Detroit Free Press from Detroit, Michigan • Page 56

DOW NASDAQ Closing 2,837.26 AUTOS I GIVX seeks efficiency Offer to UAW is part of an effort to focus on small-car unit, pace zt. Closing 11,034.13 SUSAN TOIttPGR Is island getaway veiled tax shelter for Ernest J. Olde? WEDNESDAY Sept. 8, 1999 NYSE i Nasdaq Mutuals ONTHK WXB www.freep.com raomc 313-222-8765 Section 1 ERNEST J. OLDE may have found a tax dodge on the way to selling out to Block.

A blurb buried in an issue of the Federal Register said Ernest costs Fore $8-million payout joins $10 million to educate workers it graffiti at the two plants. Su-: zette Wright, 29, a Chicago Assembly worker who has been on medical disability leave since May 1997 and who is one of the 17 women pursuing court cases, attended Tuesday's news con- ference. She told reporters after the conference that she had been harassed for four years before May 1997, including an incident when she was five months preg-' nant. "A supervisor came up be- By CHARLOTTE CRAIG FREE PRESS AUTOMOTIVE WRITER sexual harassment at the automaker's two Chicago-area plants. Ford is establishing a fund to pay damage claims by not-yet-identified current and former female employees who can prove harassment on their jobs at the Chicago Assembly Plant, which makes Ford Taurus and Mercury Sable cars, or at the company's Chicago Stamping Plant in Chicago Heights.

Women filing claims must have worked at the plants since Jan. 1 1996. EEOC officials esti mated the potential number of claimants at 700 to 900. In addition, Ford will divide $250,000 between two of 19 women who filed harassment claims against the Chicago plant in 1996, '97 and '98. The remaining 17 claimants are pursuing their cases privately through the courts.

Ford also is to commit an estimated $10 million to a company-wide education program in the United States aimed at wiping out sexual and racial discrimination. The program will have special focus on the two Chicago plants, where the company hopes to reach a goal of 30 percent women among new employees and supervisors over the next three years, said Jim Padi-11a, Ford's group vice president for manufacturing. Chicago Assembly employs 2,535 workers. Chicago Stamping has 1,975. About 14 percent of the workforce at each plant is female, according to company officials.

The EEOC in January said it had evidence that women had been called degrading names, groped and subjected to explic CHICAGO A three-year investigation culminated Tuesday in an almost $8-million settlement between Ford Motor Co. and the federal Equal Employment Opportunity Commission to remedy claims of racial and Please see FORD, Page 6F Viacom to buy CBS in. record media deal DMC bleeds $93.2 million MEDIA MEGAMERGER In the biggest media deal ever, Viacom Inc. announced it is buying CBS Corp. for $35.9 billion in stock.

It might have impact on 2 stations in metro area merger links TV, radio, ad, film outlets nee ovrooAe fnvoriet effects of cost cutting should appear in 2000 ASSOCIATED PRESS By JOHN SMYNTEK FREE PRESS STAFF WRITER By BOAZ HERZOG FREE PRESS BUSINESS WRITER Jacob Olde has renounced his U.S. citizenship. The item sheds new light on the whereabouts of the reclusive founder of Detroit-based Olde Financial Corp. Olde, who grew up in Marine City and founded his brokerage firm in downtown Detroit in 1971, had been rumored to be living in the Cayman Islands. Olde Financial officials would say only that Olde has had no role in management since 1995.

But he is the chairman of the board and majority shareholder. Block, the nation's largest tax preparer, said Sept. 1 that it would pay $850 million in cash for Olde Financial, owner of Olde Discount Corp. Ernest Olde is not to have ties after the deal is done later this year. Really get away from it all But why would a true capitalist turn his back on the home of capitalism? Olde Financial said in a statement to me: "Ernest J.

Olde's decision to relinquish his U.S. citizenship was an intensely personal one that was made after a long period of careful reflection." "It confirms a basic reality that the Olde family has lived in the Cayman Islands for several years and considers it their home." The company said Olde and his family have been "citizens of St. Kitts since 1996." St. Kitts? A quiet port for Caribbean cruise ships? Also a spot with no income taxes. "Isn't it interesting that it happens to be a tax haven off the coast?" asked Bill Zink, international tax partner for Grant Thornton in Chicago.

