NEWS,12.07.2013

Vatican freezes funds of a cleric

The Vatican said on Friday it had frozen funds belonging to a senior cleric at the centre of a suspected money smuggling operation, and could open investigations into other individuals.
Monsignor Nunzio Scarano, who has close links to the Vatican Bank, was arrested last month, accused of plotting to bring millions of euros in cash into Italy from Switzerland for rich friends.
The case was the latest in a series of scandals to tarnish the Catholic Church's image.
Details of the investigations, including police wiretaps and allegations of plots to smuggle the cash past customs, were also seen as a particular embarrassment for Pope Francis who has focused on the Church's duty to care for the poor since his election in March.
The Vatican's chief judicial official had ordered the freezing of Scarano's own funds in the Vatican Bank, the tiny city state said in a statement.
"The inquiries may also be extended to other persons," it said, without giving details.
The bank, known formally as the Institute for Works of Religion (IOR), had appointed US financial consultancy Promontory Financial Group to conduct a review of all accounts potentially affected, and was cooperating with the investigation, the statement added.
Scarano, a former senior accountant in the Holy See's financial administration, was arrested with Giovanni Zito, an Italian secret service agent, and financial broker Giovanni Carenzio.
They have been accused of plotting to bring in €20m ($26.08m) for Scarano's rich friends in the shipping industry in the southern city of Salerno.
Although the Vatican bank has not been directly implicated in the case, it is already caught up in a separate investigation into suspected money laundering.
Scarano, currently held in Rome's Queen of Heaven jail, is also under investigation in another case linked to his accounts in the Vatican bank.
Two of IOR's top managers resigned earlier this month in the wake of Scarano's arrest and prosecutors are considering seeking to have the two, former director Paolo Cipriani and former deputy director Massimo Tulli, sent to trial.

Britain, carmakers invest in research

The British government and the auto industry will invest £1bn pounds ($1.5bn) in a research centre to develop low-carbon technologies and help secure the jobs of 30 000 people working in the country's car engine supply chain.
The government and a group of 27 firms including oil major BP, Indian carmaker Tata Motors and component maker GKN will each invest £500m over the next decade in an Advanced Propulsion Centre, which will look to research, develop and commercialise those technologies.
Sixteen straight months of rising car sales in the UK are a rare bright spot for Europe's recession-hit motor industry and the government aims to persuade more of the world's top carmakers and automotive suppliers to base operations in Britain.
"The UK automotive sector has been incredibly successful in recent times, with billions of pounds of investment and new jobs," Business Secretary Vince Cable said on Friday. "With the next generation of vehicles set to be powered by radically different technologies we need to maintain this momentum and act now."
Other companies backing the investment include BMW, Bosch, Ford, Caterpillar and Nissan.

US surprises with large budget surplus

The US government posted an unexpectedly large budget surplus in June, a further sign of the rapid improvement in public finances that has taken the heat off Congress to find savings and raise the nation's borrowing limit.
Rising tax revenue, public spending cuts and big payments to the Treasury from government-backed mortgage companies helped the government take in $117bn more last month than it paid out, the US Treasury said on Thursday.
Analysts had expected a surplus of $39.5bn.
June's surplus was the largest on record for that month.
While the government is still $510bn in the red with three months to go in the fiscal year, June's big surplus will buy it time before it runs up against the limit on borrowing set by Congress. Analysts expect the Treasury to hit the debt ceiling by early November.
The surplus in June also highlighted how much an improving economy and existing legislation have helped improve the fiscal outlook. That has made overhauling public pension and healthcare systems a little less pressing.
Rising incomes and tax increases enacted earlier in the year helped cause government receipts to rise to $287bn in June, up 10% from a year earlier. While economic growth has been lackluster in the first half of 2013, job growth has been more steady. In June, 195 000 jobs were added to the nation's nonfarm payrolls.
Across-the-board budget cuts that began in March also contributed to the surplus.
Gross outlays at the department of defence and for military programmes, for example, are down about 7% in the fiscal year to date from the same period a year earlier. The current fiscal year began in October 2012.
Government-backed mortgage companies Fannie Mae and Freddie Mac, which were bailed out by taxpayers during the financial crisis but have since returned to profitability, also helped drive June's surplus by pouring billion of dollars into public coffers.
Fannie Mae, which said in May it would return $59bn to the Treasury in quarterly dividends, provided most of the funds. The big dividend payment reflected an extraordinary gain from the reversal of a tax-related writedown.

