The Palm Beach Post from West Palm Beach, Florida on August 10, 1991 · Page 38
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The Palm Beach Post from West Palm Beach, Florida · Page 38

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West Palm Beach, Florida
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Saturday, August 10, 1991
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Page 38
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SATURDAY, AUGUST 10, 1991 The Palm Beach Post MSL s c PAGE 7B SERVICES DELAYED Judge holds off lifting ban on Baby Bells' expansion. PAGE 14B mortgage rates 130 In Brief Bra Palm Beach Post Staff and Wire Reports Salomon Bros, admits it broke Treasury rules NEW YORK Salomon Brothers, one of the dominant buyers of securities the government issues to finance the national debt, suspended two executives in charge of trading these securities Friday and admitted to violating government rules. The violations, a major embarrassment for this prominent Wall Street firm, include exceeding the 35 percent limit on the portion of a Treasury issue any one buyer can purchase, and using the names of customers without authorization. Salomon said its actions had caused the government no losses. But some federal officials said such actions could damage confidence in the Treasury market, raising the government's costs by discouraging investors. Some traders at other firms who asked not to be identified said the firm's activities in May left them with large losses. ' The Treasury Department, the Securities and Exchange Commission, the Federal Reserve and the antitrust division of the Justice Department all began investigating Salomon's activities before Friday's announcement. GDC to sell time-share business MIAMI General Development Corp., operating under bankruptcy protection after defrauding more than 10,000 home buyers, said Friday it will sell its Vistana time-share business to management for $82 million. The company will be open to other offers before the sale goes before U.S. Bankruptcy Judge A. Jay Cristol for review Aug. 28. Vistana operates a 722-unit hotel and time-share resort in Orlando and a 48-unit time-share building on Hutchinson Island near Stuart. v Management is offering $40 million cash and a $23 million, five-year note and will assume $19 million in liabilities. j Miami-based General Development has admitted running a high-pressure sales scheme that targeted out-of-state buyers to purchase overpriced homes in its planned communities using inflated appraisals. Four former executives face a criminal trial in October. Bush keeps Greenspan in office ;': T KENNEBUNKPORT, Maine President Bush acted Friday to keep Federal Reserve Chairman Alan Greenspan at work after Sunday when his term expires and while lawmakers weigh his nomination to stay on for another four years. The announcement by Bush that he was making the so-called recess appointment with Congress away on its August break temporarily cleared up questions about Greenspan's status, officials said. , Bush announced on July 10 that he was nominating Greenspan for another term as head of the central bank. But the Senate Banking Committee is not scheduled to hold hearings on the nomination until September. Alcoa begins broad restructuring 'Z PITTSBURGH Aluminum Company of America on Friday announced a broad restructuring designed to increase the autonomy of its 25 business units around the world and emphasize customer relations. The restructuring followed by a week the resignation of Alcoa's president and chief oper- Fred Fetterolf, who left citing differences of opinion on "important business principles" with Alcoa Chairman Paul H. O'Neill. Fetterolf did not elaborate. " O'Neill said Friday he had eliminated the position of president as part of his restructuring of the world's largest aluminum company. "In this new structure, our customers and the business units will be the center of the focus of the company not Pittsburgh, not the vice presidents that service them, not the chairman, but the business units," he said in a statement. 2 'News' employees leave paper ! BOCA RATON The circulation director and the circulation operations manager have left The News ot Boca Raton following the discovery of irregularities in the circulation department, Publisher Clem C. Winke Jr. said Friday. - "Certain activities inconsistent with generally accepted circulation practices resulted in incorrect circulation data," Winke said. "The distortions did not become significant until mid-April. As a result, no erroneous circulation data was made public to advertisers." 