"To me, that sounds like a tax-motivated departure," Zink said. Olde might have followed the sandy footsteps of other executives who have hit the beach to cut their U.S. tax bills. Mutual fund maven, John Templeton, gave up his U.S. citizenship in 1962 and moved to the Bahamas.

He saved more than $100 million in capital gains taxes when he sold his company in 1992. Olde, worth hundreds of millions of dollars, stands to gain big selling to Block. But is he going to save millions in capital gains taxes, too? It's not small change when one considers that Olde is often seen at the penter of the discount brokerage's troubled past. Thousands of smalltime investors lost millions in the mid-1990s and blamed abusive sales practices at the brokerage. Last year, Olde personally paid $1 "million to the Securities and Exchange Commission to settle charges in a investigation.

The firm and two other executives also paid fines. No one admitted wrongdoing. "He'll pay 'required' taxes Olde Financial's statement to me said Ernest Olde's move to St. Kitts 'has no impact on Mr. Olde's U.S.

income tax obligations." The company also said Olde "has continued to pay income taxes in the United States," while living in St. Kitts. "Mr. Olde will pay U.S. income on the sale of his stock in Olde Financial Corp." The carefully chosen words here are income taxes.

Under the law, Olde Financial was jequired to withhold U.S. taxes from any dividends or interest payments made to Ernest Olde. It's probable that he did pay U.S. income taxes on income. But the issue becomes fuzzier when it comes to capital gains.

I asked an Olde spokeswoman if Ernest Olde would pay capital gains taxes on the sale. The initial answer was: "He's paying all taxes that are required. If they're not required, he's not going to pay them." Later she called to say: "Ernie Olde will be paying whatever capital gains tax there is." Most of us pay capital gains taxes when we sell stock unless we can offset those gains with losses. But is Ernest Olde, now of St. Kitts, playing by the same rules? Maybe, maybe not.

Income from U.S. sources often can be taxed for 10 years after someone gives up US. citizenship, according to Max Koss, manager for Moore Ste- phens Doeren Mayhew in Troy. But it's possible, depending on the date of expatriation, to get around thatrule. Even if Olde pays capital gains a taxes, he still might save millions in estate taxes.

Expatriation, after all, is considered the ultimate estate plan-. ning tool for the rich and reclusive. A bigger family: From left, CBS stalwarts Don Johnson of "Nash Bridges," Dan Rather, Viacom's "Rugrats" and "Titanic." Viacom's MTV grabs a prize audience with shows like "The Real World." NEW YORK Viacom Inc. is buying CBS Corp. in the richest media merger in history a deal that would combine the owner of such hip properties as MTV and VH1 with the venerable network that brought you "60 Minutes" and "Murder, She Wrote." The merger announced Tuesday would vault Viacom into the major leagues of media conglomerates alongside Time Warner Inc.

and Walt Disney Co. with a major stable of properties across television, movies, radio and outdoor advertising. The new company would be called Viacom, but the CBS name long associated with such broadcast veterans as Walter Cronkite and Edward R. Murrow would continue to identify the TV network. In a way, the deal would not be so much a merger as a reunion.

Viacom was split from CBS in the early 1970s by federal rules, now repealed, that prohibited networks from owning their own shows. Viacom Chairman and CEO Sumner Redstone, who would lead the new company as its chairman and CEO, called CBS and Viacom siblings, saying at a New York news conference that the merger "seems almost dictated by destiny." Analysts and shareholders agreed with the upbeat assessment. Chris Dixon, a media analyst at PaineWebber called the merger a "good deal for everybody. You need to be Tuesday's announced merger of CBS and Viacom could have a big local impact if the new company can continue to own both its Detroit TV stations ts. yi Crucial is a Federal Communications Commission judgment whether common ownership of Viacom's WKBD-TV (Channel 50) and CBS's WWJ-TV (Channel 62) will be approved.

Approval likely won't come until early next year. A company can own two TV stations in the same market if, among other qualifications, one of the stations is not among the market's top four in viewers. Based on the July ratings sweeps period, Channel 50 was the fourth most watched TV station in the market. WWJ was fifth. Also at issue is whether the new company would surpass the FCC limit of 35 percent viewer penetration nationally with stations it owns and operates.