Doubts over UK 'no work' contracts

No work, no pay, but still employed? Welcome to Britain's 'zero-hours contracts', which offer no guaranteed amount of work and pay, and some weeks provide nothing.
Almost unheard of in the rest of Europe and the United States, the rapid growth of this type of work helps explain how Britain's barely growing economy has nonetheless been able to provide jobs for a record number of people.
One in five jobs created in Britain since late 2008 has come with a zero-hours contract, many of them in low-paid roles such as caring for the elderly or stacking shelves, but increasingly in work that requires more qualifications.
Under a zero-hours contract, an employer has no obligation to provide a minimum number of shifts, unlike other jobs.
Workers are not obliged to accept hours either. But critics argue that the flexibility mostly benefits employers because workers who reject being called up on one occasion risk being frozen out of all future work.
This has engendered criticism. Opposition Labour party leader Ed Miliband said the contracts make some British workplaces "nasty, brutish and unfair".
His colleague Julie Elliott, who led a parliamentary debate criticising the contracts, said it put too many people's life "on call".
Some Labour politicians are trying to push through legislation to ban the contracts. But they stand little chance of success, with the governing coalition of Conservatives and Liberal Democrats convinced there is a place for them.
Flexibility in hiring is viewed by many as key to employment growth, and Britain has long had easier rules on hiring and firing workers than other European countries.
Even so, some change may still be on the way. Britain's business ministry is holding informal talks with employers and unions, which Lib Dem Employment Minister Jo Swinson said this week may presage a more in-depth inquiry.
Lawmakers also say plenty of their constituents face difficulties with the contracts. The experience of one 26-year-old man who spoke to earlier this year is typical.
He worked in warehouse jobs in central England for several months under a zero-hours contract from an employment agency. He did not wish his name to be published in case he got sacked.
Usually he gets a text message to tell him if there is work the following day. But often the number of hours is unclear, and sometimes he is required at even shorter notice.
"It is very sporadic and unpredictable, making it virtually impossible to budget or plan for my other commitments," he said. "I don't earn enough, and since I've been doing zero-hours contracts I've been getting more and more in debt."
Some weeks he works eight hours, others more than 40, generally at a minimum wage of £6.19 an hour. The unpredictable income plays havoc with his state benefit entitlements, which assume a steady amount of work each week.
'Dodgy' data
How many people are in a similar situation is unclear.
The latest official data from the Office for National Statistics - which covers the last three months of 2012 - suggests just 200 000 people are employed under zero-hours contracts, up from 116 000 in late 2008.
This is 0.7% of the workforce, but the 70% increase is a fifth of the net jobs increase over the period.
But the numbers may significantly undercount the number of people on zero-hours contracts, as its survey relies on workers knowing the precise legal status of their jobs.
Earlier this week the government said that it was possible that 300 000 people were employed on zero-hours contracts last year in the social care sector alone.
"The numbers are dodgy, really dodgy," said Ian Brinkley, a former chief economist for Britain's Trades Union Congress who now heads the Work Foundation, a labour market think.
Brinkley said he expected such contracts to grow further in the future and did not advocate a ban, but he predicted a damaging effect on worker morale would limit their use.
Data on whether the contracts acted as a stepping stone into more permanent employment or left workers stuck in a rut was largely absent, he added.
Kevin Green, director of the Recruitment and Employment Confederation, whose members place a lot of people into temporary work, does not dispute that some bad practice exists.
But he questions whether it is more prevalent in zero-hours work than in other types of contract, and added that it benefited people who might not be able to work otherwise.
"It's hugely important for businesses that they can flex and provide the right resource and the right capability to meet their customers' needs."

