The Sydney Morning Herald from Sydney, New South Wales, Australia • Page 27

26 WORLD BUSINESS THE SYDNEY MORNING HERALD THURSDAY, MAY 9, 1996 CABLE TV MONETARY CRISES Financial disaster more contagious today opposes merser of US taints 1 ck 0 -S i BANKING Norris admits part in collapse London: The former chief executive of Baring Investment Bank, Mr Peter Norris, had accepted responsibility for his role in the collapse of the bank and agreed to penalties imposed by Britain's Securities and Futures Authority (SFA), the SFA said yesterday. Mr Norris has been banned for three years from the SFA's register of directors and will pay 10,000 ($18,975) towards the regulatory body's costs. But at least one of eight other Barings executives facing disciplinary proceedings has rejected the SFA's charges against him, and several of the cases could go to a tribunal Australian-born Mr Ron Baker, the former head of Baring's financial products group, began filing his defence yesterday, his lawyers said. Barings collapsed in February last year after rogue trader Nick Leeson racked up 830 million in Asian dealing losses. The bank was salvaged by Dutch financial giant Internationale Nederkanden Groep.

The SFA said Norris admits he "failed to act with due skill, care and diligence with regard to the level of positions reportedly held by Barings in its switching on the Singapore International Monetary Exchange and the Japanese It said Norris did not deal quickly and decisively enough with a 50 million discrepancy identified by the auditors of Barings Singapore and reported to London in January 1995. This sum was used to finance the losses and margin calls arising from Leeson's unauthorised trading, the SFA said. But it stopped short of declaring Mr Norris unfit to work in the industry. The regulator said it took into account Mr Norris had not been subject to SFA disciplinary action before. More than 40,000 individuals are registered with the SFA, which regulates 1,350 firms operating in the City, London's financial district.

Reuters Call to work together Bundesbank president Hans Tietmeyer (left) and Dr Greenspan. Photograph by REUTERS the derivatives trading of just one trader working halfway around the world, to illustrate "how much more rapidly losses can be generated" today. Bloomberg financial markets, engendered by the rapid proliferation of financial products, also has the capability of transmitting mistakes at a far faster pace throughout the financial system in ways that were unknown a generation ago, and not even remotely imagined in the 19th century," Dr Greenspan said. He cited the collapse of Barings pic, brought down by modern global financial systems require that central banks address the inevitable increase of potential systemic risk," he said. "The very efficiency of global executives at Time Warner, Turner and Tele-Communications said they still believed the merger would go through.

Even if FTC staff were to recommend blocking the deal, the five commissioners could still approve it. But several lawyers familiar with the agency said its chairman, Mr Robert Pitofsky, had pushed the FTC to be more aggressive in anti-trust cases. And Mr Pitofsky has said that media-industry mergers deserve particular scrutiny. It was not clear on Tuesday exactly how the agency wanted the deal to be changed. But executives close to the companies said the FTC staff were focusing on the role of Tele-Communications and its powerful chief executive, Mr John C.

Malone. Tele-Communications owns its Turner stake through a sister company, Liberty Media, which is controlled by Mr Malone. To mollify federal regulators, Liberty Media had already agreed to turn over the voting rights from its Time Warner stake to that company's chairman, Mr Gerald Levin. Now, though, the FTC apparently wants Time Warner to insulate itself further from Liberty Media and Mr Malone, according to people close to the companies. The agency's staff is also apparently focusing more on the concentration of programming services rather than the cable systems the deal would combine.

In addition to its 22 per cent stake in Turner, Liberty Media owns significant interests in an array of cable networks, including Discovery Communications, and home-shopping networks. The New York Times New York: America's Federal Commission has threatened to try to block the billion ($9.5 billion) merger between Time Warner and Turner Broadcasting System because of fears the deal would concentrate too much cable programming and distribution power in too few hands. While the warning was not unexpected, it could set off two sets of unpredictable negotiations: between the US Government and Time Warner, and between Time Warner and its partners, which include the giant cable operator and Turner shareholder, Tele-Communications Inc. Tele-Communications's tentacles extend to Australia where it has a stake in troubled satellite broadcaster Australis and links with Mr Rupert Murdoch's News Corp. People familiar with the case said FTC officials were concerned the structure of the merger would hinder competition among cable programmers and distributors.

