May 25, 2017

Coin of Realm in China Graft: Phony Receipts

“Receipts! Receipts!” calls out a woman in her 30s to passers-by as her two children play near the city’s south train station. “We sell all types of receipts.”

Buyers use them to evade taxes and defraud employers. And in a country rife with corruption, they are the grease for schemes to bribe officials and business partners. Making them and using them is illegal in China. Some people have been executed for the crime. But demand is so strong that a surprising amount of deal-making takes place out in public.

It is so pervasive that auditors at multinational corporations are also being duped. The British pharmaceutical company GlaxoSmithKline is still trying to figure out how four senior executives at its China operation were able to submit fake receipts to embezzle millions of dollars over the last six years. Police officials say that some of the cash was used to create a slush fund to bribe doctors, hospitals and government officials.

Signs posted throughout this city advertise all kinds of fake receipts: travel receipts, lease receipts, waste material receipts and value-added tax receipts. Promotions for counterfeit “fapiao” (the Chinese word for an official invoice) are sent by fax and through mobile phone text messages. On China’s popular e-commerce Web site, Taobao.com, sellers even promise special discounts and same-day delivery of forged receipts.

“We charge by percentage if you are looking for invoices written for a large amount of money,” said one seller in an interview, quoting 2 percent of the face value of the receipt as his fee. Another seller boasted, “I once printed invoices totaling $16 million for a construction project!”

Detecting fake or doctored receipts is a challenge for tax collectors, small businesses and China’s state-run enterprises. While there are no reliable estimates of how much money is involved in the trade, as China’s economy has mushroomed and grown more sophisticated, so has the ability to falsify receipts.

With considerable tax revenue at stake, the Chinese government has announced periodic crackdowns. In 2009, the authorities said they detained 5,134 people and closed 1,045 fake invoice production sites. A year later, they said they “smashed” 1,593 criminal gangs and raided 74,833 enterprises that had filed false invoices with the government.

In one of the biggest cases this year, a businessman in Zhejiang province was jailed for helping 315 companies evade millions of dollars in taxes by issuing fake invoices, a crime sometimes punishable by death.

That could be the fate of Liu Baolu, a government official from northwest China’s Gansu province. In February, he was sentenced to death with a two-year reprieve for using fake receipts to embezzle millions of dollars.

As harsh as the crackdowns sound, experts say they are often ineffective. One reason, analysts say, is that even government officials take part in black market activity. In 2010, for instance, the National Audit Office said it caught central government departments embezzling $21 million with fake invoices.

And state employees, whether they work for government agencies or state-owned enterprises, seem as eager as anyone else to bolster their compensation by filing fake invoices.

“Their salaries are relatively low,” said Wang Yuhua, an assistant professor of political science at the University of Pennsylvania and the author of a study on bribery and corruption in China. “So they supplement a lot of it with reimbursements. This is hard to monitor.”

China’s fapiao system took root in the late 1980s and early 1990s, when the government began requiring companies to use official receipts issued by the tax authorities for every business transaction. The receipts usually come with a number and government seal.

Article source: http://www.nytimes.com/2013/08/04/business/global/coin-of-realm-in-china-graft-phony-receipts.html?partner=rss&emc=rss

Glaxo Says Executives May Have Broken Chinese Law

The statement, released after three top Glaxo executives met with Chinese investigators, came amid signs that other drug makers could also come under scrutiny from the Chinese authorities.

On Monday, the British-Swedish drug company AstraZeneca said one of its employees had been questioned by the police in Shanghai. The company released a statement saying that the police had visited the company and had questions about a sales representative.

“We believe that this investigation relates to an individual case and while we have not yet received an update from the Public Security Bureau, we have no reason to believe it’s related to any other investigations,” the statement added.

Over the weekend, the drug makers Merck and Roche acknowledged that they had used the same small Shanghai travel agency that investigators say worked with Glaxo to bribe doctors, hospitals and government officials.

Glaxo has been under intense scrutiny for the past few weeks after investigators raided offices in China and detained four senior executives on suspicion of bribery and tax fraud.

In the statement Monday, Abbas Hussain, a Glaxo executive, said: “Certain senior executives of GSK China who know our systems well appear to have acted outside of our processes and controls, which breaches Chinese law. We have zero tolerance for any behavior of this nature.”

His statement, which came after a meeting with China’s Ministry of Public Security, or national police, continued: “I want to make it very clear that we share the desire of the Chinese authorities to root out corruption wherever it exists. We will continue to work together with the MPS and we will take all necessary actions required as this investigation progresses.”

Andrew Witty, the company’s chief executive, sent three top executives to China last weekend to meet with the government. They included Mr. Hussain, who apologized in a meeting with an official from the Ministry of Public Security.

The apology and statement that its executives may have broken the law is a sharp reversal for the company. A few weeks ago, executives at Glaxo said that this year they conducted an internal investigation into allegations of bribery and fraud in the China operations and found no evidence of wrongdoing.

The police in Shanghai have also detained Peter Humphrey, a British fraud investigator who had done some contract work for Glaxo, according to a person familiar with his case. But it was unclear whether the police were holding him in connection with the investigation into Glaxo or on a separate matter.

Article source: http://www.nytimes.com/2013/07/23/business/global/glaxo-says-executives-may-have-broken-chinese-law.html?partner=rss&emc=rss

Building the Team: Nine Lessons We Learned From Andy Taylor

Building the Team

Hiring, firing, and training in a new era.

