Fukushima operator to seek foreign advice on toxic water

Japan's Economy, Trade and Industry Minister Toshimitsu Motegi (R), wearing a protective suit and a mask, inspects contaminated water tanks at the tsunami-crippled Fukushima Daiichi nuclear power plant in Fukushima prefecture August 26, 2013, in this photo released by Kyodo.

Credit: Reuters/Kyodo

By Antoni Slodkowski

HIRONO, Japan | Mon Aug 26, 2013 2:14pm EDT

HIRONO, Japan (Reuters) - Tokyo Electric Power Co, the operator of the stricken Fukushima nuclear plant, said it would invite foreign decommissioning experts to advise it on how to deal with highly radioactive water leaking from the site, and Japan signaled it may dip into a $3.6 billion emergency reserve fund to help pay for the clean-up.

Visiting the plant crippled by an earthquake and tsunami in March 2011, Toshimitsu Motegi, the trade and industry minister, said on Monday he would set up a taskforce to take charge of the clean-up, and send officials to Fukushima to oversee operations.

"I strongly feel that the government should get fully involved," he told reporters after touring the Fukushima Daiichi facility, which is 220 km (137 miles) north of Tokyo.

Motegi ordered Tokyo Electric Power, or Tepco, to replace storage tanks that are at risk of leaking radioactive water. Tepco acknowledged last week that hundreds of tons of highly radioactive water had leaked from one of around 350 tanks that were assembled quickly after the 2011 nuclear meltdowns at the site. The tanks are used to store water pumped through the reactors to keep fuel in the melted cores from overheating.

Motegi said Tepco should have more frequent patrols around the tanks and better documentation of inspections. He said the utility should replace weaker bolted tanks with sturdier welded storage units. Tepco said it was setting up its own group of experts to oversee toxic water and storage tanks at the Fukushima site.

"For measures that require sophisticated technology, we will appropriately implement them as the government while collaborating with authorities on fiscal measures, including the use of a reserve fund," Motegi said.

Earlier on Monday, Chief Cabinet Secretary Yoshihide Suga said the situation at Fukushima was "deplorable", and signaled the government could use some of the 350 billion yen set aside in this year's budget as a reserve for natural disasters and other emergencies.

Tepco's revelation of the toxic leaks is the most serious problem in a series of recent mishaps, including power outages, contaminated workers and other leaks. Tepco also said last month - after repeated denials - that the Fukushima plant was leaking contaminated water into the Pacific Ocean from trenches between the reactor buildings and the shoreline.

Japan's Nuclear Regulation Authority said last week it feared the disaster was "in some respects" beyond Tepco's ability to cope.

The latest crisis comes as Prime Minister Shinzo Abe has been touting Japan's nuclear technology abroad to countries like Turkey, promising that its nuclear reactor makers have learned vital safety lessons from the disaster.

Tepco shares ended down 6.9 percent on Monday after falling as much as 10 percent to their lowest level in 12 weeks.

CHERNOBYL LESSONS

Foreign Minister Fumio Kishida on Sunday visited Chernobyl in Ukraine, the site of the 1986 nuclear disaster, and said he hoped to apply lessons learned there to Fukushima.

"I directly saw that the battle to contain the accident still continues 27 years after the disaster. Ukraine's experience and knowledge serve as a useful reference for workers coping with the Fukushima nuclear crisis," Kyodo news agency quoted Kishida as telling reporters.

China on Sunday said it was paying close attention to developments at Fukushima, noting it has the right to request entry into waters near the facility to conduct checks and assess the impact of the nuclear accident on the Western Pacific.

The country's State Oceanic Administration said it hadn't found any evidence of a "direct impact" from radiation on Chinese waters, but will closely monitor developments.

Public distrust towards Tepco's handling of the Fukushima plant clean-up has also intensified, with a Mainichi newspaper poll finding 91 percent of respondents saying the government should take a more active role in the contaminated water issue.

($1 = 98.47 Japanese yen)

(Additional reporting by David Stanway in Beijing, and Leng Cheng, Tetsushi Kajimoto and Mari Saito in Tokyo.; Editing by Linda Sieg, Aaron Sheldrick and Ian Geoghegan)

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Indian rupee hurtles lower as foreign investors flee

1 of 2. Indian Rupee notes are seen in this picture illustration taken in Mumbai June 12, 2013.

Credit: Reuters/Vivek Prakash

By Swati Bhat and Himank Sharma

MUMBAI | Wed Aug 28, 2013 8:37am EDT

MUMBAI (Reuters) - The Indian rupee slumped to a record low near 69 to the dollar on Wednesday on growing worries that foreign investors will continue to sell out of a country facing stiff economic challenges and volatile global markets.

The pummeling in markets sent the rupee reeling 3.7 percent to an all-time low of 68.85 with the unit closing just a touch off that, at 68.80/81 per dollar, its biggest single-day fall since October 1995.

It closed on Tuesday at 66.24/25.

In absolute terms too, the 256-basis-point fall in the rupee was the biggest ever.

An assault on the psychologically key 70 level now appears imminent, as intervention from the central bank seen mid-morning only gave the rupee a brief respite.

In the stock market, state-run Life Insurance Corp, which was spotted buying shares, allowed the domestic benchmark index to erase steep early losses and end the day stronger.

"If steps are not taken to implement the reforms necessary to tackle the structural issues, the government will be left with the so-called '3D options': debt default, devaluation, deflation," said Angelo Corbetta, head of Asia equity for Pioneer Investments in London.

"In India, devaluation is happening now and deflation could be about to start. The good news is that the debt default is highly unlikely."

Foreign investors have sold almost $1 billion of Indian shares in the eight sessions through Tuesday - a worrisome prospect given stocks had been India's one sturdy source of capital inflows in the first half of 2013.

If more foreign investors throw in the towel, traders fear it will put the country in a vicious cycle in which the hit to confidence in turn slams shares and the currency even harder.

