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Germany, France Push For Power To Reject Eurozone Budgets

by on November 28, 2011

Huffington Post…

Germany and France stepped up a drive on Monday for intrusive powers to reject national budgets in the euro zone that breach EU rules, as a market rout of European debt eased temporarily on hopes of outside help for Italy and Spain. The OECD rich nations’ economic think-tank said the European Central Bank should cut interest rates and step up its purchases of government bonds to restore confidence in the euro zone, which it said now posed the main risk to the world economy. In Brussels, finance ministers of the 17-nation currency area meeting on Tuesday are due to approve detailed arrangements for scaling up the European Financial Stability Facility rescue fund to help prevent contagion spreading in bond markets, and to release a vital aid lifeline for Greece. Berlin and Paris aim to outline proposals for a fiscal union before a European Union summit on December 9 increasingly seen by investors as possibly the last chance to avert a breakdown of the single currency area. “We are working intensively for the creation of a Stability Union,” the German Finance Ministry said in a statement. “That is what we want to secure through treaty changes, in which we propose that the budgets of member states must observe debt limits.” It also dismissed a report by the newspaper Die Welt that Germany and the five other euro zone states with top-notch AAA credit ratings could issue joint bonds. Finance Minister Wolfgang Schaeuble acknowledged on Sunday that it may not be possible to get all 27 EU member states to back treaty amendments, saying agreement should be reached among the 17 euro zone members. “That can be done very quickly,” he told ARD television, adding that it only required changing an additional protocol to the EU’s Lisbon Treaty. “END OF THE EURO?” In France, Agriculture Minister Bruno Le Maire said euro zone countries would have to give up some budget sovereignty to save the euro from hostile “speculators.” “We won’t be able to save the euro if we don’t accept that national budgets will have to be a bit more controlled than in the past,” Le Maire told Europe 1 radio. “We are in an economic war with a number of powerful speculators who have decided that the end of the euro is in their interest,” he said. Handing over fiscal sovereignty to the executive European Commission is politically sensitive in France, which has a strong Gaullist, nationalist tradition. President Nicolas Sarkozy’s office sought to quash a weekend newspaper report that Berlin and Paris were planning to confer “supranational powers” on Brussels, suggesting such intrusion would only apply to countries such as Greece that were under EU/IMF bailout programs. But Le Maire, asked whether the Commission would be granted more powers over national budgets in the euro zone, said: “Why not? The French people have to realize what is at stake — the preservation of our common currency and our sovereignty. “We’ll see if it’s the council (of ministers) or some other European institution (that exercises these powers). What matters is that we ensure that budget discipline is respected within the euro zone. Otherwise the euro itself is threatened.” He acknowledged that France and Germany were still at odds over greater ECB intervention to rescue the euro but said: “We will have to find a compromise.” On financial markets, the euro regained ground after slipping below $1.33 in Asia. Italian, Spanish, French and Belgian bond yields fell, as did the cost of insuring those countries’ debt against default. But relief may be short-lived as the rally was partly due to an Italian newspaper report that the International Monetary Fund was in talks to lend Italy up to 600 billion euros — more than its entire available war chest — which the IMF denied. “There are no discussions with the Italian authorities on a program for IMF financing,” a spokesperson for the global lender said. The European Commission also said Italy had not asked for any amount of money and there were no discussions at European level on aid for Rome. IMF inspectors are due in Rome this week to study Italy’s public finances after former Prime Minister Silvio Berlusconi agreed earlier this month to submit to regular monitoring of his promised austerity measures and economic reforms. IMF TO THE RESCUE? EU officials say some sort of IMF program could make sense for both Italy and Spain as part of a multi-pronged response involving the ECB and the euro zone rescue fund to implement reforms and restore market confidence in their debt. A senior EU source confirmed that both Berlusconi and the European authorities had rejected an IMF offer of a 50 billion euro precautionary credit line for Italy in talks on the sidelines of the Cannes G20 summit on Nov 3. The source said the sum would have been insufficient to convince markets. Reuters reported exclusively last week that Spain’s People’s party, due to form a new government by mid-December, is considering applying for IMF aid as one option for shoring up public finances. [ID:nL5E7MP2R0] In its world economic outlook, the Organization for Economic Cooperation and Development forecast growth in the euro area will slow — under a baseline scenario of “muddling through” — to 0.2 percent in 2012 from an estimated 1.6 percent in 2011. The bloc’s economy will then expand by 1.4 percent in 2013. With unemployment set to rise and inflation to fall, the OECD said the choice for the ECB was clear. “This calls for … a substantial relaxation of monetary conditions,” the OECD said. Banks would need to be well capitalized and policies put in place for sovereigns to finance themselves at reasonable rates. “This calls for rapid, credible and substantial increases in the capacity of the EFSF together with, or including, greater use of the ECB balance sheet,” the OECD said. OECD chief economist Pier Carlo Padoan said current plans to leverage the euro zone bailout fund were insufficient. “The numbers we have seen floating around are not enough,” Padoan told a news conference, adding that what was needed was a multiple of what was currently on the table. Euro zone leaders initially planned to leverage the EFSF up to 1 trillion euros, but the fund’s head has said it is now unlikely to achieve that. The fund has had trouble selling its own bonds to raise funds and has yet to attract the pledges it hoped to get from countries with sovereign wealth to invest. (Additional reporting by Leigh Thomas in Paris and Emelia Sithole-Matarise in London; writing by Paul Taylor; editing by Philippa Fletcher) Copyright 2011 Thomson Reuters. Click for Restrictions .

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PCCP Partners With Principal Real Estate Investors to Acquire …

by on May 31, 2011

… real estate private equity firm focused on commercial real estate debt and equity investments. PCCP has over $6 billion under management in multiple closed-end funds and joint ventures with institutional investors. …

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JOB WANTED: A Recent Grad Looks For Work On A Street Corner

May 26, 2011

NEW YORK — Fueled by equal parts desperation and frustration, Dianez Smith took to the street. During the peak of Washington, D.C.’s Wednesday morning rush-hour commute, Smith, 26, positioned herself at the corner of K and 17th Street. She was armed with a handmade sign that read, “I am a recent graduate searching for employment — résume available.” “I’m a dime a dozen in this city,” said Smith, who wore a blue pinstriped suit and black high heels. In total, she handed out 17 copies of her résume to anyone willing to give her a second glance. “I really need a job. I just need to make a decent living.” Smith, who graduated last May from Arcadia University with a bachelor’s degree in studio art, technically already has a job. She currently sells bicycles at Performance Bike in Rockville, Md. But working full-time at $8 an hour is barely enough to scrape by. Smith is also paying down more than $75,000 in student loans and nearly $3,000 in credit card debt. She currently lives with her grandmother in Silver Spring, Md. Smith is hardly the only recent graduate unable to secure a decent paying job while also struggling with piles of debt. Last week, Carl Van Horn, a professor of public policy at Rutgers University, released a study called “Unfulfilled Expectations: Recent College Graduates Struggle in a Troubled Economy.” Van Horn and his colleagues polled young people who graduated from college between 2006 and 2010. Debt is a pervasive worry. Of the 571 graduates included in the study, nearly 60 percent had borrowed money to finance their education. Research also found that half of 2009 graduates are either unemployed or working in jobs that don’t require a college degree. “The job search requires a combination of tenaciousness and constantly putting yourself out there,” said Paul Oyer, a professor of economics at Stanford University’s Graduate School of Business. “You have to put yourself in a position where luck can happen and give yourself as many options to be in the right place at the right time as you possibly can,” he said. Oyer cautioned that while tenacity is an essential quality, the appearance of being desperate is generally frowned upon. But Matthew Segal, 25, who happened across Smith during yesterday’s commute to work, said that “desperate times call for desperate measures.” More than anything, he was struck by the boldness of Smith’s approach. “She’s the perfect example of someone well-educated and ambitious, yet not too proud to go out and do something that takes an incredible amount of courage and strength,” said Segal, the founder of Our Time , a national membership organization for people under 30. Segal’s office is routinely flooded with young graduates looking for any job they can get. Many complain that employers require three years of work to even be considered. “But how the heck do they ever get three years of experience if they can’t at least get that first, entry-level position?” asked Segal. Smith has wondered exactly that on more than one occasion. “My education is apparently not good enough,” she said, before heading off to work. “A bachelor’s degree used to mean something. It used to mean that you could at least get in the door.” While her mother is a nurse and her father works at Dulles International Airport, where he deplanes aircraft, Smith was raised by her grandmother. At 77, she works as a psychotherapist. After graduating a year ago, Smith landed a paid internship at the Smithsonian Institution. But after the summer was up and the internship ended, she went back to selling bicycles. She’s been looking for better-paying job ever since. On her days off, when she’s sitting in her room at her grandmother’s house, Smith sees vestiges of a life that never came to pass — stacks of interior design books, a drafting table, a container of drawing pens. Her current job in no way relates to anything she studied in school. Yesterday morning, it was precisely that feeling of disappointment that roused her from bed at 5:45 a.m. to make her best case to any stranger willing to give her the time of day. Standing on that street corner, Smith finally got what she had long gone in search of: recognition. “Every time someone said good luck, it lifted my spirits,” recalled Smith, who crossed paths with a woman looking to hire at a local law firm. After going in for an initial interview, she’s been asked back for a second round. “I have no problem working an entry-level job,” she said. “I don’t want to start out at middle management. All I need to do is to make a self-sufficient living.”

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French See Dominique Strauss-Kahn As Victim Of Plot

May 22, 2011

PARIS — Forget what the New York prosecutor says about Dominique Strauss-Kahn. The doubters in France are legion and the country is abuzz with conspiracy theories. Did Strauss-Kahn bring on his own ruin at a luxury Manhattan hotel? Or did his political enemies in France set him up in a sinister plot to undo the known womanizer who was a top contender to become France’s next president? From the moment that Strauss-Kahn’s arrest for the alleged sexual assault of a chambermaid flashed around the world, doubts emerged in France. A week later, with evidence still under wraps and the accused and the accuser silent, speculation abounds. A poll Thursday suggested that a majority of French, 57 percent, think Strauss-Kahn was the victim of a plot. In a country where low blows pepper the political culture, where people think politicians will do almost anything to keep their perks and where President Nicolas Sarkozy’s approval ratings are sinking relentlessly, a plot against the increasingly powerful IMF chief seems plausible to many. “The trap, you cannot not think of it,” Cooperation Minister Henri de Raincourt conceded on Radio France International a day after the arrest. “But we must let justice follow its course without any prior assumptions.” Strauss-Kahn himself is reported to have voiced fears of a setup involving an alleged rape victim last month with a journalist. And then there are the precedents. Former conservative Prime Minister Dominique de Villepin is now in a slander trial that grew out of accusations he had wind of a dirty tricks campaign against Sarkozy in 2004 and failed to stop it. Sarkozy has said he believes the scheme was meant to upend his 2007 presidential bid. Doubts are still raised over the 1994 suicide, in his office at the presidential Elysee Palace, of the man considered former Socialist President Francois Mitterrand’s closest counselor, Francois de Grossouvre. And there are those who wonder, nearly two decades later, who really aimed the gun in the 1993 suicide of former Prime Minister Pierre Beregovoy. Strauss-Kahn’s fall from grace on May 14 was brutal. It came minutes before his trans-Atlantic flight for a meeting, as chief of the International Monetary Fund, with German Chancellor Angela Merkel. The 62-year-old Socialist who led popularity polls for next year’s presidential race insists he is innocent and has resigned from his job at the IMF to fight the charges. He was indicted by a grand jury on charges including criminal sexual abuse and attempted rape for allegedly attacking a 32-year-old maid, a West African immigrant, in his suite at the Sofitel. Strauss-Kahn is now under house arrest in Manhattan, watched by armed guards and tracked with an electronic bracelet, as he prepares his defense. The French press and Internet forums are flooded with questions from those who suspect a setup or are true believers in his innocence. _ Why would he call the hotel from the airport to recover a forgotten cell phone if he was guilty? _ Why not simply arrange for a female companion rather than assault a maid? _ Why would a maid enter Strauss-Kahn’s presidential suite unaccompanied? “At this stage of the investigation, the hypothesis of a manipulation cannot be swept aside,” sociologist Michele Fize wrote in Sunday’s Le Monde newspaper. Le Monde also quoted the director general of the top French firm handling housekeeping in luxury hotels as saying a maid could be fired for entering an occupied room alone. Luxury hotel maids know the protocol: knock, wait, announce oneself, knock again, open the door slightly, said Marie-Francoise Litaudon of the Francaise de Service Group. Socialist allies thought they saw bids to damage Strauss-Kahn’s image weeks before the arrest, when paparazzi arrived in April to photograph him getting into a flashy Porsche. It wasn’t his car, it belonged to a friend, but that elitist image won’t sit well with Socialist voters. That was followed by an allegation in the France-Soir newspaper that Strauss-Kahn wore $35,000 suits. “There is a campaign against the personality of Dominique Strauss-Kahn,” Socialist lawmaker Jean-Marie Le Guen told Europe-1 radio only hours before the Frenchman was arrested. A journalist for the left-leaning newspaper Liberation said the politician himself foresaw dirty tricks in the upcoming presidential campaign and confided in an off-the-record meeting April 28 the three obstacles he faced: “money, women and my Jewishness.” “Yes, I love women … So what?” journalist Antoine Guiral quoted him as saying. Strauss-Kahn even predicted one possible line of attack against him – “a woman raped in a parking lot who has been promised 500,000 or a million euros to invent such a story,” Guiral quoted him as saying. A poll by the CSA firm showed that 57 percent of 1,007 adults questioned at their homes believed Strauss-Kahn was “certainly” or “probably” the victim of a plot, compared to 32 who felt this was “certainly” or “probably” not true. Those polled May 16 were of all levels of education, it said. No margin of error was provided but it would be plus or minus 3 percentage points for a poll of that size. Bruno Cautres, an analyst at CEVIPOF, a think tank of the prestigious school Science Po where Strauss-Kahn taught for years, says the enormity of the affair and the wave of “this is impossible” remarks by Socialist Party figures may have colored national opinion in favor of a plot theory. “Whatever the country, there will always be those who believe in a plot (to explain) a dramatic phenomenon,” he said. “That is a natural tendency because this phenomenon seems unexplainable and we seek explanations.” Strauss-Kahn’s reputation as a successful womanizer makes an alleged sexual assault even less credible because he had ample access to willing women, doubters say. The French barely shrugged when the IMF investigated Strauss-Kahn for a 2008 affair with an employee then absolved him of wrongdoing. “We have a political culture by which we will pardon a lot of politicians for behavior in private life and not necessarily make the equation that bad behavior in private life equals bad behavior in political life,” said Cautres. Cautres himself dismissed the notion of a plot. “Who would organize it … given the risk of a leak, of a spectacular revelation?” he asked. However, Strauss-Kahn’s defense team will surely be looking for that “banana peel” that centrist politician Dominique Paille suggested may have been strategically dropped. What about that tweet on Strauss-Kahn that set off a frenzy in France from a Science Po masters student who belonged to the youth wing of Sarkozy’s conservative UMP party? “A pal in the United States just let me know that DSK was arrested by police in New York an hour ago,” Jonathan Pinet tweeted at 22:59 p.m. Paris time (2059 GMT, 4:59 p.m. EDT) on May 14. The timing would be shortly after Strauss-Kahn was escorted off on an Air France plane in New York. Rejecting any conspiracy ties, Pinet later explained his information came in a Facebook chat with a friend who has another friend who works at the Sofitel in New York – and who likely mistook the happenings there hours earlier for the actual arrest.

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Porsche to Build New U.S. Headquarters in Georgia’s Aerotropolis

May 16, 2011

Porsche Cars North America will build a new $100 million headquarters in the Aerotropolis, a redevelopment of the former Ford Motor Co. assembly plant in Hapeville, GA south of Atlanta. Groundbreaking is planned for this fall with a move-in date of second-half 2013. The site near the new international terminal at Hartsfield-Jackson Atlanta International Airport is under contract for development by Jacoby Group, headed by Atlanta developer Jim…

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IMF Head Pulled Off Plane, Charged In Alleged Sexual Assault

May 15, 2011

Dominique Strauss-Kahn, the managing director of the International Monetary Fund, was arrested and is being questioned by police after allegations of sexual assault emerged on Saturday. The New York Post initially reported that Strauss-Kahn was removed from an Air France flight just minutes before takeoff from Kennedy Airport. UPDATE: Reuters has confirmed through NY police that Strauss-Kahn was charged with “a criminal sexual act, attempted rape and unlawful imprisonment.” Scroll down for the latest information on the charges. According to The New York Post , a housekeeper entered Strauss-Kahn’s New York City hotel room at noon on Saturday. Sources claim that Strauss-Kahn emerged naked from the bathroom and grabbed the housekeeper, forcing her to perform oral sex on him. Strauss-Kahn was considered a potential candidate in France’s 2012 election. The New York Times reports that Strauss-Kahn is a former economics professor, and started in the 1980′s as a deputy in parliament, and then was a finance minister: Mr. Strauss-Kahn eventually sought the socialist party’s presidential nomination himself in 2007 — calling for an “anti-Sarkozy front” — but lost to Segolene Royal. Months later he was tapped to run the I.M.F. and received Sarkozy’s support, which many critics called a strategy by Sarkozy to keep Mr. Strauss-Kahn away from the forefront of the socialist party. According to a Reuters post on Twitter, “Lawyer representing IMF chief Strauss-Kahn says Strauss-Kahn ‘will plead not guilty.’” Strauss-Kahn has blogged for HuffPost . Reuters reported early Sunday morning on the charges: IMF chief and possible French presidential contender Dominique Strauss-Kahn was arrested and charged with an alleged sexual assault, including an attempted rape, on a hotel maid in New York City, police said on Sunday. Strauss-Kahn, a key player in the world’s response to the 2007-09 financial meltdown and in Europe’s ongoing debt crisis, was removed from an Air France plane minutes before it was to take off for Paris from John F Kennedy International Airport on Saturday, New York police spokesman Paul Browne said. Browne said Strauss-Kahn was formally arrested at 2:15 a.m. (7:15 a.m. British time) on Sunday on charges of criminal sexual act, attempted rape and unlawful imprisonment. A lawyer representing Strauss-Kahn, Benjamin Brafman, told Reuters in an email that the International Monetary Fund chief “will plead not guilty.” Brafman made no further comment. A 32-year-old maid filed a sexual assault complaint after fleeing the $3,000 (1,852 pound)-a-night hotel suite at the Sofitel in Times Square where the alleged incident occurred around 1 p.m. (6 p.m. British time) on Saturday, Browne said. Strauss-Kahn, 62, who has been considered a possible Socialist Party candidate in the French presidential election in April and May 2012, appeared to have fled the hotel after the incident, the police spokesman said. Browne told Reuters an account of events which led to the state charges against Strauss-Kahn. “She told detectives he came out of the bathroom naked, ran down a hallway to the foyer where she was, pulled her into a bedroom and began to sexually assault her, according to her account.” “She pulled away from him and he dragged her down a hallway into the bathroom where he engaged in a criminal sexual act, according to her account to detectives. He tried to lock her into the hotel room,” Browne added. Browne said Strauss-Kahn does not have diplomatic immunity. He is expected to be brought before state court on Sunday. According to New York state law, a criminal sexual act includes forcibly compelling someone to engage in oral sex. The offence carries a potential sentence of 15-20 years, the same as attempted rape. Unlawful imprisonment carries a potential sentence of three to five years. IMPACT ON IMF The allegation will be a major worldwide embarrassment to the IMF, which has authorized billions of dollars in lending programs to troubled countries and has played a major role in the euro zone debt crisis. It follows the announcement on Thursday the IMF’s No. 2 official, John Lipsky, plans to step down in August when his term ends. The IMF managing director has yet to say whether he will run for president, although French opinion polls put him as a clear winner over conservative incumbent Nicolas Sarkozy if the two faced off in an election. “The NYPD realized he had fled, he had left his cell phone behind,” Browne said. “We learned he was on an Air France plane. They held the plane and he was taken off and is now being held in police custody for questioning.” After being removed from the aircraft’s first-class section, he was taken to the police department’s Special Victims Unit in Manhattan, known to viewers of a hit U.S. television show based on its work. The woman, who has not been named, “was brought by EMS (emergency medical services) to the Roosevelt Hospital, where she was treated for minor injuries,” Browne said. Strauss-Kahn was on his way to Europe for a meeting on Sunday with German Chancellor Angela Merkel to discuss the European debt crisis and then was to attend a euro zone finance ministers meeting in Brussels on Monday. Strauss-Kahn took over the IMF in November 2007 for a five-year term scheduled to end next year. Before that, he was a French finance minister, member of the French National Assembly and a professor of economics at the Institut d’Etudes Politiques de Paris. The IMF declined to comment and IMF board officials told Reuters they had not been informed officially of the incident. PAST CONTROVERSY Strauss-Kahn has faced controversy before. In October 2008, he apologized for “an error of judgement” for an affair with a female IMF economist who was his subordinate. An inquiry cleared him of harassment and abuse of power, although he was warned by the fund’s board of member countries against further improper conduct. Strauss-Kahn apologized to the woman, Piroska Nagy, and his wife, French television personality Anne Sinclair, as well as to IMF employees for the trouble he had caused. Since taking over the IMF, he has won plaudits for putting the fund, the world’s main overseer of the global economic system, at the centre of global efforts to cope with the financial meltdown of 2007-09. Strauss-Kahn introduced sweeping changes at the global institution to ensure that countries swamped by the financial collapse had access to emergency loans. He was pivotal in brokering a bailout program for Iceland, Hungary, Greece, Ireland, and recently Portugal. He has also overseen internal changes that have given emerging market countries, such as China, India and Brazil, greater voting power in the institution, and weighed into thornier issues by urging China to allow its currency to rise in value in a dispute with the United States. Based in Washington at the IMF’s headquarters, Strauss-Kahn has continued to spend a lot of time in France, fanning speculation he was considering re-entering politics as a presidential candidate. Lipsky’s planned departure and now Strauss-Kahn’s detention raises questions about a possible leadership vacuum should the IMF chief be charged by U.S. authorities or face possible discipline by the IMF board. (Reporting by Christine Kearney and Noeleen Walder; Editing by Peter Cooney, Todd Eastham and Jackie Frank) Copyright 2011 Thomson Reuters. Click for Restrictions .

