Olympus scandal highlights board inadequacies in Japan
* Olympus case takes shine off recent steps to improve
governanceBy Nathan LayneTOKYO, Oct 18 (Reuters) - The scandal at Olympus Corp
triggered by accusations of improper payments has put a
spotlight on what critics say is a key weakness of
Japanese-style management: the lack of strong independent
oversight on most boards.Japanese boards are typically stacked with insiders, and
Olympus, a camera and medical equipment maker whose chief
executive was abruptly dismissed last week, is no exception.Twelve of Olympus’ 15 board members are company executives,
and one of its three outside directors failed to pass
a test of independence set by top proxy voting firms.This structure, while common among Japanese companies,
appears to have left the Olympus board vulnerable to groupthink
when dissension and rigorous debate were needed most.”You have so many insiders, very few independent members and
none of them is really in a position to challenge the
decision-making of long-standing members of the board,” said
Robert McCormick, chief policy officer at proxy advisory firm
Glass Lewis & Co. “I think the CEO kind of came into that.”Olympus did not immediately respond to a request for comment
for this article.Former Olympus CEO Michael Woodford has told media he
believes he was sacked for questioning about $680 million in
payments to financial advisers in the purchase of Britain’s
medical equipment firm Gyrus in 2008, or one-third of the
transaction price, and $600 million in goodwill impairment after
other small acquisitions in Japan.Olympus says that Woodford was dismissed because of a clash
of management styles and that it has carried out proper
accounting and disclosure for the acquisitions.SHARES PLUNGEBut the relentless slide in the share price — it has lost
43 percent in the past three sessions — suggests investors are
not satisfied with the company’s explanation and generally lack
confidence in management.Chairman Tsuyoshi Kikukawa, who replaced Woodford as CEO,
told the Nikkei newspaper on Tuesday that the Gyrus-related
payment was closer to 30 billion yen ($391 million) and said
losses at the domestic companies it acquired represented lapses
in judgment on his part.But to some critics Kikukawa’s comments may only reinforce
the notion that there have been few checks on his authority and
may not silence criticism of the payments, which at 30 billion
yen were still unusually high for an acquisition of that size.The lack of independent directors supervising management is
one of the key factors behind Japan’s No. 36 ranking out of 39
countries on corporate governance in the latest survey by
research firm GMI .Other propagators of poor governance include
cross-shareholdings with business partners and a tendency for
executives to hang on wielding influence in advisory posts even
after they’ve retired from the board.The Olympus case may give the impression that governance is
moving backwards, despite a series of steps aimed at improving
the situation in recent years, including the Tokyo Stock
Exchange’s requirement from this year that all companies have at
least one independent director or auditor.”This is a negative step for corporate governance in Japan,”
said Jamie Allen, secretary general of the Asian Corporate
Governance Association based in Hong Kong.”There had been some hope that Japanese companies would take
on not just outside directors but outside managers and that
corporate cultures in Japan would be more open and
international.”
Alrosa plans $400 mln bond to fund deal with VTB
Alrosa, the secretive state diamond monopoly, is seeking to
buy back oil and gas assets Geotransgas and Urengoy from VTB for
$1 billion, planning to pay $600 million from its own pocket.The company, which handed the two companies to VTB during
the crisis of 2008-2009 in a repo deal, plans to develop them
but would also be open to a sale.”I am ready to sell these assets any time when I am offered
… $1 billion,” Andreyev told journalists on Monday.Andreyev also said that the company’s revenue rose 2.7
percent to 66 billion roubles ($2.13 billion) in the first half
of 2011, according to International accounting standards.Alrosa’s earnings before interest, taxes, depreciation and
amortisation (EBITDA) jumped 74 percent to 36 billion roubles in
the first six months of 2011, he said, adding that its EBITDA
margin hit a record high of 54 percent.In the whole of 2011 Alrosa, the biggest rival to global
giant De Beers, seeks to post $5 billion in revenues and a $2
billion EBITDA, which would be “enough to finance all our
projects excluding iron ore and gas (projects),” Andreyev said.