Policymakers have consistently struggled to come up with steps that can convince markets they can stabilize the rupee and attract funds into the country despite extraordinary measures last month by the central bank to drain liquidity and action to curb gold imports and cut India's huge oil import bill.

RISING OIL PRICES, FED FEARS AMPLIFY PRESSURE

India badly needs foreign capital as it struggles with a record high current account deficit, growing fiscal pressures and an economy growing at the slowest in a decade.

The failure to address India's economic challenges is becoming an increasing source of tension at a time when fears of a possible U.S.-led military strike against Syria are knocking down Asian markets, with the prospect that the Federal Reserve will soon end its prolonged period of cheap money further raising concerns.

At the same time, rising domestic bond yields threaten to raise borrowing costs across the already slowing economy, while global prices of oil and gold - the country's two biggest imports - have surged this week.

"The end game for the current decline would be the day the rupee stops falling, alongside government measures like a substantial diesel price hike," said Samir Arora, a fund manager at Helios Capital in Singapore.

BNP Paribas on Wednesday slashed its economic growth forecast for India for the fiscal year to March 2014 to 3.7 percent from its previous 5.2 percent - the weakest growth since 1991-92 when India buckled under a balance of payments crisis that required a loan from the International Monetary Fund.

"India's parliament remains toxically dysfunctional with little, if any, business conducted," BNP said.

"And, with next year's general election looming ever nearer, the government's willingness to instigate a politically unpopular fiscal tightening is close to nil."

India is due to post April-June gross domestic product data on Friday, with analysts estimating the economy grew at an annual rate of 4.7 percent, roughly in line with the previous quarter. It will also post July federal fiscal deficit figures.

LACKING CONFIDENCE

The rupee has plunged more than 20 percent this year, by far the biggest decliner among the Asian currencies tracked by Reuters.

India's main National Stock Exchange index fell as much as 3.2 percent, although suspected buying by LIC led the index to recover in the afternoon.

Foreign investors are paring equity positions, having sold a net $3.6 billion in stocks since the start of June, but still their net purchases so far this year total nearly $12 billion.

Among the blue chips that fell the most on Wednesday were Axis Bank Ltd and ICICI Bank Ltd, a concern given foreign investors had so far largely held on to their investments in lenders, owning more than 40 percent of each.

In bond markets, foreign investors have sold more heavily, with outflows reaching nearly $4.6 billion so far this year.

Yet the government has so far failed to provide a coherent response, analysts said. Its approval of infrastructure projects on Tuesday was trumped by concerns about the fiscal deficit after India's lower house of parliament this week approved a 1.35 trillion rupees ($19.6 billion) plan to provide cheap gain to the poor.

In its latest initiative, the government late on Tuesday proposed setting up a task force to look into currency swap agreements, a measure analysts said could bring some relief if carried out in time by reducing market demand for dollars or other major currencies.

"Let's see what the authorities do, but if the government can come out with some really big currency swap arrangement with some countries, that can be a strong positive," said Uday Bhatt, a forex dealer with UCO Bank in Mumbai. ($1 = 68.8 rupees)

(Writing by Rafael Nam; Additional reporting by Abhishek Vishnoi; Editing by Kim Coghill and Nick Macfie)

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Fukushima operator to seek foreign advice on toxic water

Japan's Economy, Trade and Industry Minister Toshimitsu Motegi (R), wearing a protective suit and a mask, inspects contaminated water tanks at the tsunami-crippled Fukushima Daiichi nuclear power plant in Fukushima prefecture August 26, 2013, in this photo released by Kyodo.

Credit: Reuters/Kyodo

By Antoni Slodkowski

HIRONO, Japan | Mon Aug 26, 2013 7:39am EDT

HIRONO, Japan (Reuters) - Tokyo Electric Power Co, the operator of the stricken Fukushima nuclear plant, said it would invite foreign decommissioning experts to advise it on how to deal with highly radioactive water leaking from the site, and Japan signaled it may dip into a $3.6 billion emergency reserve fund to help pay for the clean-up.

Visiting the plant crippled by an earthquake and tsunami in March 2011, Toshimitsu Motegi, the trade and industry minister, said on Monday he would set up a taskforce to take charge of the clean-up, and send officials to Fukushima to oversee operations.

"I strongly feel that the government should get fully involved," he told reporters after touring the Fukushima Daiichi facility, which is 220 km (137 miles) north of Tokyo.

Motegi ordered Tokyo Electric Power, or Tepco, to replace storage tanks that are at risk of leaking radioactive water. Tepco acknowledged last week that hundreds of tons of highly radioactive water had leaked from one of around 350 tanks that were assembled quickly after the 2011 nuclear meltdowns at the site. The tanks are used to store water pumped through the reactors to keep fuel in the melted cores from overheating.

Motegi said Tepco should have more frequent patrols around the tanks and better documentation of inspections. He said the utility should replace weaker bolted tanks with sturdier welded storage units. Tepco said it was setting up its own group of experts to oversee toxic water and storage tanks at the Fukushima site.

"For measures that require sophisticated technology, we will appropriately implement them as the government while collaborating with authorities on fiscal measures, including the use of a reserve fund," Motegi said.

Earlier on Monday, Chief Cabinet Secretary Yoshihide Suga said the situation at Fukushima was "deplorable", and signaled the government could use some of the 350 billion yen set aside in this year's budget as a reserve for natural disasters and other emergencies.

Tepco's revelation of the toxic leaks is the most serious problem in a series of recent mishaps, including power outages, contaminated workers and other leaks. Tepco also said last month - after repeated denials - that the Fukushima plant was leaking contaminated water into the Pacific Ocean from trenches between the reactor buildings and the shoreline.

Japan's Nuclear Regulation Authority said last week it feared the disaster was "in some respects" beyond Tepco's ability to cope.

The latest crisis comes as Prime Minister Shinzo Abe has been touting Japan's nuclear technology abroad to countries like Turkey, promising that its nuclear reactor makers have learned vital safety lessons from the disaster.

Tepco shares ended down 6.9 percent on Monday after falling as much as 10 percent to their lowest level in 12 weeks.