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No More Bag Check Discounts

April 24, 2011

CHICAGO — There’s no more incentive to prepay online for your checked bags if you’re flying United Continental. The carrier has done away with the $2 to $3 discount that passengers used to get if they paid for their luggage online instead of at the ticket counter. The charge for domestic flights operated by Chicago-based United Continental Holdings Inc. is now $25 for the first bag and $35 for the second, no matter how or when you pay. The change began for tickets sold since March 9. United and Continental used to offer a $2 discount on the first bag and $3 off the second to encourage passengers to pay up before arriving at the airport. Delta Air Lines Inc. still offers a similar discount. Other carriers, including AMR Corp.’s American Airlines, never offered different prices. Southwest Airlines Co. continues to allow passengers to check two bags for free.

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Angela Haines: Immigrant Entrepreneurs Challenge the Barriers

April 19, 2011

Maria Lores-Browne, a Colombian immigrant, began dreaming about her own business during her years working as a laborer on construction sites, doing everything from pouring concrete to laying flooring. She asked herself, “How can I do this when I’m 45 or 55 years old?” So she went to school to learn how to operate heavy machinery though she was repeatedly advised “they don’t take girls.” After taking the requisite courses, she qualified to join the Operating Engineers Union, but “they were always reluctant,” she says, “to send out woman to operate equipment so they only assigned me to jobs as a watchman for construction sites.” Maria persisted because “I love running big equipment; I love the feel of the paint, the fittings, the tires, the same way many women love diamond rings.” Last fall she started Berma Construction Company. The harsh New York winter provided her with her first customer. JFK Airport hired her company to plow snow. Like Maria, who now seeks funds to purchase equipment, the biggest problems most immigrants face is access to capital. What’s particularly hard for them, says Catalina Castano, Director of the Brooklyn Small Business Development Center is that “they are unfamiliar with credit rules. Many have no credit histories, though lenders insist on credit scores. And unlike native born entrepreneurs, they frequently can’t turn to their networks for a ‘friends and family’ first round; they often can’t find a co-signer on a micro loan.” Adds Elisa Balabram, who heads a government-funded Business Center in Brooklyn, “other countries have more informal rules for doing business, so immigrants have to learn about requirements; their language problems can add to their difficulties understanding financial rules and regulations.” The Vinci Tablet Dan’s new Galaxy tablet provides an interactive learning platform with an Android operating system; it features a sturdy red silicon handle, a non toxic tempered glass screen and has no wi fi components to minimize radiation; it will be available in July. These days Dan works mainly with psychologist, educators, and artists as she develops software for her tot tablet, combining her talents in advanced technology with the creative world, a step which presumably her early teachers would have considered a more appropriate arena for women! For more on women entrepreneurs, visit www.wstartup.com

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Video: Gensler Discusses Redesign of San Francisco Terminal 2

April 7, 2011

April 6 (Bloomberg) — Arthur Gensler, chairman of U.S. architectural firm Gensler, discusses the redesign of San Francisco International Airport’s Terminal 2. Virgin America will fly out of the terminal. (Source: Bloomberg)

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Gaddafi’s Son Had Internship In U.S. Just Before Libyan Conflict

March 26, 2011

WASHINGTON (AP) — A son of Libyan leader Muammar Gaddafi toured U.S. ports and military facilities just weeks before he helped lead deadly attacks on rebels protesting his father’s authoritarian regime. Khamis Gaddafi, 27, spent four weeks in the U.S. as part of an internship with AECOM, a global infrastructure company with deep business interests in Libya, according to Paul Gennaro, AECOM’s Senior Vice President for Global Communications. The trip was to include visits to the Port of Houston, Air Force Academy, National War College and West Point, Gennaro said. The West Point visit was canceled on Feb. 17, when the trip was cut short and Gaddafi returned to Libya, Gennaro said. The uprising there began with a series of protests on Feb. 15. By late February, forces controlled by Khamis Gaddafi were leading the brutal assault to retake Zawiya, a city near Tripoli that rebels captured soon after the uprising began. Gennaro said the U.S. State Department approved of the trip, and considered Gaddafi a reformer. He said the government signed off on the itinerary, at times offering advice that affected the company’s plans for Gaddafi. State department officials denied any role in planning, advising or paying for the trip. “We did greet him at the airport. That is standard courtesy for the son of the leader of a country,” said State Department spokesman Mark Toner. Toner said the government was aware of Gaddafi’s itinerary, but “did not sign off on it.” AECOM was not paid to arrange the trip, and did not pay for related expenses, Gennaro said. He said the trip was arranged at the request of a Libyan, whom he declined to name. Gennaro was one of the AECOM executives who met with Gaddafi during the trip, to educate him on U.S. corporate practices. He said Gaddafi was “very, very interested in the planning, design, how do you advance large infrastructure projects.” “That was the nature and the tenor of this internship,” he said. Khamis Gaddafi was killed earlier this week after a disaffected Libyan air force pilot who crash-landed his jet in the ruling family’s headquarters, according to unconfirmed reports cited by ABC News and Al-Arabiya television. He died from burn injuries after the crash, the reports said. Gaddafi, Muammar Gaddafi’s youngest son, was pursuing an MBA at the IE Business School, in Madrid, Spain, until earlier this month. The school expelled him because of his role in attacks on Libyan protestors. Khamis Gaddafi led the Khamis Brigade, one of several professional military units that are loyal to leader Muammar Gaddafi. U.S. diplomats in leaked memos have called it “the most well-trained and well-equipped force in the Libyan military.” In one brutal attack, his forces surrounded Zawiya while rebels in the city celebrated their victory and cared for the injured. The Khamis Brigade then unleashed an all-out assault from three sides, unloading their weapons and artillery as they stormed the city. The city sank into darkness at night due to power outages and the main hospital became too dangerous for patients because it was under the control of government forces. ____ Associated Press writer Matthew Lee contributed to this report.

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Video: Devastation, Confusion in Sendai Amid Nuclear Fears

March 16, 2011

March 16 (Bloomberg) — Bloomberg’s Stuart Biggs speaks from the airport in Sendai, Japan, about the impact of the March 11 tsunami and resulting nuclear crisis on the region. Japan was hit by a 5.7-magnitude aftershock and a second fire at the stricken Fukushima nuclear plant as the government struggled to overcome the aftermath of the nation’s strongest earthquake on record. Linzie Janis also speaks. (Source: Bloomberg)

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Simon Johnson: No Smoke Without Mirrors — Disinformation About the Consumer Financial Protection Bureau

February 28, 2011

In Washington, before lobbyists try hard to destroy something, they first spread a great deal of disinformation about it. Thus the “End Users’ Coalition” (a front for the derivatives dealers) promotes its lobbying points as fake research. And “fiscal conservatives” attempt to distract from the fact that our largest banks brought us to the brink of budget disaster — this is their preparation for demolishing all vestiges of financial reform. On a closely related front, there is now a concerted effort to undermine the newly formed Consumer Financial Protection Bureau (CFPB), mostly by spreading disinformation about its supposed lack of accountability. This disinformation approach contains the standard elements of exaggeration, misdirection, and distraction (all quotes are via Fred Barnes ): Slogans: “If you like TSA at the airport, you’ll love these guys” (Congressman Spencer Bachus). This is a major step towards dictatorship. “Its powers are very, very vast…. Who in the world would consider it appropriate to have one person appointed–one person!–to set the rules for the entire financial industry. It’s a tremendous overreach. It’s incredible to think about” (Senator Bob Corker) And it would be a one-person dictatorship. “”It would be dangerous to the American economy if Elizabeth Warren were put in that job by a recess appointment, thwarting the will of Congress…. [She would be] accountable to no one” (Senator Richard Shelby) Naturally, none of this is remotely close to the facts — an important principle of disinformation is that it should create an alternative reality which, through repetition by apparently disparate and supposedly credible people, becomes regarded as containing an element of truth. Elizabeth Warren, the interim head of the new agency, has in fact consulted widely with members of Congress (from both sides), as well as with the industry. There is a great deal of accountability, down to the level of explaining exactly how the agency will be structured and the principles that will guide its operation. She has also shared with members of Congress the details of key personnel appointments, as well as the responsibilities that various people will have. Legislators have every right to ask tough questions about the details – and this is exactly what they have been doing. The oversight mechanisms at work here are exactly the same as for existing regulators — the CFPB is largely a consolidation and streamlining of their powers. Of course, we might worry that legislative oversight of regulators in the past helped bring us to the brink of financial and fiscal disaster, but that is another matter (e.g., see Inside Job , which just won the Oscar for Best Documentary.) A particular bone of contention is the role of Elizabeth Warren herself. She is currently Assistant to the President (i.e., a White House role), as well as a Special Advisor to the Secretary of the CFPB. She is not Director of the CFPB — nor is she currently the nominee for that position. Some members of Congress are clearly positioning themselves for a bruising confirmation hearing — and sending signals that they will fight hard against any potential appointment of Professor Warren, presumably mostly on procedural grounds. But everything about her current role, the timing of when and how the agency is established, and the confirmation hearings is exactly as laid down by the Dodd-Frank Act. And remember that Ms. Warren was, until recently, head of the Congressional Oversight Panel for TARP — in other words, she had a prominent role overseeing part of the executive branch. She understands the need to be scrupulous and careful about process in the current situation. Her appointment calendar is posted on-line. By my count, she has met with more than 50 members of Congress in one-on-one meetings since September. Elizabeth Warren stands for transparency. After decades of abuse, consumers of financial products deserve prices that are clearly stated up front, risks that are plainly visible, and absolutely nothing buried in the fine print. This kind of transparency allows people to comparison shop in an effective way; it will also spur market competition and encourage the kind of innovation that really benefits consumers. It’s time to end the deception that comes packaged with complicated agreements wrapped around hidden fees and all kinds of nasty surprises. And please remind all members of Congress, regarding their oversight role during 2000-08, that despite everything Countrywide did, including the horrible way it treated consumers and the many apparent deceptions in its practices, Angelo Mozilo walked away a rich man. According to the research of Professors Sanjai Bhagat and Brian Bolton, as CEO between 2000 and 2008, Mr. Mozilo received over $90 million in salary and bonus and sold Countrywide stock worth over $500 million. (You must read the Bhagat and Bolton paper.) Let’s have the substantive discussion, in the open — before Congress and elsewhere. Which way do we go next: Elizabeth Warren’s way, with transparency for all; or Angelo Mozilo’s way, with vast fortunes for a very few people and great misery for many? This is not about being pro- or anti-market. This is about what kind of market you want: transparent or opaque; honest or based on deceit. But rather than discussing the merits of the debate — and the real issues at stake — instead we are treating to phony procedural complaints and fake claims regarding how the Constitution is supposedly being undermined. “No smoke without fire” is the principle that reasonable people often apply to stories they hear. If enough people are talking about an issue in a particular way, there must be some legitimate grounds for concern. But, as any former official can tell you, while this presumption may be reliable in everyday life, it plays into the hands of politicians who wish to mislead you. All the smoke around the CFPB is designed purely for mirrors; there is no merit to any of the accusations. This is the first stage in a careful and orchestrated campaign to undermine and eventually destroy the agency, with the ultimate goal of allowing some irresponsible elements in the financial industry to go back to the disgusting ways of 2000-08. This post originally appeared at The Baseline Scenario .

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Dorie Clark: Lessons From an Inefficient Costa Rican Airport

January 7, 2011

Almost anyone would agree Costa Rica is a beautiful country, replete with rainforests, volcanoes, a perfect climate, and picturesque vistas. It’s also home to a hopelessly inefficient airport that dampens any joy a traveler might feel upon arrival. Since breaking onto the international scene in 2002 with the arrival of Delta Airlines, the Daniel Oduber Quiros International Airport in Liberia has opened up a new world for Costa Rican tourism. The sandy beaches of the northwestern Guanacaste province were suddenly accessible from the airport (previously, it was an arduous five-hour drive from the capital, San Jose). Let’s hope the airport’s current expansion project helps it improve. But in the interim, there are three major marketing lessons we can learn from it. 1. Customers Hate to Be Confused . The roof is tin. There’s no air conditioning, and the building appears to be a sort of open-to-the-elements warehouse. That’s cool. It’s all part of the charm of exploring new places. There are many things travelers can enjoy, even ones that in our home countries might be bizarre or annoying. But one thing no traveler can countenance is confusion. Waiting in line isn’t too much of a problem if you can read a book or chat with your companions. That isn’t possible, however, when you’re jockeying for position in the customs line against a horde of people surging forward from 10 different directions. Relaxation isn’t an option. Similarly, we need to look at our own companies and ask ourselves: are our processes clear for customers? How can we simplify things? What’s confusing, and how can we remedy it? 2. Customers Hate Needless Bureaucracy . We understand: there are procedures when you enter a new country, and it takes time to go through them. But to wait for over an hour in a customs line — only to be waived through at the end with nary a question or a bag search — feels like time completely wasted. Yes, I suppose I should be thankful my underwear wasn’t riffled through in front of 500 other travelers. But as behavioral psychology demonstrates, what really drives people insane over time is the feeling that their efforts and exertions have been pointless. Why make me wait unless there’s a legitimate reason (preventing me from secretly importing drugs, guns, or mad-cow-disease-infected beef)? Ask yourself: are there any procedures you follow (or you make your customers follow) that have outlived their usefulness? Change them or eliminate them. 3. Customers Hate Needless Repetition . Sadly, leaving the Liberia Airport isn’t much better than arriving. Warned to arrive three hours in advance (just as in Israel, where they legitimately need it to interrogate you and search every pore of your body), we duly complied…and ended up sitting in the overheated airport lounge for 2 ½ hours. Again, perhaps it’s better to be safe than sorry, but I could have used that extra hour by the pool. And why did they now insist on searching every passenger’s bags twice (once at security and once at the gate, prior to boarding)? I’m sure TSA types will insist this is an “international best practice” – but it seems rather hollow when we were simply shrugged through upon entry. What’s the line between a legitimate security need and bad customer service that forces you into redundant steps? When we all come home from our travels, that’s another question we can ponder. How can we streamline operations to reduce inefficiency and still provide excellent, high-quality work? What are your suggestions? And what else do customers hate? Dorie Clark is a marketing strategy consultant who has worked with clients including Google, Yale University, and the National Park Service. Read her blog , listen to her podcasts or follow her on Twitter

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Barry Moltz: Can I Pick Your Brain?

December 23, 2010

What is the most popular question asked in the New Year? As small business owners go into planning mode, it’s “Can I pick your brain?” I love helping people and paying it forward, but this expression really isn’t very visually appealing to me. While we realize that not every business meeting needs to have a form of financial return, there are certain guidelines we need to set in order to effectively give back to the business community, but at the same time accomplish the goals we set for our own companies. Here are six rules to follow if you want to help. but not lose track of your own work: 1. Begin by asking: “Do you need help as a possible paying customer or just some friendly advice?” This sets expectations on both sides. Determine if this a future prospect or a one time free advice call? Schedule it appropriately. 2. Then ask “How specifically can I help you?”. This focuses the call so it does not ramble on for a very long time without you being able to provide the help the person needs. 3. Do it on the phone . Everyone wants to meet for a breakfast or lunch. This takes at least two hours between getting to the appointment and having the meal. We can’t afford this type of time commitment (or weight gain) on an ongoing basis. 4. Set a time that is convenient for you . I typically do these calls while I am driving or waiting at the airport. These are times where I am not looking to accomplish heavy work, but can still focus on helping the person. 5. Set a time limit and keep to it . I tell people that I have 15 minutes and announce it at the beginning of the call. If you haven’t been able to help the person in 15 minutes, then they need to seek a free resource that is available or pay you. 6. Set a limit on follow up by email . Tell them they can follow up by email, but if more than a few emails come, see advice in #5 . While there may be some people you want to invest in on an ongoing basis as their mentor, these are the rules you need to follow for everyone else. Remember, time truly is money, but you can still help others without sacrificing your goals. What rules do you have for people “picking your brain?”

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Les McKeown: The Vital Missing Voice in the Economic Recovery Debate Is Someone You’ve Never Heard of

October 21, 2010

It’s clear that we’re going to see a shakeup in the administration’s economic policy team before the end of the year , and there’s been much talk of bringing in a successful business leader (such as Anne Mulcahy, ex-Xerox CEO) in an attempt to counter criticism that the Obama White House appears out of touch with — and unsympathetic to — corporate America. While I admire many successful leaders of large corporations — it’s a hard and complex job and requires a wide range of skills — with the greatest respect to those same people, theirs is not the voice that we most need to hear from at this time. To stabilize, strengthen and accelerate our barely-breathing economic recovery, a truly brave move on the part of the president and his team would be to appoint not a marquee “brand name” business leader like Mulcahy, but instead, to turn to one or more successful founder-owners from the SME (small- and medium-sized enterprise) community. Why? There are five main reasons we need to hear from this group, rather than from their more well-known celebrity big-business colleagues: 1. They think, talk and act with skin in the game. Founder-owners are distinguished from just about every other business group as being people who live or die by the decisions they make. There are fewer Mark Hurd-like second acts in the world of SME business owners, and as a result, they ruthlessly stress-test the likely results of their decisions. With all the best will in the world, when you’re “merely” salaried (no matter how high or performance-oriented that salary is), you think in a completely different way from people who are literally “all in.” It’s like the old adage of the chicken and the pig. When it comes to breakfast, the chicken may be involved in delivering the egg, but the pig is committed . Founder-owners are committed. Celebrity CEOs are merely involved. We’ll get very much less of the “let’s throw it against the wall and see if it sticks” policy approach if founder-owners are part of the process. 2. They do results, not optics. Let’s face it, running a public company these days is as much about the optics — how things look — as it is about the underlying fundamental realities. In this regard, most celebrity CEOs are far too like their political brethren in being easily swayed to agree to a path of action because it looks good, rather than because it will actually make a real positive difference to the people impacted. Running a privately-held organization is a different game altogether. Managing by “what makes me look good” has a short shelf life, and those that rise to the top in the SME world — and stay there — tend to be people who trade in bloody, inconvenient reality. 3. They’re less likely to be building a future platform. We’ve all seen the celebrity CEO that has used their business fame as a stepping stone to political power — see the current races in California as an example. That’s their right, of course, and more power to them — but it’s not the type of person we need to hear from while trying to stabilize and accelerate our faltering economic recovery. The people we need to hear from — urgently — are those who will only under the utmost reluctance engage in public service; give it their all while they can make a difference, then get the heck out of there and back to where their true passion is — running their business. Would one or more SME founder-owners become enamored of the political life and decide to hang around? Sure. But I’d rather start with the reluctant many than depend on the clamoring few. 4. They know how to (and will) speak truth to power. If, as I have, you’ve worked in a wide range of both privately-held and publicly-traded companies, you’ll have noticed that one of the biggest differences between them is the degree of honest interaction at the very top. There’s simply less… well, politics. That’s not to say that there aren’t privately-held companies where senior execs play politics, or publicly-traded organizations with a mature, no-nonsense top team, but the general tendency is that founder-owners put up with (and generate) a lot less bull-hockey, and tend much more toward straight talk. You think we could do with some straight talk right now? 5. They’re closer to the real world. If there’s one thing that marks the era of modern-day economic policy making, it’s that the policymakers are increasingly cocooned from personally living with — and suffering from — the impact of their decisions (I’d love to watch a few senators travel coach for a month before approving yet another dignity-abasing piece of security theater at the airport). Especially in the area of economic recovery, we need the policy debate to be from people who live, eat and sleep in the real world just like the rest of us — not for reasons of schadenfreude (I have no problem with celebrity CEO’s traveling by company jet everywhere, heck, if I could get that gig I might take it too), but because we need real, working answers in the next 18 months — and those are much more likely to come from people who are living it in the trenches every day. There’s no glamor or media brownie points in eschewing the celebrity CEO and appointing a relative unknown founder-owner from the SME community to advise on real-world economic reform — but there just might be a massive payoff.