Last week, I wrote about why we set out to visit with Andrew C. Taylor, chairman and chief executive of Enterprise Holdings (“Maybe Someone Else Has Already Figured This Out“). In this post, I want to highlight what we learned during that half-day session in St. Louis in 2011.

Take time to teach

The time that Mr. Taylor, who is now executive chairman of Enterprise, spent with the H.Bloom team was not anomalous. The day before we were there, he had met with senior executives from one of the world’s largest banks. Every day, the team at Enterprise takes the time to teach new employees at Enterprise. Because their leaders do this at a world-class level, business people at other organizations want to learn from them as well. When people in an organization see the organization’s leaders taking the time to teach, they understand that it is important and they learn to do it themselves. This culture of teaching starts at the top.

Develop senior leadership that’s passionate

The senior executives that we met along with Mr. Taylor – Dave Deibert, Aaron Toombs, Tina Diehl, Steven McCarty and Pam Webster – were all passionate about Enterprise as a company. Each one had been with Enterprise for many years, some for decades, and they had moved from place to place as they climbed the ranks. Mr. Taylor talked about the importance of this dynamic: “Develop a small group of senior leaders who are in love with the business and are thinking about it all of the time.” It was clear that this group loved Enterprise, were proud of the talent development programs they had developed and were eager to share what they had learned with us. This type of enthusiasm is nothing but contagious. If you can get your senior leaders excited, they will ignite the passions of their direct reports, and so on.

You can be a nice person and tough

In the three hours that we spent with Mr. Taylor, he came across as a genuinely nice person. But, it was clear that he was no-nonsense about his business. “Do not compromise on talent,” he said. “Provide great training and extraordinary opportunity. But be honest about the hard work. The Management Training Program at Enterprise isn’t for everyone. Even if folks don’t make it to the end, they will have learned a lot that they can take with them to another company.”

You want only to promote the best

At Enterprise, management trainees are in the program for six to 12 months. Then, they have a written skills-evaluation test. After that, they participate in something called “The Grill,” which is an oral test conducted by an area or district manager. If a trainee passes this test, she is ready to interview for a management position when the next one becomes available. This is the first position that is eligible to receive incentive compensation from branch profits.

It’s not about the Ping Pong

There is always a lot of talk about company culture. Often, the talk is focused on the perks a company might offer: onsite dry cleaning, unlimited soda and snacks, a table tennis table. At Enterprise, it is clear that the company’s culture is built on the people. “We promote from within,” Mr. Taylor said. “We provide a career path. People move around to move up; we average 8,700 internal transfers per year. And we celebrate success.” This is sustainable culture. The reason the executives I listed above have been at Enterprise for so long is because they love the company and believe in its mission; it’s not because of a superficial perk.

Building the team is building the business

“Take care of your employees and customers first,” Mr. Taylor said. “Growth and profits will follow.” He knew that as Enterprise grew, he couldn’t be everywhere all of the time. The key to growth would be to train and then empower his employees. Moreover, if he could provide them with a well-defined career path, they would have the incentive to perform in their current roles and the chance to be promoted into a position of greater responsibility and compensation. At Enterprise, the career path looks like this (though at the branch manager level, many additional opportunities open up within the company as well):

  1. Management trainee
  2. Management assistant
  3. Assistant manager
  4. Branch manager
  5. Area manager
  6. Group rental manager
  7. Regional vice president
  8. General manager

Keep base salaries low but pay for performance

At Enterprise, income is tied to profit performance. Employees know base salaries remain low, but they have the ability to earn more and more money as they move up in the organization. As an example, while general managers may have the same base salary as management trainees, their overall compensation is far greater, which provides the incentive to work hard and rise through the ranks.

Leaders and managers are different

Mr. Taylor talked about how his company worked hard to separate leaders from managers. “Anybody can count the money,” he said. “We need true leaders to run our markets.”

Measure everything and share the results

Enterprise has dashboards to measure performance. Each market has a scorecard that evaluates performance in four areas: growth, profits, customer service and employee development and retention. Each market is then ranked on its overall performance, and everyone sees the results.

Bryan Burkhart is a founder of H.Bloom. You can follow him on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/06/18/nine-lessons-we-learned-from-andy-taylor/?partner=rss&emc=rss

DealBook: Hunch About Bloomberg Brought Rivals Together

Bloomberg’s TV studio in Manhattan. The news and financial data company has recently begun expanding into new businesses like stock and bond trading.Hiroko Masuike for The New York TimesBloomberg’s TV studio in Manhattan. The news and financial data company has recently begun expanding into new businesses like stock and bond trading.

Goldman Sachs and JPMorgan Chase are usually bitter rivals, competing for lucrative banking and trading business. But one day in April, the Wall Street titans found common ground: frustration with the Bloomberg news and financial data empire.

Goldman’s public relations chief, Jake Siewert, a former Treasury official, called his counterpart at JPMorgan Chase, Joe Evangelisti, with a simple question: “Do you have any issues with Bloomberg?”

Before he could finish his sentence, Mr. Evangelisti began rattling off his grievances, say people briefed on the call. At the top of the list was a Bloomberg News article in 2011 that likened the strife in an Italian town after a bad deal with JPMorgan to the fallout from the Nazis’ occupation in World War II. He also mentioned another episode when a Bloomberg reporter surreptitiously obtained an access code to listen to a private conference call for senior executives.