CHERNOBYL LESSONS

Foreign Minister Fumio Kishida on Sunday visited Chernobyl in Ukraine, the site of the 1986 nuclear disaster, and said he hoped to apply lessons learned there to Fukushima.

"I directly saw that the battle to contain the accident still continues 27 years after the disaster. Ukraine's experience and knowledge serve as a useful reference for workers coping with the Fukushima nuclear crisis," Kyodo news agency quoted Kishida as telling reporters.

China on Sunday said it was paying close attention to developments at Fukushima, noting it has the right to request entry into waters near the facility to conduct checks and assess the impact of the nuclear accident on the Western Pacific.

The country's State Oceanic Administration said it hadn't found any evidence of a "direct impact" from radiation on Chinese waters, but will closely monitor developments.

Public distrust towards Tepco's handling of the Fukushima plant clean-up has also intensified, with a Mainichi newspaper poll finding 91 percent of respondents saying the government should take a more active role in the contaminated water issue.

($1 = 98.47 Japanese yen)

(Additional reporting by David Stanway in Beijing, and Leng Cheng, Tetsushi Kajimoto and Mari Saito in Tokyo.; Editing by Linda Sieg, Aaron Sheldrick and Ian Geoghegan)

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Exclusive: Tough-talking China pricing regulator sought confessions from foreign firms

The national flag of China flutters behind a fence of the headquarters of the National Development and Reform Commission (NDRC) in Beijing, in this picture taken July 12, 2013.

Credit: Reuters/Kim Kyung-Hoon

By Michael Martina

BEIJING | Wed Aug 21, 2013 8:40am EDT

BEIJING (Reuters) - A senior Chinese official put pressure on around 30 foreign firms including General Electric and Siemens at a recent meeting to confess to any antitrust violations and warned them against using external lawyers to fight accusations from regulators, sources said.

The meeting is evidence of what many antitrust lawyers in China see as increasingly aggressive tactics to enforce a 2008 anti-monopoly law and highlight a worsening relationship between foreign companies and China's array of regulators.

Two sources who were at the July 24-25 closed-door meeting said the senior official showed in-house lawyers how to write what they called "self-criticisms" and displayed copies of letters from companies admitting guilt in past antitrust cases. Lawyers employed by some of those firms were in the room.

The two sources, and another source with direct knowledge of the meeting at a small hotel in Beijing, said the official who delivered the blunt remarks was Xu Xinyu, a division chief at the National Development and Reform Commission (NDRC).

One of the sources at the meeting said Xu noted, without being specific, that half of the companies in the room were either being investigated or had been probed by the NDRC. "The message was: if you put up a fight, I could double or triple your fines. This speech went way over the line," the second source who attended the meeting told Reuters.

The NDRC did not respond to questions from Reuters. Xu could not be reached for comment.

The agency has been at the forefront of a wave of investigations into how companies do business in China, especially into whether they effectively force retailers to sell their products at a minimum price.

On August 7 it announced fines totaling a record $110 million against five foreign milk powder firms and one Chinese producer for price fixing and anti-competitive behavior. Three other milk powder makers were investigated but not fined because, among other things, they carried out "self-rectification", the NDRC said at the time.

In-house lawyers from some 30 firms attended the July meeting, which was conducted in Chinese. It had been billed as a training session for multinationals to mark the fifth anniversary of the anti-monopoly law. Officials from the Ministry of Commerce as well as the State Administration for Industry and Commerce (SAIC), a regulator in charge of market supervision, were also at the meeting, but their presentations were overshadowed by Xu's speech.

His comments were perceived as threatening, and while other NDRC officials at the meeting may not have supported the way it was conveyed, Xu's message was consistent with the approach taken by other officials in private conversations with companies in recent months, the two sources at the meeting said.

They declined to be identified because they were not authorized to speak to the media, but word of the meeting has circulated widely in the antitrust community.

GLOBAL COMPANIES

The two sources said the following companies were at the hotel: GE, Siemens, Samsung Electronics, Microsoft, Volvo, IBM Corp, Michelin; Swedish packaging giant Tetra Pak; Intel Corp; Qualcomm; Dumex, a subsidiary of France's Danone and U.S. cable equipment maker Arris Group Inc.

Tetra Pak confirmed it was there but declined to comment further. Siemens said it was unaware of any meeting, as did Samsung and Volvo. IBM, Intel, GE and Microsoft declined to comment. Arris, Michelin and Dumex did not respond to questions while Reuters was unable to immediately reach Qualcomm. Reuters does not have a full list of firms at the meeting.

The government agencies held a separate training session for Chinese state-owned enterprises around the same time, one of the sources said, though it was unclear what was discussed.

The two sources said Xu did not explain why he didn't want foreign firms to hire external lawyers if they were probed.

Getting an admission of guilt from companies makes it easier for the NDRC because lawyers who have dealt with it said its capacity for legal analysis was weak and that few within its antitrust bureau had a background in law.

"They don't do analysis. They just do an interview and ask for an admission," said one lawyer from a leading antitrust firm in China who also had direct knowledge of the July meeting.

When one lawyer asked a question about the anti-monopoly law, Xu asked the executive to elaborate on his company's practices so he could determine on the spot if it was in violation or not, the two sources said. The lawyer clammed up, they said.

While Chinese regulators have said little to explain the motivations behind the various pricing investigations, state media have accused the foreign media of exaggerating the issue.

In a commentary on Monday, the official Xinhua news agency said such probes were routine in a market-oriented economy.

"The battle is not targeted at foreign companies. It is aimed at creating a fairer, cleaner and better-regulated environment for economic competition," the English language commentary said. "Probing and punishing ill-behaved companies will increase the confidence of international firms in the Chinese market, not the other way round."

WARY OF NDRC

Lawyers and sources familiar with the NDRC said Xu was elevated to the role of a division chief in its antitrust bureau after the agency, keen to keep pace with China's two other antitrust enforcers - the Ministry of Commerce and SAIC - added dozens of personnel in 2011.