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William Astore: Major Sporting Events: Too Corporatized, Too Controlling, Too Much

September 15, 2010

Been to a major American sporting event lately? If not, consider yourself fortunate. The NFL and NASCAR are already over-the-top when it comes to manufactured noise, exaggerated pyrotechnics, and wall-to-wall corporate advertisements. Even my beloved sport of baseball has fallen victim to sensory saturation and techniques of crowd control that would make a dictator proud. The grace and spontaneity of America’s pastime is increasingly lost in Jumbotrons, overly loud and canned music, and choreographed cheering. With all the Jumbotrons and other video screens everywhere, people are no longer focused on the game as it takes place on the field, and perhaps turning to their neighbor for an explanation if they miss a play or nuance. Instead, people look to the screens to follow the game. Indeed, sight lines at some seats at Yankee Stadium are so poor that the only way you can watch the action on the field is on video screens posted at strategic locations. Speaking of Yankee Stadium, last month a friend of mine went to a game there and found the experience “shocking.” In his words: “The new stadium is flooded with noise from constant speakers as well as screens everywhere. It was so loud that there was really not much independent reaction from the crowd. I got a feeling like I was in a scene from Triumph of the Will . The noise would come out of the speakers and people would chant. When it stopped so did the people. The entire experience left me dying to get out of there!” Mediocre seats are $110 each, and an $11 beer only compounds the pain. Attending a Yankees game “used to be something of a social leveler, where people of all classes would come and meet to support the team… Although the place was packed for a Red Sox game, it was a largely white crowd, looking nothing like the mix of people who actually inhabit New York,” my friend concluded. I share my friend’s concerns. I hate being coerced by screens and speakers telling me when to cheer and what to say. Even at my local Single-A baseball games, the post-game fireworks are set to music, usually of a patriotic tenor. I’ve got nothing against music, but why can’t I just enjoy the fireworks? I don’t need “Proud to be an American” blaring to make me proud to be an American. But it seems like many fans are happy being told when to cheer, what to say, even what to feel. Or they’ve simply become accustomed to being controlled, which has the added benefit to owners of suppressing any inconvenient spontaneity. More and more, our senses are saturated so we cannot pause to converse or even to think. If the game grows tiresome, people turn to cell phones, palm pilots, and other personal technologies for stimulation. And the phenomenon is hardly limited to sporting events. Today’s version of “Sesame Street” is an exercise in frenetic action and hyperkinetic stimulation; one wonders whether it’s designed for ADHD kids, or to create ADHD kids. More and more, we’re surrounded by and immersed in near-total sensory saturation; the stifling effect such an environment has on individual spontaneity and thought can’t be disregarded (nor can it be accidental). And it appears in the most unlikely of places. I used to watch air shows at the U.S. Air Force Academy. Few things are more viscerally thrilling (or chilling) than a formation of F-16s screaming overhead. But that effect apparently wasn’t enough. The powers-that-be “augmented” the air show with loud rock music (call it the “Top Gun” effect) along with an especially annoying (and superfluous) narrator. There was even a proposal to add huge video screens and even bigger speakers to the performance until it got shot down due to charges of contractual cronyism. In a way, it’s sad to compare today’s thunderingly loud yet sterile air shows to their Depression-era counterparts. The latter, as another friend reminded me, had in his words: “No concrete runways, no visitor stands, just grass in a field on the edge of town. I loved planes so much that as an eleven year old I would take the two streetcars … then walk a mile to the airport. There was always one or two old biplanes and the small crowd would wait expectantly for the pilots and the daredevils to appear. What excitement just to see those little planes taxing across the grass and getting into position to take off. Gunning their little engines and racing along into the wind. Loops, upside down and then the big thrill, the ‘wing walkers.’ Try that on a jet.” Bigger, faster, louder doesn’t always mean “better.” Whether it’s an air show or ball game today, we seem saturated by noise, video images, and other sensory distractions, often advertised as “necessary” to broaden the appeal to non-fans or casual spectators who simply want to feel that they’ve witnessed a spectacle, whatever its meaning. It’s hard to develop an inner life when you’re constantly plugged-in and distracted. It’s also hard to take independent political stances when you’re constantly bombarded by infotainment, not just in the mainstream media but in the sports world as well. I don’t care about off-field shenanigans or contract disputes or manufactured grudges between teams, nor do I want to watch pre-game and post-game shows that last longer than the games: I just want to watch the game and marvel at the accomplishments of world-class athletes while cheering for my home team. Sports have always been a form of entertainment, of course, but today’s events are being packaged as life-consuming pursuits, e.g. fantasy football leagues. And if we’re spending most of our free time picking and tracking “our” players and teams, it leaves us a lot less time to criticize our leaders and political elites for their exploitation of the public treasury – and betrayal of the public trust. I wonder, at times, if we’re heading in the direction of “Rollerball” (the original movie version with James Caan), in which a few corporations dominate the world and keep the little people (you and me) distracted with ultra-violent sports and hedonistic consumption, so much so that people can’t recognize their own powerlessness and the empty misery of their lives. Until our sporting events and air shows return to a time when players and fans and enthusiasts collectively showed up simply for the love of the game and the purity of it all (and I can hear my brother mischievously singing, “Until the twelfth of never”), count me out. I can be more spontaneous in my living room with friends — and the beer sure is cheaper. Professor Astore currently teaches History at the Pennsylvania College of Technology in Williamsport, PA. He writes regularly for TomDispatch.com and can be reached at wjastore@gmail.com .

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United-Continental Merger Addresses Justice Department Antitrust Concerns

August 27, 2010

MINNEAPOLIS — United and Continental airlines moved a big step closer to their proposed combination on Friday, with the Justice Department saying it has no more antitrust concerns about the deal. On Friday, the two airlines said they would lease takeoff and landing slots in Newark to Southwest Airlines. The Justice Department says that clears up its main competitive concern. Shareholders at Continental Airlines Inc. and United parent UAL Corp. are set to vote on the deal on Sept. 17. The combination would create the world’s biggest airline. The Justice Department says the two airlines overlap on a limited number of routes. The biggest overlap was at Newark (N.J.) Liberty International Airport. Continental and United operate 442 daily roundtrip flights in and out of Newark. Under the deal announced Friday, Southwest would get enough slots from Continental to operate up to 18 roundtrip flights there by June 2011. The move increases competition for Continental at its Newark hub, as well as for United. Currently, Southwest operates a few flights at New York’s LaGuardia Airport but none at Newark or Kennedy. Mike Boyd, an airline and airport consultant in Colorado, said giving up a few slots at Newark was an easy decision for the combining giants. “United and Continental want to get this merger done,” Boyd said, and if federal regulators “stick their nose in there and say, ‘Give something up,’ they’re going to give it up.” Bob Jordan, Southwest’s executive vice president for strategy, said Newark would complement his airline’s service at LaGuardia and increase competition in the New York market. Southwest said it was still deciding what cities it would serve from Newark. From LaGuardia, it flies only to Chicago and Baltimore. ___ Koenig reported from Dallas.

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AvStar Aviation Group, Inc. Announces the Appointment of Clayton I. Gamber Jr. as Chief Executive Officer and President on August 19, 2010

August 23, 2010

HOUSTON, TX–(Marketwire – August 23, 2010) –  AvStar Aviation Group, Inc. ( PINKSHEETS : AAVG ): Clayton I. Gamber, Jr., the son of Ft. Lauderdale, Florida aviation pioneers “Red” and Athley Gamber, accepted the position of Chief Executive Officer and President of the AvStar Aviation Group, Inc. on Thursday, August 19, 2010. While being “raised at the airport,” Clayton began his aviation career by obtaining a Glider Pilot License at the age of 14 and currently is an Airline Transport Pilot with over 8000 flight hours logged. Additionally, he is certified as an Airframe and Power Plant Mechanic.

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David Isenberg: The GAO Transcripts, Part 14: When PSCs and Soldiers Throwdown

July 16, 2010

This is the fourteenth installment of the Government Accountability Office interview transcripts that were prepared pursuant to the July 2005 GAO report ” Rebuilding Iraq: Actions Needed To Improve Use of Private Security Providers .” This interview was with someone from the U.S. Army’s 1st Armored Division , which is one of the oldest and most prestigious armored divisions in the United States Army. In the build-up in the months prior the March 2003 invasion of Iraq, two battalions of the 1st Armored Division’s 3d Brigade were deployed in support of Operation Iraqi Freedom. The 2-70 Armor and 1-41 Infantry battalion task forces augmented the 82nd Airborne Division, the 3d Infantry Division, and the 101st Airborne Division throughout the campaign to oust Iraqi dictator Saddam Hussein. In April 2003, the remainder of the division deployed to Iraq and assumed responsibility for Baghdad, under command of Brigadier General Martin E. Dempsey, and the surrounding areas, relieving the 3d Infantry Division. The division was scheduled to return to Germany in April 2004, but was extended three months in order to defeat a Shia militia led by Moqtada Al Sadr. Although the 1st AD official interviewed found few serious private security contractors there were tensions between PSCs and soldiers. There were several incidents between 1 AD [Armored Division] personnel and PSCs when PSCs escorted dignitaries on 1 AD bases. PSCs acted as though they had the right to do whatever they wanted and thought they were exempt from 1 AD rules. Sometimes there were confrontation between 1 AD soldiers and PSCs that came to fist fights and drawing weapons. And, although it is hardly novel to say this, back in 2004 it was not just Iraqi civilians complaining that contractors seeming operated under no rules. It was unclear as to what laws covered contractors. There was no martial law in Iraq before the transition. ___________ had numerous conversations on the applicability of the law of occupation, which she did not believe was developed for the modern battlefield. The law of occupation mostly deals with obligations to the civilian population, not contractors. In many ways they were in unchartered territory in Iraq. Existing laws went back to the 1940s and 1950s. There was even some debate about whether the laws applied. Standard disclaimer: I have put in ( _____ ) to reflect those words of phrases which have been blacked out in the transcript. I have also put in the underlining as it appeared in the original transcript. As in the transcript, I have left out letters from various words, even when it seems obvious what the word is. Prepared by: Steve Sternlieb Index: Type bundle Index here Date Prepared: March 18, 2005 DOD Number: 1281431 Reviewed by: Type reviewer name here DOD Library. H02 Job Code: 350544 _____________ Record of Interview Title _____________ Interaction with Private Security Contractors (PSC) in Iraq Purpose To discuss _____________ Division Interaction with Private Security Contractors in Iraq Contact Method Interview Contact Place _____________ Contact Date December 9, 2004 Participants _____________ Steve Sternlieb, Assistant Director, GAO Comments/Remarks: _____________vided the following information. _____________ _____________ _____________ _____________ _____________ _____________ She said that there were few offenses involving PSCs and contractors overall. She could recall no incident reaching her involving PSCs in Iraq that would rise to the serious level (murder, aggravated assault, rape). There were smaller incidents involving allegations of theft by PSC employees and allegations involving weapons permits involving either a PSC employee or an interpreter (she could not recall which). The result in those instances was that the employee was dismissed. She did say that the more contractors there are, the more there are claims. There were several incidents between 1 AD [Armored Division] personnel and PSCs when PSCs escorted dignitaries on 1 AD bases. PSCs acted as though they had the right to do whatever they wanted and thought they were exempt from 1 AD rules. Sometimes there were confrontation between 1 AD soldiers and PSCs that came to fist fights and drawing weapons. The issue for the SJA was whether soldiers used excessive force. _____________ did not think the problem was fully resolved as of April 2004 when the division moved to a new location and was not as close to the Coalition Provisional Authority and so had fewer such issues The problem did not go away but it get better (Auditor’s note _____________ _____________ _____________ _____________ _____________ _____________ __________________________ _____________ _____________ AD elevated confrontations, which was easier for 1 AD than other divisions since they were collocated with MNF-I HQ. If PSC’s went over the line they had no means to punish the person (they could punish the soldier if he/she was at fault); would send a complaint or result of investigation to higher HQ. IF an incident involved killing an Iraqi the matter would be outside I AD’S jurisdiction but 1 AD would probably investigate it. Contractor legal issues/visibility She did deal with other types of legal issues. The chain of command on 1ega issues was from _____________ _____________ _____________ _____________ _____________ Arming contractors’ was one of the biggest issues the SJA worked. At some point CENTCOM’s position Page 1 Record of Interview was that arming contractors was that arming contractors was a violation of the rule of war as was having contractors provide security, including for convoys. There was, however, a distinction between contractors accompanying the force and other contractors. For example, although soldiers were stationed at The Baghdad International Airport (BIAP) because it was owned by the Iraqi Ministry of Transportation security contractors could guard the outside perimeter of the airport. CPA order 3 and CPA memo 17 had to be enforced by military JAGs. CENTCOM guidance said that contractors could not be given weapons, She also said ___________ that as of July 2004 CENTCOM had to approve arming contractors. However, arming PSCs was outside the SJA world because it did not involve the military. Auditor’s note: ___________ ___________ ___________ ___________ ___________ had a hard time enforcing any contracts that were not let b 1 AD. It was hard to get a copy of contracts let by others and usually 1 AD could not get the contracts. Therefore local commanders did not know what the rules and entitlements were for those contractors although the division could go back to the source for an interpretation of what was required under the contract. One of the SJA legal lessons learned was that all contracts are difficult at the division level and that lesson was forwarded to the JAG corps. There is a need to take someone trained in contract law and with experience on deployment. There is also a need for boilerplate language for all contracts supporting deployed forces and for language to be provided to the divisions for contracts they write. It was also hard to know who contractors were in theater in part due to the mix of military and civilian contractors. People would come in and out of the battlespace. There was no central processing system for contractors. For example, sometimes people would arrive in Kuwait or RN- an, rent a car, and drive into Iraq. ___________ elieved that there was supposed to be a central processing system for contractors in Kuwait. It was unclear as to what laws covered contractors. There was no martial law in Iraq before the transition. ___________ had numerous conversations on the applicability of the law of occupation, which she did not believe was developed for the modern battlefield. The law of occupation mostly deals with obligations to the civilian population, not contractors. In many ways they were in unchartered territory in Iraq. Existing laws went back to the 1940s and 1950s. There was even some debate about whether the laws applied. Contractors did not provide convoy security for contractors accompanying the force. The distinction was if the contractors were accompanying the force. Lack of Higher HQ Guidance ___________ is not involved in writing an order or info paper on how the division was to interact with PSCs in its sector. She does not recall any rules/instructions being provided the division from CJTF-7 and MNF-I that laid out for the division what its relationship should be with PSCs. If there were no such rules there should be The division did get rules on arming, contractors (again see above re distinction between contractors accompanying the force and PSCs.) Page 2 Record of Interview

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Flying Car Slated For Sale Next Year

July 1, 2010

WASHINGTON — If cars had wings, they could fly – and that just might happen, beginning next year. The company Terrafugia, based in Woburn, Mass., says it plans to deliver its car-plane, the Transition, to customers by the end of 2011. It recently cleared a major hurdle when the Federal Aviation Administration granted a special weight limit exemption to the Transition. “It’s the next ‘wow’ vehicle,” said Terrafugia vice president Richard Gersh. “Anybody can buy a Ferrari, but as we say, Ferraris don’t fly.” The Transition is a long way from cartoon dad George Jetson’s flying car zooming above traffic, or even the magical Chitty Chitty Bang Bang. “There is no launch button on the (instrument) panel,” Gersh noted. Rather, the car-plane has wings that unfold for flying – a process the company says takes one minute – and fold back up for driving. A runway is still required to takeoff and land. The Transition is being marketed more as a plane that drives than a car that flies, although it is both. The company has been working with FAA to meet aircraft regulations, and with the National Highway Traffic Safety Administration to meet vehicle safety regulations The company is pitching the Transition to private pilots as a more convenient – and cheaper – way to fly. They say it eliminates the hassle trying to find another mode of transportation to get to and from airports: You drive the car to the airport and then you’re good to go. When you land, you fold up the wings and hit the road. There are no expensive hangar fees because you don’t have to store it at an airport – you park it in the garage at home. The plane is designed to fly primarily under 10,000 feet. It has a maximum takeoff weight of 1,430 pounds, including fuel and passengers. Gas mileage on the road is about 30 mpg. Terrafugia says the Transition reduces the potential for an accident by allowing pilots to drive under bad weather instead of flying into marginal conditions. The Transition’s price tag: $194,000. But there may be additional charges for options like a radio, transponder or GPS. Another option is a full-plane parachute. “If you get into a very dire situation, it’s the ultimate safety option,” Gersh said. So far, the company has more than 70 orders with deposits, he said. Terrafugia is Latin for “escape from the land.” The company was founded in 2006 by five Massachusetts Institute of Technology grad students who were also pilots. They received some seed money from the school. The concept of a car-plane has been around since at least the 1950s, but it’s possible that Terrafugia may become the first company to mass-produce one, FAA spokeswoman Laura Brown said. “We’re working very closely with them, but there are still some remaining steps,” Brown said. ___ On the Net: Terrafugia http://www.terrafugia.com/ Federal Aviation Administration http://www.faa.gov

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Flying Car Slated For Sale Next Year

July 1, 2010

WASHINGTON — If cars had wings, they could fly – and that just might happen, beginning next year. The company Terrafugia, based in Woburn, Mass., says it plans to deliver its car-plane, the Transition, to customers by the end of 2011. It recently cleared a major hurdle when the Federal Aviation Administration granted a special weight limit exemption to the Transition. “It’s the next ‘wow’ vehicle,” said Terrafugia vice president Richard Gersh. “Anybody can buy a Ferrari, but as we say, Ferraris don’t fly.” The Transition is a long way from cartoon dad George Jetson’s flying car zooming above traffic, or even the magical Chitty Chitty Bang Bang. “There is no launch button on the (instrument) panel,” Gersh noted. Rather, the car-plane has wings that unfold for flying – a process the company says takes one minute – and fold back up for driving. A runway is still required to takeoff and land. The Transition is being marketed more as a plane that drives than a car that flies, although it is both. The company has been working with FAA to meet aircraft regulations, and with the National Highway Traffic Safety Administration to meet vehicle safety regulations The company is pitching the Transition to private pilots as a more convenient – and cheaper – way to fly. They say it eliminates the hassle trying to find another mode of transportation to get to and from airports: You drive the car to the airport and then you’re good to go. When you land, you fold up the wings and hit the road. There are no expensive hangar fees because you don’t have to store it at an airport – you park it in the garage at home. The plane is designed to fly primarily under 10,000 feet. It has a maximum takeoff weight of 1,430 pounds, including fuel and passengers. Gas mileage on the road is about 30 mpg. Terrafugia says the Transition reduces the potential for an accident by allowing pilots to drive under bad weather instead of flying into marginal conditions. The Transition’s price tag: $194,000. But there may be additional charges for options like a radio, transponder or GPS. Another option is a full-plane parachute. “If you get into a very dire situation, it’s the ultimate safety option,” Gersh said. So far, the company has more than 70 orders with deposits, he said. Terrafugia is Latin for “escape from the land.” The company was founded in 2006 by five Massachusetts Institute of Technology grad students who were also pilots. They received some seed money from the school. The concept of a car-plane has been around since at least the 1950s, but it’s possible that Terrafugia may become the first company to mass-produce one, FAA spokeswoman Laura Brown said. “We’re working very closely with them, but there are still some remaining steps,” Brown said. ___ On the Net: Terrafugia http://www.terrafugia.com/ Federal Aviation Administration http://www.faa.gov

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Flying Car Slated For Sale Next Year

July 1, 2010

WASHINGTON — If cars had wings, they could fly – and that just might happen, beginning next year. The company Terrafugia, based in Woburn, Mass., says it plans to deliver its car-plane, the Transition, to customers by the end of 2011. It recently cleared a major hurdle when the Federal Aviation Administration granted a special weight limit exemption to the Transition. “It’s the next ‘wow’ vehicle,” said Terrafugia vice president Richard Gersh. “Anybody can buy a Ferrari, but as we say, Ferraris don’t fly.” The Transition is a long way from cartoon dad George Jetson’s flying car zooming above traffic, or even the magical Chitty Chitty Bang Bang. “There is no launch button on the (instrument) panel,” Gersh noted. Rather, the car-plane has wings that unfold for flying – a process the company says takes one minute – and fold back up for driving. A runway is still required to takeoff and land. The Transition is being marketed more as a plane that drives than a car that flies, although it is both. The company has been working with FAA to meet aircraft regulations, and with the National Highway Traffic Safety Administration to meet vehicle safety regulations The company is pitching the Transition to private pilots as a more convenient – and cheaper – way to fly. They say it eliminates the hassle trying to find another mode of transportation to get to and from airports: You drive the car to the airport and then you’re good to go. When you land, you fold up the wings and hit the road. There are no expensive hangar fees because you don’t have to store it at an airport – you park it in the garage at home. The plane is designed to fly primarily under 10,000 feet. It has a maximum takeoff weight of 1,430 pounds, including fuel and passengers. Gas mileage on the road is about 30 mpg. Terrafugia says the Transition reduces the potential for an accident by allowing pilots to drive under bad weather instead of flying into marginal conditions. The Transition’s price tag: $194,000. But there may be additional charges for options like a radio, transponder or GPS. Another option is a full-plane parachute. “If you get into a very dire situation, it’s the ultimate safety option,” Gersh said. So far, the company has more than 70 orders with deposits, he said. Terrafugia is Latin for “escape from the land.” The company was founded in 2006 by five Massachusetts Institute of Technology grad students who were also pilots. They received some seed money from the school. The concept of a car-plane has been around since at least the 1950s, but it’s possible that Terrafugia may become the first company to mass-produce one, FAA spokeswoman Laura Brown said. “We’re working very closely with them, but there are still some remaining steps,” Brown said. ___ On the Net: Terrafugia http://www.terrafugia.com/ Federal Aviation Administration http://www.faa.gov

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Australia Utilities Scale Debt Wall as Economy Trumps MBIA Subprime Fall