($1 = 30.92 Russian Roubles)
(Writing By Andrey Ostroukh; Editing by David Cowell)
DOJ charges former Citadel employee with theft of trade secrets
Pu appeared before U.S. Magistrate Judge Maria Valdez and
was ordered to remain in federal custody pending a detention
hearing on Friday, DOJ said.DOJ said that a complaint contains only charges and is not
evidence of guilt. The defendant is presumed innocent and is
entitled to a fair trial.
On George Soros, Occupy Wall Street, and Reuters
Wouldn’t it be ironic if Occupy Wall Street — the soi-disant “99%” — were being secretly funded by billionaire Davos Man George Soros, exemplar of the 1%? Well, no, it wouldn’t, actually. As Noreen Malone points out, lots of the 1% have, like Soros, expressed sympathy with OWS, including Bill Clinton, Ben Bernanke, and at least one member of the Buffett family. And when you’re sympathetic to a cause, and have lots of money, often you donate money to that cause.
But in this case it looks very much as though there’s no connection at all between Soros and OWS. That makes sense: for one thing, Soros is a creature of Wall Street himself, and for another, he tends to fund well-organized groups with specific goals. Which, clearly, OWS isn’t.
Which is why today’s Reuters story about the connection between Soros and OWS has elicited so much derision around the blogosphere. Beyond allowing us to shoehorn the #ows and #soros hashtags into a single tweet, there’s no real substance to it at all:
There has been much speculation over who is financing the disparate protest, which has spread to cities across America and lasted nearly four weeks. One name that keeps coming up is investor George Soros, who in September debuted in the top 10 list of wealthiest Americans. Conservative critics contend the movement is a Trojan horse for a secret Soros agenda.
Soros and the protesters deny any connection. But Reuters did find indirect financial links between Soros and Adbusters, an anti-capitalist group in Canada which started the protests with an inventive marketing campaign aimed at sparking an Arab Spring type uprising against Wall Street. Moreover, Soros and the protesters share some ideological ground.
Yes, there are people — led, it would seem, by Rush Limbaugh — who are loudly speculating that Soros is funding OWS. There might conceivably be a story in their rabble-rousing, which could point out that Soros’s agenda is hardly secret — it’s right there on his website for all to see.
Alternatively, as John Carney points out, there’s an interesting story in the way that OWS has raised money, through crowdsourced means like Kickstarter.
But the angle we went with is not a story, especially since Soros says he’s never even heard of Adbusters.
According to disclosure documents from 2007-2009, Soros’ Open Society gave grants of $3.5 million to the Tides Center, a San Francisco-based group that acts almost like a clearing house for other donors, directing their contributions to liberal non-profit groups. Among others the Tides Center has partnered with are the Ford Foundation and the Gates Foundation.
Disclosure documents also show Tides, which declined comment, gave Adbusters grants of $185,000 from 2001-2010, including nearly $26,000 between 2007-2009.
The Tides Center is not some great sloshing pool of money which takes in money and hands it out. Yes, one of the many things that it offers foundations is the opportunity to create collective action funds, enabling a group of donors to channel their money in a collaborative manner. The fact that Soros gave money to Tides and that Tides gave money to Adbusters in no way means that there’s an “indirect financial link” between the two. That’s like saying that there’s an “indirect financial link” between me and Mitt Romney, because I lend money to Citigroup (I’m a depositor at Citibank), and Citigroup has given money to Romney.
Besides, OWS wasn’t even dreamed of back in 2009. If somehow some Soros money did make it to Adbusters between 2007 and 2009 — despite Adbusters co-founder Kalle Lasn’s clear statement that “he’s never given us a penny” — then that’s still a good two years away from any connection to OWS.
The article is particularly problematic from my perspective because I’m incredibly proud of Reuters’s long tradition of impartial journalism. I’m on the opinion side, not bound by such things, and if you think I’m biased you’re right. (I should mention here explicitly that this post, just like everything else on this blog, is my personal opinion. It may or may not be shared by others within the organization. But it should emphatically not be taken as representing the views of Thomson Reuters.)
Reuters news stories like the one about OWS are held to a very high standard of integrity, independence, and freedom from bias. And there’s lots in this article which tilts hard to the right.