The two men shared one major concern: they believed that Bloomberg reporters were using the company’s data terminals to monitor Wall Street sources — the executives at the banks that were spending thousands of dollars a year to use the data-rich machines.

That phone call lifted the lid on a long-simmering, but seldom discussed, tension between Bloomberg and Wall Street. This article is based on interviews with many of the people with whom Mr. Siewert spoke.

There had long been suspicions among public relations executives that Bloomberg reporters might be using terminals to check up on bank executives. But one Wall Street chief executive, who spoke on the condition that he not be named, said recently, “I hate it when something happens that hadn’t occurred to me, and this situation certainly hadn’t.”

The grumbling and gossiping never amounted to much until Mr. Siewert, who joined Goldman last year, began his mission.

Through its lucrative terminal business, Bloomberg provides firms with intricate financial information. And while the company is not alone in providing data to the big banks — Reuters and others offer similar services — Bloomberg terminals have become so ubiquitous on Wall Street that they are essentially a prerequisite for traders. They come at a steep price: each machine can cost an average of more than $20,000 a year.

Adding to the tension between Wall Street and the data provider, many bank executives have grown to resent the fact that Bloomberg will not reduce the cost of the terminals, as other vendors have. After reports of Bloomberg’s monitoring emerged, some Wall Street executives sought concessions on the cost of the terminals, but those efforts failed, according to people briefed on the matter.

At the same time, Bloomberg is also expanding into businesses like stock and bond trading, a lucrative sector that is still largely dominated by banks like Goldman. The company has put more resources into offering fresh methods of trading stocks, bonds and some more complex financial instruments.

As a result, some at Bloomberg have privately accused Goldman Sachs of creating a firestorm over the terminal surveillance. Goldman executives bristle at that assertion.

Still, the business initiatives at Bloomberg, which has reporters around the globe, exacerbates the tensions that any news organization has with the people it covers.

“Bloomberg has to walk a fine line between selling a service to firms like Goldman Sachs on the one hand and hammering them on the other with stories,” said Paul A. Argenti, a professor of corporate communications at Dartmouth’s Tuck School of Business.

Bloomberg reporters had a limited window into what terminal users were doing, according to people close to Bloomberg. For instance, they knew when a subscriber was logged in or out, and could see help-desk chats, which might give clues about what a subscriber was interested in.

Mr. Siewert said in a statement that Bloomberg representatives had told Goldman that they would get to the bottom of the issue.

“We’ve got a lot of respect for Bloomberg reporters, and the company is making sure that the news desk has no special access to client information, so they’re on top of it,” he said.

A spokeswoman from JPMorgan declined to comment.

Ty Trippet, a spokesman for Bloomberg, said, “We always want to hear from our clients and others about our editorial coverage, and we take substantive concerns very seriously.”

Goldman’s response began when a press officer in Hong Kong received a call from a Bloomberg reporter about the whereabouts of a partner who the reporter noted had not logged into his terminal in a few weeks.

The Goldman employee felt the call crossed the line, and she immediately mentioned it to her boss in Hong Kong, who in turn raised it with Mr. Siewert in New York.

His first move was to find out whether Bloomberg had guidelines prohibiting reporters from using terminals to further their reporting. Mr. Siewert is probably best known for his years working for President Clinton, including as his press secretary.

Mr. Siewert called a reporter at Bloomberg who covers Goldman. He was directed to an editor, who assured him that Bloomberg had a policy aimed at preventing exactly the sort of behavior Mr. Siewert was concerned about.

This response surprised executives at Goldman because the reporter who called the Hong Kong office had admitted monitoring an executive’s whereabouts through the terminal.

Mr. Siewert then called more than half a dozen former Bloomberg reporters, most of whom now work at The Wall Street Journal. Most of those acknowledged using the terminal to further their reporting, or said they knew people who had done so.

At the same time, Mr. Siewert contacted a number of public relations executives on Wall Street and in Washington. Several executives told Mr. Siewert that they too had previous episodes of Bloomberg reporters’ checking the whereabouts of employees, but had not been concerned enough to take the issue up with Bloomberg.

Goldman held a series of meetings on Bloomberg’s monitoring. Goldman’s legal department pulled out the bank’s contract with Bloomberg, which prohibits Bloomberg from using confidential information it might glean from its relationship with Goldman for purposes not contemplated by the contract.

Mr. Siewert’s work culminated in a meeting on April 29 at Goldman’s headquarters in Lower Manhattan. In a conference room on the 43rd floor overlooking the Hudson River, Daniel L. Doctoroff, the chief executive of Bloomberg, met with Gary D. Cohn, the president of Goldman Sachs.

“This data is sensitive,” Mr. Cohn told Mr. Doctoroff, according to others present at the meeting. Mr. Doctoroff assured Goldman officials that Bloomberg was concerned about the breach and had cut off the ability of reporters to access client information, according to attendees of the meeting.

“They were very responsive and didn’t pretend it was an isolated incident,” said one executive at the meeting.

Mr. Cohn told Mr. Doctoroff that Goldman was considering notifying its clients of the breach, but before it did it wanted to be able to tell them what remedial action Bloomberg was taking. The two men agreed to talk again soon.

Bloomberg executives left the meeting feeling things were moving in a positive direction and were surprised by the subsequent news media attention.

Still, Mr. Siewert’s calls had piqued the interest of reporters, and The Wall Street Journal and The New York Post began reporting.