The FTC had notified the companies of those concerns during the last two weeks, after an exhaustive study of the proposed merger. Time Warner is the nation's second-largest cable operator and owns the leading pay cable network, Home Box Office. Turner owns several popular cable networks, including CNN and TNT. Through its investment in Turner, Tele-Communications would end up with a 9 per cent stake in Time Warner linking in one stroke the nation's two largest cable operators and three of the largest owners of cable programming services. Despite the FTC warning, junior shares take on his Among the dozens of bankers involved are Goldman Sachs, Janney Montgomery Scott, Merrill Lynch and Morgan Stanley.

Mr Buffett has made it abundantly clear, whenever he can, in the annual report and prospectus or talking to shareholders, that he would not buy the shares at these prices. The company, which has $US1 billion in cash and short-term government securities, does not need the money. So why did Mr Buffet and the company's shareholders vote on Monday in favour of the offer fund claiming to be modelled after that style and developed investment unit trusts that allow smaller investors to buy a piece of the Buffett action. Mr Buffett has never been one to spurn growth. In fact, the offering this week of what might be called Berkshire junior shares shares equal to one-thirtieth the value of the existing stock seems to be an effort to take advantage of this exploitation as well as to discourage it.

While Mr Buffett himself says he would not buy the Berkshire junior stock, the company will, of course, end up pocketing the proceeds, which are estimated to be a not-too-shabby $US400 million or so. And no-one can fault the company and its underwriters for not doing their very best to make sure that everybody who wants the shares can get them. They are expected to be priced at about $1,200 each. To that end, Mr Buffett and the underwriter, Salomon Brothers, have lined up an impressive array of investment bankers, remarkable only for the few firms it may exclude. GROWTH Frankfurt: Increased integration of financial markets means upheavals in one corner of the world can trigger ever more rapid and wide-scale disruptions in the global marketplace, Federal Reserve chairman Dr Alan Greenspan said this week.

Central banks must work together to contain the risk of future market crashes, he said. At the same time, central banks must provide a safety net only rarely, to ensure that private financial institutions did not engage in reckless behaviour on the assumption that central banks would bail them out if catastrophe struck, Dr Greenspan told a Frankfurt international bankers' dinner. Dr Greenspan did not mention US domestic monetary policy or economic conditions in his speech. He also did not provide any estimate of hen or where, or how often, such financial market disruptions might occur. Less than three months after he took the Fed's helm, Dr Greenspan led the Fed's efforts to successfully contain the Black Monday crash, when the Dow Jones Industrial Average plummeted 508 points on October 19, 1987.

Dr Greenspan the next morning pledged to provide sufficient liquidity to the financial system. His action restored investors' confidence and the bull market resumed, with the Dow more than tripling from its post-crash low of 1738. "The changing dynamics of INVESTMENT MOGULS Buffett's New York: The mania surrounding the near-legendary investor Mr Warren Buffett and his company, Berkshire Hathaway, has spawned its own growth industry. Because a single share of Berkshire Hathaway stock is now making it the most expensive stock in the world, creative financiers have devised numerous ways to capitalise on the inability of most small investors to buy the shares. They have written books explaining Mr Buffett's investment style, created a mutual Special Ofet 25 MINUTE VIDEO OR CD ROM FOR $29.95 The Internet Free Starter Kit 7tu4, 5 Hours of FREE Time on the Net Ttu Over $100 Netscape Software FREE Software en TR6 Erskineville, 2043, NSW.