June 17, 2010

By Sarah McDonald June 18 (Bloomberg) — Bond prices show the pace of Australia’s economic growth may help infrastructure and utility companies to refinance $13 billion of debt without top credit ratings they once bought from insurers such as MBIA Inc. Envestra Ltd. , ElectraNet Ltd. and five more firms raised $2.3 billion from bonds this year, up from $140 million in 2009, according to data compiled by Bloomberg. Brisbane Airport Corp. has A$350 million ($304 million) of MBIA-backed notes due on June 30, while SP AusNet has A$185 million of bonds insured by a unit of Ambac Financial Group Inc. due in September. The nation’s central bank has led Group of 20 policymakers in increasing the benchmark cash rate six times since October on surging Asian demand for commodities and a jobs boom that has pushed down unemployment to around half that of the U.S. and Europe. The extra yield investors demand to own Australian utility debt instead of government bonds has fallen 52 basis points to 206 basis points this year while spreads for firms in the industry widened globally, Bank of America Merrill Lynch indexes show. “Investors are buying into an economy that outperformed the world through the financial crisis,” said Brad Scott , director of debt capital markets at Australia & New Zealand Banking Group Ltd. in Sydney. “Many recognize Australia is a far more attractive place to invest than previously given credit.” Infrastructure and utility firms were Australia’s biggest users of insurers to sell cheaper, longer-dated debt until MBIA and Ambac were stripped of their top ratings in 2008 amid losses on notes backed by subprime mortgages. Since then five straight quarters of growth in the country’s A$1.2 trillion economy have bolstered corporate profits, attracting investors willing to accept lower credit rankings and greater risk. U.S. Placements Investors “show strong appetite for names out of the region,” Lori Pollicino , an executive director of debt capital market private placements at JPMorgan Securities Inc. in New York, said in an e-mailed response to questions. Australian utility companies’ spreads will “modestly tighten throughout the remainder of 2010.” Between 2000 and 2006 Brisbane Airport paid spreads of between 100 basis points and 130 basis points including fees on five bond sales backed by insurers, or so-called monolines, Chief Financial Officer Tim Rothwell said in a telephone interview. While new debt is “certainly going to cost more than it did a few years ago, it’s come down from the very high margins of late 2008 and early 2009” when the airport was told it would have to pay as much as 600 basis points, Rothwell said. Miami Visit The owner of the nation’s third-busiest airport aims to pay about 200 basis points on a sale by early 2011, according to Rothwell, who was “pleasantly surprised” at U.S. interest in Australian bonds when he visited Miami last year. A basis point is 0.01 percentage point. SP AusNet, which manages a A$6.3 billion electricity and gas network and is rated A- by Standard & Poor’s, has sold bonds denominated in Swiss francs, Hong Kong dollars and Australian dollars since February. The company’s Ambac-insured notes yielded 45 basis points more than the bank bill swap rate when they were issued in 2000, according to Bloomberg data, which doesn’t show the insurer’s fee. SP AusNet, based in Melbourne, priced A$300 million of bonds to yield 160 basis points more than the swap rate in March. As companies seek to develop relationships with investors now they’re refinancing without monoline support, Australia’s economic strength is proving to be a “positive factor” in negotiations, SP AusNet Treasurer Alastair Watson said in an interview. Concentration Risk Airports, utilities and infrastructure-related issuers have A$15 billion of debt due by the end of 2011, according to Moody’s Investors Service, while S&P says utilities must refinance a third of their outstanding debt next year. S&P said in a March 5 report that it’s concerned about the concentration of maturing debt, even though companies are arranging refinancing well before their bonds and loans mature. Investors demanded about 60 basis points of extra yield to hold Australian corporate bonds rather than government debt in June 2006, a Bank of America Merrill Lynch index shows. That spread widened to as much as 433 basis points in April 2009 before shrinking to 212 as of yesterday, the index shows. Bond Returns Australia is the world’s biggest exporter of iron ore and coal, and Chinese demand helped the economy expand 2.7 percent in the first quarter of 2010 from a year earlier. Investors have profited from Australian corporate bonds every year for at least the past 13 years, according to Bank of America Merrill Lynch data, and the notes delivered a 4.18 percent return this year. Adelaide Airport Ltd. bought back A$231.5 million of MBIA- insured bonds in April and issued A$235 million of notes without a third-party guarantee. The new bonds yield 255 basis points more than the bank bill swap rate compared with 49 basis points on the insured notes, excluding MBIA’s fee, Bloomberg data show. United Energy Distribution Pty. Ltd. , which provides electricity to more than 600,000 customers in the state of Victoria, sold $435 million of four- and seven-year notes to U.S. investors in April. The bonds were priced to yield 180 basis points more than similar-maturity Treasuries, according to a person familiar with the transaction. The company, rated Baa2 by Moody’s, paid an 83 basis point spread when it sold $260 million of Ambac-insured notes in 2003, according to Bloomberg data which doesn’t show the insurer’s fees. “While these companies are paying more for their debt now than before the crisis, they’re certainly not alone,” said Michael Bush , Melbourne-based head of credit research at National Australia Bank Ltd. “The market’s so different to what it was three years ago, and all borrowers are affected.” To contact the reporter on this story: Sarah McDonald in Sydney at smcdonald23@bloomberg.net .

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Air India Boeing Crashes Carrying 166 in First Fatal Accident in a Decade

May 22, 2010

By Vipin Nair and Rakteem Katakey May 22 (Bloomberg) — An Air India Express plane overshot the runway and burst into flames while landing in heavy rain in southern India, killing all but three of the at least 166 people aboard in the country’s first fatal commercial air crash in a decade. “We have been able to confirm three survivors,” said Prabhakar Sharma, additional deputy commissioner of Mangalore district in southern Karnataka state. The plane “is almost completely burnt,” he said. There was little chance of more people being found alive, state home minister V.S. Acharya said by phone. Television channels including CNN-IBN and NDTV 24×7 showed flames and thick smoke billowing from a forested area at the end of the runway. Broadcasters said the plane crashed through a boundary wall and fell into a ravine. Firefighters had to cross a railway line and battle through trees to reach the wreckage, according to the reports. There were 137 adults, 23 children and six crew aboard the low-cost flight IX-812 when it crashed this morning, Sharma said. The survivors have been taken to a hospital 20 kilometers (12 miles) from the crash site, he said. Acharya put the total number of passengers and crew at 169. CNN-IBN showed a rescue worker carrying the foam-covered body of young girl up a mud bank away from the crash. It was not immediately clear if she was one of the survivors. ‘Grievous Loss’ Prime Minister Manmohan Singh expressed condolences over the “grievous loss of life” in a statement, announcing compensation for those killed. Singh postponed celebrations to mark the first anniversary of his re-election. The Boeing Co. 737-800 plane flying from Dubai to Mangalore crashed at 6:30 a.m. local time, Air India spokesman Swaminathan said by telephone. The crash may be the worst in India in 14 years, according to the Aviation Safety Network website. There was heavy rain and fog at the time of the crash, Sharma said. Civil aviation officials are on their way to Mangalore from the Karnataka capital city of Bangalore, he said. Boeing is sending a team to provide technical assistance to the investigation at the invitation of Indian authorities, the Chicago-based aircraft manufacturer said in a statement. Air India said in statement it was deploying “all its resources” to assist the families of passengers. India will be the fastest-growing air travel market for the next 10 years, Airbus SAS, the world’s biggest planemaker, predicts. Over the next 20 years, Indian carriers will need 1,030 new aircraft worth $138 billion, it forecasts. Bihar Crash In the South Asian country’s last major air disaster, a Boeing 737-200 crashed into a residential area while approaching Patna airport in the eastern state of Bihar in July 2000. The Alliance Air aircraft, which carried 52 passengers and six crew, nose-dived into a house one kilometer short of the airport, killing 45 passengers, all crew members and two people on the ground. Air India had debt of 152 billion rupees ($3.3 billion) as of June, according to the government. It may post a loss of 54 billion rupees for the fiscal year ended March 31, compared with a loss of 55.5 billion rupees a year earlier, according to Civil Aviation Minister Praful Patel . International air travel has rebounded from last year’s slump as the global economy expanded. Indian airlines carried 16.82 million passengers between January and April this year, 22 percent more than a year earlier, according to the Civil Aviation Ministry. Like state-controlled Chinese carriers and Japan Airlines Ltd., Air India has sought government aid as it flies unprofitable routes and faces growing competition from carriers including Singapore Airlines Ltd. To contact the reporters on this story: Vipin Nair in Mumbai at vnair12@bloomberg.net ; Rakteem Katakey in New Delhi at rkatakey@bloomberg.net .

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David Isenberg: The Olympics Will Be Protected by Aegis: Ay, There’s the Rub

May 21, 2010

It appears that people in London for the 2012 Olympics can rest easier; at least in theory. One of Britain’s major private security firms will be helping to protect them. It was announced on Feb. 17 that Aegis Defence Services Ltd., headquaartered in London, won a multiple awardees contract award from the Olympic Delivery Authority to provide security consultancy services( Lot 3. Contract Award Notice No.: 2010/S 33-046942, Contract No.: 9938). No contract amount was specified. According to the award description Aegis is to provide: The provision of specialist, strategic and tactical advice regarding the security of the Olympic Games, specifically: 1. Security Design and Engineering Consultancy Services; 2. Security Strategic, Planning and Operations Consultancy Services; and 3. Corporate Security Consultancy Services. Aegis is a heavyweight in the private security industry, or as it calls itself, a “British security and risk management company.” It has been among the biggest firms in Iraq, judging by the value of its past contracts. Back in May 2004 Aegis won a contract, despite a protest by DynCorp, another security firm, valued at a maximum of $293 million over the next three years to provide antiterrorism support and analysis and to serve as a clearinghouse for information between coalition forces in Iraq and security contractors. Before Aegis was awarded that contract, coordination between the U.S. military and civilian contractors was handled through the Regional Operations Centre (ROC). In June 2005 the Pentagon extended the contract for a second year and expanded it. The new deal was worth about $145 million. For its money Aegis had to pay a staff of 500 based all over the country, organize the coordination of intelligence from all the security firms and the military, and also provide a central emergency hotline, so that if someone is ambushed on the road, there is one number (or radio frequency) he or she can ring for help. It operated one national and six regional command centers in cities across Iraq. Staff acts as a link between coalition forces and civilian contractors on security issues, passing on information on the activity of insurgents. They provide a daily intelligence service to contractors and track the position of their vehicles. In addition, Aegis established 75 teams of eight men each to provide security on all major Iraqi government projects following the handover of sovereignty. Back then it was the fifth-largest contract ever awarded by the CPA, amounting to almost 3 percent of the CPA Program Management Office’s entire Iraq reconstruction budget. As Tim Spicer, cofounder and head of Aegis, said in a BBC interview: “We’re currently employing about 500 people. We’re not actually responsible for everybody’s security, what we’re responsible for is the coordination, in a number of civil military operation centres, the coordination of the security of the reconstruction companies and its interface with military operations–the counter-insurgency operations.” The award of this contract struck many observers as odd, as Aegis had no significant experience in Iraq, or the Middle East for that matter, and its expertise was largely limited to antipiracy consulting. Although Aegis subsequently had its challenges and controversies it did its job well enough that the contract was renewed and has been awarded other contracts. In January it was awarded a contract by the Pentagon to provide Facility Protective Services in East Afghanistan, Shindand. The Special Inspector General Iraq Reconstruction (SIGIR) issued an audit on January 14, 2009 that found “well-supported contract awards to Aegis; appropriate government oversight of Aegis’s bills, inventories, performance, and operations; and contract performance assessed as satisfactory to outstanding.” Aegis described the report on its website as “commending Aegis as a reliable, responsible, and cost-effective partner to government.” Aegis did not mention that the SIGIR report also found that contract administration could be improved. Specifically: There is no central location for the contract-related electronic records that provide a history of Aegis’s performance and the government’s actions to oversee the contractor. Communications between U.S. agencies and the U.K. agency auditing Aegis’s invoices have broken down. Aegis has not shared in the cost of replacing government-provided vehicles lost due to the negligence of Aegis personnel because this cost-sharing is not required by the contract. Still, Aegis seems a reasonably well run company nowadays. Certainly, far more so than Sandline , the famous private security company founded by Tim Spicer, who founded Aegis. Sandline ceased all operations on April 16, 2004. Aegis started operations the same year. In 2004 the International Peace Operations Association, a U.S. private military and security trade group, asked Aegis to apply for membership, but the application was rejected by a British competitor. Aegis is a founding member of the British Association of Private Security Companies (BAPSC), a British trade group. It is also a member of the Private Security Company Association of Iraq . So everything is just great, right? Aegis can help protect athletes and spectators. Well, since we are talking about England let me borrow from Shakespeare’s Hamlet, “To sleep: perchance to dream: ay, there’s the rub.” Apparently Aegis’s work in Iraq wasn’t good enough to prevent some friendly fire. One wonders if the Olympic Development Authority was aware that it was Aegis security contractors who shot and permanently disabled U.S. Special Forces sergeant Khadim Alkanani as he returned to Baghdad International Airport after an intelligence mission in June 2005. In his subsequent law suit Alkanani claimed his shooting was “remarkably similar” to other incidents which employees of Aegis Defense Services have captured on ” trophy videos ” which showed “senseless shootings of innocent personnel in automobiles from an armed vehicle.” Of course, immediately after the shooting, the Aegis employees apologized for shooting him and his three-vehicle convoy, Alkanani says. They claimed they had mistaken them for suicide bombers – though Alkanani’s convoy had been traveling directly behind the contractors and had stopped and showed identification at two checkpoints before the shooting. The shooting took place within the main gate of Baghdad International airport, where there were no ongoing hostilities nor a credible threat of imminent hostilities, the complaint states. Alkanani says he received prompt medical treatment for a bullet wound to his right foot, but subsequently developed Hepatitis C and has not regained full use of the foot. The disability ended his military career, resulting in his discharge in September 2006. On February 8 the U.S. District Court for the District of Colombia granted a summary judgment for Aegis dismissing Alkanani’s case. The reasoning for the dismissal is quite fascinating. The facts were not in dispute. Alkanani was shot by Aegis contractors. Instead, Aegis showed that it did not exist as a corporate entity at the time of the alleged incident. Judge Richard Roberts reasoning was straightforward. Aegis provided evidence that it simply didn’t exist at the time of the alleged shooting (the company was incorporated in the U.S. in 2006). Its parent company, meanwhile, argued that the court didn’t have personal jurisdiction. Evidently while a corporation is liable for the torts of its employees if committed within the scope of employment, corporate liability attaches only upon corporate existence. And, under Delaware law, a limited liability company such as Aegis does not exist until it files a certificate of formation with the Secretary of State. According to the judgment, Aegis LLC, the U.S. company that is part of the worldwide Aegis Group filed its certificate of formation with the Delaware Secretary of State on May 30, 2006. And Aegis LLC was not a party to the service contract awarded by the U.S. Department of the Army to Aegis UK on May 25, 2004, and Aegis LLC did not provide security services under the contract. Because Aegis LLC presented undisputed evidence that it was not formed as a corporation until nearly a year after the alleged shooting, the defendant’s summary judgment motion was granted. So is this the end for Alkanani’s case? Maybe. After Roberts’ judgment, Alkanani’s legal team, sent an emergency request for the judge to withdraw them. The contended that the parties had agreed to a Feb. 15 deadline for the opposition motions, and that Roberts had ruled too quickly. Word of advice to the Olympic Development Authority. You might want to ensure the Aegis unit you signed a contract with is officially incorporated and deemed to legally exist.

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Mall Maestro Caruso Eludes Retail Slump, Ponders Run for Los Angeles Mayor

May 21, 2010

By Daniel Taub and Nadja Brandt May 21 (Bloomberg) — Mall developer Rick Caruso plans to take his success in retail to distressed shopping centers, apartments, luxury hotels, airports and maybe a run for Los Angeles mayor. The Grove, Caruso’s town square-like shopping center in Los Angeles that attracts 17 million shoppers a year, had few vacancies through the recession, he said. Sales at the Americana at Brand, his first retail-residential complex, have grown since its 2008 opening. Caruso plans to use profits to buy distressed properties he can rehabilitate. Caruso’s Los Angeles-based company, closely held Caruso Affiliated, last month announced a $750 million debt-and-equity venture with TPG Capital, David Bonderman ’s buyout firm, to make retail and mixed-used purchases. The venture has looked at about 100 properties in cities including San Francisco, Seattle and Portland, Oregon, and intends to announce a retail acquisition in Orange County, California, within 30 days, he said. “There’s a lot of junk that we won’t touch, that I don’t think you can fix,” Caruso, 51, said in an interview at Bloomberg’s Los Angeles offices. While there’s “a ton of money on the sidelines” for properties worth saving, many buyers are passive investors while Caruso is interested in redevelopment, he said. Caruso is expanding beyond retail centers while considering a mayoral candidacy in cash-strapped Los Angeles. He is building luxury apartments outside Beverly Hills, planning a beach resort in Montecito, California, and seeking to develop stores and restaurants at Los Angeles International Airport. ‘Guest Experience’ “Why can’t the airport experience actually be pleasant?” Caruso said. LAX travelers should have a “guest experience” similar to the Grove, and to shopping choices at London’s Heathrow Airport, he said. “We’re going to come up with a pretty compelling proposal,” Caruso said, declining to discuss details. “Hopefully we start in L.A. and it will be the first of many.” Caruso hopes to open his first luxury resort, the redeveloped Miramar Beach Resort and Bungalows in Montecito, near Santa Barbara, by 2013. “I like beach resorts. I love the water,” Caruso said. “If you find a great property that’s tough to duplicate, you have inherent value.” Caruso faces a challenge making his entry into high-end lodging pay off. He purchased Miramar in 2007, the height of the commercial real estate market, for an undisclosed amount. Hurdles in getting entitlements to redevelop the planned 192- room hotel have delayed groundbreaking, and construction won’t start before next year. Hotel Comeback? Luxury hotels have been hurt by a decline in business and leisure travel during the U.S. recession. The average daily rate among hotel chains with the costliest rooms fell 16 percent in 2009 from a year earlier to $242.99, according to Smith Travel Research Inc. in Hendersonville, Tennessee. A recovery of the U.S. hotel industry isn’t likely until 2011 because room rates are down and commercial real estate values have plunged, Fitch Ratings Ltd. said in December. In California, hotel foreclosures climbed 27 percent in the first quarter. “It’ll prove to be a very good investment,” Caruso said. “Luxury hotels will come back.” Caruso, who has nine shopping centers in the Los Angeles area, has thrived in retail while other mall owners were hurt by the recession. Vacancies at the largest U.S. malls reached 8.9 percent in the first quarter, the highest rate since at least 2000, New York-based real estate research firm Reis Inc. said. Grove Shoppers At the 20-acre Grove , adjacent to Los Angeles’s historic Farmers Market, the average shopper spends $179, about triple the industry average, Caruso said. Net operating income has risen over the past 18 months, and the facility is “99 percent leased,” he said. Caruso said he adds touches to encourage shoppers to stay longer . The Grove has a free trolley, and the open-air Americana in Glendale has grassy slopes for relaxing. “Many of his projects are anything but plain vanilla,” said Jim Sullivan , managing director at real estate researcher Green Street Advisors in Newport Beach, California. “His projects are fun places to go.” Caruso has had his stumbles outside of retail. At the Americana, opened in 2008 during the housing-market collapse, he has struggled to sell its 100 condominiums. Buyers are being enticed with discounts and half-price association dues for two years. “It was a really tough time to come out,” Caruso said. While Caruso Affiliated is responsible for management and sales, the condos’ backer is Barrow Street Capital LLC. “We did not have anything at risk financially,” Caruso said. Nicholas Chermayeff , co-chief executive officer of Stamford, Connecticut-based Barrow Street, declined to comment. Mayoral Run? A Republican who has served as board president at the Los Angeles Department of Water and Power and the Los Angeles Police Commission, Caruso has flirted for years with a mayoral run. “I’m leaning towards it” when Mayor Antonio Villaraigosa is termed out in 2013, Caruso said. “I have to make a decision probably sometime next year.” The city needs to do a better job keeping and attracting businesses, rework its pension system and encourage development, he said. He also imagines a monorail along Interstate 10 from downtown Los Angeles to the coast going up faster than a planned “subway to the sea,” which could take decades to build. Caruso’s chances of winning would depend in part on the competition, said Sherry Bebitch Jeffe , a senior fellow at the school of policy, planning and development at the University of Southern California. “There is a long list of tested Latino leaders who probably will be looking at the office,” Jeffe said. Caruso, who is married with four children, said family and business obligations will factor in to the decision. He also will weigh the Los Angeles mayor’s limited powers. “I’ve got to get convinced that, if I did it, that I can actually make a meaningful difference,” Caruso said. “If the city is so structurally hamstrung that I’m going to go waste four years of my life, I don’t want to do it.” To contact the reporters on this story: Daniel Taub in Los Angeles at dtaub@bloomberg.net ; Nadja Brandt in Los Angeles at nbrandt@bloomberg.net .