On the afternoon of May 9, Mark DeCambre, a reporter for The Post, called Bloomberg. His article, with the headline “Goldman Sachs employees concerned Bloomberg news reporters are using terminals to snoop,” broke the news.

Mr. Doctoroff responded in a note to Bloomberg clients.

“A Bloomberg client recently raised a concern that Bloomberg News reporters had access to limited customer relationship management data through their use of the Bloomberg terminal. Although we have long made limited customer relationship data available to our journalists, we realize this was a mistake,” he wrote.

A version of this article appeared in print on 06/01/2013, on page B1 of the NewYork edition with the headline: Hunch About Bloomberg Brought Rivals Together.

Article source: http://dealbook.nytimes.com/2013/05/31/hunch-about-bloomberg-brought-rivals-together/?partner=rss&emc=rss

Fair Game: Shareholders Can Slow the Executive-Pay Express

A more important question may be this: Do this year’s figures show any evidence of progress toward a new pay paradigm? You know, where the gap between the compensation of executives and workers narrows, or where company directors put shareholders’ interests before those of the hired hands?

After looking over the numbers, I asked some experts in the compensation arena if they’d seen any promising shifts toward greater fairness in executive pay.

“The more things change, the more they stay the same,” said Brian T. Foley, an independent compensation consultant in White Plains.

Still, there were some encouraging signs. Some outliers, like Alan R. Mulally of Ford Motor and James P. Gorman of Morgan Stanley, took pay cuts in 2012 because their company’s performance declined. That’s the way it’s supposed to be.

And there are some cases where shareholders are actually reining in executive pay. Consider the work of some 128,000 Verizon shareholders who are also retirees of the company.

Known as the Association of BellTel Retirees, this group, for the last 15 years, has achieved a series of corporate governance and executive compensation changes at the company. This year, the association won a partial victory in a battle over performance-based stock awards. The company, according to its proxy statement, agreed to reduce such awards to senior executives when Verizon shares underperformed, a change the retirees had urged.

The retirees have also proposed that Verizon shareholders approve any severance package that exceeds 2.99 times an executive’s base salary plus incentives. This proposal will be voted on at the company’s annual meeting on May 2.

There is movement elsewhere, too. James F. Reda, an independent compensation consultant in New York, said he was noticing a shift among boards to award lower compensation to incoming chief executives, especially if they are from inside the company. “When new C.E.O.’s are hired, in a lot of cases, they are getting below-median total-compensation packages, with the idea that higher pay will get phased in over time,” Mr. Reda said. “New hires are not coming up to the C.E.O. level of pay right away as they did in the past. Now boards are making sure that they work out.”

Mr. Reda’s point brings up what compensation experts say may be the most formidable roadblock to fairer pay practices: longstanding chief executives who prefer the status quo and who hold sway over their directors.

Jon F. Hanson joined the board of HealthSouth in late 2002, just before a long-running accounting fraud at the company came to light. He has been its chairman since 2005 through a turnover of the company’s top management and board. “When a new C.E.O. comes in,” he said, “it emboldens the compensation committees to look at the methods we are using to compensate our C.E.O.”

In a vote last year, 98.8 percent of HealthSouth shareholders supported its pay practices; the compensation of its C.E.O. Jay F. Grinney stayed essentially flat last year, even though the company turned in solid gains in the period.

“It’s the hardest to introduce a new form of compensation when you have a long-entrenched C.E.O.,” Mr. Hanson said.

There are plenty of those around, of course. And that may explain why a pay practice that has contributed mightily to ever-rising compensation — the use of the corporate peer group — remains intact at most companies.

Using peer groups to determine executive pay was supposed to ground it in reality, basing it on the practices of similar companies. Instead, such benchmarking created a kind of arms race in pay.

One problem is that the makeup of the peer group is easily manipulated. For example, if a medium-size company uses much larger and more complex businesses as its benchmark, its compensation can be skewed, sending it far higher than it should be.

“Peer-group data is, as always, part art, part science,” said Mr. Foley, the compensation consultant. “It can be very constructive if done well, but can also be heavily gamed.”

A decade ago, directors at the New York Stock Exchange awarded Richard A. Grasso, its chief executive at the time, $140 million in compensation. He was compared against a peer group made up of companies with median revenue more than 25 times that of the exchange and median assets 125 times its own.

A furor erupted back then, but the reliance on peer groups goes on. A compelling paper on the problems with peer groups was published last fall by Charles M. Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, and Craig K. Ferrere, a fellow there. In it, the authors argue that corporate directors should eliminate peer groups and instead “develop internally consistent standards of pay based on the individual nature of the organization concerned, its particular competitive environment and its internal dynamics.”

Investor groups have embraced this argument against benchmarking, said Yale D. Tauber, the director of programs on executive compensation at the Conference Board Inc. “There is a growing dissatisfaction with where benchmarking takes us,” he said.

BUT effecting change in the boardroom on pay matters is a glacial process.

“When you have a new idea that is different from the status quo, there’s always some resistance to it,” explained Mr. Hanson, the HealthSouth chairman. “The dialogue is in the early stages, but at least people are discussing management’s compensation and benchmarking it against how they are performing and how the shareholders are doing. Management is beginning to realize that it’s not just about their compensation. We also have to make sure that the shareholders benefit. That’s the change I’m seeing.”

Let’s hope these discussions turn into action sooner than later.

