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CompaqCoagwig 

Everything goes right, 
and thafs by design 

Psg»15 



ZBleaditheway 

A new model company, 
from top to bottom 



Greener pastares 

Private sector beckons 
Europe's mandarins 


Page 14 



Crying lime again 

_p When business 
;S ends in tears 

Management, Page B 


FINANCIAL TIMES 


>.'Eufop^’s>Stisi ness* N'ev^ paper r;-. . 





, French air 
. J delays thousands 
55 of tourists 

Thousands of tourists throughout west Europe had 
their holiday flights to and from the Mediterranean 
delayed by an air traffic controllers' strike in 
scuthem France. In Palma. Majorca, more tha n 
10,000 people were affected by delays at the week- 
end. The controllers in Aix-en-Provence warned yes- 
terday that Mediterranean services would only 
return to normal some time this morning. 

Page 2 

Middle East peace progress: Israeli prime 
minister Yitzhak Rain and King Hussein of Jordan 
are expected to declare in Washington today that 
their 46 years of official hostilities are over. 

Page 3 

Blast damages Welsh refinery: An explosion 
caused a big fire and widespread damage at Tex- 
aco's Milford Haven oil refinery in south west 
Wales. There were only minor casualties. Texaco 
said it was too early to pinpoint the cause of the 
explosion, which will put 10 per cent of the UK's 
refining capacity oat of action for an indefinite 
period. 

German Interest rates: The era of falling 
German interest rates is nearing its end. according 
to Herbert Hax. one of the Bonn government's top 
independent advisers. The economy had improved 
so much that further cuts in short-term rates were 
unnecessary, he said. Page 16 

European Monetary System: The week saw 
the dollar recover and the Bundesbank fix the repo 
rate for four weeks, but the order of currencies in 
the EMS grid remained nnrhangad The range 
between the strongest and weakest currencies nar- 
rowed slightly. Currencies, Page 29 


MONDAY JULY 2S '1994 


EMS: Grid 


July 22. 1994 

! 



o e i% 2 % 


3% 


49fe . 5% 


The chart shows the member currencies of the 
exchange rate mechanism measured against the 
uvakest currency in the system. Most of the curren- 
cies can fluctuate within 15 per cent of agreed central 
rates against the other members of the mechanism. 
The exceptions are the D-Mark and the guilder which 
maiv m a narrow 2.25 per cent band. 

US accounting plan: US companies will 
probably have to take the costs of stock options as a 
charge against profits within the next three years 
under proposals being considered by the US Finan- 
cial Accounting Standards Board. 

Page 17 

Standard Chartered. UK-based international 
bank group, is co-operating with an independent 
bribery and corruption probe in Hong Kong into 
alleged malpractice at Mocatta, its bullion dealing 
arm. Page 17 

No dear answer from Sinn Ffin: Sinn Ffein. 
political wing of the Irish Republican Army which 
opposes Britain's presence in Northern Ireland, 
stopped short of saying "yes" or “no" to peace pro- 
posals put forward by the British and Irish govern- 
ments. Page 16 

Refugees riot in Germany: About 40 refugees, 
most of them Algerians, rioted in a German jail and 
took a prison guard hostage. The prisoners, facing 
deportation after their asylum applications were 
rejected, demanded a bus and free passage to a 
neighbouring country. 

Quebec sets poll date: Quebec premier Daniel 
Johnson announced that a provincial election will 
be held on September 12. The move launched fierce 
fresh debate on whether the mainly French-speak- 
ing province should secede from Canada. 

Author throws away medal: Wole Soyinka, 
Nigeria’s Nobel prize winner, threw away his 
national merit medal in anger when Lagos police 
halted a democracy march he was leading. The 
marchers were demanding an end to army rule and 
the release of opposition leader Mas hood Abiola. 
Gambia detains Nigerians. Page 2 

Warning of UK bulk materials shortage: 

This week's rail strike in Britain could bring seri- 
ous shortages and delays in bulk materials nor- 
mally carried by rail materials producers warned 
indukry. 

South African cricketers triumph at Lord’s 

South African captain 
Kepler Wessels (right) 
was mobbed by jubilant 
team-mates after they 
beat England by 356 runs 
with more than a day to 
spare in the first Test at 
Lord's in London. 