'The total qualified daily circulation of The News is 30,083 for the first seven months of the year, and total qualified Sunday circulation for the first seven months is 31,749, Winke said. i Paid daily circulation of The News is 23,239, or 6.4 percent ahead of last year for the first seven months of the year. Paid Sunday circulation is 24,776, or 8.7 percent ahead of last year. The News is owned by Knight-Ridder Inc., which also publishes The Miami Herald. ALCOA ating officer, C. Markets At A Glance INDEXES: Dow Jones Industrial Avg. 2996.20 -1 7.66 ' American Stock Exchange 365.98 -0.61 ; Standard & Poor's 500 387. 1 2 -2.20 r NASDAQ Composite 508.31 -1.08 Toronto Composite 3502.7 -11.9 Volume: 144.07m Losers: 868 NYSE: 212.17 -1.06 . Gainers: 695 Unchanged: 518 COMMODITIES (New York Commodity Exchange): "Gold: $358.40$ 1.20 Silver: $3.960 0.049 r TREASURY BILLS, MONEY RATES: ' 3-Month: 5.46 6-Month: 5.60 1-Year: 5.76 T30-Year: 8.24 Fed Funds: 5.50 Prime: 8S6 ; FOREIGN EXCHANGE (quotations equal U.S. $1): I British Pound: " -5899 .0033 Canadian Dollar: 1.1464 -.0001 ;. German Deutschemark: 1.7270 .0105 Japanese Yen: 136.60 0.40 ; CRUDE OIL (U.S. benchmark, N.Y. Mercantile Exchge.): I. September delivery: $2 1 .62 0.04 iii ii i i--"- Wholesale prices down 0.2 in July Survey finds economists doubting 'double-dip' The Associated Press WASHINGTON Wholesale prices fell in July for the fifth time this year, led by the biggest one-month decline in food costs 0.8 percent since early 1987, the Labor Department reported Friday. The 0.2 percent overall decrease in the Producer Price Index was greeted by the White House as "certainly good news" that could encourage lower interest rates and accelerate recovery. The lower prices in the food sector included an almost 25 percent drop for vegetables, as well as markedly lower prices for coffee, eggs and chickens. Private economists agreed that the Federal Reserve would now have more leeway to drive interest rates lower, but some still expressed concerns about the possibility that the weak recovery that began in the spring could falter, plunging the nation back into a recession. They said that the fact that wholesale prices have declined in five out of seven months this year showed how weak economic activity is at present. "The combination of the recession and the virtual absence of a recovery continues to act as a dampener on inflation," said Robert Dederick, chief economist at Northern Trust Co. of Chicago. Donald Ratajczak, director of economic forecasting at Georgia State University, said he felt there was a 40 percent chance of a relapse back into recession. But he said the Fed's move Tuesday to trim interest rates and its apparent willingness to do more should lessen that danger in coming months. But a new survey of 51 of the country's top economists found that only 9 percent believed the country would topple back into a recession despite various signs of weakness this summer. The consensus view held that the threat of a so-called double dip recession was about one in eight. The survey, conducted by Blue Chip Economic Indicators, did project extremely weak growth of around 2.7 percent, as measured by the gross national product, during the second half of this year, less than half the normal recovery pace coming out of a recession. ' 1 Presidential spokesman Martin Fit?-, water said the two consecutive declines in wholesale prices "is certainly good news on the inflation front That does give room for some impetus to continued growth and for recovery from the reces- sion." The 0.2 percent July drop in wholesale prices followed a 0.3 percent June decrease. So far this year, inflation at the wholesale level is actually falling at an annual rate of 1.7 percent. Economists said that the good news from falling food and petroleum prices would be partially reversed in coming months, but they predict 1991 will be the best year for inflation, both at the wholesale and consumer level, since 1986. Excluding the volatile food and energy sectors, wholesale prices edged up 0.2 percent. A Bidding War 1 esses! VN3108s 1 - .v w ft ft ft ft ft t ft v. ..trr w w w w - - , a Pan Am planes, routes and workers are on the line as the remaining major carriers make bids. Palm Beach Post Wire Services Delta Air Lines tripled the size of its bid for struggling Pan American World Airways to $904 million Friday, in what was widely viewed by the industry as a pre-emptive move against its competitors. The Delta offer came just hours after United Airlines offered $465 million for certain Pan Am assets, including Pan Am's Latin American routes. Delta's