The Philadelphia Inquirer from Philadelphia, Pennsylvania • Page 44

C8 THE PHILADELPHIA INQUIRER Friday, April 7, 2000 Ex-vitamin executives agree to time in prison Local firm is cited in case for easing China's trade status I i I kI I vr: s'F '7 4-ri Lji I LfiA. Strotmann, a former BASF grdVp vice president, each agreed jtojj serve three months in prison and pay a $75,000 fine. Steinmetz, who headed the division when the plot began, was succeeded by Suter in r-1996; Strotmann joined the scheme in 1995, the Justice Department said. Hauri is the third Hoffmann-La Roche executive charged in this conspiracy. Kuno Sommer, a Swiss citizen and former worldwide marketing director for Hoffmann's vitamin di-, vision, pleaded guilty in July to par--, ticipating in the conspiracy and lying as part of a cover-up; he was sentenced to four months in prison and a $100,000 fine.

In October, Roland Bronnimann, a Swiss citizen and former presi- dent of Hoffmann-La Roche's vitamin division, was sentenced to five 4 months in prison and fined I $150,000. VITAMINS from CI In May, Hoffmann-La Roche pleaded guilty to the same conspiracy and was sentenced to pay a record $500 million criminal fine. In September, BASF pleaded guilty in the vitamin conspiracy and was sentenced to pay a $225 million criminal fine. Yesterday's charges were brought against two Swiss nationals, Andreas Hauri and Dieter Surer, and two Germans, Reinhard Steinmetz and Hugo Strotmann. Hauri was a marketing director for Hoffmann-La Roche's vitamin division; the other three were top executives for BASF.

Hauri agreed to serve four months in a U.S. prison and pay a $350,000 fine. Steinmetz, a former president of BASFs fine chemicals division, agreed to serve 3i months in prison and pay a $125,000 fine. Suter, also a former BASF fine chemicals division president, and She said the hardest part of selling the agreement to Congress was answering concerns over China's human rights record. But Congress has approved China's trading status for 22 years, and already has effectively ceded its clout over human rights without gaining benefits for U.S.

exporters, she said. Margaretta M. Clulow, chairwoman of Kingsbury's board, and a grand-aughter of its founder, Albert Kingsbury, said she was concerned about how the agreement might affect Taiwan. "We simply cannot abandon Taiwan," Clulow said. Barshefsky said that if China did join the World Trade Organization, the organization would become the only international body with both Taiwan and China as members.

That could provide a forum for the two to work out their problems, she said. After visiting Kingsbury, Barshefsky promoted the deal at the University of Pennsylvania's Wharton School before returning to Washington. And there awaits Congress, including Rep. Robert A. Borski, who represents Northeast Philadelphia and is a staunch opponent of the trade deal.

"Regrettably, China's trading practices are far from normal," Borski said in a statement yesterday. "China will deserve normal trade status when it fully opens its markets to foreign competition, abides by international human rights standards, and ceases military support for terrorist nations." 'S. 1 Firms to pay $140 million to settle allegations of securities overcharges it' i TRADE from CI taxes for U.S. importers, and eliminate other Chinese business practices that discriminate against U.S. companies.

The Clinton administration, and many business leaders are pushing the pact as a good economic move. Barshefsky said the pact could lead to a doubling of U.S. exports to China, from $15 billion to $30 billion annually, in the next five years. Beyond economics, she said the agreement would help Chinese leaders cope with growing unemployment and instability in China. Those problems could threaten China's democracy movement and U.S.

security in Asia, she said. Critics say the deal gives low-wage China an opportunity to take away U.S. jobs. And, by eliminating the annual trade review, the United States loses clout over Chinese violations of human rights, they say. They also argue that U.S.

multinationals are supporting the permanent trade status to use China as a manufacturing base, cutting out U.S. suppliers such as Kingsbury. Brown, however, said he was not concerned that his customers would abandon Kingsbury for Chinese suppliers. "We make a highly engineered product," he said. "They can't do what we do." Bill Schull, president of the Kingsbury Shop Employee Association, the in-house union, said the agreement "probably is a gamble.

But we have been doing business in China for 17 years, and so far it has been good for us." For months, both sides in the debate have been building steam. But their campaigns heated up on Wednesday when House Speaker J. Dennis Hastert 111.) said the House would vote on China's trade status during the week of May 22. "You will be hearing a lot about this in the coming weeks," Barshefsky told employees gathered yesterday in the Kingsbury cafeteria. YIELD from CI The agreements resolve charges from a five-year federal investigation of alleged yield burning in the municipal bond market in the early 1990s.

Yield burning refers to the practice of charging too much for Treasury securities needed to refinance outstanding municipal bonds. A PaineWebber spokesman, Paul Marrone, said the firm was "pleased" with the settlement. "This resolves any uncertainty regarding tax liability" for the bond issuers and bondholders, he said. Dan Callahan, a spokesman for Dain Rauscher, said: "An industrywide settlement in this matter is in the best interest of all in the public-finance market." Officials from some municipali-ties weren't happy. "The industry got off cheap," Utah's state treasur-1' er, Ed Alter, said.

TOM GRALISH Inquirer Staff Photographer Kingsbury Inc. executives listen to U.S. Trade Representative Charlene Barshefsky discuss China. James Chan (foregnjUnd), Asia adviser; Stephen Burmeister (left), repairs and service manager; Sean O'Hara (center), corporate information system manager; and Anthony McCann, senior sales application engineer, were among those present yesterday. rf, i 1 mm 1 1 LJ L- t' lili I 7 $135 million is offered forRmco ill W) -I 1 ,1) Ml Uuimi 400 MINUTES A MONTH FOR $399-9 PLUS 500 FREE WEEKEND MNUTES.

Just sign up by April 30th and Omnipoint will treat you to 500 FREE minutes per month all day Saturday and Sunday for a whole six months. Jill OMNIPOINT -i'i Motorola M3682 Suggested Retail Price $49 1 BUYOUT from CI proposal is nonbinding and would be subject to regulatory approval and negotiation. Babbage's "did not provide any additional details to us," Bodine said. "As we announced on April 3, we do have a definitive merger agreement with Electronics Boutique that has been signed by both sides." Babbage's officials did not respond to requests for comment yesterday. Bodine noted that Funco and Electronics Boutique were proceeding with plans to file papers with the Securities and Exchange Commission to begin the tender offer to Funco shareholders, scheduled for next week.

Joseph Firestone, president and chief executive officer of Electronics Boutique, said his company was proceeding with acquisition plans. "All I do know is that we have a definitive agreement, and they Babbage's don't seem to have one," he said. "We are moving forward." Electronic Boutique's definitive agreement with Funco includes a break-up fee of $3 million plus expenses if one side backs out of the deal. The sales talk was a boon for Fun-co's stock, which had plummeted after it reported on Dec. 21 that a significant softening in December sales would result in lower-than-ex-pected sales and earnings for the third quarter.

Funco officials blamed the slowdown on shortages of such popular new products as Nintendo's Game Boy Color systems and Pokemon Yellow games. Funco's shares fell to a 52-week low of $9,625 on Feb. 11. The company operates 400 Fun-coland stores in strip malls and publishes the video-game magazine Game Informer. Funco started out by reselling games, and the sale of used games still accounts for 40 percent of its business.

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