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Delta, American, Hawaiian Win Routes to Haneda Airport Near Central Tokyo

May 7, 2010

By John Hughes May 8 (Bloomberg) — U.S. and Japanese business travel may be easier after Delta Air Lines Inc. , American Airlines and Hawaiian Holdings Inc. won routes to Tokyo’s Haneda airport, favored by executives flying to the capital. The U.S. Transportation Department approved four flights for the carriers yesterday while UAL Corp. ’s United Airlines and Continental Airlines Inc. , which announced a plan to merge this week, were denied the Haneda flights they sought. Japan-U.S. treaties since 1978 have restricted U.S. carriers to serving Narita Airport, the Japanese capital’s main international airport, about 44 miles (71 kilometers) east of the city by car. A draft “Open Skies” agreement reached in December permits four daily U.S.-Japan round trips at Haneda, 10 miles south of the city, starting in October. Delta’s two daily Haneda flights will connect Los Angeles and Detroit, AMR Corp.’s American will fly to and from New York, and Hawaiian will link Honolulu, the department said in granting the first U.S. flights to the airport in 32 years. “Haneda is the busiest airport in Asia and the fourth busiest airport in the world,” Will Ris , an American senior vice president, said in a statement. “It is in the public’s best interest that New York is first in line.” American, the world’s second-largest carrier, is based in Fort Worth, Texas. The preliminary decision is subject to final approval by the countries under the “Open Skies” treaty. United didn’t comment. Continental, which applied with partner Continental Micronesia, was “disappointed,” spokeswoman Mary Clark said an e-mailed statement. “We believe we presented strong cases that would benefit our customers, communities and passengers,” she said. ‘Customer Benefits’ The award “will increase competition and enhance customer benefits,” Delta Chief Executive Officer Richard Anderson said in a statement. Hawaiian is “delighted” with approval of its flight that would depart Haneda about midnight and arrive in Honolulu about noon, Mark Dunkerley , the carrier’s chief executive officer, said in a statement. The Transportation Department declined to give any of the carriers all the routes they requested, and rejected Continental’s application, citing the carrier’s existing access to U.S-Asia routes through a global alliance. In the decision, the agency cited specific market benefits. Los Angeles is the largest U.S. West Coast market for Tokyo flights, and Delta would serve more passengers from the city with Boeing Co. 747s than American with smaller Boeing 777s, Susan Kurland , a department assistant secretary, wrote in the decision. Chicago-based United, the No. 3 U.S. carrier, had sought service from San Francisco. ‘Strong Hub’ Delta’s service is the best option in the central U.S. because Detroit is a “strong hub” for Asian service and offers good connecting service, Kurland wrote. Michigan and Ohio have “extensive industrial relationships with Japanese companies.” American’s flights from New York’s Kennedy airport offer “greater public benefits” than Continental’s from Newark because they would boost alliance competition, Kurland wrote. Delta’s SkyTeam and United and Continental’s Star alliances “hold significant positions” in the U.S.-Asia market compared with American’s Oneworld, the decision found. Hawaiian would boost competition as a new entrant in the Tokyo-U.S. market, Kurland said. Houston-based Continental, ranked fourth in the U.S. by traffic, and its Micronesia unit filed for routes from New Jersey’s Newark Liberty airport and Guam. Atlanta-based Delta, the world’s largest airline, also applied for Haneda flights from Seattle and Honolulu. Hawaiian proposed a second daily flight from Honolulu, where the carrier is based. To contact the reporter on this story: John Hughes in Washington at jhughes5@bloomberg.net

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Times Square Car Bomber Left Trail of Clues From House Keys to Phone Calls

May 5, 2010

By Patricia Hurtado May 5 (Bloomberg) — U.S. authorities looking for the person who tried to blow up a car in New York’s Times Square with firecrackers, propane, gasoline and fertilizer had a valuable ally: the suspect himself. Faisal Shahzad , who was arrested May 3 and charged with attempting to detonate a weapon of mass destruction in one of the busiest intersections in the U.S., left behind a trail of clues including the keys to his Connecticut home and a second vehicle as well as records of mobile-phone calls to a Pennsylvania fireworks shop and from associates in Pakistan. Shahzad may have been “purposefully hapless” so that his possible accomplices could see how the New York police responded to terrorist threats, said Michael Wildes , a former federal prosecutor in Brooklyn, New York. “The materials were rudimentary and the effort was captured on 87 different cameras,” said Wildes, an immigration attorney who represents defectors who cooperate with prosecutors in terrorism cases. “Anybody who has the tenacity to put together a bomb like this doesn’t make these kinds of mistakes. “Or, this may be the dumbest terrorist in the world,” Wildes said. Agents from the Department of Homeland Security arrested Shahzad at New York’s John F. Kennedy International Airport May 3 as he attempted to fly to Dubai, said U.S. Attorney General Eric Holder . Shahzad admitted his role in the plot, Holder said yesterday at a press conference in Washington. Training in Pakistan A U.S. citizen of Pakistani origins, Shahzad was charged with five counts, including attempting to use a weapon of mass destruction and receiving “bomb-making training” in the Waziristan region of Pakistan, after driving a bomb-laden Nissan Pathfinder into Times Square. His plot dated as far back as December, prosecutors said. Shahzad faces as long as life in prison if convicted of the mass destruction weapon charge or acts of terrorism transcending national boundaries, Manhattan U.S. Attorney Preet Bharara said in a statement. After receiving four calls from Pakistan on April 24, Shahzad called the seller of the Pathfinder twice and then bought the vehicle using 13 $100 bills, federal officials said in the criminal complaint. The next day, Shahzad called a store in rural Pennsylvania that sells M-88 firecrackers, authorities said. House, Car Keys Shahzad left his house key along with the key to his Isuzu Rodeo in the Pathfinder that he failed to blow up in Times Square, prosecutors said. The police used that house key to enter his residence and discovered fireworks and fertilizer in a garage. Shahzad left the Isuzu in the parking lot of the Bridgeport, Connecticut, supermarket where he arranged to buy the Pathfinder. Dubai-based Emirates Airlines said U.S. authorities removed three passengers from the May 3 flight from New York to Dubai. After the airliner left the gate and was recalled, Shahzad was arrested, according to a person familiar with the investigation. The other two people were later released, the person said. Shahzad was put on the federal no-fly list early on the afternoon of May 3, said a law-enforcement official who requested anonymity. Within an hour, federal authorities electronically sent out an advisory about his addition to the list. Airlines have to individually update their computer systems with the additions, and Emirates hadn’t done so, the official said. Customs and Border Protection officials discovered the suspect was on the plane after scanning a passenger manifest that airlines are required to submit about 30 minutes before takeoff, the official said. Onboard Arrest Emirates’ flight EK202 landed in Dubai seven hours late, at 2.45 a.m. An American passenger who declined to be identified said he saw three or four police officers enter the aircraft in New York and detain the three men, who were sitting in economy class. The men looked calm as they were taken away, he said. Shahzad got a bachelor’s degree in computer applications and information systems from the University of Bridgeport in 2000 and earned an MBA in 2005, said Michael Spitzer, the school’s provost, in an e-mailed statement. Shahzad worked for three years at Affinion Group Holdings Inc., a company controlled by Leon Black ’s private-equity firm, Apollo Management LP. Affinion, a provider of marketing and customer-loyalty plans, employed Shahzad as a financial analyst in its accounting department from 2006 until 2009, the company said. ‘Dumb Mistakes’ “Not all terrorists are created equally,” said Anthony Barkow , a former Assistant Manhattan U.S. Attorney who handled terrorism cases. “Although some plots are highly sophisticated, others are not. Just like common criminals, aspiring terrorists often get caught because of dumb mistakes.” Barkow cited the 1993 World Trade Center truck bombing as an example of terrorist ineptitude. After the attack, one of the plotters returned to the car-rental company to recover the deposit on the vehicle that held the explosives. “But none of this is to suggest what the law enforcement officials did here was anything other than extraordinary — they identified the perpetrator of this plot at the speed of a television show,” said Barkow, now the director of a center on criminal prosecutions at New York University Law School. “What is often dismissed as the speed of Hollywood fantasy here was reality.” New York Police Department Commissioner Ray Kelly at a news conference yesterday credited investigators for their fast work. “By my calculation, from the time Faisal Shahzad drove into and across Broadway and parked that vehicle, to when he was apprehended last evening at JFK Airport, it was 53 hours and 20 minutes,” Kelly said. “Now, we know that Jack Bauer can do it in 24” hours, Kelly said, referring to Fox Television’s “24” starring Kiefer Sutherland as the anti-terrorism agent Bauer. “But in the real world, 53 is a pretty good number.” The case is U.S. v. Shahzad, 10-00928, U.S. District Court, Southern District of New York (Manhattan). To contact the reporter on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net

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Times Square Car Bomber Left Trail of Clues From House Keys to Phone Calls

May 5, 2010

By Patricia Hurtado May 5 (Bloomberg) — U.S. authorities looking for the person who tried to blow up a car in New York’s Times Square with firecrackers, propane, gasoline and fertilizer had a valuable ally: the suspect himself. Faisal Shahzad , who was arrested May 3 and charged with attempting to detonate a weapon of mass destruction in one of the busiest intersections in the U.S., left behind a trail of clues including the keys to his Connecticut home and a second vehicle as well as records of mobile-phone calls to a Pennsylvania fireworks shop and from associates in Pakistan. Shahzad may have been “purposefully hapless” so that his possible accomplices could see how the New York police responded to terrorist threats, said Michael Wildes , a former federal prosecutor in Brooklyn, New York. “The materials were rudimentary and the effort was captured on 87 different cameras,” said Wildes, an immigration attorney who represents defectors who cooperate with prosecutors in terrorism cases. “Anybody who has the tenacity to put together a bomb like this doesn’t make these kinds of mistakes. “Or, this may be the dumbest terrorist in the world,” Wildes said. Agents from the Department of Homeland Security arrested Shahzad at New York’s John F. Kennedy International Airport May 3 as he attempted to fly to Dubai, said U.S. Attorney General Eric Holder . Shahzad admitted his role in the plot, Holder said yesterday at a press conference in Washington. Training in Pakistan A U.S. citizen of Pakistani origins, Shahzad was charged with five counts, including attempting to use a weapon of mass destruction and receiving “bomb-making training” in the Waziristan region of Pakistan, after driving a bomb-laden Nissan Pathfinder into Times Square. His plot dated as far back as December, prosecutors said. Shahzad faces as long as life in prison if convicted of the mass destruction weapon charge or acts of terrorism transcending national boundaries, Manhattan U.S. Attorney Preet Bharara said in a statement. After receiving four calls from Pakistan on April 24, Shahzad called the seller of the Pathfinder twice and then bought the vehicle using 13 $100 bills, federal officials said in the criminal complaint. The next day, Shahzad called a store in rural Pennsylvania that sells M-88 firecrackers, authorities said. House, Car Keys Shahzad left his house key along with the key to his Isuzu Rodeo in the Pathfinder that he failed to blow up in Times Square, prosecutors said. The police used that house key to enter his residence and discovered fireworks and fertilizer in a garage. Shahzad left the Isuzu in the parking lot of the Bridgeport, Connecticut, supermarket where he arranged to buy the Pathfinder. Dubai-based Emirates Airlines said U.S. authorities removed three passengers from the May 3 flight from New York to Dubai. After the airliner left the gate and was recalled, Shahzad was arrested, according to a person familiar with the investigation. The other two people were later released, the person said. Shahzad was put on the federal no-fly list early on the afternoon of May 3, said a law-enforcement official who requested anonymity. Within an hour, federal authorities electronically sent out an advisory about his addition to the list. Airlines have to individually update their computer systems with the additions, and Emirates hadn’t done so, the official said. Customs and Border Protection officials discovered the suspect was on the plane after scanning a passenger manifest that airlines are required to submit about 30 minutes before takeoff, the official said. Onboard Arrest Emirates’ flight EK202 landed in Dubai seven hours late, at 2.45 a.m. An American passenger who declined to be identified said he saw three or four police officers enter the aircraft in New York and detain the three men, who were sitting in economy class. The men looked calm as they were taken away, he said. Shahzad got a bachelor’s degree in computer applications and information systems from the University of Bridgeport in 2000 and earned an MBA in 2005, said Michael Spitzer, the school’s provost, in an e-mailed statement. Shahzad worked for three years at Affinion Group Holdings Inc., a company controlled by Leon Black ’s private-equity firm, Apollo Management LP. Affinion, a provider of marketing and customer-loyalty plans, employed Shahzad as a financial analyst in its accounting department from 2006 until 2009, the company said. ‘Dumb Mistakes’ “Not all terrorists are created equally,” said Anthony Barkow , a former Assistant Manhattan U.S. Attorney who handled terrorism cases. “Although some plots are highly sophisticated, others are not. Just like common criminals, aspiring terrorists often get caught because of dumb mistakes.” Barkow cited the 1993 World Trade Center truck bombing as an example of terrorist ineptitude. After the attack, one of the plotters returned to the car-rental company to recover the deposit on the vehicle that held the explosives. “But none of this is to suggest what the law enforcement officials did here was anything other than extraordinary — they identified the perpetrator of this plot at the speed of a television show,” said Barkow, now the director of a center on criminal prosecutions at New York University Law School. “What is often dismissed as the speed of Hollywood fantasy here was reality.” New York Police Department Commissioner Ray Kelly at a news conference yesterday credited investigators for their fast work. “By my calculation, from the time Faisal Shahzad drove into and across Broadway and parked that vehicle, to when he was apprehended last evening at JFK Airport, it was 53 hours and 20 minutes,” Kelly said. “Now, we know that Jack Bauer can do it in 24” hours, Kelly said, referring to Fox Television’s “24” starring Kiefer Sutherland as the anti-terrorism agent Bauer. “But in the real world, 53 is a pretty good number.” The case is U.S. v. Shahzad, 10-00928, U.S. District Court, Southern District of New York (Manhattan). To contact the reporter on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net

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Chip Conley: Your Culture Is Your Brand

May 4, 2010

Is it possible that your head of HR may also be your head brand strategist? That’s hard for most companies to imagine. But, in the transparent “word-of-mouse” business world that exists today, your company culture and how it influences employee and customer engagement is the ultimate secret sauce that defines whether you’re a Zappos or a zippo. I had the great fortune of visiting Zappos’ headquarters in the Las Vegas area a week ago. How many companies have customers who choose to throw their wedding inside their favorite company’s offices? I saw it – complete with an Elvis impersonator and a real live minister – while strolling through Zappos’ lively and colorful cubicles last Monday morning. Zappos’ CEO Tony Hsieh chose to close down the offices that afternoon so that all 800 employees could come together to hear about Zappos big revenue progress and experience me giving a talk about the importance of addressing employees’ and customers’ higher needs as chronicled in my book PEAK . And, the day culminated with 52 different employee groups brainstorming about new ways to “wow” their customers and then a two-hour raging happy hour that was as wild as anything I’ve seen since my fraternity party days. Frankly, the whole experience felt like a religious revival given the enthusiasm and sheer company faith I saw in the diverse employee pool. For me, it was like traveling to Mecca as I don’t think I’ve ever seen a company so committed to living the “service profit chain” theory that came out of Harvard Business School a quarter century ago (which I document in PEAK): a unique culture creates happy employees which drives customer loyalty which leads to a profitable and sustainable business. There are many service industry companies that do this well – Southwest Airlines , In ‘n Out Burger , Nordstrom’s , Apple retail stores – but none does it better than Zappos. Tony Hsieh believes that in the noisy world of advertising, what cuts through the clutter is creating peak experiences for his employees and customers such that Zappos becomes a magnet for mojo. Zappos is also a money magnet as the company sold to Amazon for nearly $1.2 billion in stock last fall, primarily because Jeff Bezos marveled at the culture of this skyrocketing online shoe and clothing retailer. What are some of my lasting impressions of Zappos beyond the wacky wedding and the Elvis impersonator? (1) Zappos hires for attitude and trains for skill. First off, they do a four-week intensive training with all new employees that helps them understand the company’s 10 core values. You may have heard of the contrarian approach Zappos takes to weed out those that aren’t a great fit during training. At the end of the first week of training (during which employees are paid their full salary), they offer all new hires $2,000 to quit right then or at any time during the remaining three weeks of training. Zappos wants to make sure that their new employees aren’t there purely for the paycheck, but that they want to live and breathe the culture. They’ve found that less than 1% of their new hires take them up on this offer. (2) Culture is a fundamental part of how employees are evaluated and grown within the organization. 50% of an employee’s performance review comes back to how they’re living the culture, so relationships are just as important as results for rising superstars in this company. (3) Their call center is seen not as a departmental cost that needs to be starved in order to maximize the bottom line, but instead it’s an opportunity to create another brand touch point through a PEC (personal emotional connection). Only 5% of customers actually connect with Zappos’ phone call center, but the company’s well-deserved great reputation certainly has been solidified by the kind of customer service that is delivered by this engaged phone team. (4) How many companies offer their customers tours of their headquarters? Not many. Even more impressive is the fact that you are picked up at the airport by an engaged Zapponista who transports you to their offices for free answering all kinds of questions along the way, takes you throughout the facility along with dozens of other Zappos evangelists, and then gives you a series of complimentary business books to choose from in their lobby library (including, happy to say, my book PEAK) to take with you. Tony Hsieh’s new book, Delivering Happiness , comes out in early June. Keep an eye out for it because there’s no better example of how an engaged company culture creates a brand reputation that can lead to a billion dollar business.

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Chip Conley: Your Culture Is Your Brand

May 4, 2010

Is it possible that your head of HR may also be your head brand strategist? That’s hard for most companies to imagine. But, in the transparent “word-of-mouse” business world that exists today, your company culture and how it influences employee and customer engagement is the ultimate secret sauce that defines whether you’re a Zappos or a zippo. I had the great fortune of visiting Zappos’ headquarters in the Las Vegas area a week ago. How many companies have customers who choose to throw their wedding inside their favorite company’s offices? I saw it – complete with an Elvis impersonator and a real live minister – while strolling through Zappos’ lively and colorful cubicles last Monday morning. Zappos’ CEO Tony Hsieh chose to close down the offices that afternoon so that all 800 employees could come together to hear about Zappos big revenue progress and experience me giving a talk about the importance of addressing employees’ and customers’ higher needs as chronicled in my book PEAK . And, the day culminated with 52 different employee groups brainstorming about new ways to “wow” their customers and then a two-hour raging happy hour that was as wild as anything I’ve seen since my fraternity party days. Frankly, the whole experience felt like a religious revival given the enthusiasm and sheer company faith I saw in the diverse employee pool. For me, it was like traveling to Mecca as I don’t think I’ve ever seen a company so committed to living the “service profit chain” theory that came out of Harvard Business School a quarter century ago (which I document in PEAK): a unique culture creates happy employees which drives customer loyalty which leads to a profitable and sustainable business. There are many service industry companies that do this well – Southwest Airlines , In ‘n Out Burger , Nordstrom’s , Apple retail stores – but none does it better than Zappos. Tony Hsieh believes that in the noisy world of advertising, what cuts through the clutter is creating peak experiences for his employees and customers such that Zappos becomes a magnet for mojo. Zappos is also a money magnet as the company sold to Amazon for nearly $1.2 billion in stock last fall, primarily because Jeff Bezos marveled at the culture of this skyrocketing online shoe and clothing retailer. What are some of my lasting impressions of Zappos beyond the wacky wedding and the Elvis impersonator? (1) Zappos hires for attitude and trains for skill. First off, they do a four-week intensive training with all new employees that helps them understand the company’s 10 core values. You may have heard of the contrarian approach Zappos takes to weed out those that aren’t a great fit during training. At the end of the first week of training (during which employees are paid their full salary), they offer all new hires $2,000 to quit right then or at any time during the remaining three weeks of training. Zappos wants to make sure that their new employees aren’t there purely for the paycheck, but that they want to live and breathe the culture. They’ve found that less than 1% of their new hires take them up on this offer. (2) Culture is a fundamental part of how employees are evaluated and grown within the organization. 50% of an employee’s performance review comes back to how they’re living the culture, so relationships are just as important as results for rising superstars in this company. (3) Their call center is seen not as a departmental cost that needs to be starved in order to maximize the bottom line, but instead it’s an opportunity to create another brand touch point through a PEC (personal emotional connection). Only 5% of customers actually connect with Zappos’ phone call center, but the company’s well-deserved great reputation certainly has been solidified by the kind of customer service that is delivered by this engaged phone team. (4) How many companies offer their customers tours of their headquarters? Not many. Even more impressive is the fact that you are picked up at the airport by an engaged Zapponista who transports you to their offices for free answering all kinds of questions along the way, takes you throughout the facility along with dozens of other Zappos evangelists, and then gives you a series of complimentary business books to choose from in their lobby library (including, happy to say, my book PEAK) to take with you. Tony Hsieh’s new book, Delivering Happiness , comes out in early June. Keep an eye out for it because there’s no better example of how an engaged company culture creates a brand reputation that can lead to a billion dollar business.