APPROPRIATE BOX PACKAGE No 2. $49 6 and insurance. rti V. i i ii i SAVING East Asia to tip scales How World bank Sees Growth pattern I first year 1996-05 1996-97 1995 1991-94 1981-90 World total 3.5 3.1 2.8 1.5 3.1 High-income countries 2.9 2.6 2.5 1.7 3.2 Developing countries 5.3 4.8 3.9 1.0 3.0 East Asia 7.9 8.2 9.2 9.4 7.9 South Asia 5.4 5.5 5.5 3.9 5.7 Sub-Saharan Africa 3.8 3.7 3.8 0.7 1.7 Latin AmerCarib 3.8 2.6 0.9 3.6 1.7 EuropeCentral Asia 4.3 3.0 2.1 MidEastNth Africa 2.9 3.2 2.5 2.4 0.8 East Europeex-USSR 4.4 2.9 1.8 THE SIITIPLE UJflV TO LOOK D1T0 THE WMmmi li ti 1 Note: GDP measured at market prices and rates. Sources: OECD, World Bank data growth subsided to a less inflationary pace.

After a peak of 24 per cent in 1994, Chinese consumer price inflation is estimated to have eased to 1 7 per cent last year and official forecasts are for an annual average 10 per cent in the next five years. Annual output growth in China is forecast to average 8 to 9 per cent over the same period. However, the bank said China's outlook was complicated by the ECONOMIES mimics ing? To discourage the development of investment unit vehicles that buy its stocks or stocks that the company owns as way of offering small investors a chance to participate in the company's historic gains, which have been an astonishing 28 per cent a year for the past decade. "Berkshire intends to provide a direct, low-cost means of investment in Berkshire so superior to the investments offered by the unit trust promoters that their products will be rendered unmarketable," the prospectus said. The New York Times expressed in 198 7 prices and exchange and projections.

fact that tight monetary policies had made the improvement of finances of indebted state-owned enterprises more difficult Highlighting another landmark development, the bank said that for the first time since 1989, sub-Saharan countries were enjoying rising income. The bank forecast that as a result of high world commodity prices, more liberal economic policies in many countries and, But it could cause trouble later as it opposes the Maastricht criteria for Italy's reentry to the European Community A-Ieague, which Mr Prodi wants to achieve as soon as possible. Mr Prodi, when president of the state holding company, IRI, privatised several sectors. But his mooted privatisation of the state electricity authority ENEL is opposed by more than the Refounded Communist Party. Another delicate issue for Mr Prodi is drawing the consequences of his professed antitrust policy in the communications field, especially as regards television.

Opposition leader Mr Berlusconi owns the three major commercial networks and will scream blue murder if the new Government, as is rumoured, deprives him of one. It is said that the Government intends to close down one of the three state broadcasting networks also, and it has denied any intention of vendetta against Berlusconi. Mr Prodi, 56, a Bologna University economics professor, Jias promised vigorous measures to reduce unemployment, which has topped 12 per cent. It Here is a fabulous, loin cosl look inlo Die internet fill the questions most commonly asked are answered in every day terms. CyberTree have designed this very simple to understand video for those mho are confused by all they hear, see and read about the Internet.

rpnTflQTir inTmnrT A 1 11J1 1 HO I lb lJliLillllUl eunmTHTC c. mriTC I JJIUIUUUIJ JUJllJ -ifrl mi I I 1 1 at 8pc most importantly, South Africa's relatively peaceful transition from apartheid to democracy, the region as a whole would grow about an average 4 per cent annually over the next 10 years. However, it said its cautiously optimistic projections depended on gains in civil peace being maintained in areas like the Horn of Africa and southern Africa. Strong South Asian growth and a resurgent Africa would occur against a backdrop of modest, low-inflation growth in the seven main industrial states. The bank predicted growth in the G-7 area would average 2.8 per cent a year over the coming decade, with inflation averaging 2.6 per cent during the period.

World trade is meanwhile predicted to expand by an average 6.3 per cent annually. The bank also said the transition economies of eastern Europe, central Asia and Russia seemed to have broadly ended the decline in output under way since the fall of the Berlin Wall in November 1989. Bloomberg ranges from 3 per cent in the prosperous north-east to 30 per cent in the south with 50 per cent there among young adults, many of them with tertiary qualifications. There are no unemployment benefits for those ho have never had a job. Mr Prodi proposes subsidies for job-formation programs and incentives for new businesses.