England captain Mike 
Atherton denied having 
.... „ . tampered with the ball. 

-■•t ■ ■ - J? but admitted not giving a 
2 V .a:W JsiZxiix * full explanation of his 
actions to the match referee. Ray Illingworth, 
England chairman of selectors, fined Atherton 
£1,000 ($1,550) for using dirt to keep his hands dry 
and a further £1,000 for not exp la in i ng his actions 
fully. 

Cycling: Miguel Indurain of Spain won the Tour 
de France for the fourth time running. 



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UAE CnilCO 


Berlusconi 
faces new 
corruption 
challenge 


By Robert Graham In Rome 

Italian anti-corruption 
magistrates issued a new chal- 
lenge at the weekend to the gov- 
ernment of Mr Silvio Berlusconi, 
ordering a string of arrests of 
prominent businessmen and poli- 
ticians including two executives 
at Fininvest, the prime minister’s 
media empire. 

The move cast a farther cloud 
over the stability of Mr Berlus- 
coni's 10 week old rightwing 
coalition. It also raised the pros- 
pect of a damaging battle 
between the executive branch of 
government and the judiciary at 
a time when many commentators 
believe the magistrates have 
adopted too political a role. 

Attention yesterday centred on 
the activities of the Milan magis- 
trates. But in Catania. Sicily, 
magistrates also made a high-pro- 
file move when they arrested 
three of the best-known local pol- 
iticians for alleged corruption - 
including Mr Salvo Ando, a for- 
mer Socialist defence minister, 
and Mr Rino Nicolosi, the former 
Christian Democrat head of the 
Sicilian regional government. 

The arrest warrants came five 
days after the government 
backed down on issuing a decree 
that limited powers of investiga- 
ting magistrates to use preven- 
tive detention. The Milan magis- 
trates. the most prominent 
anti-corruption team in Italy, had 
threatened to resign unless the 
decree was withdrawn and its 
terms redrafted to be made less 
restrictive. 

When the decree was approved 
by the cabinet on July 13, the 
Milan magistrates were prepar- 
ing a series of arrest warrants for 


prominent businessmen allegedly 
involved in paying bribes to 
members of the Guardia di Fin- 
alize. the financial police, for 
favourable tax assessmen ts and 
compliant inspections of com- 
pany balance sheets. Last week 
49 of these warrants were issued 
and another 23 late on Saturday. 

The warrants covered two men 
in Fininvest’s tax department - 
Mr Marco Rizzi, former member 
of the Guardia di Finanza, and 
Mr Salvatore Sciasda, the depart- 
ment's head. Mr Sciascia’s lawyer 
said he would hand himself over 
shortly but last night he still had 
not been located. Other promi- 
nent names on the arrest list 
included Mr Felice Vitali, the 
chief executive of Gemma, the 
finance group that controls the 
Rizzo li-Corriere della Sera pub- 
lishing empire controfied by Flat. 

Milan magistrates have been 
investigating several aspects of 
Fininvest's operations, from the 
granting of television licences to 
illicit transfer fee payments to 
football players. The magistrates 
have hinted that the present line 
of inquiry is the most serious so 
far. 

Almost 20 members of the 
Guardia di Finanza are under 
arrest and co-operating with the 
investigators, including a general 
and several senior officers. In 
less than a month., three mem- 
bers of the Guardia di Finanza 
have committed suicide, the most 
recent on Friday. Those co-oper- 
ating have reportedly said an 
organised system of payments, 
structured by rank, enabled com- 
panies to enjoy low tax assess- 
ments and square their public 
balance sheets with their “real” 
accounts. 


Brussels will agree 
to consolidate EU 
employment laws 


By David Goodhart, 

Labour Editor 

The European Commission will 
this week agree to rein back the 
launch of further initiatives in 
EU-wide employment law, in an 
approach which will find favour 
with the UK government 
ins tead of pushing ahonri with 
fresh directives, new emphasis 
will be placed on ensuring proper 
implementation of what has 
already been passed. 

This is one of the central 
planks of the European Union 
white paper on social policy, 
drawn up the Mr Padraig Flynn, 
social affairs commissioner, and 
due to be endorsed by the Com- 
mission on Wednesday. 

“A lot of progress has been 
made over the past 18 months 
and we do not think it is relevant 
to come forward with a new legis- 
lative agenda," said one of Mr 
Flynn's senior aides at the week- 
end. 