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Greek Workers Occupy Acropolis, Shut Hospitals as Budget Protests Escalate

May 4, 2010

By Maria Petrakis May 4 (Bloomberg) — Greek government workers shut down schools and hospitals and disrupted flights as demonstrators occupied the Acropolis in an escalation of protests against 30 billion euros ($40 billion) of additional wage cuts and tax increases unveiled this week. The ADEDY union federation, which represents more than 500,000 civil servants having their pensions and pay slashed under measures announced May 2 by Prime Minister George Papandreou , will hold a rally at midday joined by striking teachers. A general strike, the third this year, is planned for tomorrow, with private-sector workers due to participate. “Protests will increase,” said Spyros Papaspyros , the head of ADEDY. “Opting for the easy path of cutting wages and pensions can’t be accepted.” Papandreou has called on Greeks to endure more sacrifices in return for an unprecedented 110 billion-euro bailout from the European Union and the International Monetary Fund. The austerity measures, called “savage” by union groups, include a second set of wage cuts for public workers, a three-year freeze on pensions and a second increase this year in sales taxes and the price of fuel, alcohol and tobacco. Protesters from the Communist Party of Greece draped banners over the walls of the ancient Acropolis citadel in Athens today that said “Peoples of Europe Rise Up” in Greek and English, as tourists took photographs. Unemployed teachers yesterday disrupted the evening news show on state-run NET TV. ‘Terrorizing’ Tourists Government spokesman George Petalotis condemned the occupation of the Acropolis, saying on NET TV that such protests “aimed to destroy tourism to Greece by terrorizing foreign visitors.” “My trip is complete,” said Roger Smith from the U.S. as he took photos of the protests below the Acropolis. Smith, on his first visit to Greece with his wife, Diane, said rich Greeks, like rich Americans, needed to pay their taxes. Elected in October on pledges to raise wages for public workers and step up stimulus spending, Papandreou revised up the 2009 budget deficit to more than 12 percent of gross domestic product, four times the EU limit, and twice the previous government’s estimate. EU officials revised the deficit further on April 22, to 13.6 percent of GDP. Investor Concern The surge in the budget gap as the economy contracted fueled investor concern about Greece’s ability to finance the deficit and sent borrowing costs to the highest since before the start of the euro in 1999. Papandreou has pledged to cut the shortfall to within the EU limit of 3 percent in 2014. Fifty-one percent of Greeks say they won’t accept new austerity measures and would join protests against them, according to a poll of 1,000 people by ALCO for Proto Thema newspaper. That compared with 33 percent who would accept them. No margin of error was given for the poll, which was conducted from April 27 to April 29. Most Greeks feel anger and dismay rather than relief over Papandreou’s decision to request emergency loans, a separate survey showed. Just 14.8 percent of the 1,256 people polled by Kappa Research April 28-29 for To Vima newspaper felt relief or hope after the move, compared with 31 percent who answered “anger,” 30.6 percent “disappointment or fear” and 22.8 percent who said they felt “shame.” The margin of error for the poll was 2.6 percentage points. Aid Package Greeks were divided on whether Papandreou needed to ask for the aid package with just over 50 percent saying it was necessary and 41.9 percent saying it could have been avoided, according to the Kappa poll. With cuts in wages and increases in taxes, the Greek economy is forecast to shrink 4 percent this year and 2.6 percent in 2011. Unemployment has risen to 11.3 percent, a six- year high . Archbishop of Athens and All Greece, Hieronymos, the leader of the Greek Orthodox Church, said the Church, which represents most of the 11 million Greeks, would stand by the “battered Greek people” and urged “unity, strength and optimism,” according to the state-run Athens News Agency. Finance Minister George Papaconstantinou said the government plans to submit legislation on the latest budget cuts to parliament today. Papandreou has a 10-seat majority in parliament, enabling the government to push through the measures. Electricity Company Tomorrow’s general strike could disrupt public transport, air traffic, ferry sailings and other services as workers from shopkeepers to sportswriters walk off the job. Employees at Public Power Corp SA , the state-controlled electricity company, also will strike. An air-traffic controllers’ strike will mean all flights at the Athens International Airport, the country’s biggest, will be cancelled. Greek carriers Aegean Airlines SA, which cancelled 17 flights for today, and Olympic Airlines SA won’t operate any flights tomorrow. The government also promised changes to the pension system, such as raising the retirement age for women in the public sector, increasing the number of years worked before qualifying for a pension and overhauling labor rules to make firing workers easier and cheaper. Labor Minister Andreas Loverdos plans a press conference on the measures today. Some economists say the worst is yet to come. Paul Mylonas , chief economist at National Bank of Greece, anticipates social unrest “will be muted this year” and could grow as the austerity measures continue into the coming years. “The risk is more for ‘adjustment fatigue’ going down the road,” Mylonas said. “There’s a higher risk of social opposition for further reforms in 2011 and 2012 if light doesn’t begin to appear at the end of the tunnel.” To contact the reporter on this story: Maria Petrakis in Athens at mpetrakis@bloomberg.net

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UAL, Continental Boards Said to Approve Merger to Create Largest Carrier

May 2, 2010

By Mary Jane Credeur, Zachary R. Mider and Mary Schlangenstein May 3 (Bloomberg) — United Airlines parent UAL Corp. and Continental Airlines Inc. agreed to merge in a stock swap valued at $3.7 billion that would create the world’s biggest carrier , people with knowledge of the situation said. The airlines’ boards approved the transaction yesterday, and the deal will be announced today, said the people, who asked not to be identified because the terms aren’t public. The companies’ combined equity value would be about $8.3 billion, one person said. United and Continental together would take the top spot in global traffic from Delta Air Lines Inc. , with hubs in New York and Washington and the most traffic among U.S. carriers on high- fare Atlantic and Pacific routes. The airlines reignited merger talks last month after negotiations collapsed two years ago. “This is transformational,” said Vicki Bryan , a debt analyst at New York-based Gimme Credit LLC. “This has really been two years in the making. They did all the heavy lifting in 2008.” Annual cost savings and new revenue from the merger should reach $1 billion to $1.2 billion by 2013, one person briefed on the plans said yesterday. United’s name and Chicago headquarters will be retained, while Continental Chief Executive Officer Jeff Smisek , 55, will become the CEO and United’s Glenn Tilton , 62, will be chairman, the people said. Jean Medina , a spokeswoman for United, and Julie King of Houston-based Continental declined to comment. Options, Convertibles The $8.3 billion combined value includes the impact of options and convertible securities, a person with knowledge of the deal said. UAL will swap 1.05 shares for each Continental share , the people said. Based on April 30 closing prices, UAL had the third-largest market value among U.S. carriers at $3.63 billion, followed by Continental at $3.12 billion. UAL gained 13 cents to $21.60 on the Nasdaq Stock Market on that date, while Continental slid 35 cents to $22.35 on the New York Stock Exchange. Together, the airlines fly to 370 destinations in 59 countries and plan to continue service to all those points, a person with knowledge of the matter said. United and Continental also are ranked third and fourth in the U.S. by traffic. Fleet, Hubs United and Continental had almost $29 billion in combined revenue last year. Their main jet fleets total 700 aircraft, and they now employ more than 88,000 workers. Besides Washington and New Jersey’s Newark airport, their other hubs are in Chicago, Denver, San Francisco, Los Angeles, Houston, Cleveland and Guam. Delta vaulted to the top of the worldwide industry by traffic after buying Northwest Airlines Corp. in 2008, spurring talks on consolidation across the U.S. industry.     The deal comes two years after Continental, then led by Larry Kellner , came within hours of approving a merger with United before walking away. Smisek was chief operating officer at the time, and succeeded Kellner as CEO in January. Those talks collapsed because “it was a more risky environment at that time” when oil prices exceeded $120 a barrel and economic growth was slowing, Gimme Credit’s Bryan said. Crude traded at $86.26 on April 30 on the New York Mercantile Exchange. Merger discussions restarted last month. After the New York Times reported on April 7 that UAL was negotiating with US Airways Group Inc. , Smisek called Tilton two days later and expressed interest in a merger, said a person with knowledge of the matter. Over the next couple of days, they worked out a timeline to exchange financial information and potentially reach a deal by yesterday, this person said. US Airways     UAL put its talks with US Airways on hold to focus on Continental, prompting US Airways to pull out of those negotiations on April 22.     UAL and Continental soon reached agreement on an “at market” stock swap, in which neither side pays a control premium, the people said. It took until April 27 to work out the exact terms. While Continental argued that the ratio should be set based on the airlines’ stock prices before the April 7 leak, United pushed for a more recent period, the people said.     Smisek and Tilton reached a compromise during an April 27 meeting in Memphis, Tennessee, at a Radisson hotel near the airport, said two people with knowledge of the matter. That was where they agreed to set the ratio for the stock swap, the people said. To contact the reporters on this story: Mary Jane Credeur in New York at mcredeur@bloomberg.net ; Zachary R. Mider in New York at zmider1@bloomberg.net ; Mary Schlangenstein in Dallas at maryc.s@bloomberg.net .

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Israel Lifts Ban on Apple’s iPad, Finding Device Can Meet Local Standards

April 24, 2010

By Calev Ben-David April 24 (Bloomberg) — Israel has lifted a ban forbidding tourists and citizens from bringing Apple Inc.’s iPad into the country, the Communications Ministry said in an e-mailed statement. The ministry earlier this month requested that Israeli customs confiscate iPads brought in to the country at Ben-Gurion Airport, saying the product’s Wi-Fi transmitter did not confirm to local standards. To contact the reporter on this story: Calev Ben-David in Jerusalem at cbendavid@bloomberg.net

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Volcano Forces Cancellation of 70% of Europe Flights; May Last to April 22

April 17, 2010

By Matthew Brown and Omar R. Valdimarsson April 17 (Bloomberg) — European airlines canceled more than 77 percent of their flights today as most of the continent’s northern and central nations remained closed to air traffic, and Accuweather predicted little change until April 22. No flights will operate out of the U.K. until at least 7 a.m. London time tomorrow, the National Air Traffic Service said today via e-mail. German airports will remain closed until 8 a.m. Berlin time tomorrow, the DFX air traffic control agency said. The European Organisation for the Safety of Air Navigation, or Eurocontrol , expects about 5,000 flights across Europe today, compared with 22,000 on a “normal” Saturday, it said today in a statement. “Expect ongoing interruptions for the next four or five days,” Teitur Atlason, at the Icelandic meteorological office , said in a telephone interview today. “The eruption is still in full swing, and the volcano is spewing pretty dark ashes as high into the air as 5 to 6 kilometers.” Flights were grounded after April 14 when an eruption at the Eyjafjallajökull volcano, spewed dust across thousands of miles of European airspace, closing terminals from Dublin to Moscow. The direction of winds high in the atmosphere mean the disruption may continue for the next few days. ‘No Signs of Change’ “The jet stream winds, which extend from 10,000 feet up to 40,000 feet, show no signs of change through Wednesday,” Accuweather said in a statement. “Any ash plume that is released from the Eyjafjall volcano in Iceland will continue to threaten northern Europe and the British isles.” Canceled flights are costing carriers about $200 million a day, the International Air Transport Association estimates. Anyone hoping to travel should contact their airline before traveling to the airport, NATS said. Flights have been halted because of concerns that the ash plume could damage engines and speed sensors. The finest material from the blast is formed of dust akin to glass, which can melt and congeal in a turbine, causing it to stop, said Sue Loughlin , head of vulcanology at the British Geological Survey. “The current in the height the ashes are reaching remains a strong northwesterly wind, which blows the ashes to Scotland and South Scandinavia,” Atlason of the Icelandic Met Office said. “Once the ashes reach those places other more complex wind systems take over, which spread the ashes across North and Central Europe. This will continue until Wednesday.” Continue for Months Volcanic eruptions may continue for months, curtailing European air traffic when the ash reaches the region, said Sigrun Hreinsdottir, a geophysicist at the University of Iceland in Reykjavik. “From what we’ve seen, it could erupt, pause for a few weeks, and then possibly erupt again.” The last eruption of Eyjafjallajökull in December 1821 continued until January 1823. The current blast has sent ash to as high as 7 kilometers (4.5 miles), according to Gudrun Larsen, a vulcanologist at the University of Iceland. The magma had to pierce 200 meters of ice before erupting, she said. “We really don’t know if this eruption is going to last as long as the previous one, but we can’t say it’s not a possibility,” Larsen said by telephone. Deutsche Lufthansa AG cancelled all flights to and from German airports today. All long-distance flights to Germany with a scheduled arrival until 2 p.m. tomorrow were also cancelled, the company said in a statement on its Web site today. “This is the first time all our planes are grounded,” Lufthansa spokesman Wolfgang Weber said via telephone. Canceled Flights British Airways Plc , which halted flights from the U.K. from midday on April 15, said no short-haul services in London will operate today or tomorrow. Its shares tumbled 3.1 percent in the U.K. capital yesterday, the most since Feb 12. Denmark extended the shutdown of its airspace for all flights until 2 a.m. local time tomorrow, according to the Web site of Copenhagen-based Naviair, Denmark’s flight controller. Switzerland and Belgium today extended closure of their respective airspaces to 8 p.m. local time, Agence France-Presse reported. Paris airports will remain shut until 8 a.m. on Monday, a government official said. Belarus closed airspace for passenger and cargo flights, Interfax reported. The ash may stay over the country for two or three days, it said. Air France-KLM Group’s Dutch KLM unit canceled today’s flights into and out of Amsterdam Airport Schiphol, the company said in a statement on its Web site. Dutch airspace is closed until at least 8 p.m., the Netherlands’ Inspectorate for Transport, Public Works and Water Management said. Rome Open Italy will keep airspace in the north of the country closed until at least 8 a.m. on April 19 and may curtail flights in the south as a cloud of volcanic ash spreads across Europe from Iceland, ENAC, the nation’s civil aviation authority, said in an e-mailed statement today. Airports in Rome remain open, though they’re experiencing delays and cancellations. TUI AG , owner of Europe’s largest travel company, has cancelled all flights until at least Sunday 12 p.m. German time. TUI will assume the costs for one more night at a hotel for all customers affected by the decision, the Hanover, Germany-based company said in an e-mailed statement today. Carriers throughout the Asia-Pacific region canceled flights on the routes to Europe, with Australia’s Qantas Airways Ltd. saying it didn’t know when service might resume. Cathay Pacific Airways Ltd. , based in Hong Kong, scrapped departures to London, Paris, Frankfurt and Milan and said it wouldn’t accept new bookings for the next few days. Europe-bound flights from Japan, South Korea, China and India were stopped because of danger from the ash. Air India and Singapore Airlines Ltd. canceling some routes to North America. ‘Several Days’ “At this stage it’s highly unlikely things are going to return to normal for several days at least,” David Epstein , a Qantas spokesman in Melbourne, said today at a press briefing. “It may well be a week.” The outlook this weekend is for westerly winds to pick up over northern Britain, shifting ash away from Scotland, while a blocking pattern may continue to keep it over England. The edge of the ash cloud was forecast to reach as far south as northern Italy and Romania and as far east as the borders of Kazakhstan today, according to the Met office. Because of the wind direction, Iceland’s Keflavik airport remains open, with North American flights operating on schedule. The eruption began on March 20 with a lava flow on the eastern flank of the Eyjafjallajökull volcano, according to the Institute of Earth Sciences at the University of Iceland. After a lull, it erupted again early on April 14, directly under the icecap that covers most of the mountain. Magma and Ice “The problem here is we have magma interacting with glacier ice, and that leads to explosions,” Hreinsdottir said. “That causes the material to go much higher in the air.” Mike Burton, a researcher at the Italian National Vulcanology Institute who has studied the ash from the latest explosion, said it presents more of a threat to aircraft than would the dust from a typical eruption. “It’s likely that ash production will continue long after all the ice is melted in the volcano as this kind of magma can produce ash without water,” Burton said by telephone. “Fine ash is easier to transport long distances and goes higher into the atmosphere. This is not good news for flights.” To contact the reporters on this story: Matthew Brown in London at mbrown42@bloomberg.net ; Omar R. Valdimarsson in Reykjavik valdimarsson@bloomberg.net

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Kristin Boekhoff: Ecopreneur: Buying Land in Bangladesh

April 17, 2010

Dozens of villagers crowded into the candlelit land registration office to put their fingerprints on the document that would mean a significant amount of income for them and a gorgeous piece of land in southern Bangladesh for me. My team and I had worked hard for two years to get to this point — the first land purchase. Two weeks before I wasn’t sure if the project would even go forward; some early investor commitments fell through and the villagers were in an uproar because for over a year we had been telling them we would buy their land, but had not delivered on our promise. One angry villager went as far as cutting down some of the beautiful mahogany trees on our intended project site. We got the local government to intervene to save the trees, but this created additional ill will (understandably) with the community. Fortunately, just a couple of days before our trip to Jessore, after months of meetings and negotiations, I convinced a few forward-thinking Bangladeshi businessmen to invest their faith and their taka in me and my dream of creating a socially and environmentally responsible resort out of mud. Because all of the legal paperwork that would allow my investors to own the company had not yet been completed, one of the investors came to Jessore with me to co-buy the land in his name for collateral (when he receives his company shares he will transfer the name back to Panigram Resort ). I anticipated problems with the land purchase; this was the first time that we had done it and the first time for anything in Bangladesh is always a struggle as we figure out the system. Sure enough, our day started with a delayed flight and an hour wait for our colleague who was on another plane. When we got to Jessore, I learned that none of the sale deeds had been printed yet because we still had to consult the local attorney about some issues with the complicated Islamic inheritance laws. (Because few people have wills when a landowner dies, their land is distributed among their heirs. This means that even small pieces of land in Bangladesh are often owned by many people.) The land registration office was outside of Jessore City, so we drove a half hour to the proper thana (a Bangladeshi legal division, similar to a U.S. county) intending to print the documents when we arrived. When we got there, however, the power was out, so we had to wait an hour for the electricity to come back on. When it did, my local agent, Koli, got to work on the documents, but unfortunately twenty minutes into the work the power went out again. My investor started to become frustrated with the disorganization. Forty minutes later the power came back on and Koli finished his work. I told him to print whatever he had and said that if there were any small changes we could make them by hand. Ten seconds after I said that the power went out again for an hour. ( Panigram Resort will have alternative energy not only because we want to be “green”, but also because the municipal power in this part of the world is woefully unreliable!) Finally, in the middle of the afternoon, we were able to get a printed set of documents. The villagers were waiting for us at the land registration office. Because we still had not told the villagers that I am the owner of the project (I hate the dishonesty, but I lost two pieces of land before because the price increased by a factor of ten once they found out it was a foreign owner), I went into a small room to privately sign the documents before we handed them over to the landowners for signatures. Koli took all of the landowners around to the back side of the land registration building for the signing; there were several bamboo stalls set up in between the date palm and jackfruit trees that villagers use to conduct business. It took the rest of the afternoon for all fifteen people to sign the documents that sold me just an acre of land (our first parcel). When the sun went down we migrated into the land registration office which was now lit by candles. When the first group of people finished signing the documents they came to us to get their money before we filed the registration; my investor, Pintu, gave them pay orders. The villagers had never seen a pay order before and did not believe that we were giving them real money. We explained to them that they just had to open a bank account and that the bank would cash the check immediately. Koli took them to the local bank to open an account, but sadly the bank teller had never seen a pay order before either and told the villagers that it would take a week for them to get their money if the check cleared. The villagers were understandably upset, as were we because the entire point of a pay order is that we pay beforehand and the money comes directly from the bank so that we can avoid the check clearing process. We called several other banks in Jessore city and we were told that because the pay order came from a different bank and originated in Dhaka, it would take a week for the money to clear. The villagers almost walked away from the deal, but Koli worked with the banks to convince the villagers that they would be able to get the money, they just would have to wait for it. The villagers agreed to proceed with the sale, but they would only let us register our documents after the money had cleared the bank. I drove Pintu back to the airport so he could catch his evening flight. We were all frustrated that the land registration didn’t finalize that day. I assured Pintu that it would go through in a few days and tried to relieve some of his annoyance with the disorganization by having him read my Huffington Post article about my first investor meeting ( “Ecopreneur: Never Let Them See You Sweat” ); he felt better after reading about that adventure! A week later the pay orders cleared and the land registration was finalized. A few days after that, the investors officially closed on the first round of equity and I went back to Jessore to buy the next piece of land. For the second purchase, all of the land documents were printed beforehand, we arranged to pay the villagers in cash, and Koli had procured a generator for the print shop near the land registration office, just in case we needed to make some corrections… Buying land in Bangladesh wasn’t easy, but just look at my new view! This article is also cross-posted on the Panigram Resort website: www.panigram.com .