Article source: http://www.nytimes.com/2013/04/07/business/shareholders-can-slow-the-executive-pay-express.html?partner=rss&emc=rss

Ex-Bank Officials Named in Cyprus Inquiry

LONDON — Two of the most senior executives at Bank of Cyprus may have deleted crucial e-mail documents last year related to what proved to be a disastrous decision to invest heavily in Greek government bonds just before Greece’s international bailout in 2010, according to an investigative report commissioned by the central bank of Cyprus.

The report said forensic experts found that the computer belonging to the bank’s former chief executive, Andreas Eliades, who was forced to resign last summer, had “wiping software loaded which is not part of the standard software installations” at the Bank of Cyprus.

Investigators also found such software on the computer of Christakis Patsalides, a senior executive in the bank’s treasury department who, according to the report’s findings, was a driving force behind the decision to buy the Greek government bonds. Mr. Patsalides has also left the bank.

Efforts to reach Mr. Eliades and Mr. Patsalides late Thursday were not immediately successful. The report said Mr. Eliades did not “participate or assist” in the investigation, despite being urged to do so by the bank and its outside lawyers.

The Bank of Cyprus, long considered the better run of the two large banks that have been at the center of the Cypriot bailout debacle, decided to speculate in high-yielding Greek bonds by accumulating a 2.4 billion euro position from late December 2009 until June 2010, just as the Greece government was running out of money.

That decision resulted in a loss of 1.9 billion euros, or about $2.4 billion, when bond investors were eventually forced to take a 75 percent haircut under the final terms of the Greek bailout, worked out last year.

That loss and a larger one at the other big Cypriot bank, Laiki Bank, on a similarly misguided investment foray, totaled 4.5 billion euros. That was more than Cyprus, with a gross domestic product of 18 billion euros, was able to sustain. And the losses resulted in a near-collapse of the Cypriot banking sector, leading the country’s government to seek a 10 billion euro bailout from the troika of international lenders: the International Monetary Fund, the European Commission and the European Central Bank.

Under terms of the bailout, the Bank of Cyprus’s biggest depositors will be forced to take losses of as much as 60 percent to help absorb the cost of cleaning up Cyprus’s financial mess.

The issue of how the banks became laden with Greek government bonds has become an explosive one in Cyprus as politicians and regulators try to explain to furious taxpayers why the country has been forced to impose harsh measures on bank clients of all sizes, including restrictions on fund transfers and withdrawals.

A committee of judges has already been appointed by the government to get to the bottom of the matter.

The report that surfaced Thursday was commissioned by the Cypriot central bank last August, well before the country’s bailout was made final. The central bank hired Alvarez Marsal, a financial consulting firm, to investigate how and why the Bank of Cyprus had come to make such a high-risk gamble.

Investigators say that from Aug. 12, 2012, the central bank had ordered that all electronic data at the banks be preserved. The report did not say when the file-wiping software on Mr. Eliades’s and Mr. Patsalides’s computers was installed.

But investigators did suggest that digital documents could have been erased during the many delays that followed Alvarez’s requests for documents.

“Mass deletion of data appears to have been undertaken on the Patsalides computer on 18 October 2012,” the report said.

The findings of the Alvarez report, especially the contention that top bank executives may have obstructed a central bank investigation, are likely to stir anger widely in Cyprus. And while the top executives and board members most closely tied to the Greek bond purchase are no longer with the banks, the allegations could raise further questions about the Bank of Cyprus’s ability to survive.

The Alvarez report provides new details on the extent to which Bank of Cyprus officials were hoping that the high yields generated by the Greek bonds would cover the bank’s imploding loan book.

Alvarez investigators said that, according to the records they were able to secure from the bank, the decision to buy the bonds was based on a last gasp effort by the bank to generate profits as their loan book began to sour in late 2009 and through the spring of 2010.

Investigators also said that the bank, like others in Europe at the time, made use of cheap financing from the European Central Bank to make these bets. As a result, executives in the bank’s treasury department bought the riskiest high-yielding bonds available and found willing sellers in banks eager to reduce their exposure to Greece.

When it became clear not long after the Greek bailout in May 2010 that some form of debt restructuring would have to take place, the Bank of Cyprus found itself stuck with a 2.4 billion euro portfolio of Greek bonds.

Article source: http://www.nytimes.com/2013/04/05/business/global/former-top-cypriot-bankers-cited-in-report.html?partner=rss&emc=rss

Media Decoder Blog: Weather Channel’s Challenge: Predictable Programming for Advertisers

Eyebrows usually rise when the Weather Channel makes upfront presentations, sharing with marketers and agencies its programming plans for the coming television season. As one reader of this blog commented on a post on Tuesday that mentioned in passing the Weather Channel’s 2013-14 upfront, “I can’t wait to see which hurricanes they’ll be covering this summer. : )”

Kidding aside, the Weather Channel, part of the Weather Company, has been adding original scripted series to its schedule for several years for one primary reason: Although weather is mercurial, marketers and agencies crave regularity.

So for next season, the Weather Channel will add six series to its schedule, along with three online-only series that will be streamed on the channel’s Web site, weather.com. The new shows, along with additional changes that will include a new look for the channel’s regular programs, were outlined by senior executives at the 2013-14 upfront presentation on Wednesday morning.

At the center of the plans is a renewed commitment to the channel’s core audience, the dedicated viewers who were described by David Kenny, chairman and chief executive of the Weather Company, as “weather enthusiasts.”