At the same time, the NDRC is offering leniency for some companies in return for cooperation.

In the case against the milk powder makers, Swiss giant Nestle was among the three firms spared fines because it "provided important evidence and carried out active self-rectification", the NDRC said.

"I am happy that the NDRC is actively investigating, but they can't prohibit a company from hiring a lawyer," said the lawyer from the antitrust firm. "The NDRC is very powerful and some companies are afraid and willing to give up counsel."

A second China-based antitrust lawyer said foreign firms were frightened of challenging the NDRC by filing a judicial review in court, which could overrule an NDRC finding. While China's judiciary is not considered independent, experts regard it as more capable of detailed legal analysis.

"So far, no companies have challenged the NDRC for a judicial review because they are afraid of retaliation. (This) is the same reason why they would sign a confession letter," said the lawyer.

Daniel Sokol, a law professor and antitrust expert at the University of Florida, said that while Chinese firms had been targeted by the NDRC over antitrust issues, the uncertainty was making foreign investors especially jittery.

"The problem is that because it has so much power and because in various forums they have been focusing on foreign enforcement, this is definitely impacting business decision-making about further FDI into China," Sokol said.

(Additional reporting by Kazunori Takada in SHANGHAI, Norihiko Shirouzu, Matt Miller, Paul Carsten in BEIJING and Anna Ringstrom in Stockholm; Editing by Dean Yates)

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Exclusive: Tough-talking China pricing regulator sought confessions from foreign firms

The national flag of China flutters behind a fence of the headquarters of the National Development and Reform Commission (NDRC) in Beijing, in this picture taken July 12, 2013.

Credit: Reuters/Kim Kyung-Hoon

By Michael Martina

BEIJING | Wed Aug 21, 2013 8:40am EDT

BEIJING (Reuters) - A senior Chinese official put pressure on around 30 foreign firms including General Electric and Siemens at a recent meeting to confess to any antitrust violations and warned them against using external lawyers to fight accusations from regulators, sources said.

The meeting is evidence of what many antitrust lawyers in China see as increasingly aggressive tactics to enforce a 2008 anti-monopoly law and highlight a worsening relationship between foreign companies and China's array of regulators.

Two sources who were at the July 24-25 closed-door meeting said the senior official showed in-house lawyers how to write what they called "self-criticisms" and displayed copies of letters from companies admitting guilt in past antitrust cases. Lawyers employed by some of those firms were in the room.

The two sources, and another source with direct knowledge of the meeting at a small hotel in Beijing, said the official who delivered the blunt remarks was Xu Xinyu, a division chief at the National Development and Reform Commission (NDRC).

One of the sources at the meeting said Xu noted, without being specific, that half of the companies in the room were either being investigated or had been probed by the NDRC. "The message was: if you put up a fight, I could double or triple your fines. This speech went way over the line," the second source who attended the meeting told Reuters.

The NDRC did not respond to questions from Reuters. Xu could not be reached for comment.

The agency has been at the forefront of a wave of investigations into how companies do business in China, especially into whether they effectively force retailers to sell their products at a minimum price.

On August 7 it announced fines totaling a record $110 million against five foreign milk powder firms and one Chinese producer for price fixing and anti-competitive behavior. Three other milk powder makers were investigated but not fined because, among other things, they carried out "self-rectification", the NDRC said at the time.

In-house lawyers from some 30 firms attended the July meeting, which was conducted in Chinese. It had been billed as a training session for multinationals to mark the fifth anniversary of the anti-monopoly law. Officials from the Ministry of Commerce as well as the State Administration for Industry and Commerce (SAIC), a regulator in charge of market supervision, were also at the meeting, but their presentations were overshadowed by Xu's speech.

His comments were perceived as threatening, and while other NDRC officials at the meeting may not have supported the way it was conveyed, Xu's message was consistent with the approach taken by other officials in private conversations with companies in recent months, the two sources at the meeting said.

They declined to be identified because they were not authorized to speak to the media, but word of the meeting has circulated widely in the antitrust community.

GLOBAL COMPANIES

The two sources said the following companies were at the hotel: GE, Siemens, Samsung Electronics, Microsoft, Volvo, IBM Corp, Michelin; Swedish packaging giant Tetra Pak; Intel Corp; Qualcomm; Dumex, a subsidiary of France's Danone and U.S. cable equipment maker Arris Group Inc.

Tetra Pak confirmed it was there but declined to comment further. Siemens said it was unaware of any meeting, as did Samsung and Volvo. IBM, Intel, GE and Microsoft declined to comment. Arris, Michelin and Dumex did not respond to questions while Reuters was unable to immediately reach Qualcomm. Reuters does not have a full list of firms at the meeting.

The government agencies held a separate training session for Chinese state-owned enterprises around the same time, one of the sources said, though it was unclear what was discussed.

The two sources said Xu did not explain why he didn't want foreign firms to hire external lawyers if they were probed.

Getting an admission of guilt from companies makes it easier for the NDRC because lawyers who have dealt with it said its capacity for legal analysis was weak and that few within its antitrust bureau had a background in law.

"They don't do analysis. They just do an interview and ask for an admission," said one lawyer from a leading antitrust firm in China who also had direct knowledge of the July meeting.

When one lawyer asked a question about the anti-monopoly law, Xu asked the executive to elaborate on his company's practices so he could determine on the spot if it was in violation or not, the two sources said. The lawyer clammed up, they said.

While Chinese regulators have said little to explain the motivations behind the various pricing investigations, state media have accused the foreign media of exaggerating the issue.

In a commentary on Monday, the official Xinhua news agency said such probes were routine in a market-oriented economy.

"The battle is not targeted at foreign companies. It is aimed at creating a fairer, cleaner and better-regulated environment for economic competition," the English language commentary said. "Probing and punishing ill-behaved companies will increase the confidence of international firms in the Chinese market, not the other way round."

WARY OF NDRC

Lawyers and sources familiar with the NDRC said Xu was elevated to the role of a division chief in its antitrust bureau after the agency, keen to keep pace with China's two other antitrust enforcers - the Ministry of Commerce and SAIC - added dozens of personnel in 2011.