Previous governments also have had southern aid programs but some northerners claim that the southern development funds which did not end up in party pockets finished in those of the Mafia. Increased funds for the south could increase separatist demands because the Northern League Party wants fiscal autonomy before, it fears, Rome taxes the north to death. Tax levels are high and evasion extensive. During the election campaign Mr Prodi said tax levels could not be reduced for a couple of years but he would simplify tax procedures and crack down on evasion. He intends to present a take-it-or-leave-it Budget instead of having each provision subject to parliamentary debate and compromise.

Prodi has a problem trying to keep Italy's welfare state London: East Asian countries were set to enjoy the strongest growth in the developing world in the next 10 years, with an average yearly expansion of 7.9 per cent, the World Bank said. Other conclusions in the bank's latest report on Global Economic Prospects and the Developing World showed private capital flows to the developing world should grow significantly. The bank also highlighted the fact that some sub-Saharan and former eastern bloc countries showed signs of recovery for the first time this decade. The bank said east Asian countries would grow by 8.2 per cent this year, outpacing south Asia (5.5) Latin America and the Caribbean (2.6) and the industrial world (2.6). The bank's report, released on Tuesday, said the fastest-growing regions were also those pursuing policies which accelerated the pace of their integration into the global economy.

Within the East Asian region, the Chinese economy looked set for a "soft landing" in which Car imports up Tokyo (Bloomberg): Sales of imported cars in Japan rose 23.7pc in April from the same month a year ago to 33,043 vehicles, the Japan Automobile Importers Association said. Sales have risen for 30 months. US sales rise New York (Bloomberg): US retail sales rose last week, according to Johnson Redbook Service's weekly retail sales report. Retail sales in the week ended Saturday rose 2.2pc from" the year-ago week on an unadjusted basis. On-line pact New York (Bloomberg): America Online was about to unveil an agreement with Mitsui Co that would propel the No 1 on-line service into the Japanese market, analysts said.

Japan deficit Tokyo (Bloomberg): Japan posted a trade deficit of 30.727bn yen in the first 20 days of April, compared with a trade surplus of 329.04bn yen in the year-earlier period, the Finance Ministry said. China output Beijing Bloomberg): China's incremental industrial output the benchmark production indicator grew 13.7pc in April from the same month a year ago, the State Statistics Bureau reported. Special Ocr It's amazing but true for only $29.95 you will receive a 25 minute high quality video or CD-Rom that introduces the Internet in an educational, usable and non threatening way. RECEIVE ALL OF PACKAGE NO. 1 Ptca, VIDEO ar A CD Rom FOR ONLY $19.95 EXTRA A FURTHER $10 It TF.66 Unit 40, 1A Coulson St, INDICATE QUANTITY REQUIRED IN THE PLEASE PACKAGE No1: $29 6 postage, handling and insurance.

By DESMOND O'GRADY in Rome Mr Romano Prodi won the April 21 Italian election proposing a German-style social market against the Reaganomies of the centre-right leader Silvio Berlusconi. But Mr Prodi's hopes of fostering growth while maintaining the welfare state seem shakier now that Germany's Chancellor, Mr Helmut Kohl, has had to cut back on welfare programs and even France's Mr Alain Juppe is promising major spending cuts. Only if inflation decreases from its current 4.5 per cent to 4 per cent will the Bank of Italy cut interest rates and make servicing the huge public debt less onerous in an economy whose predicted growth rate this year is 1.8 to 2 per cent. But one component of the centre-left majority, the hardline Refounded Communist Party, wants automatic cost-of-living adjustments which could increase inflation. Mr Prodi's Olive Coalition is.

dependent on the Refounded Communist Party vote only in the lower house and he is confident it will not bring down the Government over this issue. YOUR DETAILS (Please complete USING BLOCK LETTERS) First Name: MrMrsMissMs Surname: Address: postage, handling Postcode: PAYMENT DETAILS (Please complete the relevant payment details) 1 YES! Please charge my credit card Bankcard Mastercard Visa Diners Others Card No: n. Name of Card Holder Signature: Expiry 2. YES! Please find enclosed my chequemoney order State: AH( BH(.