Mr. Kenny took pains to reassure the marketers and agency executives who attended the presentation that those viewers are not couch potatoes who watch weather forecasts because they have nothing better to do, thus making them poor targets for commercial pitches.

Rather, Mr. Kenny said, weather enthusiasts are “over-indexing on weather because they do stuff,” which makes them “an audience worth investing in.”

So worthwhile is that audience, Mr. Kenny said — whether they consume Weather Channel content on cable, online or on mobile devices — that the company is urging marketers and agencies to “Own the weather.”

David Clark, president of the Weather Channel, described plans to further localize the content of the channel.

For instance, there will be a revamping of the forecasts known as “Local on the 8s,” Mr. Clark said, and a customization of coverage so that while viewers in markets affected by severe local weather are watching coverage of that news, viewers in other, unaffected markets will be able to continue watching regular programming.

As for the programming lineup for 2013-14, he added, there will be, all told, 20 “new original series” on the channel, “up from eight in 2012.”

The six newcomers are: “Coast Guard Cape Disappointment,” “Freaks of Nature,” “Secrets of the Earth,” “Storm Warriors,” “Strangest Weather on Earth” and “Weather That Changed the World.” They will join new original series that were previously announced, among them “Breaking Ice,” “Lava Chasers” and “Reel Rivals.”

The three original series to be available on weather.com, scheduled to start in the summer, are “Brink,” “The Bucket List” and “The Explorers.”

Curt Hecht, chief global revenue officer of the Weather Company, discussed how he wants to “make our analytics and our data more available to” marketers and agencies so they may, for example, better use location targeting to reach the right consumers in the right place at the right time.

There was also an announcement of a deal between Twitter and the Weather Company – owned by Bain Capital, the Blackstone Group and the NBCUniversal unit of Comcast – to create customized content around weather-related activity on twitter.com. The content, which can be sponsored by marketers, will include video clips of local forecasts

At the end of the presentation, the hosts of the event, Jim Cantore and Maria LaRosa – two of the on-camera meteorologists-cum-personalities on the Weather Channel – offered the weekend forecast for the New York area. (Temperatures, they predicted, will be near-average, in the 50s.)

Ms. LaRosa jokingly reassured the audience that despite the presence of Mr. Cantore, who has become known for his coverage of extreme weather like hurricanes, “there is no major storm” in the forecast.


Article source: http://mediadecoder.blogs.nytimes.com/2013/04/03/weather-channels-challenge-predictable-programming-for-advertisers/?partner=rss&emc=rss

Executives Press European Antitrust Chief on Google

The letter, organized by one of the original complainants in the case, a British online shopping service called Foundem, asked the European competition commissioner, Joaquin Almunia, to take a hard line in ongoing negotiations with Google to produce “effective and future-proof” concessions that will protect small European competitors.

The commission, which has expressed concerns about Google’s use of algorithmic standards to rank its own services ahead of those of some competitors, is studying Google’s own proposals to avoid litigation, and may decide soon on whether to settle the matter or initiate a prosecution that could lead to a conviction and big fines.

“We are becoming increasingly concerned that effective and future-proof remedies might not emerge through settlement discussions alone,” the letter signed by the group stated. “In addition to materially degrading the user experience and limiting consumer choice, Google’s search manipulation practices lay waste to entire classes of competitors in every sector where Google chooses to deploy them.”

Neither Google nor Mr. Almunia were immediately available for comment.

Mr. Almunia, a Spanish jurist, asked Google in December to submit its final proposals to settle the case, which began in February 2010 when complaints were filed in Brussels by Foundem; Ciao, a German price comparison site; and Ejustice.fr, a French legal advice site.

The letter was signed by senior executives at six European online businesses: Foundem and Streetmap EU, both in Britain; Twenga, a French-based price comparison site; and Visual Meta, Hot Maps Medien and Euro-Cities, three German online businesses.

Executives at two American Web businesses, Expedia and TripAdvisor, also signed, as well as the directors of three German associations representing the publishers of newspapers, magazines and independent telephone books.

Mr. Almunia has favored negotiated settlements over protracted litigation in his three years as Europe’s top antitrust official. Google has argued that it is impossible to exert monopoly control over the vast online marketplace, and has criticized some of the complainants for belonging to professional groups set up by its an arch-rival, Microsoft.

Microsoft had urged the U.S. Federal Trade Commission to bring suit against Google over its search engine practices, but the U.S. agency closed its own two-year investigation in January after Google agreed to make voluntary changes to its search practices.

Heiko Hanslik, the president of the VfT German Association of Independent Directory Publishers, said his members worried that European officials would not take a hard line in their negotiations with the U.S. search engine, which has a more than 90 percent share of the European search advertising market. The European probe focuses on complaints that Google favors its own competing services in the placement of search results.

Mr. Hanslik, whose association represents German publishers of online and print directories and telephone books, said a typically relevant Google search — such as for a painter in the town of Saarbrücken — would not turn up one of his member’s directories until the fourth entry in Google’s search results.

“For many of my members, this is an existential question that needs to be addressed,” Mr. Hanslik said. “Google is exploiting its market position here in Europe and many, many online retailers will not be able to survive if this isn’t fixed.”

Mr. Almunia has been characteristically cautious about his negotiations with Google. In February 2011, he met with Eric Schmidt, then the Google chief executive, who asked him to give Google a chance to come forward with its own solutions before Mr. Almunia issued a so-called statement of objections, a legal instrument used by the European Commission to lay out its antitrust case and set the clock running for a response from the company.