At the same time, the NDRC is offering leniency for some companies in return for cooperation.

In the case against the milk powder makers, Swiss giant Nestle was among the three firms spared fines because it "provided important evidence and carried out active self-rectification", the NDRC said.

"I am happy that the NDRC is actively investigating, but they can't prohibit a company from hiring a lawyer," said the lawyer from the antitrust firm. "The NDRC is very powerful and some companies are afraid and willing to give up counsel."

A second China-based antitrust lawyer said foreign firms were frightened of challenging the NDRC by filing a judicial review in court, which could overrule an NDRC finding. While China's judiciary is not considered independent, experts regard it as more capable of detailed legal analysis.

"So far, no companies have challenged the NDRC for a judicial review because they are afraid of retaliation. (This) is the same reason why they would sign a confession letter," said the lawyer.

Daniel Sokol, a law professor and antitrust expert at the University of Florida, said that while Chinese firms had been targeted by the NDRC over antitrust issues, the uncertainty was making foreign investors especially jittery.

"The problem is that because it has so much power and because in various forums they have been focusing on foreign enforcement, this is definitely impacting business decision-making about further FDI into China," Sokol said.

(Additional reporting by Kazunori Takada in SHANGHAI, Norihiko Shirouzu, Matt Miller, Paul Carsten in BEIJING and Anna Ringstrom in Stockholm; Editing by Dean Yates)

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Exclusive: Tough-talking China pricing regulator sought confessions from foreign firms

The national flag of China flutters behind a fence of the headquarters of the National Development and Reform Commission (NDRC) in Beijing, in this picture taken July 12, 2013.

Credit: Reuters/Kim Kyung-Hoon

By Michael Martina

BEIJING | Wed Aug 21, 2013 8:40am EDT

BEIJING (Reuters) - A senior Chinese official put pressure on around 30 foreign firms including General Electric and Siemens at a recent meeting to confess to any antitrust violations and warned them against using external lawyers to fight accusations from regulators, sources said.

The meeting is evidence of what many antitrust lawyers in China see as increasingly aggressive tactics to enforce a 2008 anti-monopoly law and highlight a worsening relationship between foreign companies and China's array of regulators.

Two sources who were at the July 24-25 closed-door meeting said the senior official showed in-house lawyers how to write what they called "self-criticisms" and displayed copies of letters from companies admitting guilt in past antitrust cases. Lawyers employed by some of those firms were in the room.

The two sources, and another source with direct knowledge of the meeting at a small hotel in Beijing, said the official who delivered the blunt remarks was Xu Xinyu, a division chief at the National Development and Reform Commission (NDRC).

One of the sources at the meeting said Xu noted, without being specific, that half of the companies in the room were either being investigated or had been probed by the NDRC. "The message was: if you put up a fight, I could double or triple your fines. This speech went way over the line," the second source who attended the meeting told Reuters.

The NDRC did not respond to questions from Reuters. Xu could not be reached for comment.

The agency has been at the forefront of a wave of investigations into how companies do business in China, especially into whether they effectively force retailers to sell their products at a minimum price.

On August 7 it announced fines totaling a record $110 million against five foreign milk powder firms and one Chinese producer for price fixing and anti-competitive behavior. Three other milk powder makers were investigated but not fined because, among other things, they carried out "self-rectification", the NDRC said at the time.

In-house lawyers from some 30 firms attended the July meeting, which was conducted in Chinese. It had been billed as a training session for multinationals to mark the fifth anniversary of the anti-monopoly law. Officials from the Ministry of Commerce as well as the State Administration for Industry and Commerce (SAIC), a regulator in charge of market supervision, were also at the meeting, but their presentations were overshadowed by Xu's speech.

His comments were perceived as threatening, and while other NDRC officials at the meeting may not have supported the way it was conveyed, Xu's message was consistent with the approach taken by other officials in private conversations with companies in recent months, the two sources at the meeting said.

They declined to be identified because they were not authorized to speak to the media, but word of the meeting has circulated widely in the antitrust community.

GLOBAL COMPANIES

The two sources said the following companies were at the hotel: GE, Siemens, Samsung Electronics, Microsoft, Volvo, IBM Corp, Michelin; Swedish packaging giant Tetra Pak; Intel Corp; Qualcomm; Dumex, a subsidiary of France's Danone and U.S. cable equipment maker Arris Group Inc.

Tetra Pak confirmed it was there but declined to comment further. Siemens said it was unaware of any meeting, as did Samsung and Volvo. IBM, Intel, GE and Microsoft declined to comment. Arris, Michelin and Dumex did not respond to questions while Reuters was unable to immediately reach Qualcomm. Reuters does not have a full list of firms at the meeting.

The government agencies held a separate training session for Chinese state-owned enterprises around the same time, one of the sources said, though it was unclear what was discussed.

The two sources said Xu did not explain why he didn't want foreign firms to hire external lawyers if they were probed.

Getting an admission of guilt from companies makes it easier for the NDRC because lawyers who have dealt with it said its capacity for legal analysis was weak and that few within its antitrust bureau had a background in law.

"They don't do analysis. They just do an interview and ask for an admission," said one lawyer from a leading antitrust firm in China who also had direct knowledge of the July meeting.

When one lawyer asked a question about the anti-monopoly law, Xu asked the executive to elaborate on his company's practices so he could determine on the spot if it was in violation or not, the two sources said. The lawyer clammed up, they said.

While Chinese regulators have said little to explain the motivations behind the various pricing investigations, state media have accused the foreign media of exaggerating the issue.

In a commentary on Monday, the official Xinhua news agency said such probes were routine in a market-oriented economy.

"The battle is not targeted at foreign companies. It is aimed at creating a fairer, cleaner and better-regulated environment for economic competition," the English language commentary said. "Probing and punishing ill-behaved companies will increase the confidence of international firms in the Chinese market, not the other way round."

