THE ECONOMIST : Business this week Apr 8th 2009
From The Economist print edition
Sour charity
New York state’s attorney-general accused Ezra Merkin, a hedge-fund manager, of placing clients’ money with Bernard Madoff without telling them. There was no suggestion that Mr Merkin, a prominent Manhattan philanthropist, who invested money for many non-profit organisations, including New York University, knew Mr Madoff was running a Ponzi scheme.
Indian police widened their investigation into alleged fraud at Satyam Computer Services, one of India’s biggest technology companies, arresting three executives in its finance department for an “active role” in the crime. Satyam’s chairman resigned in January after admitting he had overstated profits and hidden liabilities at the company.
The European Commission sent a “statement of objections” to Visa Europe (a separate entity to Visa) regarding the transaction fee paid by retailers’ banks to the banks of their customers. Europe’s antitrust regulators are pushing for change at big credit-card companies, accusing them of acting as a cartel when setting fees. The commission recently reached an agreement with MasterCard to reduce its fees on cross-border payments.
Berry good
Research In Motion’s quarterly earnings cheered investors. The BlackBerry-maker’s profit rose by 26% compared with a year ago, to $518m, and revenue soared by 84%. It added a net 3.9m subscribers, bringing the total number of those who use the popular e-mail device to 25m.
A judge in Hong Kong ruled that Richard Li, the chairman of PCCW, had done nothing wrong when he handed out shares to investors ahead of a vote on his buy-out offer. Shareholders at the telecoms company voted in favour of Mr Li’s proposal, but Hong Kong’s Securities and Futures Commission insists his actions affected the outcome.
The Pentagon proposed capping purchases of Lockheed Martin’s F-22 fighter jets and said it would cancel orders with the company to supply VH-71 presidential helicopters. The programme would have cost taxpayers $13 billion.
PartyGaming reached a settlement with American authorities, agreeing to pay $105m to avoid prosecution for providing online-gambling facilities to American residents. The company, which has its headquarters in Gibraltar, was a darling of the London Stock Exchange after a share offering in 2005, but in October 2006 Congress passed a law that clamped down on internet gaming and PartyGaming’s share price slumped.
HSBC reported that existing shareholders had responded well to its rights issue and bought 96.6% of the shares on offer; the remainder were sold in the market. The bank, one of the few global financial institutions not to request state aid during the crisis, raked in $18.5 billion in new capital through the public offering.
Royal Bank of Scotland said it would cut 9,000 jobs worldwide. Meanwhile RBS’s remuneration report was rejected by 90% of shareholders at the annual meeting. The report included Sir Fred Goodwin’s contentious annual pension of £700,000 ($1m). The bank’s former boss, whose aggressive approach to cost-cutting earned him the nickname “Fred the Shred”, resigned when the bank had to be bailed out.
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