China watchdog warns against nepotism

China's regulator of major state-run industries has warned senior executives to control their impulses and manage their family connections as the government steps up the fight against corruption.
Zhang Yi, Communist Party chief of the State-Owned Assets Supervision and Administration Commission (Sasac), told a meeting of more than 150 senior executives that they should treat battling graft as one of their most important tasks.
"Cultivate your moral character and nurture virtue, raise your ability to fight corruption," the watchdog quoted Zhang saying on its website (www.sasac.gov.cn) on Friday.
"Properly manage your relatives and those close to you; don't be encumbered by your emotions, damaged by your emotions or misled by your emotions," he added.
Sensitive to public outrage and warning that corruption threatens the party's very survival, President Xi Jinping has pledged to crack down on corruption at all levels, though only a few senior officials have been fired or investigated for corruption since he came to power last year.
Sasac is a ministerial-level body run by China's cabinet, the State Council, and is directly responsible for 116 state-owned companies, including national industrial champions such as CNOOC, PetroChina, China Mobile, State Grid Corp and Air China.
Xi has gone after extravagance and warned officials to be morally upstanding as part of his graft-fighting strategy.
Government departments and ministries have held meetings similar to the State-Owned Assets Supervision and Administration Commission gathering over the past few weeks and months.
A string of high-profile incidents, including a high-speed Ferrari crash reportedly involving the son of a senior public official, and numerous scandals with family members of government employees, have enraged many Chinese who have taken to the internet to vent their anger.

US, China restart investment treaty talks

The United States and China agreed on Thursday to restart stalled negotiations on an investment treaty, with Beijing dropping previous efforts to protect certain sectors of its economy from the start.
The agreement to resume negotiations was welcomed by the U S  business community as a major advance during annual Strategic and Economic Dialogue talks in Washington, which have often produced few agreements of substance.
Top officials from both sides strived to project a friendly, businesslike tone as they tried to build what China calls a "new model of major country relations" between the world's two biggest economies in the first year of Chinese President Xi Jinping's mandate.
But talks struck a sour note over China's handling of former spy agency contractor Edward Snowden, who hid out in the Chinese territory of Hong Kong last month as he revealed a secret US  surveillance programme before fleeing to Russia.
Disputes over cyber security topped the agenda going into this year's talks, which were launched in 2008 to manage a relationship that was growing more complex and tense with China's emergence as major economic and military power.
US  Treasury Secretary Jack Lew hailed the investment treaty commitment as a sign of positive change in Beijing, as China retools its economic growth model away from heavy investment and exports toward growth driven by consumption.
"China announced its intention to negotiate a high standard bilateral investment treaty with us that will include all stages of investment and all sectors - a significant breakthrough, and the first time China has agreed to do so with another country," he said as the talks concluded.
China and the United States began negotiations on a pact to govern bilateral investment in 2008 under then-US president George W Bush, but discussions were put on hold after President Barack Obama took office the following year.
Previously, Beijing had agreed to talks only if certain Chinese industries, especially in its service sector, were exempt. But it agreed to drop blanket restrictions for the current talks, a US  Treasury official said.
The official, briefing reporters at the US-China economic talks, said the move was an encouraging sign the world's second-largest economy was willing to open up more sectors to foreign competition.
Chinese Commerce Minister Gao Hucheng told reporters China and the United States share "a common purpose, which is to try to find ways to reduce and mitigate differences and barriers that both sides place in our trade and investment relations".
Explaining China's motives for reopening the investment talks, Chinese Vice-Finance Minister Zhu Guangyao said China had about $20bn of direct investment in the United States and $1.2trn in US treasury bills.
"With such an extensive investment relationship, it is necessary for the two sides to have an institutional environment for the protection of these investments," he told reporters.
In addition, Zhu said: "Business leaders from China and the United States have a strong desire to invest in the market of the other. They both want an open and more transparent market."
Analysts and US officials said another factor was a relative reversal of fortunes from previous years, with the United States enjoying economic recovery while China grappled with a slowing economy that showed the limits of its model.
"This set of meetings, as many of the meetings that I've had in recent months have had this character to them, that there's a renewed recognition and respect for the resilience of the American economy," said Lew.
US business groups welcomed the agreement to resume negotiations, but warned that both sides still faced many other tough issues and that negotiations on a treaty could be lengthy. Any pact would need to be ratified by the US Senate.
"The US chamber called for this last year as a pre-condition, and we are very pleased that both governments rose to the challenge," said Myron Brilliant, head of international affairs at the US Chamber of Commerce.
Barriers to business
US investors face barriers or ownership limits in about 90 Chinese sectors, while Chinese companies seeking to invest in the United States often fear a political backlash in Congress or rejection on national security grounds.
"If China negotiates a treaty that not only protects investments after they are made but also improves US investors' access to the Chinese market, this would be a real breakthrough," said Michael Smart of consultants Rock Creek Global Advisors, who worked on investment issues in the Bush White House.
The talks opened just weeks after Snowden' disclosure of extensive US electronic surveillance of American citizens and foreign countries, including China, which undercut years of complaints from Washington about Chinese hacking.
In remarks at the end of the talks, the United States said it had made clear its displeasure that Chinese authorities allowed Snowden, on the run in Hong Kong, to leave for Moscow rather than send him back to face US justice.
"We were disappointed with how the authorities in Beijing and Hong Kong handled the Snowden case, which undermined our effort to build the trust needed to manage difficult issues," US Deputy Secretary of State William Burns said.
Chinese State Councilor Yang Jiechi swiftly brushed off Burns' criticism of Hong Kong, the former British colony that h is a special administrative region of China. Hong Kong answers to Beijing on matters of foreign policy, but unlike China, it has an extradition treaty with the United States.
"The central government has always respected the Hong Kong SAR government's handling of cases in accordance with law," he said.
"The Hong Kong government handled the Snowden case in accordance with law, and its approach is beyond reproach," Yang said about the decision to not detain Snowden.
Douglas Paal, of the Carnegie Endowment for International Peace, said Snowden's case "makes it impossible for any countries to make concessions to the United States for the time being, because we look like big cyber offenders."
Burns said the two powers "need to reach a shared understanding of the rules of the road" in cyber space and repeated US complaints about the cyber theft of intellectual property that most American experts blame on China.
"The cyber-enabled theft of trade secrets, intellectual property, and confidential business information is unacceptable," he said.
Chinese leaders did not publicly address the cyber-theft issue during the Washington talks, although Gao said China was determined to improve protection of intellectual property.
A US official said that Washington's lobbying on the issue had made some headway - in part because China was generating more of its own intellectual property.
"What we're seeing is an acknowledgment that this realm of activity is distinct, is important and needs to be addressed," said the official, speaking on condition of anonymity.
Both countries' officials said they were clear-eyed about the differences in political system, wealth and values that divided them, saying the key was to manage relations.
"Of course, because of differences, there's a need for us to make rules. And to formulate those rules, we need to have dialogue," Chinese Vice-Premier Wang Yang said in a dinner speech late on Thursday.