Last May, Mr. Almunia asked Google to come forward with suggestions for resolving the conflict. Later that autumn, he said Google’s response had been insufficient and gave the company until the end of January to present remedies.

Google has provided those suggestions, according to one person with knowledge of the situation who was not authorized to speak publicly. Mr. Almunia’s staff is currently examining Google’s response, but it is unclear whether the E.U. agency is close to reaching a decision on whether to accept the company’s proposals and settle or proceed with a prosecution.

In their letter, the complainants such as Foundem made it clear that they would prefer Mr. Almunia to issue a statement of objections, and then, with greater leverage under the threat of fines and legal sanctions, enter negotiations with Google.

“We will respectfully withhold judgment on Google’s proposed commitments until we have seen them, but Google’s past behavior suggests that it is unlikely to volunteer effective, future-proof remedies without being formally charged with infringement,” the group wrote in its letter. “Given this, and the fact that Google has exploited every delay to further entrench, extend, and escalate its anti-competitive activities, we urge the Commission to issue the Statement of Objections.”

Mr. Almunia’s decision will have far-reaching consequences for the development of the Continent’s digital economy, said Christoph Fiedler, the managing director for European affairs and media policy at the VDZ German Federation of Magazine Publishers.

“This decision will have critical importance because it will set standards for the digital world,” Mr. Fiedler said.

James Kanter in Brussels contributed reporting.

Article source: http://www.nytimes.com/2013/03/22/technology/european-executives-ask-antitrust-chief-to-be-tough-on-google.html?partner=rss&emc=rss

At Microsoft, Sinofsky Seen as Smart but Abrasive

Less than three weeks later, Mr. Sinofsky — who, as the head of Windows, was arguably the second-most important leader at Microsoft — suddenly left the company. His abrasive style was a source of discord within Microsoft, and he and Steven A. Ballmer, Microsoft’s chief executive, agreed that it was time for him to leave, according to a person briefed on the situation who was not authorized to speak publicly about it.

Mr. Sinofsky was widely admired for his effectiveness in running one of the biggest and most important software development organizations on the planet. But his departure, which Microsoft announced late on Monday, parallels in many respects that of Scott Forstall, the headstrong former head of Apple’s mobile software development, who was fired by Apple’s chief executive, Timothy D. Cook, in late October.

Both cases underscore a quandary that chief executives sometimes face: when do the costs of keeping brilliant leaders who cannot seem to get along with others outweigh the benefits?

The tipping point that led to Mr. Sinofsky’s departure came after an accumulation of run-ins with Mr. Ballmer and other company leaders, rather than a single incident, according to interviews with several current and former Microsoft executives who declined to be named discussing internal matters.

One example of the kind of behavior that hurt Mr. Sinofsky’s standing at the company occurred this year at a two-day retreat for Microsoft’s senior executives at the Semiahmoo resort on the coast just below the Canadian border in Washington State. At the meeting, Microsoft’s various division heads were expected to make presentations on their businesses, answer questions and remain to hear their peers repeat the exercise.

When Mr. Sinofsky stood on the first day to speak about the Windows division, he told the group he had not prepared a presentation, and if they wanted to catch up on the progress of Windows 8, they could read his company blog, where he publicly chronicled the software’s development. He answered questions from the audience and then left the resort, while his colleagues remained until the next day, according to multiple people who were present.

Mr. Sinofsky’s early exit and halfhearted presentation were widely noted by his colleagues, irking even his admirers in the company. “He lost a lot of support,” one attendee said.

It wasn’t until this Monday, though, that Mr. Sinofsky and Mr. Ballmer both decided it would be best if Mr. Sinofsky left. Bill Gates, Microsoft’s chairman, supported the move, a person briefed on the matter said. Mr. Sinofsky served as a technical assistant to Mr. Gates in the 1990s.

In an e-mail to Microsoft employees, Mr. Sinofsky said the decision to leave “was a personal and private choice.” Many surprised Microsoft insiders noted that Mr. Sinofsky’s departure was immediate, an unusual arrangement for someone with a 23-year track record at the company. A Microsoft spokesman, Frank Shaw, said Mr. Sinofsky was not available to comment.

Although Mr. Ballmer grew increasingly impatient with Mr. Sinofsky throughout the year, he held back from taking any action earlier to avoid disrupting the release of Windows 8, the most important product Microsoft has unveiled in years, a person with knowledge of his thinking said.

The final decision could not have come lightly. Although many people at Microsoft viewed him as a ruthless corporate schemer, Mr. Sinofsky ran the highly complex organization responsible for Windows as a disciplined army that met deadlines, and he was respected by people on his team.

He achieved hero status within Microsoft several years ago by taking over the leadership of Windows after the debacle that was Windows Vista, a much-delayed operating system whose sluggish performance and technical problems worsened Microsoft’s reputation for mediocre software. Mr. Sinfosky led the development of a new version of the operating system, Windows 7, which was positively reviewed and sold well.

“He did great things with Windows,” said Michael Cusumano, a professor at the Sloan School of Management at the Massachusetts Institute of Technology. “That’s still the core of the company.”

But while Mr. Sinofsky was effective, Mr. Cusumano said, he could be secretive and difficult to get along with, as he learned while dealing with Mr. Sinofsky while Mr. Cusumano was writing a book on Microsoft in the early 1990s. “I could imagine that he burned a lot of bridges and created a bunch of enemies,” he said.

