don’t need Detroit against the state.”

Still, Mr. Bing, a former basketball star who built an auto-parts manufacturing company, says he also knows the risks — symbolically, financially and politically — if a city of this size reaches a point where it cannot pay debts.

“If Detroit would ever go into default, it would kill the state,” he said, quickly adding that he did not think the situation would come to that.

Already, though, Detroit is the only major American city with credit that sits beneath investment grade, experts say. With 11,000 city employees and 139 square miles of increasingly vacant land to tend to, it has struggled, year by year, deficit by deficit, to pay its bills. Once the nation’s fourth-largest city, it has seen its population drop since a high of 1.8 million in 1950 to a low last year of 714,000.

In the eyes of some leaders, this financial crisis, despite the recent positive signs from the private sector, was decades in the making: the city never shrank its operations enough to match a shrinking tax base, and it delayed its woes with borrowing, exaggerated revenue estimates and accounting shifts.

This fall, Mr. Bing warned that Detroit would run out of cash without major cuts, particularly layoffs and deep salary reductions.

Within days of Mr. Bing’s announcement, state officials said they were starting a preliminary review of the city’s finances, which concluded this week with the announcement of a deeper state look at the books and an alarming snapshot of Detroit: more than $12 billion in long-term debt, an estimated general fund deficit of $196 million and no sufficient plan for dealing with the shortfall.

The state’s moves have set off an uproar. Under Michigan law, a formal review must precede a state finding that a city’s financial circumstances are so dire as to require an outside manager to take over — and many here view that as the state’s ultimate intent. Mr. Bing, a Democrat, and even groups he has sparred with — the City Council and leaders of the city’s 48 unions, whose contracts are the target of much of the cuts — have pushed back, as have residents. The refrain: Detroiters can take care of Detroit just fine, thanks.

For Gov. Rick Snyder, a Republican and businessman elected in the wave of Republican statehouse victories in 2010, Detroit’s crisis comes at a complicated moment. Earlier this year, Mr. Snyder and the Republican-dominated Legislature passed a law adding vast powers to the emergency managers sent to troubled Michigan cities, including the ability to throw out union contracts.

Critics said the law was an attack on democratic principles and an assault on labor unions. A lawsuit is pending. A campaign to repeal the law is under way, raising the possibility that the current emergency manager law could be suspended until the vote — even as the state’s most significant city may be on the verge of being assigned one.

Article source: http://feeds.nytimes.com/click.phdo?i=890688b3aa7efbbe897ff85659adc6df

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Advertising: Boxed Wine Firms Claim They’ll Pass the Taste Test

October 12, 2011 by Leave a Comment

“I said, ‘Don’t do it!’ ” said Ms. Ermel, 30, an unemployed lawyer. She then pointed out that another brand of boxed wine, Black Box, was on sale.

“This is just a couple dollars more and you’re going to like it a lot more,” Ms. Ermel recalled telling the woman, who proceeded to return her original choice to the shelf and plop two varieties of Black Box into her cart instead.

It was not, to be sure, the first time Ms. Ermel had sung the praises of the eight-year-old brand, whose eight varieties are sold in three-liter boxes, the equivalent of four 750-milliliter bottles, for about $20.

“I’ve pointed Black Box out to random people shopping for wine, and said, ‘If you’re looking for something different, you should try this,’ ” she said.

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Ms. Ermel, it turns out, is an agent who has been tapped by BzzAgent, a 10-year-old Boston company that specializes in word-of-mouth and social-network marketing.

BzzAgent was hired by Black Box last fall, according to a written summary of the campaign, to “generate word-of-mouth to increase awareness” and to “increase trial, advocacy and impact sales.”

Like about 2,000 other volunteers, who are not paid but receive products deeply discounted or free, Ms. Ermel was asked to invite friends to a blind tasting party at her home, and to serve the wine without first mentioning that it had come out of a box (the brand provided carafes for serving). Then, after the revelation, hosts solicited feedback from guests, who in Ms. Ermel’s case numbered 50.

Only four attendees at her gathering had even heard of Black Box before, but she said guests were so impressed that at least 20 subsequently bought the wine. She has bought it about a dozen times in the last year.

She is under no obligation to praise BzzAgent products unless she feels genuinely enthusiastic, and in the couple of instances she has tried products that she thought were duds, she did not recommend them to anyone, Ms. Ermel said.

Now, for another campaign for Black Box, BzzAgent is enlisting 5,000 agents to host wine tastings over the next two months.

“What we’re trying to do is get people away from their preconceptions about box wine,” said Malcolm Faulds, senior vice president for marketing at BzzAgent, which is owned by Dunnhumby.

Unlike HouseParty.com, which as its name makes clear focuses mainly on consumer-hosted parties to sample brands, parties play a role in only about 15 percent of the hundreds of campaigns BzzAgent undertakes annually, Mr. Faulds said.

Rather, most of what BzzAgent does, and a large component of the Black Box campaign, is encouraging participants to engage with friends about brands on social media sites like Facebook and Twitter, as well as in face-to-face situations. Those agents regularly account for their online and offline mentions of participating brands on the BzzAgent Web site, enabling the company to inform brands how many consumers saw or heard those mentions.

The company reports having about 850,000 agents at its disposal, allowing it to assemble groups based on factors including interests, income level, age, gender and location.

Wine snobs tend to turn up their noses at wine sold in a box, and not without cause: boxed wine in the United States historically has been marketed to consumers who were interested almost exclusively in a good value and did not care whether their chardonnay had a herbaceous bouquet or complex finish.

But in the last decade, a new crop of boxed brands — including Black Box, a Constellation Wines brand — has aimed to raise the expectations of consumers. The so-called premium boxed wines, which tend to be sold in three-liter boxes, smaller than the more common five-liter boxes, have won over numerous wine reviewers, and are often compared favorably with bottled wine.

“Bottles might be prettier, but boxes are looking increasingly attractive to wine drinkers for one reason: they cost as little as $4 for the equivalent of a standard 750-milliliter bottle,” Consumer Reports wrote in 2009. “Here’s more reason to celebrate: Three boxed chardonnays our experts recently tried are very good.”

The brands were FishEye, Banrock Station and Black Box.

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Sales of premium boxed wines like Black Box, those in three-liter sizes that tend to cost $20 or more, rose 19 percent in 2010 from 2009, according to Nielsen. Similarly, sales for Black Box itself rose 18.2 percent in the year ending Sept. 4 from the previous year, according to the SymphonyIRI Group.

Besides the better-than-expected quality and affordability, a selling point for boxed wine is its shelf life. Air oxidizes bottled wine and ruins it within a few days, but boxed wine comes in an airtight plastic bag attached to a spigot, meaning there is little space for air and wine stays fresh for up to four weeks.

Kim Moore, Black Box’s director for marketing, said the brand had not done traditional advertising because consumers might be so certain that boxed wine was inferior that they would dismiss advertising that claimed otherwise. “There’s definitely a stigma of box wine because people think of the value box wine that they drank too much of back in their college days,” she said, referring to the cheaper brands sold in larger boxes. “We say tasting is believing, and just getting people to try our wine gets them to peel back that stigma.”

Article source: http://feeds.nytimes.com/click.phdo?i=4aa024885c7b869a8b85c1c84ded9116

Filed Under: Business News Tagged With: , ,