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Ash-Cloud Flight Disruptions Intensify in Europe, Will Extend Into Weekend

April 16, 2010

By Alex Morales and Steve Rothwell April 16 (Bloomberg) — Europe’s air-travel chaos worsened as the ash cloud from an Icelandic volcano spread as far east as Moscow, cutting off parts of Britain, France and Germany and threatening weekend travel. As many as 15,000 flights may be lost in the region today, or about half the usual timetable, according to Brian Flynn, operations chief at Eurocontrol, which oversees the region’s flight paths. That’s up from 8,000 cancellations yesterday. Ash from the eruption of Iceland’s 5,500-foot Eyjafjallajökull volcano drifted southeast overnight. While airports in Scotland, Norway and Ireland reopened, others are shutting as the cloud spreads and as many as six million passengers could be affected if the closures extend into a third day, according to the Centre for Asia Pacific Aviation. “The outlook for today is in fact worse,” Flynn said in an interview with Bloomberg Television. “The forecast is that most of the northern European airports will remain closed for most of the day.” Flights have been halted amid concern that the ash plume could damage engines or parts such as speed sensors. The finest material from the blast is formed of dust akin to glass, which can melt and congeal in an engine, causing it to stop, said Sue Loughlin, head of vulcanology at the British Geological Survey. U.K. Closures Britain’s airspace will be restricted until at least 1 a.m. tomorrow, according to flight-control authority National Air Traffic Services, compounding the most severed disruption in the country’s aviation history. In Germany , 10 airports including Frankfurt were shuttered, according to the DFS air traffic control agency. Closure of airspace in the south of the country will be reviewed as the dust cloud reaches Munich this afternoon or evening, the airport said in an e-mailed statement today. Deutsche Lufthansa AG , Europe’s second-biggest airline said it was monitoring forecasts. France’s civil aviation authority shut the Roissy-Charles de Gaulle and Orly airports near Paris late yesterday. The closures will be in effect until at least 2 p.m. Three days of disruptions could cost the aviation industry $1 billion in lost revenue, Derek Sadubin , chief operating officer of the Sydney-based Centre for Asia Pacific Aviation said in an e-mail. BA, Ryanair British Airways Plc , Europe’s third-largest carrier, said it can’t be sure when services will resume. Ryanair Holdings Plc and EasyJet Plc , Europe’s biggest discount airlines with their main hubs in the U.K., cut the bulk of flights. Delta Air Lines Inc. and UAL Corp.’s United Airlines led their peers in canceling European operations. Ryanair was trading down 2 percent at 3.91 euros as of 11:13 in Dublin today. British Airways was down 0.9 percent at 240.4 pence in London and EasyJet was little changed. The plume covered parts of Britain, Germany, Norway, Ireland, Sweden, Finland, Belgium, the Netherlands and Russia as of 6 a.m. in London, according to data from the U.K. Met Office’s volcanic-ash advisory service . It’s forecast to drift southeast over northern France, Poland and the Czech Republic before reaching Switzerland, Austria and Hungary by midnight. Further Eruptions “The volcano could continue to erupt like this for several days, possibly even for a few weeks, we just don’t know at the moment,” vulcanologist Loughlin said in a Bloomberg television interview. Wind directions are also “very unfavorable” for the U.K. and Europe right now, she said. The ash threat will continue through April 18 for Europe, based on prevailing air streams, AccuWeather.com said. NATS is not expecting a rapid improvement in the conditions. “In general, the situation cannot be said to be improving with any certainty as the forecast affected area appears to be closing in from east to west,” the agency said in a statement. Airspace over the Polish city of Krakow is closed as it prepares to welcome world leaders including Barack Obama for the funeral of late President Lech Kaczynski on April 18. Delaying the funeral has become a “very serious possibility,” according to the country’s presidential minister. “Once they start operations again, obviously we will have aircraft in places they are not supposed to be,” said Jonathan Nicholson , a spokesman for the U.K. Civil Aviation Authority. “It takes time before normal operations resume once flying starts again.” Extra Buses, Trains British bus operator National Express Group Plc said all services from London’s Heathrow airport to Scotland were full yesterday and that extra vehicles will be added today. Virgin Trains and East Coast also put on extra services, while ferry companies and Channel Tunnel rail operator Eurostar Group Ltd. reported a surge in bookings. Iceland has more than 200 volcanoes and 600-plus hot springs. When Eyjafjallajökull last erupted in 1821 the event lasted more than a year, according to the Global Volcanism Program at the Smithsonian Institution in Washington. The latest eruption , which began early April 14, is a further blow to a country struggling to rebuild a crippled economy after financial collapse prompted the world’s fifth- richest nation per head in 2007 to turn to the International Monetary Fund. Indonesia Incident Volcanic fumes have disrupted commercial air travel in the past. In 1982, all four engines on a British Airways Boeing Co. 747 flying to Perth, Australia, shut down as the aircraft encountered ash spewed from Mount Galunggung in Indonesia . The plane fell for almost four miles before the pilot was able to restart three engines and make an emergency landing in Jakarta. Another Boeing jumbo lost all engine thrust in 1989 after encountering ash from Alaska’s Redoubt Volcano, and four other airliners were damaged during the next three months, according to the Federal Aviation Administration Web site. “Given the fact that this could bring a plane down very easily, airlines are not going to risk flying through these volcanic clouds,” Hunter Keay , an analyst at Stifel Nicolaus & Co. in Baltimore, said yesterday in an interview with Tom Keene on Bloomberg Radio. Emmanuelle Wargon of Paris and her husband, Mathias, learned yesterday that their Air France flight to New York from Paris today had been canceled because of the eruption, and they may have to postpone a long-planned vacation with their three children, ages 12, 10 and 6. “We had planned for all sorts of things,” Wargon, a magistrate in France’s National Audit Office, said in a telephone interview. “But we didn’t plan for a volcano.” To contact the reporters on this story: Alex Morales in London at amorales2@bloomberg.net ; Steve Rothwell in London at srothwell@bloomberg.net

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Ash-Cloud Flight Disruptions Intensify in Europe, Will Extend Into Weekend

April 16, 2010

By Alex Morales and Steve Rothwell April 16 (Bloomberg) — Europe’s air-travel chaos worsened as the ash cloud from an Icelandic volcano spread as far east as Moscow, cutting off parts of Britain, France and Germany and threatening weekend travel. As many as 15,000 flights may be lost in the region today, or about half the usual timetable, according to Brian Flynn, operations chief at Eurocontrol, which oversees the region’s flight paths. That’s up from 8,000 cancellations yesterday. Ash from the eruption of Iceland’s 5,500-foot Eyjafjallajökull volcano drifted southeast overnight. While airports in Scotland, Norway and Ireland reopened, others are shutting as the cloud spreads and as many as six million passengers could be affected if the closures extend into a third day, according to the Centre for Asia Pacific Aviation. “The outlook for today is in fact worse,” Flynn said in an interview with Bloomberg Television. “The forecast is that most of the northern European airports will remain closed for most of the day.” Flights have been halted amid concern that the ash plume could damage engines or parts such as speed sensors. The finest material from the blast is formed of dust akin to glass, which can melt and congeal in an engine, causing it to stop, said Sue Loughlin, head of vulcanology at the British Geological Survey. U.K. Closures Britain’s airspace will be restricted until at least 1 a.m. tomorrow, according to flight-control authority National Air Traffic Services, compounding the most severed disruption in the country’s aviation history. In Germany , 10 airports including Frankfurt were shuttered, according to the DFS air traffic control agency. Closure of airspace in the south of the country will be reviewed as the dust cloud reaches Munich this afternoon or evening, the airport said in an e-mailed statement today. Deutsche Lufthansa AG , Europe’s second-biggest airline said it was monitoring forecasts. France’s civil aviation authority shut the Roissy-Charles de Gaulle and Orly airports near Paris late yesterday. The closures will be in effect until at least 2 p.m. Three days of disruptions could cost the aviation industry $1 billion in lost revenue, Derek Sadubin , chief operating officer of the Sydney-based Centre for Asia Pacific Aviation said in an e-mail. BA, Ryanair British Airways Plc , Europe’s third-largest carrier, said it can’t be sure when services will resume. Ryanair Holdings Plc and EasyJet Plc , Europe’s biggest discount airlines with their main hubs in the U.K., cut the bulk of flights. Delta Air Lines Inc. and UAL Corp.’s United Airlines led their peers in canceling European operations. Ryanair was trading down 2 percent at 3.91 euros as of 11:13 in Dublin today. British Airways was down 0.9 percent at 240.4 pence in London and EasyJet was little changed. The plume covered parts of Britain, Germany, Norway, Ireland, Sweden, Finland, Belgium, the Netherlands and Russia as of 6 a.m. in London, according to data from the U.K. Met Office’s volcanic-ash advisory service . It’s forecast to drift southeast over northern France, Poland and the Czech Republic before reaching Switzerland, Austria and Hungary by midnight. Further Eruptions “The volcano could continue to erupt like this for several days, possibly even for a few weeks, we just don’t know at the moment,” vulcanologist Loughlin said in a Bloomberg television interview. Wind directions are also “very unfavorable” for the U.K. and Europe right now, she said. The ash threat will continue through April 18 for Europe, based on prevailing air streams, AccuWeather.com said. NATS is not expecting a rapid improvement in the conditions. “In general, the situation cannot be said to be improving with any certainty as the forecast affected area appears to be closing in from east to west,” the agency said in a statement. Airspace over the Polish city of Krakow is closed as it prepares to welcome world leaders including Barack Obama for the funeral of late President Lech Kaczynski on April 18. Delaying the funeral has become a “very serious possibility,” according to the country’s presidential minister. “Once they start operations again, obviously we will have aircraft in places they are not supposed to be,” said Jonathan Nicholson , a spokesman for the U.K. Civil Aviation Authority. “It takes time before normal operations resume once flying starts again.” Extra Buses, Trains British bus operator National Express Group Plc said all services from London’s Heathrow airport to Scotland were full yesterday and that extra vehicles will be added today. Virgin Trains and East Coast also put on extra services, while ferry companies and Channel Tunnel rail operator Eurostar Group Ltd. reported a surge in bookings. Iceland has more than 200 volcanoes and 600-plus hot springs. When Eyjafjallajökull last erupted in 1821 the event lasted more than a year, according to the Global Volcanism Program at the Smithsonian Institution in Washington. The latest eruption , which began early April 14, is a further blow to a country struggling to rebuild a crippled economy after financial collapse prompted the world’s fifth- richest nation per head in 2007 to turn to the International Monetary Fund. Indonesia Incident Volcanic fumes have disrupted commercial air travel in the past. In 1982, all four engines on a British Airways Boeing Co. 747 flying to Perth, Australia, shut down as the aircraft encountered ash spewed from Mount Galunggung in Indonesia . The plane fell for almost four miles before the pilot was able to restart three engines and make an emergency landing in Jakarta. Another Boeing jumbo lost all engine thrust in 1989 after encountering ash from Alaska’s Redoubt Volcano, and four other airliners were damaged during the next three months, according to the Federal Aviation Administration Web site. “Given the fact that this could bring a plane down very easily, airlines are not going to risk flying through these volcanic clouds,” Hunter Keay , an analyst at Stifel Nicolaus & Co. in Baltimore, said yesterday in an interview with Tom Keene on Bloomberg Radio. Emmanuelle Wargon of Paris and her husband, Mathias, learned yesterday that their Air France flight to New York from Paris today had been canceled because of the eruption, and they may have to postpone a long-planned vacation with their three children, ages 12, 10 and 6. “We had planned for all sorts of things,” Wargon, a magistrate in France’s National Audit Office, said in a telephone interview. “But we didn’t plan for a volcano.” To contact the reporters on this story: Alex Morales in London at amorales2@bloomberg.net ; Steve Rothwell in London at srothwell@bloomberg.net

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Airports in U.K., Northern Europe Shut as Volcanic Ash Sweeps From Iceland

April 15, 2010

By Ola Kinnander and Chris Cooper April 15 (Bloomberg) — European air traffic from Scotland to Scandinavia and the Netherlands was disrupted by volcanic ash spreading from Iceland, shutting airports and prompting British Airways Plc to suspend all domestic flights. Aberdeen, Edinburgh and Glasgow airports are already closed on advice from U.K. air traffic control, and all London airports will likely shut from midday, airport operator BAA Ltd. said today. Oslo will close its Gardamon airport outside the Norwegian capital from 10 a.m. local time, and Amsterdam’s Schiphol airport canceled dozens of flights. “Volcanic ash represents a significant safety threat to aircraft,” Taylor Samuelson, a spokeswoman for the U.K. National Air Traffic Services, said in a statement. The number of flights allowed to enter U.K. airspace had been limited because of the cloud of ash, she said. The volcanic eruption in Iceland is the second in four weeks and prompted the evacuation of the nearby area by more than 800 people as water levels in rivers rose by almost three feet. Iceland straddles mid-Atlantic tectonic plates, making the island of about 300,000 residents geologically active. Volcanic ash can disrupt flights because of the potential risk of engine malfunction and impairment of cabin air quality. Flight Delays Ryanair Holdings Plc and EasyJet Plc , Europe’s two biggest discount airlines, both warned of likely disruption because of the ash, while All Nippon Airways Co. , Asia’s largest listed carrier by sales, delayed services to London, Paris and Frankfurt. Continental Airlines Inc. may reroute some flights to the U.S. from Europe, according to a statement on its Web site. British Airways, Europe’s third-largest carrier, said it heeded advice from the National Air Traffic Services by canceling all domestic flights, according to spokeswoman Victoria Martin. All Nippon delayed Europe services by an hour to draw up new flight plans, spokeswoman Megumi Tezuka said. Deutsche Lufthansa AG has delayed and canceled some flights, with routes to and from the U.K. affected the most, Thomas Jachnow , a spokesman for the German carrier, said. Emirates, the largest Arab airline , said it had cancelled 10 flights into Heathrow, Gatwick, Manchester, Newcastle and Birmingham because of the restrictions. Passengers should check with airlines or airports on travel plans, according to BAA. Manchester, Gatwick Manchester Airport said it would suspend flights until 1 p.m. because of the cloud, spokesman Paul Hadfield said. A spokesman for Gatwick Airport, south of the capital, said 89 domestic flights had been cancelled so far today. In Norway, most flights have been cancelled. Norwegian Air Shuttle ASA, Europe’s fourth-largest low-cost carrier, has cancelled more than 100 flights today, spokeswoman Anne-Sissel Skaanvik. The National Air Traffic Service said officials would meet this morning in London to decide whether it will make a joint policy statement or recommendation. For now, it’s up to airlines to decide whether to operate flights as the volcanic ash from Iceland spreads, she said. “We shut down most of the airpace yesterday,” said Sindre Aanonsen, spokesman for Avinor, which operates 46 airports in Norway. “Now there is still space open over the eastern parts of Norway but we are strongly considering to shut down that airspace too within a few hours.” Northern Sweden In Sweden, four airports in the northern part of the country — Kiruna, Luleaa, Oestersund and Skellefteaa — closed this morning, SAS Group spokeswoman Elisabeth Manzi said. Sweden’s main airport, Arlanda in Stockholm, remains open. “More airports may be cancelled soon, and we don’t know how long this will last,” she said by telephone today. “It’s outside our control.” It is too early to gauge the economic impact of this, she said. Copenhagen Airports A/S, Scandinavia’s biggest hub, said some 20 flights, all operated by SAS, have been cancelled. The airport expects more cancellations and delays today, spokesman Soeren Hedegaard Nielsen said in a telephone interview. In Finland, all airport remain open, the country’s aviation authority Finavia Oyj said. The ash from the eruption caused some delays in flights, according to the authority. Officials may issue further guidelines after talks with the U.K. Meteorological Office and Eurocontrol, which is responsible for traffic in Europe. In the meantime it is up to individual carriers to take decisions on flights. To contact the reporter on this story: Ola Kinnander in Stockholm at okinnander@bloomberg.net Chris Cooper in Tokyo at ccooper1@bloomberg.net

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London Airports Likely to Close as Volcanic Ash Disrupts European Flights

April 15, 2010

By Ola Kinnander and Chris Cooper April 15 (Bloomberg) — European air traffic from Scotland to Scandinavia and the Netherlands was disrupted by volcanic ash spreading from Iceland, shutting airports and prompting British Airways Plc to suspend all domestic flights. Aberdeen, Edinburgh and Glasgow airports are already closed on advice from U.K. air traffic control, and all London airports will likely shut from midday, airport operator BAA Ltd. said today. Oslo will close its Gardamon airport outside the Norwegian capital from 10 a.m. local time, and Amsterdam’s Schiphol airport canceled dozens of flights. “Volcanic ash represents a significant safety threat to aircraft,” Taylor Samuelson, a spokeswoman for the U.K. National Air Traffic Services, said in a statement. The number of flights allowed to enter U.K. airspace had been limited because of the cloud of ash, she said. The volcanic eruption in Iceland is the second in four weeks and prompted the evacuation of the nearby area by more than 800 people as water levels in rivers rose by almost three feet. Iceland straddles mid-Atlantic tectonic plates, making the island of about 300,000 residents geologically active. Volcanic ash can disrupt flights because of the potential risk of engine malfunction and impairment of cabin air quality. Flight Delays Ryanair Holdings Plc and EasyJet Plc , Europe’s two biggest discount airlines, both warned of likely disruption because of the ash, while All Nippon Airways Co. , Asia’s largest listed carrier by sales, delayed services to London, Paris and Frankfurt. Continental Airlines Inc. may reroute some flights to the U.S. from Europe, according to a statement on its Web site. British Airways, Europe’s third-largest carrier, said it heeded advice from the National Air Traffic Services by canceling all domestic flights, according to spokeswoman Victoria Martin. All Nippon delayed Europe services by an hour to draw up new flight plans, spokeswoman Megumi Tezuka said. Deutsche Lufthansa AG has delayed and canceled some flights, with routes to and from the U.K. affected the most, Thomas Jachnow , a spokesman for the German carrier, said. Emirates, the largest Arab airline, said it had cancelled 10 flights into Heathrow, Gatwick, Manchester, Newcastle and Birmingham because of the restrictions. Passengers should check with airlines or airports on travel plans, according to BAA. Manchester, Gatwick Manchester Airport said it would suspend flights until 1 p.m. because of the cloud, spokesman Paul Hadfield said. A spokesman for Gatwick Airport, south of the capital, said 89 domestic flights had been cancelled so far today. In Norway, most flights have been cancelled. Norwegian Air Shuttle ASA, Europe’s fourth-largest low-cost carrier, has cancelled more than 100 flights today, spokeswoman Anne-Sissel Skaanvik. The National Air Traffic Service said officials would meet this morning in London to decide whether it will make a joint policy statement or recommendation. For now, it’s up to airlines to decide whether to operate flights as the volcanic ash from Iceland spreads, she said. “We shut down most of the airpace yesterday,” said Sindre Aanonsen, spokesman for Avinor, which operates 46 airports in Norway. “Now there is still space open over the eastern parts of Norway but we are strongly considering to shut down that airspace too within a few hours.” Northern Sweden In Sweden, four airports in the northern part of the country — Kiruna, Luleaa, Oestersund and Skellefteaa — closed this morning, SAS Group spokeswoman Elisabeth Manzi said. Sweden’s main airport, Arlanda in Stockholm, remains open. “More airports may be cancelled soon, and we don’t know how long this will last,” she said by telephone today. “It’s outside our control.” It is too early to gauge the economic impact of this, she said. Copenhagen Airports A/S, Scandinavia’s biggest hub, said some 20 flights, all operated by SAS, have been cancelled. The airport expects more cancellations and delays today, spokesman Soeren Hedegaard Nielsen said in a telephone interview. In Finland, all airport remain open, the country’s aviation authority Finavia Oyj said. The ash from the eruption caused some delays in flights, according to the authority. Officials may issue further guidelines after talks with the U.K. Meteorological Office and Eurocontrol, which is responsible for traffic in Europe. In the meantime it is up to individual carriers to take decisions on flights. To contact the reporter on this story: Ola Kinnander in Stockholm at okinnander@bloomberg.net Chris Cooper in Tokyo at ccooper1@bloomberg.net

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Polish President Kaczynski, Central Bank Governor Killed in Plane Crash

April 10, 2010

By David McQuaid and Piotr Skolimowski April 10 (Bloomberg) — Polish President Lech Kaczynski and central bank Governor Slawomir Skrzypek were killed when their plane crashed today in heavy fog in western Russia, the Foreign Ministry said. The 60 year-old president’s wife, Maria, and several Polish officials also died in the crash, which happened as the aircraft was on approach for landing in Smolensk, according to ministry spokesman Piotr Paszkowski . There were 87 people on the passenger list and the ministry was trying to establish how many eventually boarded the Soviet-built Tupolev 154, he said. The plane was carrying 132 people, RIA Novosti reported. Poland’s central bank confirmed Skrzypek was on board, bank spokesman Maciej Antes told Bloomberg in a phone interview. Piotr Wiesiolek , a deputy governor of the central bank, will temporarily assume the duties of bank governor, Antes said. Under Poland’s constitution the duties of the president will be taken over by the speaker of the lower house of parliament, Bronislaw Komorowski . Komorowski, who is the ruling party’s candidate for president in elections due to be held later this year, and Prime Minister Donald Tusk , are both travelling to Warsaw to handle the crisis. The government of the largest of the 10 former communist nations to join the European Union will hold an emergency cabinet meeting today in the “early afternoon”, spokesman Pawel Gras told TVN24 television, which also showed footage of Poles lighting candles in town squares in several cities across the country as they began to mourn the tragedy. Fourth Attempt The plane clipped the tree line at about 10:50 a.m. in and broke in two as the pilot attempted a fourth landing amid heavy fog at a military airport near Smolensk, Russia, Rossiya-24 said, citing officials at the scene. Newswire RIA quoted an unnamed Russian security official as saying pilot error was a factor in the accident. Rossiya-24 TV showed live footage of rescue workers attempting to extinguish pockets of fire among the wreckage almost two hours later at the airport, about 320 kilometers (200 miles) east of Moscow. Russian President Dmitry Medvedev dispatched Emergency Ministry Sergei Shoigu to the site of the crash and formed a special commission headed by Prime Minister Vladimir Putin to investigate the cause. Sergei Antufiev, regional governor of Smolensk, said there were no survivors. “It clipped the tops of the trees, crashed down and broke into pieces,” Antufiev told Russia-24 television news network by telephone. The delegation was to attend a commemoration of thousands Poles and Russians killed in the spring of 1940 by Soviet forces under Josef Stalin at Katyn. Ryszard Kaczorowski, the last Polish president in exile during World War II, the head of the Institute of National Remembrance Janusz Kurtyka and the Polish general chief of staff Franciszek Gagor were to be on the plane, according to a list of passengers obtained by PAP newswire. To contact the reporter on this story: David McQuaid in Warsaw at dmcquaid1@bloomberg.net Piotr Skolimowski in Warsaw at pskolimowski@bloomberg.net

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Geithner Leaves Beijing After Talks With Vice Premier on Economic Outlook