new bid covers a broader range of holdings than its previous offers. "What we're doing now is detailing our plans for an investment in the remainder of Pan Am," said Neil Monroe, a spokesman for the Atlanta-based airline. "We've said all along that we were going to do just that. It just took time to put all of the numbers together." Delta previously offered $310 million for most of Pan Am's European routes, its lucrative Northeast shuttle and some planes and equipment. Under its new bid, Delta has agreed to pay $515 million cash for Pan Am, of which $205 million is earmarked as an investment in the airline's Latin American operations. Delta also has offered to assume $389 million in liabilities. The buyout plan would save about 6,900 Pan Am jobs, Delta said in a formal statement. Pan Am's creditors, who objected to the previous agreement, would receive the $515 million cash and at least 51 percent of the stock of the reorganized Pan Am under the new offer. New York-based Pan Am had no comment on Delta's latest bid. A federal bankruptcy court judge in New York will review all the offers for Pan Am Monday. TWA chairman Carl Icahn said late Friday he may alter his three-part bid over the weekend to counter Delta's new proposal. "Although we think we have the best bid, we may revise it," Icahn told Reuters. "We're working with the creditors." TWA's most recent bid, made Thursday, is nominally worth between $1.06 billion and $1.16 billion, according to documents filed with the bankruptcy court. Although that price is substantially higher than TWA's earlier bid to buy Pan Am for $450 million, the amount of cash remains the same at $280 million, of which $250 million will be provided by American Airlines. The price includes assumed debts and liabilities, including a protection plan for $100 million worth of Pan Am tickets, $180 million of lease liabilities associated with six Boeing 747 jets, and $100 million worth of other equipment liens and debt obligations. Other bidders include Northwest Airlines. Investors Jay Pritzker and Kirk Kerkorian also have expressed interest. 3- i Comptroller I wanted BCQ;; for Florida Lewis wooed bank in '85 before closing it in '90 '"""'.I. The Associated Press TALLAHASSEE State Comptroller Gerald Lew-is shut down BCCI last year, but state records show taxpayers paid for his trip to London to woo the bank to Florida in 1985. Lewis' trip came years before BCCI was implicated in a multitude of crimes, and aides said the comptroller moved swiftly to protect the public after bank officers were indicted in Tampa in a 1988 money-laundering case. "In 1985, the world thought BCCI was a good corporate citizen and we were in competition," said Deputy Comptroller Larry Fuchs. "In all, three states were trying to get the headquarters. " The comptroller went to London on the recommenr dation of staff member Wilbert Bascom, who had ' visited BCCI three months earlier while on annual leave. The Bank of Credit and Commerce International helped make arrangements for that trip to London. BCCI got Lewis a room at its corporate rate at the Hotel Inter-Continental near Buckingham Palace duiy; ing the busy Christmas season. The state paid for Lewis' air fare and some of his . expenses totaling $1,153, even though aides said he ; spent only one hour meeting with bankers during the four days he charged to the state. - . Lewis paid for all of his wife's expenses, plus their) expenses for an extra four days at the hotel. . v. Back home, Lewis wrote BCCI President Agha . Hasan Abedi, saying, "I want to express my apprecia-:; tion for the courtesies shown to me by yourself and staff and to thank you for this opportunity to reinforce my personal feeling that you should consider Florida in the future expansion of your bank." Lewis spokesman Terry McElroy said his boss' meeting with BCCI officials in London was held during", business hours, but he didn't know whether Lewis had; socialized with them. - : McElroy said Lewis was just trying to boost " Florida's chances of getting the bank to expand in . Miami. BCCI later expanded in New York City. Florida banking officials first licensed BCCI to do business in 1982 after checking with a half-dozen American banks and regulators in the United States-and Luxembourg, where the bank was founded. Federal regulators now say the bank's web of shell companies, overseas banks and subsidiaries in 69 countries allowed it to operate virtually without regulation in many parts of the world. Bank regulators around the world took over the; bank last month, and the bank was indicted in New York on state fraud and bribery