The UK has been the most hos- 
tile of the 12 EU states to the 
growth of European employment 
legislation, such as the recent 
directives regulating working 
time and young people at work. 

The British government will, 
however, welcome a new initia- 
tive to create greater mobility for 
workers within the EU. The 
white paper is expected to recom- 
mend the creation of a high-level 
European Commission working 
party, with the aim of breaking 
down continuing barriers to 
mobility, especially in occupa- 
tional pensions. 

On the implementation of 
employment legislation, where 



the UK has a good record, special 
emphasis will be placed on 
encouraging southern European 
countries, such as Greece, to put 
into practice health and safety 
legislation already approved at 
EU level. 

The UK government will not, 
however, support everything in 
the white paper. The Commission 
is expected to emphasise that if 
no agreement can be reached by 
the end of the year on key 
employment directives, such as 
that on the rights of part-time 
workers, negotiations will be 
transferred from the political 
level to EU trade union and 
employer groups. 

The current German presi- 
dency of the EU is eager to reach 
a EU-wide deal giving part-time 
workers equal rights, and even 
equal pay on a pro rata basis, as 
part of its campaign to boost 
part-time employment in Ger- 
many. But the UK government is 
almost certain to block an agree- 
ment, which would open up the 
possibility that the issue will be 
dealt with by the 11 other EU 
states in their “social protocol". 

Other points that the social 
policy white paper is expected to 
raise include: 

• EU-wide legislation outlawing 
race discrimination. Although all 
individual states have such legis- 
lation. those who have been the 
victims of discrimination while 
travelling from one state to 
another have found it difficult to 
get justice. 

• An action programme on 

equality between the sexes, 

Continued on Page 16 


^:^ICONTENTS 


MantftoHf Now *-» 

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People Page 12 

Weather 16 

Week Ahead 20 


□teener — 
M an oganert. 
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Waiting UWSoort. 
Arts — 


Emsglng Markets . 



Rwandan children gather on the tarmac at Goma airport in Zaire to watch the arrival of the first US soldiers. The advanced team of 25 has 
been sent to assess the needs of the refugees 


Fvawr. Hemar 


Rwandan refugees begin to go home 


By Lesfle Crawford in Kigali 

The tide of Rwandan Hutus 
seeking refuge in Zaire began to 
turn at the weekend, with thou- 
sands beading homeward as chol- 
era took hold in the camps along 
the border where up to 1,500 a 
day were estimated already to be 
dying. 

Aid officials were awaiting the 
arrival of the first US military 
aircraft. scheduled to make drops 
of small amounts of food. Mr 
Kengo wa Dondo, the Zairean 
prime minister who was visiting 
the border town of Goma, yester- 
day reopened the frontier which 
had been closed since Thursday. 
Refugees cheered and some 
crossed back into Rwanda. 

Their return will be crucial to 
the new government installed 
last week in the capital Kigali by 
the Tutsi-dominated Rwandan 
Patriotic Front, leaders of which 
say that their top priority is con- 
vincing the more than 2m Hutus 
who have fled that their lives will 
not be under threat if they come 
back. 

Those who are dying in Goma 
from thirst, hunger, cholera or 


Democrats 
vow to 
pass US 
health bill 


By Jurefc Martin, US Editor, 
in Washington 

Mr A1 Gore, the US 
vice-president, and the Demo- 
cratic leaders of both houses of 
the US Congress yesterday re- 
asserted their determination to 
pass a healthcare reform bill this 
year that would eventually pro- 
vide medical insurance coverage 
for all Americans. 

Mr George Mitchell, the Senate 
majority leader, said be would 
introduce a bill within the next 
week and that he intended to 
keep the Senate in session “until 
we complete action on it”, even 
if that meant delaying the sum- 
mer recess due in three weeks. 

Mr Gore, Mr Mitchell and Con- 
gressman Richard Gephardt, the 
House majority leader, all con- 
ceded, as Mr Gore put it in a 
television interview, that “the 
phase-in period may have to be 
extended” from the administra- 
tion’s target date of 1998. 