April 8, 2010

By Rebecca Christie April 9 (Bloomberg) — U.S. Treasury Secretary Timothy F. Geithner left Beijing after meeting with a Chinese counterpart amid increasing speculation that the yuan may be revalued. Geithner and Vice Premier Wang Qishan “exchanged views on U.S.-China economic relations, the global economic situation and issues relating to” a May meeting of officials from the two nations in Beijing, according to a Treasury Department statement. Geithner’s unexpected visit to China, announced two days ago in Mumbai, came as the world’s third-largest economy weighed letting its currency appreciate. The Treasury secretary last week postponed an April 15 deadline for a semiannual review of the currency policies of major U.S. trading partners amid calls in Congress to brand China a currency manipulator for keeping the yuan fixed against the dollar. “The Chinese have come to a solution internally on what they’re doing on the exchange rate, which has next to nothing to do with America, but the U.S. administration wants to appear to be involved,” said Huw McKay , a senior international economist at Westpac Banking Corp. in Sydney. “The debate has been quite vigorous in the corridors of power in Beijing and one suspects they’ve come to a compromise solution which includes a widening of the band and return to flexibility for the exchange rate,” he said. Airport Meeting Yesterday’s 75-minute meeting between Geithner and Wang Qishan took place at the VIP terminal of Beijing International Airport, a Treasury official said. Two officials took part for each side, with Geithner accompanied by David Dollar , the Treasury’s economic and financial emissary to China. Officials from the two nations will meet in May in Beijing as part of a series of talks known as the U.S.-China Strategic and Economic Dialogue. Yuan forwards rose the most in six weeks yesterday in Hong Kong after the New York Times reported that the government is “very close” to announcing a change in its currency policy. Twelve-month non-deliverable forwards fell 0.3 percent to 6.6307 per dollar as of 8:02 a.m. local time, reflecting bets the currency will strengthen about 3 percent from its spot rate of 6.8245. U.S.-China relations have been strained by U.S. weapons sales to Taiwan, President Barack Obama ’s meeting with the Dalai Lama in February and the shutdown of Google Inc.’s Internet search engine in mainland China. “It appears both sides have taken a step down,” said Marc Chandler , global head of currency strategy at Brown Brothers Harriman & Co. in New York. State Council Wang Qishan is the vice premier in charge of trade and financial affairs and, with State Council member Dai Bingguo , led China’s delegation at the Strategic and Economic Dialogue talks. He is also a member of the Central Leading Group on Financial and Economic Affairs, along with Premier Wen Jiabao , People’s Bank of China Governor Zhou Xiaochuan and economic adviser Liu He , according to China experts and non-governmental Web sites as of September. Geithner’s visit to Beijing is a “very encouraging” development ahead of Chinese President Hu Jintao ’s trip to Washington next week for talks with Obama, said Stephen Roach , chairman of Morgan Stanley Asia Ltd. China may announce a revision of its currency policy within days with a small, one-time jump in the yuan, which would then be allowed to trade in a greater range against the dollar, the New York Times reported, citing unidentified people with knowledge of an emerging consensus on the issue. The newspaper said that while any glitch in talks could delay an announcement, the model for the shift would be the revaluation in July 2005, when the yuan was allowed to rise 2.1 percent overnight. Schumer ‘Dubious’ U.S. Senator Charles Schumer , a Democrat from New York, reacted with skepticism to indications that China may be preparing to loosen its grip on the yuan. “In the past when the Chinese government has said it would change its policy, the steps taken were small, halting, and temporary,” Schumer said in an e-mailed statement. “We are dubious that this time would be any different, but will await the details.” Some Chinese officials are arguing against suggestions that the nation should end the yuan’s 21-month-old peg to the dollar with a significant revaluation. “A one-time big appreciation in the yuan would have limited benefit to the U.S., the world, and China,” Xia Bin , an adviser to the People’s Bank of China, said at a forum in Shanghai. “The yuan’s exchange rate should go back to the pre- crisis managed float mechanism as soon as possible,” said Xia, who is also head of financial research at the State Council’s Development Research Center. Snow’s View Former U.S. Treasury Secretary John Snow , visiting Shanghai along with former U.S. President George W. Bush , said in an interview that the U.S. should refrain from labeling China a currency manipulator. “It would be a mistake,” said Snow, now chairman of Cerberus Capital Management LP. “There is a lot of pressure and I think it would be a mistake to succumb to that pressure because the important thing is continue to have open trade and good trade relations.” On April 3, Geithner said meetings over the next three months will be “critical” to bringing policy changes that lead to a more balanced global economy. Yesterday he stopped in Hong Kong to meet with officials including Hong Kong Chief Executive Donald Tsang and Financial Secretary John Tsang for a courtesy call. Neither side commented on what was discussed. India Stop During a two-day visit to India this week, Geithner declined to elaborate on the U.S.-China relationship. He was asked about it on numerous occasions and answered by talking about efforts to smooth lopsided global flows of trade and investment. “Countries large and small, countries around the world, have a huge interest in making sure that growth in their countries comes more from domestic sources,” he said in an interview on Bloomberg Television in Mumbai. China is the U.S.’s second-largest trading partner after Canada. The U.S. trade deficit with China in 2009 was $226.8 billion, down 15 percent from a year earlier, according to the U.S. Commerce Department. China’s economic rebound is stoking calls for an end to the currency restrictions. Exports have advanced for three straight months, industrial production climbed 20.7 percent in the first two months of 2010 from last year and the Organization for Economic Cooperation and Development forecasts gross domestic product growth of about 10 percent, contributing one-third to the global expansion this year. To contact the reporter on this story: Rebecca Christie in Mumbai at rchristie4@bloomberg.net ;

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Northeast States Declare Emergency on Record Rainfall

March 30, 2010

By Aaron Clark March 30 (Bloomberg) — Massachusetts, Rhode Island and Connecticut declared emergencies, closing roads and sandbagging low-lying areas as storms pounded the U.S. Northeast for a second day today. Massachusetts Governor Deval Patrick mobilized about 1,000 National Guard troops. The storm, which set a daily rainfall record in Boston, is expected to bring “beach erosion, major flooding and widespread road closures,” he said on his Web site yesterday . Connecticut Governor M. Jodi Rell said in a statement the weather had created “extremely dangerous situations” in the eastern part of the state. In Rhode Island, where officials warned of “historic flooding,” Governor Donald Carcieri urged residents to leave work early and head home, said a spokeswoman, Amy Kempe. “In some cases there has been two months of rain in the matter of a few days,” Tom Kines , a senior meteorologist for AccuWeather Inc., said in a telephone interview. “When you get that much rain over a few-day period, that spells trouble.” Storm Upon Storm Flooding in the Northeast from two storms earlier this month caused more than $10 million in damage, drove residents from their homes as power failed and sewer systems backed up, and washed out a section of the Massachusetts Bay Transit Authority’s Green Line light rail service. The Charles River, which divides Boston and Cambridge, is set to break the record crest of 9.24 feet reached in August 1955 when two hurricanes dumped more than 26 inches of rain in less than two weeks, the National Weather Service said. Boston’s Logan International Airport set a single-day record for rain after 1.96 inches fell yesterday, breaking the high of 1.85 inches set in 1984. March 2010 became the wettest March in Boston history and the second-wettest month on record today after the 30-day total reached 13.63 inches. Rainfall from the three separate storms within the last three weeks is “unprecedented in our recent 100-year weather history,” said the National Weather Service office in Taunton, Massachusetts. As much as 8 inches of rain is expected in parts of Rhode Island before the three-day storm ends tomorrow, with the Pawtuxet and Blackstone basins hardest-hit, according to the state’s Emergency Management Agency. Rivers Rise The Yantic River in Connecticut is expected to reach record flood levels, said Rell, who activated 150 National Guard troops and said helicopters from the U.S. Coast Guard, the military and state police are on standby. Mandatory evacuations are under way in Rhode Island, although Kempe said she did not know how many. State officials are monitoring Interstate 95, which runs from Maine to Florida, and will close it if necessary, she said. “The rain is still coming down very heavily and it has caused major street flooding, major street closures” throughout Rhode Island, said Kempe. “The governor is recommending that individuals consider leaving work early to head home.” The Pawtuxet River in Cranston, Rhode Island, set a flooding record of 17.03 feet at 2:45 p.m. and is expected to crest at 19 feet tomorrow, according to the weather service. Charles River The Charles River at Dover, Massachusetts, will crest at a record 9.9 feet on April 1, the weather service estimated. The 1955 storms and flooding killed at least 180 people and caused more than $650 million in damage, including the complete or partial failures of more than 200 dams in southern New England, according to the agency. New York City had received a monthly total of 10.16 inches by early today, heading toward the March record of 10.54 inches set in 1983. The rain was easing off in the city by mid- afternoon today. About 150 people have evacuated their homes in the Fall River area in southeast Massachusetts because of flooding, said Peter Judge , a spokesman for the state’s Emergency Management Agency . Record flooding is forecast on the Sudbury and Assabet rivers, he said. “Every river in central and eastern Massachusetts is expected to be at well-above flood stage before this storm is over,” Judge said. To contact the reporter on this story: Aaron Clark in New York at aclark27@bloomberg.net

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Myrna Blyth: Thank You, Sandra Robertson — and Jet Blue

March 25, 2010

We’ve all heard horror stories about airlines, about delayed flights and lost baggage, missed connections and hours spent on the runway without food. But this isn’t that kind of airline story. This is a thank-you letter to Jet Blue and one of its employees. Let me tell you what happened. I was in Florida on a very sad journey. My brother died there a couple of months ago, and so I had gone to Boca Raton to host a little gathering at his home for his friends. I also began to sort his papers and belongings. It was an exhausting, emotion-packed weekend. I got up very early on the Monday morning to get to the Fort Lauderdale airport two hours ahead of time, the way you have to do these days, to take a 9:45 a.m. Jet Blue plane back home to New York. But LaGuardia was engulfed by fog that morning, and the plane was delayed and delayed and delayed. Was I annoyed? Not really. The plane that was taking me home was already at the airport where I was waiting, so I knew that Jet Blue was ready to leave. They just couldn’t control the New York weather. So I read the newspapers, tried to nap, looked in my bag for a book I thought I had brought. I unpacked a few things but it wasn’t there. Finally, around 12:30 p.m., we boarded and left maybe at 1:45. Kind of frustrating, but the movies were free on the flight. I watched The Blind Side and thought everything was okay. But when I got home and started to unpack, I discovered with absolute horror that a file that contained legal documents related to my brother’s death, as well as his small, personal handwritten telephone book, weren’t there. I must have taken out the file when I unpacked the bag in my book search and never put it back in. How could I have done that? I was furious at myself and in tears. I could probably get copies of the documents, but my brother’s little telephone book, though valueless, was irreplaceable. I cried, screamed at myself and rushed about, unsure of what to do. I didn’t think anyone would take the little file, but probably it had already been thrown in an airport garbage bin. Several hysterical minutes passed before I found the airport number and, after clicking through a half dozen taped messages, spoke to someone from Jet Blue. They listened to my woeful tale and, sounding sympathetic, gave me the number of the Jet Blue baggage department at the Fort Lauderdale airport. That’s when Sandra Robertson came on the line. She listened. She calmed me down. She told me she would go up to the gate where I had been waiting and look. She didn’t say she would do it later. She didn’t say she would wait to see if anything was turned in. She would do what she could right away. But I was sure the file and the papers and the little telephone book were gone forever. I waited, without much hope, for her call back. When the phone rang, I said, “You didn’t find it, did you?” “Oh, yes, I did,” she said. “It was there, just where you told me you had been sitting.” She promised to FedEx it to me in New York that night and I had everything, including my brother’s telephone book, by ten o’clock the next morning. So thank you, Jet Blue. Thank you so very much–and here’s to you, Sandra Robertson. I can’t tell you how much I appreciate what you did. And I want lots of other people to know about your efficiency, your thoughtfulness and your kindness. Myrna Blyth is BettyConfidential’s editor-in-chief.

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UK- Airport passenger numbers plunge by 7.4 pct

March 14, 2010

UK- Airport passenger numbers plunge by 7.4 pct

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Greek Aid Plans Said to Be Considered by EU Officials After Merkel Rebuff

March 5, 2010

By Brian Parkin and Rainer Buergin March 5 (Bloomberg) — European Union nations are working on a contingency rescue plan for Greece to be funded by European governments, according to two people briefed yesterday in Berlin by an EU official. The briefing, coming the day Greece sold 5 billion euros ($6.8 billion) of bonds, underscores the balancing act facing European officials as they prod Greek Prime Minister George Papandreou to cut the biggest EU budget deficit without their committing funds. Papandreou today begins meetings in Luxembourg, Berlin, Paris and Washington after protesters besieged the Greek Finance Ministry to denounce tax increases and spending cuts. “We’re telling financial markets: Look out, we’re not abandoning Greece,” Luxembourg’s Jean-Claude Juncker , who heads the group of euro-area finance ministers, told Germany’s Deutschlandradio today. He praised Greece’s “ambitious” deficit-reduction plan and said “I don’t assume outside financial help will become necessary.” Should financial assistance become required, it would be tied to stringent conditions, Juergen Kroeger, who heads a European Commission department that oversees national economies, told the Berlin meeting, said the people, who spoke on condition of anonymity because the briefing of lawmakers, academics and executives in a parliamentary office building was private. Kroeger gave no sign that aid was imminent, the people said. Kroeger was not immediately available for comment today. Persuading Markets The briefing backs up comments made last week by German lawmakers who said the EU was developing a plan to offer Greece about 25 billion euros in emergency aid, even as German Chancellor Angela Merkel and other leaders say Greece has now done enough to rein in the deficit and reassure financial markets. Merkel said today that Papandreou has “grabbed the bull by the horns” with 4.8 billion euros of additional deficit cuts this week. The Greek program is showing results and the bond issue yesterday “gives us cause for optimism,” Merkel told reporters in Munich. Papandreou met Juncker in Luxembourg today and is scheduled to meet Merkel and brief reporters in Berlin at 6:30 p.m. local time. Convince Investors Merkel said March 3 the meeting won’t be “about aid commitments” and her finance minister, Wolfgang Schaeuble , said Greece’s additional deficit-reduction measures are probably enough to convince investors to buy Greek debt. The Greek government has pledged to reduce the deficit by 4 percentage points from 12.7 percent of gross domestic product. Merkel’s spokesman, Ulrich Wilhelm , said today’s meeting “will not be about financial commitments for Greece’s handling of its debt crisis, but that it will of course be about political support.” Wilhelm said that political support “is an important signal to financial markets, which are monitoring the situation in Greece closely.” In Greece, meantime, labor unions shut down transport today and state workers walked off the job in protest as parliament prepares to pass the austerity package. Police scuffled with protesters and fired tear gas at demonstrators outside the parliament building during a protest march. Airport Strike Tram, rail, subway and bus services shut in Athens and other cities as employees rallied against cuts to bonuses and holiday payments. Air traffic controllers are holding a four- hour walkout, forcing the cancellation of all 58 flights to and from Athens International Airport between midday and 4 p.m. and the rescheduling of another 135, according to a spokeswoman. Greece “is not looking for money” from Merkel, Papandreou told Germany’s Frankfurter Allgemeine Zeitung newspaper in an interview today. “What we need is the support of the EU” to borrow at more favorable conditions, he said. In a bond sale that marked a test of investor response to Papandreou’s austerity measures, Greece yesterday sold 5 billion euros of 10-year bonds. Investor demand when the order book closed exceeded 16 billion euros, according to Petros Christodoulou , head of Greece’s debt agency. In the EU, there’s “solidarity that can be activated should financial markets fail to note that Greece is taking determined action,” Juncker said. “One has to say loud and clear: the Greeks won’t be left alone because the Greeks deserve not to be left alone after having made these tremendous efforts in the past weeks.” European Central Bank President Jean-Claude Trichet told Belgian RTBF radio that the Greek government’s decision was “courageous, but absolutely necessary,” with polls showing a “very large majority” of Greeks backing the government’s plans. French Finance Minister Christine Lagarde praised the “courage” of the measures decided by Papandreou. To contact the reporters on this story: Brian Parkin in Berlin at bparkin@bloomberg.net ; Rainer Buergin in Berlin at rbuergin1@bloomberg.net

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Chile Struck by Magnitude 8.8 Earthquake, at Least Six Are Reported Killed

February 27, 2010

By Mike Millard Feb. 27 (Bloomberg) — Chile was rocked by a magnitude 8.8 earthquake, the USGS said on its Web site . A tsunami warning was issued by the Pacific Tsunami Warning Center for Chile and Peru, and later extended to Colombia, Panama, Costa Rica and Antarctica. The temblor struck 197 miles (317 kilometers) southwest of the capital, Santiago, at a depth of 36.9 miles at 3:34 a.m. local time, the USGS said. “This is a major damaging earthquake,” Randy Baldwin of the USGS told the BBC in an interview. “For any population in the area it would be reasonable to expect some damage occcuring.” Chile’s Radio Cooperativa reported that the quake struck near a copper mining area, that power and telephone lines in Santiago were cut and that the airport was closed. Chile was shaken in 1960 by the most powerful earthquake on record, a magnitude 9.5 temblor that killed about 1,655 people, according to the USGS Web site. A further 211 people were killed by tsunamis generated by the quake that struck Hawaii, Japan and the Philippines. Earlier today, a magnitude 7 earthquake hit near Okinawa, Japan, at about 5:31 a.m. local time, the U.S. Geological Survey said on its Web site. Last month, Haiti was struck by a magnitude 7 quake. The death toll may reach 300,000, Psresident Rene Preval said Feb. 21. More than 1 million people were left homeless. To contact the reporter on this story: Mike Millard in Singapore at Mmillard2@bloomberg.net ;

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New York City May Get 16 Inches of Snow as Storm Gains Strength, Hangs On

February 26, 2010

By Brian K. Sullivan Feb. 26 (Bloomberg) — A winter storm warning for New York City is in effect until 6 p.m. today as a system carrying heavy, wet flakes and gusty winds threatens to smother the region with as much as 16 inches, forecasters said. Airlines canceled hundreds of flights as the snow moved in around 8 a.m. yesterday. Temperatures in the mid-30s Fahrenheit (about 1 degree Celsius) kept snow from sticking for much of the day and kept forecasters guessing about the total accumulation for the largest U.S. city. The National Weather Service said in a 3:30 p.m. advisory yesterday that the storm was strengthening and it will probably be tomorrow before it tapers off. AccuWeather Inc. warned of downed trees and power lines and said winds may cause whiteouts in some areas. A man was killed by a falling tree branch in New York’s Central Park, WNBC reported. “If people pigeonhole this and say that, ‘Oh, this is a snow storm on Thursday,’ they are missing the big picture,” said Michael Schlacter , chief meteorologist at Weather 2000 Inc . in New York. “This is definitely not just a Thursday story.” It was the second winter storm of the week for the U.S. Northeast, and came just weeks after snowfall set seasonal records for parts of the mid-Atlantic coast. Speculation that the snows would reduce demand for motor fuel contributed to a drop in gasoline futures. Gasoline for March delivery declined 6.17 cents, or 2.9 percent, to settle yesterday at $2.037 a gallon on the New York Mercantile Exchange. Gasoline Demand ‘Annihilated’ “Demand numbers are going to be annihilated by the bad weather,” said Ray Carbone , president of Paramount Options Inc. in New York, a trader at the Nymex. More than 1,500 flights were halted across the Northeast yesterday, most of them in New York, Boston and Philadelphia. That represented about 3 percent of the 50,000 flights scheduled in the U.S. this time of year, according to FlightStats.com , a Web site that tracks aircraft movements. Continental has canceled 20 flights in its main jet operations from the Newark, New Jersey, New York area, and all 200 of its regional partner airlines from Newark’s Liberty International Airport, said Mary Clark ,a spokeswoman for the carrier. Amtrak canceled eight trains on its Empire Service line in upstate New York yesterday and some service between New York City and Albany-Rensselaer was temporarily reduced while CSX Corp., which owns the line, repairs tracks and systems damaged by trees, said Tracy Connell , a spokeswoman for the passenger railway. Oil Tankers CSX, the third-largest U.S. railroad by revenue, said its customers should expect delays during “the worst of the storm” and that its effects will linger through the weekend. The lines are used by shippers including coal producers. Two crude oil tankers put off unloading in Portland, Maine, at least until today, said Tony Youells, port manager for Inchcape Shipping Services , a shipping agent. Waves as high as 27 feet are forecast in the waters off Maine, said Jim Hayes, a weather service meteorologist in Gray, Maine. “Waves are already washing over roads in southeast Maine,” Hayes said. “We might see waves this height once or twice a year.” Winter storm warnings, meaning heavy snow, ice and freezing rain are imminent, were issued from Maryland to Maine, while blizzard warnings stretched from the mountains of North Carolina into West Virginia. High-wind warnings calling for gusts as high as 60 mph were posted for parts of North Carolina, Virginia, Massachusetts, Vermont, Maine and the District of Columbia. About 75,000 customers in New York and New England were already without power as the storm moved through the Northeast, according to utilities. A system brought rain to New York City and almost two feet of snow to western Massachusetts starting Feb. 23, disrupting air traffic in Newark, Boston, Baltimore and New York. The new storm will linger over New York because a high pressure ridge over the Atlantic and eastern Canada is essentially blocking its forward progress, which typically would be to move out over the ocean, Schlacter said. To contact the reporter on this story: Brian K. Sullivan in Boston at bsullivan10@bloomberg.net ;

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