The new Viacom would reach about 41 percent. (However, there reportedly are exceptions for ultra-high frequency stations such as WKBDandWWJ. Viacom, the name of the merged company, could apply for a Detroit waiver. Without FCC sanction, the company might be be forced to sell one of the stations. The Viacom merger news release did not include Detroit when it mentioned markets where it expected to have TV station duopolies.

(Viacom officials could Detroit Medical Center lost $93.2 million during the first seven months of 1999, the hospital system says, or 76 percent more than it had projected to lose for the entire year. Already reeling from a deficit last year, DMC has made drastic moves to cut costs. But health care industry experts say most of the payoff from that effort won't begin showing up on DMC's financial statements until next year. One of the system's most significant money-saving moves, for example, was the closing of Sinai Hospital in northwest Detroit and the consolidation of DMC services at nearby Grace Hospital. Yet more than half of this year's losses $58.4 million through July occurred at Sinai-Grace Hospital, the name for the combined facility.

System officials blamed reduced patient volumes and higher expenses related to the consolidation, completed in June. DMC officials also confirmed the system will save about $20 million a year from a revised affiliation agreement with the Wayne State University School of Medicine. Details of the agreement are to be announced this week. "They're changing the entire operation," said Craig Kornett, an analyst for New York-based financial ratings agency Fitch IBCA. "It's sort of like trying to turn a huge oil tanker on a dime.

It will take a while for them to turn it around." Several large hospital systems in metro Detroit have announced The world's largest pure-play media company. Operations include CBS Television and Cable. It also has a majority stake in Infinity Broadcasting its radio and outdoor business. One of the world's largest entertainment companies. Operations include Blockbuster, MTV Networks, Paramount Pictures, Spelling Television, Showtime Networks and Simon Schuster.

It also has stakes in the UPN television network and the Comedy Central cable channel. VIACOM 0CBS 1998 sales: $12.1 billion El998loss: million Employees: 111,730 Headquarters: New York 1998 sales: $6.81 billion 1 998 toss: is! million Employees: 46,189 New York Source Hoover's compaiwt; Bloomberg News Associated Press, Detroit Free Press SUMMING IT UP Last TV season, CBS's average viewer age was 53. Viacom, with the crowd, brings a new audience. CBS TV President Leslie Moonves sees the merger as total market coverage: "We have them from the time they're 2 years old until the time they're 80." Please see VIACOM, Page 2F Please see DMC, Page 6F Please see TV, Page 2F FINANCIAL HEADLINES RETAIL Levi gets PepsiCo exec Levi Strauss Co. tapped a savvy marketer from beverage giant PepsiCo to lead the struggling jeans maker from its prolonged slump and get Americans especially today's youth interested in wearing its jeans again.

Philip Marineau, the CEO of Pepsi-Cola North America who boosted Pepsi sales, was named Levi's president and CEO. AUTOS Libyan car may raise safety bar Libyan leader Moammar Qaddafi has had his scientists and engineers working overtime to create Saroukh el-Jamahiriya, or Libya's rocket, which is supposed to be the world's safest car. Unveiled Tuesday in Tripoli, it is also intended to make James Bond green with envy over its i high-tech features. The narrow, rocket-shaped, five-passenger car has air bags that deploy all around the interior in case of an accident, a collapsible bumper that creates a greater crumple zone and a system of anti-roll rocker panels that self-activate to protect the passengers. TREASURY Rates on bills fall Interest rates on short-term Treasury securities fell.

The Treasury Department sold $6.5 billion in three-month bills at a discount rate of 4.720 percent, down from 4.875 percent. An additional $7.5 billion worth of six-month bills fetched 4.950 percent, down from 4.990 percent. The three-month rate sold for 4.680 percent in August and the six-month rate for 4.900. BANKING Buying bank branches Sovereign Bancorp of Pennsylvania announced Tuesday it is buying 278 Fleet and BankBoston branches for $1.4 billion, a deal that would make it the third-largest bank in the region. As part of a proposed merger, Fleet and BankBoston have agreed to divest more than 300 branches to satisfy antitrust concerns.

Sovereign will also take over 176 branches in other states. SUSAN TOMPOR can be reached at.