Article source: http://www.nytimes.com/2012/11/14/technology/at-microsoft-sinofsky-seen-as-smart-but-abrasive.html?partner=rss&emc=rss

Bits: In Shake-Up, Apple’s Mobile Software and Retail Chiefs to Depart

Scott Forstall at an Apple event in September.Jeff Chiu/Associated Press Scott Forstall at an Apple event in September.

8:24 p.m. | Updated Apple fired the executives in charge of the company’s mobile software efforts and retail stores, in a management shake-up aimed at making the company’s divisions work more harmoniously together.

The biggest of the changes involved the departure of Scott Forstall, an Apple veteran who for several years ran software development for Apple’s iPad and iPhone products. Mr. Forstall was an important executive at the company and the one who, in many respects, seemed to most closely embody the technology vision of Steven P. Jobs, the former chief executive of Apple who died a year ago.

But Mr. Forstall was also known as ambitious and divisive, qualities that generated more friction within Apple after the death of Mr. Jobs, who had kept the dueling egos of his senior executives largely in check. Mr. Forstall’s responsibilities will be divided among a few other Apple executives.

While tensions between Mr. Forstall and other executives had been mounting for some time, a recent incident appeared to play a major role in his dismissal. After an outcry among iPhone customers about bugs in the company’s new mobile maps service, Mr. Forstall refused to sign a public apology over the matter, dismissing the problems as exaggerated, according to people with knowledge of the situation who declined to be named discussing confidential matters.

Instead, Timothy D. Cook, Apple’s chief executive, in September signed the apology letter to Apple customers over maps.

Apple said in a news release on Monday that the management changes would “encourage even more collaboration” at the company. But people briefed on Apple’s moves, who declined to be identified talking about confidential decisions at the company, said Mr. Forstall and John Browett were fired.

John BrowettDixons Retails, via Associated Press John Browett

Steve Dowling, an Apple spokesman, said neither executive was available for an interview. Mr. Forstall did not respond to interview requests over e-mail and Facebook.

Mr. Browett, who took over as head of the company’s retail operations in April, will also leave the company after a number of missteps. Apple said that a search for a new head of retail was under way and that the retail team would report directly to Mr. Cook in the meantime.

Mr. Forstall will leave Apple next year and serve as an adviser to Mr. Cook until then.

Eddy Cue, who oversees Apple’s Internet services, will take over development of Apple maps and Siri, the voice-activated virtual assistant in the iPhone. Both technologies have been widely criticized by some who say they fall short of the usual polish of Apple products.

Jonathan Ive, the influential head of industrial design at Apple, will take on more software responsibilities at the company by providing more “leadership and direction for Human Interface,” Apple said. Craig Federighi, who was previously in charge of Apple’s Mac software development, will also lead development of iOS, the software for iPads and iPhones.

Apple said Bob Mansfield, an executive who previously ran hardware engineering and was planning to retire from Apple, will lead a new group, Technologies. That group will combine Apple’s wireless and semiconductor teams. Apple in a statement said the semiconductor teams had “ambitious plans for the future.”

Recently, Mr. Mansfield had been working on his own projects at the company, operating without anyone reporting to him directly. One of the areas of interest Mr. Mansfield had been exploring is health-related accessories and applications for Apple’s mobile products, said an Apple partner who declined to be named discussing unannounced products.

Mr. Forstall was a staunch believer in a type of user interface, skeuomorphic design, which tries to imitate artifacts and textures in real life. Most of Apple’s built-in applications for iOS use skeuomorphic design, including imitating thread of a leather binder in the Game Center application and a wooden bookshelf feel in the newsstand application.

Mr. Jobs was also a proponent of skeuomorphic design; he had a leather texture added to apps that mimicked the seats on his private jet. Yet most other executives, specifically Mr. Ive, have always believed that these artifacts looked outdated and that user interface design on the computer had reached a point where skeuomorph was no longer necessary.

Mr. Forstall, who trained as an actor at a young age, also shared with Mr. Jobs a commanding stage presence at events introducing Apple products, often delivering his speeches with a pensive style that echoed that of Mr. Jobs.

According to two people who have worked with Apple to develop new third-party products for the iPhone, the relationship between Mr. Forstall and Mr. Ive had soured to a point that the two executives would not sit in the same meeting room together.

A senior Apple employee who asked not to be named said Mr. Forstall had also incurred the ire of other executives after inserting himself into product development that went beyond his role at the company. One person in touch with Apple executives said the mood of people at the company was largely positive about Mr. Forstall’s departure.

“This was better than the Giants winning the World Series,” he said. “People are really excited.”

The departure of Mr. Browett was less surprising to outsiders. In August, the company took the unusual step of publicly apologizing for a plan by Mr. Browett to cut back on staffing at its stores. Charlie Wolf, an analyst at Needham Company, said he was never convinced that Mr. Browett was a good choice to join Apple because he had previously run Dixons, a British retailer that is viewed as being more downmarket than Apple’s retail operations.


This post has been revised to reflect the following correction:

Correction: October 29, 2012

A caption with an earlier version of this post misspelled the surname of Apple’s departing retail director. He is John Browett, not Browlett.

Article source: http://bits.blogs.nytimes.com/2012/10/29/apples-mobile-software-and-retail-chiefs-to-depart/?partner=rss&emc=rss