Mr Gore said that to wait eight 
to ten years for universal cover- 
age to take effect was “way too 
long". But he insisted that the 
administration had always 


Continued on Page 16 
Healthcare debate. Page 4 



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Their return from cholera-ridden 
camps in Zaire crucial to success 
of mixed Hutu-Tutsi government 


exhaustion fled in fear of RPF 
reprisals for the genocide of the 
Tutsis conducted by the former 
Hutu government. Extremist 
Hutu radio stations continue to 
.function in exile, sowirg panic 
among the population and urging 
them to leave Rwanda. 

“The inter nati onal community 
must help us persuade refugees 
they will be safe back home,” 
Rwanda’s new prime minister, 
Mr Fails tin Twagtramungu - 
himself a Hutu - said in an inter- 
view. “They have been intoxi- 
cated with propaganda. We must 
persuade them the RPF is not 
composed of killers." 

The former rebels of the RPF 
have taken pains to appoint a 
mixed Hutu-TTitsi government to 
win the support of the majority 
Hutu population. As well as the 
prime minister , his deputy, the 
president and the justice minister 
are ethnic Hutus, and say they 


reject Rwanda’s ethnic divisions. 
The new government promises to 
abolish the Rwandan identity 
card, which identified the holder 
as belonging to the Hutu, Tutsi 
or pigmy Twa ethnic group. 

The UN High Commission for 
Refugees, and all relief agencies, 
say the only solution to the 
humanitarian catastrophe in 
Goma is the voluntary repatria- 
tion of Hutu refugees. Mr Michel 
Moussalli. a special UNHCR 
envoy, believes a massive 
humanitarian presence is 
required in Rwanda to convince 
Hutus to return. “We need expa- 
triates, non-government organi- 
sations. UN military observers - 
the more the better." he said. 

After talks with the new gov- 
ernment, he is inclined to believe 
their pledge to protect the Hutus. 
He hopes to have food, UN moni- 
tors and assistance stations 
inside Rwanda within days. 


However, there were reports at 
the weekend of disappearances 
and detentions conducted by the 
RPF forces in Kigali. Mrs Philo- 
mene Mukabarali. the wife of a 
former ambassador and moderate 
Hutu politician, Mr Silvestre 
Kamali. said yesterday her hus- 
band had been abducted at an 
RPF road block in the capital 10 
days ago and had not been seen 
since. The RPF denies holding 

him 

Beyond the immediate impera- 
tive of winning back a population 
in exile, the new government 
faces overwhelming challenges. 
The RPF has taken over a coun- 
try with no electricity, telecom- 
munications or running water. 
There is no civil service - the 
Hutu intelligentsia was murdered 
alongside the Tutsi community 
in the wave of orchestrated kill- 
ings triggered by the death of the 
then President, Juvenal Habyari- 
rnana. in April. 

“Everyone who fought for 
democracy is dead," says Mr 
Alphonse-Marie Nkubito, the new 
justice minister. 

Rwanda's new president. Page 3 


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FINANCIAL TIMES MONDAY JULY 25 1994 


NEWS: INTERNATIONAL 


Estonian mouse determined to find 
way to get Russian bear off its back 


A sked if he thinks the 
Russian troops will 
leave his country by 
the deadline date or August 31, 
Estonia's president says: “I 
think they will go on the 32nd 
of August” By which the quix- 
otic Mr Lennart Men means 
the troops will not be pushed, 
but will go, a view widely held 
in the tiny country jammed 
against the Baltic Sea by a vast 
state whose most visible politi- 
cians employ a barrage of fier- 
cesomely chauvinistic rhetoric. 

“Look, they will go,” says Ms 
Riina Kionka, head of policy 
planning at the foreign minis- 
try. And, though the Russian 
defence ministry said last 
Thursday that it would stop 
the steady pull-out, Mr Raul 
Malk, Estonian chief negotia- 
tor with the Russians, said on 
Friday that "our information is 
that it is still going on". 

Everything about these nego- 
tiations is small - the number 
of troops, the size of Estonia 
itself (1.6m people) and the 
issues which divide the two 
sides. It is, however, large in 
that it is taken by the world’s 
lparirng states as a symbol of 
Russia's willingness to abide 
by a declared intent to with- 
draw; to face down domestic 
nationalist pressures; and to 
recognise, in actions if not yet 
in words, that the Soviet occu- 
pation of the three Baltic 
states in 1940 and their absorp- 
tion into the USSR was an act 
of illegal occupation. 