French super rich thrive despite crisis

The economic crisis in France has spared the super rich, according to a survey published Thursday, which showed the combined wealth of the country's 500 richest people up nearly 25% in the last year.
Challenges magazine's 2013 ranking of the country's biggest fortunes estimated the top 500 earners to have combined assets of €330bn ($423bn), the highest level since the ranking began in 1996.
The 500 richest people accounted for 16% of gross domestic product and 10% of the total financial assets of the French, meaning one-hundredth-thousandth of the population controlled one-tenth of the nation's wealth.
"It's enough to make you dizzy and to lend arguments to a country that has always hated the rich, especially in times of crisis," Challenges wrote.
Keeping his top spot was the boss of luxury goods conglomerate LVMH, Bernard Arnault, who was estimated to be worth €24.3bn.
Second came Liliane Bettencourt, the elderly heiress to the L'Oreal cosmetics fortune, with an estimated fortune of €23.2bn.
Luxury goods, defence, retail, telecommunications and wines and spirits were all represented in the Top 10.
Bertrand Puech, chief executive of high-end handbags-maker Hermes and the Hermes family were ranked fourth behind Gerard Mulliez, founder of Auchan supermarket chain, and his family.
Of the richest 500, 55 were billionaires, 10 more than in 2012.
The statistics showed the 10 wealthiest people getting richer faster than others in the elite club, meaning more wealth concentrated in the hands of a few.
The Top 10 accounted for 40% of the riches of the Top 500, up from 25% in 1996.
The survey was likely to reignite debate about whether France's highest earners are sharing the burden of the crisis.
President Francois Hollande's attempts to push through a 75% super tax on top earners last year was condemned by business leaders, who warned of an exodus of top talent if it passed.
He was eventually forced to abandon the proposal after it was struck down by the Constitutional Council.