There’s the idea that Rush Limbaugh is a good place to look if you want someone to “sum up the speculation” and provide the news hook for the entire story. The idea that the Council on Foreign Relations is a “liberal cause”. The idea that the protests were “triggered” by a campaign poster featuring a “battle-ready mob” of people “dressed in anarchist black”. The description of OWS as “the so-called occupation”. And then there’s this:
Since its obscure beginnings, the campaign has drawn global media attention in places as far-flung as Iran and China. The Times of London, however, was not alone when it called the protests “Passionate but Pointless.”
Reuters cannot — must not — get a reputation as a right-wing media outlet. We have to report the news as impartially as we can. In this case, there was no story, and nothing to report. Inventing a tenuous and intellectually-dishonest link between Soros and OWS might get us traffic from Matt Drudge — but that’s traffic which, frankly, we don’t particularly value or care for. Much more importantly, it serves to undermine the heart of what Reuters stands for. And we can never afford to do that.
MIDEAST STOCKS-Most Gulf bourses fall; Egypt gains on valuations
Cairo’s index rose 2.5 percent but is still down 43
percent this year and volumes until recently were near
multi-year lows.Dealers say short-term trading has become the norm given the
uncertain political backdrop and a lack of visibility for
investors.”It’s the same scenario being repeated. The market crashes
and every dip is a buy. Events are quickly reflected in the
market,” said Omar Darwish at CIBC.Market heavyweight Orascom Construction gained 5.6
percent and was also the most traded stock.Commercial International Bank and Orascom Telecom
rose by 2.5 percent and 2.2 percent.In the UAE’s capital, National Bank of Abu Dhabi
fell 1.5 percent, Abu Dhabi Commercial Bank slipped
1.8 percent and Investment Bank dropped 5.9 percent.”Banks will be interesting once the numbers are out because
they will be telling us about the credit quality and loan
growth,” said a trader based in Abu Dhabi. “But it’s too risky
to be buying banks before the numbers.”The index slipped 0.4 percent to its lowest close
since August 2010.”There’s been nothing new on the table recently but we’ve
had a sentiment swing (in world markets). Until you see real
concrete proposals, the market will trade on very small
margins,” the trader added, speaking on European politicians
trying to contain the region’s banking crisis.Dubai’s share index ended little changed, up 0.06
percent with only 33.7 million shares exchanging hands, against
the 50-day average of 68.5 million shares.Drake and Scull gained 1.2 percent, accounting for
a third of all shares traded on the index.Emirates NBD , Dubai’s largest stock by market
value, rebounded as investors picked up the battered stock.Its shares rose 1.1 percent, recovering from Wednesday’s
27-week low. It had slumped after announcing it would take over
struggling Islamic lender Dubai Bank.Elsewhere, Qatar fell 0.3 percent to 8,397 points,
with investors locking in gains following a five-day rise.Qatar National Bank fell 0.5 percent, Qatar
Navigations shed 1.8 percent and Qatar Islamic Bank
slipped 0.5 percent.Bucking the trend, Industries Qatar (IQ) rose 0.9
percent after its third-quarter earnings beat
estimates.”Although the results look alright with growth primarily on
back of more capacity, quarter-on-quarter there is a decent
decline of 14 percent. This ties is with the global trend of
margins tightening,” said Ibrahim Masood, senior investment
officer at Mashreq Bank.In Oman, Bank Muscat, the largest lender by market
value, rose 0.6 percent after reporting a 15.8 percent increase
in third-quarter earnings a day earlier. The bank’s results
topped analysts’ estimates.In Kuwait, logistics firm Agility jumped 6.8
percent to its highest level since May 9.”The market still thinks they are in talks with large armies
even though Agility denied signing a deal,” said a Kuwait-based
trader on condition of anonymity.The stock hit a four-month high on Sunday on speculation
about a contract. On Tuesday, the firm denied reports that it
had won a military contract worth up to $700 million, sending
its shares lower.THURSDAY’S HIGHLIGHTSEGYPT* The index rose 2.5 percent to 4,152 points.ABU DHABI* The benchmark slipped 0.4 percent to 2,478 points.DUBAI* The index edges up 0.06 percent to 1,385 points.QATAR* The index declined 0.3 percent to 8,397 points.OMAN* The index eased 0.06 percent to 5,516 points.KUWAIT* The measure rose 0.3 percent to 5,868 points.BAHRAIN* The measure climbed 0.2 percent to 1,150 points.