WARY OF NDRC

Lawyers and sources familiar with the NDRC said Xu was elevated to the role of a division chief in its antitrust bureau after the agency, keen to keep pace with China's two other antitrust enforcers - the Ministry of Commerce and SAIC - added dozens of personnel in 2011.

At the same time, the NDRC is offering leniency for some companies in return for cooperation.

In the case against the milk powder makers, Swiss giant Nestle was among the three firms spared fines because it "provided important evidence and carried out active self-rectification", the NDRC said.

"I am happy that the NDRC is actively investigating, but they can't prohibit a company from hiring a lawyer," said the lawyer from the antitrust firm. "The NDRC is very powerful and some companies are afraid and willing to give up counsel."

A second China-based antitrust lawyer said foreign firms were frightened of challenging the NDRC by filing a judicial review in court, which could overrule an NDRC finding. While China's judiciary is not considered independent, experts regard it as more capable of detailed legal analysis.

"So far, no companies have challenged the NDRC for a judicial review because they are afraid of retaliation. (This) is the same reason why they would sign a confession letter," said the lawyer.

Daniel Sokol, a law professor and antitrust expert at the University of Florida, said that while Chinese firms had been targeted by the NDRC over antitrust issues, the uncertainty was making foreign investors especially jittery.

"The problem is that because it has so much power and because in various forums they have been focusing on foreign enforcement, this is definitely impacting business decision-making about further FDI into China," Sokol said.

(Additional reporting by Kazunori Takada in SHANGHAI, Norihiko Shirouzu, Matt Miller, Paul Carsten in BEIJING and Anna Ringstrom in Stockholm; Editing by Dean Yates)

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Exclusive: Tough-talking China pricing regulator sought confessions from foreign firms

The national flag of China flutters behind a fence of the headquarters of the National Development and Reform Commission (NDRC) in Beijing, in this picture taken July 12, 2013.

Credit: Reuters/Kim Kyung-Hoon

By Michael Martina

BEIJING | Wed Aug 21, 2013 8:40am EDT

BEIJING (Reuters) - A senior Chinese official put pressure on around 30 foreign firms including General Electric and Siemens at a recent meeting to confess to any antitrust violations and warned them against using external lawyers to fight accusations from regulators, sources said.

The meeting is evidence of what many antitrust lawyers in China see as increasingly aggressive tactics to enforce a 2008 anti-monopoly law and highlight a worsening relationship between foreign companies and China's array of regulators.

Two sources who were at the July 24-25 closed-door meeting said the senior official showed in-house lawyers how to write what they called "self-criticisms" and displayed copies of letters from companies admitting guilt in past antitrust cases. Lawyers employed by some of those firms were in the room.

The two sources, and another source with direct knowledge of the meeting at a small hotel in Beijing, said the official who delivered the blunt remarks was Xu Xinyu, a division chief at the National Development and Reform Commission (NDRC).

One of the sources at the meeting said Xu noted, without being specific, that half of the companies in the room were either being investigated or had been probed by the NDRC. "The message was: if you put up a fight, I could double or triple your fines. This speech went way over the line," the second source who attended the meeting told Reuters.

The NDRC did not respond to questions from Reuters. Xu could not be reached for comment.

The agency has been at the forefront of a wave of investigations into how companies do business in China, especially into whether they effectively force retailers to sell their products at a minimum price.

On August 7 it announced fines totaling a record $110 million against five foreign milk powder firms and one Chinese producer for price fixing and anti-competitive behavior. Three other milk powder makers were investigated but not fined because, among other things, they carried out "self-rectification", the NDRC said at the time.

In-house lawyers from some 30 firms attended the July meeting, which was conducted in Chinese. It had been billed as a training session for multinationals to mark the fifth anniversary of the anti-monopoly law. Officials from the Ministry of Commerce as well as the State Administration for Industry and Commerce (SAIC), a regulator in charge of market supervision, were also at the meeting, but their presentations were overshadowed by Xu's speech.

His comments were perceived as threatening, and while other NDRC officials at the meeting may not have supported the way it was conveyed, Xu's message was consistent with the approach taken by other officials in private conversations with companies in recent months, the two sources at the meeting said.

They declined to be identified because they were not authorized to speak to the media, but word of the meeting has circulated widely in the antitrust community.

GLOBAL COMPANIES

The two sources said the following companies were at the hotel: GE, Siemens, Samsung Electronics, Microsoft, Volvo, IBM Corp, Michelin; Swedish packaging giant Tetra Pak; Intel Corp; Qualcomm; Dumex, a subsidiary of France's Danone and U.S. cable equipment maker Arris Group Inc.

Tetra Pak confirmed it was there but declined to comment further. Siemens said it was unaware of any meeting, as did Samsung and Volvo. IBM, Intel, GE and Microsoft declined to comment. Arris, Michelin and Dumex did not respond to questions while Reuters was unable to immediately reach Qualcomm. Reuters does not have a full list of firms at the meeting.

The government agencies held a separate training session for Chinese state-owned enterprises around the same time, one of the sources said, though it was unclear what was discussed.

The two sources said Xu did not explain why he didn't want foreign firms to hire external lawyers if they were probed.

Getting an admission of guilt from companies makes it easier for the NDRC because lawyers who have dealt with it said its capacity for legal analysis was weak and that few within its antitrust bureau had a background in law.

"They don't do analysis. They just do an interview and ask for an admission," said one lawyer from a leading antitrust firm in China who also had direct knowledge of the July meeting.

When one lawyer asked a question about the anti-monopoly law, Xu asked the executive to elaborate on his company's practices so he could determine on the spot if it was in violation or not, the two sources said. The lawyer clammed up, they said.

While Chinese regulators have said little to explain the motivations behind the various pricing investigations, state media have accused the foreign media of exaggerating the issue.

In a commentary on Monday, the official Xinhua news agency said such probes were routine in a market-oriented economy.

"The battle is not targeted at foreign companies. It is aimed at creating a fairer, cleaner and better-regulated environment for economic competition," the English language commentary said. "Probing and punishing ill-behaved companies will increase the confidence of international firms in the Chinese market, not the other way round."