charges last week. C Lewis Sterling joins Peugeot in leaving U.S. The Associated Press NEW YORK Sterling Motor Cars, hurt by a persistent inability to improve sales, followed Peugeot Friday as the second European luxury carmaker to bow out of the U.S. market this week. The Sterling was introduced in 1987 as an amalgam of Japanese engineering and British style, with a Honda engine and a host of fancy features including heated leather seats, air conditioning, power everything and a walnut interior. But it suffered from a plethora of defects and an inability to compete with the multimillion-dollar advertising budgets of its full-blooded Japanese competitors, analysts said. "The United States is an inviting and cruel market," said Arvid Jouppi, analyst with Keane Securities Co. in Grosse Point, Mich. "The Japanese had the financial resources to do the advertising and all the things you have to do to introduce a new' product. If you're going to enter this market you need deep pockets or a rich uncle in Germany, England or Japan," he said. Peugeot, which had argued for Japanese import quotas, alstf'com- Less Than Sterling Sales Reported U.S. sales of Sterling Motor Cars since coming onto the market in February, 1987,:: 20,000 15,000 10,000 5,000 1987 '88 Q 1 BW K-.Xv.-a BSXXi HI i 89 90 '91" 'February through December "January through July SOURCE: Sterling Motor Cars Judge dismisses lawsuit seeking legal aid access to farmworkers THE ASSOCIATED PRESS plained about the depressed market and stiff competition in withdrawing Wednesday. Sterling, a Miami-based subsidiary of Britain's Rover Group, will end sales with the 1991 model year, said spokesman Michael Geylin. Imports have ceased and about 900 cars remain at 124 dealers around the country. Most of the firm's 117 employees will be kept on for the time being and a parts and service network will be maintained. j The decision has no effect on Rover's other U.S. model, the' Range Rover luxury 4-wheel drive vehicle. By LISA SHUCHMAN Palm Beach Post Staff Writer A Palm Beach County Circuit Court Judge on Friday dismissed a lawsuit that sought to force Okeelanta Corp. to give legal-service workers access to labor camps housing sugar cane cutters. In his order, Judge Robert M. Gross said the legal arguments cited by Florida Rural Legal Services to get guaranteed access to the labor camps were insufficient. But he gave Legal Services 90 days to amend its counterclaim against the sugar company, owned by the Fanjul family of Palm Beach. Jeanne Baker, who as staff counsel for the American Civil Liberties Union of Florida is representing Legal Services, said the judge's order does not necessarily spell the end of the case. "Any order issued by a judge should be taken seriously, but this particular order is of little consequence to the litigation," she said. "We would have amended the claim anyway." The counterclaim stems from a suit filed in March by Okeelanta. The company asked the court to issue a temporary restraining order that would force Legal Services employees to stay off Okeelanta property. Legal Services, a legal aid organization that provides counsel to farmworkers, coun-tersued, claiming that Okeelanta was illegally denying access to sugar cane cutters living in company labor camps. The camps house about 2,000 cane cutters brought to Florida from the Caribbean for the can harvest. What's Ahead ATTORNEYS representing Florida Rural Legal Services have 90 days in which to amend their counterclaim. BETWEEN now and then they will continue the discovery process, including the taking of depositions. Legal aid -workers will still have limited access to Okeelanta labor camps. A temporary order issued in March by!; Palm Beach County Circuit Court Judge, ; Matthew Stevenson granted Legal Services limited access to Okeelanta's camps. Representatives of the organization would be permitted to meet with cane cutters on camp-, property in designated areas, but would not : be able to go from bunk to bunk in the? barracks, he said. Legal Services says it is entitled to ap-i',-..1 proach workers at their bunks, comparing such visits to the legal equivalent of the right to go door-to-door. .' 1 ,,- Judge.Gross' order supersedes the tempo, rary order. That means by law, outreach, workers for Legal Services could be preventv-ed from entering camps altogether. ."' '. But Joe Klock, general counsel and spokesman for the Fanjuls, said Okeelantal would continue to allow Legal Services work' ers to meet with cane cutters in designated!" areas if they give advance notice. " ",',r

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