WARY OF NDRC

Lawyers and sources familiar with the NDRC said Xu was elevated to the role of a division chief in its antitrust bureau after the agency, keen to keep pace with China's two other antitrust enforcers - the Ministry of Commerce and SAIC - added dozens of personnel in 2011.

At the same time, the NDRC is offering leniency for some companies in return for cooperation.

In the case against the milk powder makers, Swiss giant Nestle was among the three firms spared fines because it "provided important evidence and carried out active self-rectification", the NDRC said.

"I am happy that the NDRC is actively investigating, but they can't prohibit a company from hiring a lawyer," said the lawyer from the antitrust firm. "The NDRC is very powerful and some companies are afraid and willing to give up counsel."

A second China-based antitrust lawyer said foreign firms were frightened of challenging the NDRC by filing a judicial review in court, which could overrule an NDRC finding. While China's judiciary is not considered independent, experts regard it as more capable of detailed legal analysis.

"So far, no companies have challenged the NDRC for a judicial review because they are afraid of retaliation. (This) is the same reason why they would sign a confession letter," said the lawyer.

Daniel Sokol, a law professor and antitrust expert at the University of Florida, said that while Chinese firms had been targeted by the NDRC over antitrust issues, the uncertainty was making foreign investors especially jittery.

"The problem is that because it has so much power and because in various forums they have been focusing on foreign enforcement, this is definitely impacting business decision-making about further FDI into China," Sokol said.

(Additional reporting by Kazunori Takada in SHANGHAI, Norihiko Shirouzu, Matt Miller, Paul Carsten in BEIJING and Anna Ringstrom in Stockholm; Editing by Dean Yates)

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As Indian rupee hits record low, foreign investors baulk

1 of 2. A cashier counts Indian rupee currency notes inside a bank in Mumbai in this August 5, 2013 file photo.

Credit: Reuters/Danish Siddiqui/Files

By Rafael Nam and Himank Sharma

MUMBAI | Fri Aug 16, 2013 6:41am EDT

MUMBAI (Reuters) - The rupee fell to a record low on Friday as measures to curb foreign currency outflows were seen as the latest roll of the dice by policymakers struggling to defend the currency in a slowing economy and a toughening global investment environment.

Far from propping up the currency, the measures from the Reserve Bank of India late on Wednesday to restrict how much its citizens and companies can invest abroad raised fears of outright capital controls that would further undermine the confidence of foreign investors.

Indian policymakers have cobbled together a slew of steps over the past month in a bid to halt the rupee's slide, including the central bank's extraordinary steps on July 15 to drain cash from the system and raise short-term interest rates in an economy already growing at a decade low.

Yet none of the steps unveiled so far have convinced investors that India can attract overseas investments, which is seen as essential in narrowing a record high current account deficit that is the biggest source of the rupee weakness.

The approach is beginning to test the patience of foreign investors, just when emerging markets such as India are already seen as particularly vulnerable ahead of the expected tapering of monetary stimulus by the U.S. Federal Reserve.

"They're coming across as a bit panicky. That's what is damaging sentiment for investors," said Jonathan Schiessl, a fund manager at Ashburton Investments in Jersey, referring to the RBI's actions to defend the rupee.

"Unless things improve, we will probably in all likelihood be withdrawing some weightings from our India positions."

The partially convertible rupee fell to an all-time low of 62.03 to the dollar as trading began. By 0500 ET, it was trading at 61.88, weaker than its Wednesday's close of 61.43/44. Markets were closed on Thursday for a holiday.

SLIP SLIDING AWAY

The central bank's capital outflow restrictions came a day before the dollar spiked after U.S. jobless claims data on Thursday suggested an early end to the Fed's asset purchases.

That prospect looms over India at a time when it is suffering from a current account deficit that hit a record high of 4.8 percent of gross domestic product and an economy growing at a decade low of 5 percent.

Foreign investors have already sold a net $11.6 billion of Indian debt and equities since late May, sparking fears of continued weakness.

India's main NSE index .NSEI fell 4 percent at one point on Friday, while benchmark 10-year bond yields surged to their highest since May 2012 as prices headed for their worst week in four-and-a-half years.

UBS strategist Manik Narain said that as emerging central banks tightened policy to defend their currencies, stocks would be affected, something that is already happening in India.

"India is losing control over the currency and you are starting to see the weakness transmitting to stock markets. There could be a self-perpetuating cycle where currency weakness flushes out equity investors and that takes the rupee weaker still."

CAPITAL CONTROLS?

The RBI's new measures also included further capping the amount that companies can invest abroad.

But overseas investments from India had already been on the wane, averaging a monthly $400 million in the first half of the year from $710 million in 2012, according to DBS data.

The biggest fear is that the RBI's action could be the start of a far stronger move to restrain capital.

"The steps taken so far only target residents, but if this raises expectations that they could potentially resort to capital controls targeted at non-residents, that could have adverse near-term implications for capital flows," HSBC's Chief economist for India and ASEAN Leif Eskesen said.

"It will, therefore, be critical to tread very carefully when it comes to capital controls, to anchor expectations, and also not use it as a substitute for more appropriate and effective measures," Eskesen said in a note to clients.

RUPEE FALLS

As policy makers struggling to find a solution for the rupee's falls, investors expect more weakness ahead. Overseas investors betting via one-month offshore non-deliverable forwards quoted the rupee trading at 62.46, while onshore bets see the rupee at 62.35 within the month.

Meanwhile, a Reuters poll on Thursday showed short positions in the Indian rupee have hit the highest in two months.

At heart of India's failed defense of the rupee so far is that none of the measures unveiled so far have given markets assurance that the country can attract foreign flows in an increasingly difficult global environment.

India last month unveiled plans to further ease restrictions on foreign direct investment (FDI) but previous measures have had mixed results. FDI fell to $36.9 billion in the fiscal year ending in March from $46.6 billion the previous year.

This week it announced measures to attract near-term capital inflows, including by spurring state-run companies to sell debt abroad and raising funds from Indians abroad.

Yet doing so could prove hard without major confidence-inspiring reforms, especially as RBI measures last month to drain cash raise the prospect that borrowing costs will rise.

"We remain underweight on Indian credits as the current spreads do not offer enough compensation in our view," said Arthur Lau, head of fixed income for Asia ex-Japan for Pinebridge Investments in Hong Kong

(Additional reporting by Swati Bhat, Subhadip Sircar & Aradhana Aravindan in MUMBAI, and Umesh Desai in HONG KONG; Editing by Kim Coghill)

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U.S. judge approves IBM's foreign bribery case settlement with SEC

By Alina Selyukh

WASHINGTON | Thu Jul 25, 2013 7:21pm EDT

WASHINGTON (Reuters) - A U.S. judge on Thursday signed off on IBM's 2011 settlement with U.S. regulators over charges of foreign bribery, wrapping up the latest case that questioned U.S. authorities' aggressiveness in investigating corporate misconduct.

U.S. District Judge Richard Leon approved the settlement between International Business Machines Corp (IBM.N) and the Securities and Exchange Commission after IBM agreed to a two-year reporting requirement on accounting fraud or bribery as well as federal investigations.

IBM in March 2011 agreed to pay some $10 million to resolve SEC charges over improper gifts to government officials in South Korea and China. The Department of Justice is now investigating allegations of illegal activity by a former IBM employee in Poland as well as transactions in Argentina, Bangladesh an Ukraine, according to IBM's April 30 filing with the SEC.

Leon warned that if any IBM violations land on his desk in the future, he would be stricter in his review.

"If there's a problem in the next two years, obviously it won't be a day like today, it won't be a happy day," Leon told IBM's General Counsel Robert Weber at the court hearing.

IBM neither admitted nor denied the allegations of bribery in South Korea or China, a common feature in SEC settlements.

"When we receive an allegation of wrongdoing, we investigate it and take appropriate action," IBM said in a statement on Thursday while also calling its compliance program "robust" and welcoming Leon's ruling.

In February, Leon scolded IBM for a "history" of violating provisions of the Foreign Corrupt Practices Act and "major payments" to foreign governments, the latest federal judge to express concerns over U.S. regulators' handling of settlements with corporations during the past two years.

Numerous federal judges have recently asked whether U.S. regulators were aggressive enough in responding to corporate misconduct. The law bars payments to officials of foreign governments in exchange for business and also requires companies to maintain accurate books.

Leon's ruling on Thursday required IBM to annually report to the court and the SEC about its compliance with the foreign corruption laws and immediately notify them if bribery or accounting fraud violations have "reasonably likely" happened.

IBM would also have to report within 60 days of discovering that it is party to any federal investigation, enforcement or civil litigation.

IBM's lawyers at the hearing enumerated steps IBM takes to internally avoid and pursue violation allegations, including a confidential reporting system, and said the company's board of directors has agreed to Leon's reporting requirements.

The case is SEC v. International Business Machines Corp, U.S. District Court, District of Columbia, No. 11-00563.

(Reporting by Alina Selyukh; Editing by Ros Krasny and Ken Wills)

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U.S. judge approves IBM's foreign bribery case settlement with SEC

By Alina Selyukh

WASHINGTON | Thu Jul 25, 2013 7:21pm EDT

WASHINGTON (Reuters) - A U.S. judge on Thursday signed off on IBM's 2011 settlement with U.S. regulators over charges of foreign bribery, wrapping up the latest case that questioned U.S. authorities' aggressiveness in investigating corporate misconduct.

U.S. District Judge Richard Leon approved the settlement between International Business Machines Corp (IBM.N) and the Securities and Exchange Commission after IBM agreed to a two-year reporting requirement on accounting fraud or bribery as well as federal investigations.

IBM in March 2011 agreed to pay some $10 million to resolve SEC charges over improper gifts to government officials in South Korea and China. The Department of Justice is now investigating allegations of illegal activity by a former IBM employee in Poland as well as transactions in Argentina, Bangladesh an Ukraine, according to IBM's April 30 filing with the SEC.

Leon warned that if any IBM violations land on his desk in the future, he would be stricter in his review.

"If there's a problem in the next two years, obviously it won't be a day like today, it won't be a happy day," Leon told IBM's General Counsel Robert Weber at the court hearing.

IBM neither admitted nor denied the allegations of bribery in South Korea or China, a common feature in SEC settlements.

"When we receive an allegation of wrongdoing, we investigate it and take appropriate action," IBM said in a statement on Thursday while also calling its compliance program "robust" and welcoming Leon's ruling.

In February, Leon scolded IBM for a "history" of violating provisions of the Foreign Corrupt Practices Act and "major payments" to foreign governments, the latest federal judge to express concerns over U.S. regulators' handling of settlements with corporations during the past two years.

Numerous federal judges have recently asked whether U.S. regulators were aggressive enough in responding to corporate misconduct. The law bars payments to officials of foreign governments in exchange for business and also requires companies to maintain accurate books.

Leon's ruling on Thursday required IBM to annually report to the court and the SEC about its compliance with the foreign corruption laws and immediately notify them if bribery or accounting fraud violations have "reasonably likely" happened.

IBM would also have to report within 60 days of discovering that it is party to any federal investigation, enforcement or civil litigation.

IBM's lawyers at the hearing enumerated steps IBM takes to internally avoid and pursue violation allegations, including a confidential reporting system, and said the company's board of directors has agreed to Leon's reporting requirements.

The case is SEC v. International Business Machines Corp, U.S. District Court, District of Columbia, No. 11-00563.

(Reporting by Alina Selyukh; Editing by Ros Krasny and Ken Wills)

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Challenges for regional innovation policies in CEE countries: Spatial concentration and foreign control of US patenting. (arXiv:1301.1757v2 [cs.DL] UPDATED)

Subjects: Digital Libraries (cs.DL) Sorry, I could not read the content fromt this page.

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