After the last round of talks, 
between Mr Malk and the Rus- 
sian deputy foreign minister, 
Mr Vitaly Churkin, in Helsinki 


John Lloyd writes from Tallinn on how a tiny state 
is trying to settle relations with a giant neighbour 


last week, the differences on 
the military issue - according 
to the Estonian minister - nar- 
rowed to three. Two of these 
concerned the time required to 
leave the submarine base at 
Pai diski and whether Estonian 
or Russian troops guard it The 
third, the most touchy, con- 
cerns the payment of pensions 
to, and continue residence of. 
some 10,000 former Soviet offi- 
cers now in Estonia. 

The -'main problem in the 
pensioners' issue is that some 
officers, according to Mr Malk, 
are former or even present 
KGB officers “who have taken 
active part in organisations 
which are hostile to the Esto- 
nian state". The Estonians will 
not pay them pensions, in part 
because they are too young, 
and more importantly because 
they believe many of them to 
be a fifth column in their 
midst. It would be better for 
the Russians to take them out 
now because, if they stayed, 
sooner or later some of them 
will be called to trial for crimes 
against Estonia,” said Mr 
Malk. 

Mr Churkin - among the 
most famed of Russia's diplo- 
mats because of his shuttle 
diplomacy as his country’s 
main negotiator with the Bos- 
nian Serbs - appeared on Rus- 
sian television on Saturday 
evening to say that he hoped 
the Estonian side would 
“reconsider -rite position" 


before a meeting between the 
two countries' presidents, 
mooted by Mr Boris Yeltsin 
two weeks ago but as yet not 
fixed “It is up to them to ask," 
says Mr MexL “and they have 
not asked yet.” 

Even if, as seems likely, the 
troop pull-out is agreed, two 
other issues remain. The Esto- 
nians claim two thin slices of 


Estonia wants 
formal Russian 
recognition 
that occupation 
was illegal 


Russian territory - the area 
around Ivangorod, opposite the 
Estonian town of Narva in the 
north-east; and the area 
around Pskov in the south- 
east These, they claim, were 
recognised as part of Estonia 
in the 1920 Estonian-USSR 
Treaty of Tartu. And since 
present-day Estonia has 
affirmed its succession from 
the inter-war republic and Rus- 
sia has claimed to be the inher- 
itor of Soviet treaties, its terms 
must be recognised, the more 
so since the claim to these 
pieces of land is enshrined in 
the new Estonian constitution. 

Second, as Mr Malk stresses, 


Estonia wants a formal recog- 
nition by Russia that the 
Soviet occupation was illegal 
and the acts of murder and 
deportation criminal. Says Mr 
Meri “I think Russia wants to 
forget its own history. I see no 
reason why Russia should 
admit its guilt before the 
Czechs, the Poles and others 
and not before our small 
nation.” 

Ms Riina Kictnka admits that 
the inscribing of territorial 
claims puts Estonian politi- 
cians “between a rock and a 
hard place”, between the com- 
mitment to and the desire of 
the people for a restitution, 
and a Russia which has unilat- 
erally strengthened the border. 
Compromises are possible, 
however, one being to sign a 
treaty recognising the pre-war 
Tartu treaty borders and then 
Immediately conclude a new 
treaty redrawing them along 
the present line. But that 
would take trust and goodwill 

Relations between the ele- 
phant and the mouse will 
depend on the willingness and 
ability of the 500,000-plus Rus- 
sian speakers in Estonia to 
become citizens of the new 
state; and the continued exis- 
tence in power of a Russian 
government more interested in 
being an accepted member of 
the international community 
than in re-asserting empire. 

Presently, says Ms Kionka. 
some 40,000 Russians have 


applied to leave the country 
and 60.000 have applied for citi- 
zenship. The main qualifica- 
tion for the latter is a language 
test described as simple: profi- 
ciency in basic conversation 
and residence of at least two 
years. “The main problem.” 
says Ms Kionka, "is with Rus- 
sians who live in all-Russian 
communities and never natu- 
rally speak Estonian". 

What Estonians see as Rus- 
sian great-power attitudes 
towards Estonia have been on 
display in the past few weeks. 
Mr Yeltsin said at the Group of 
Seven summit in Naples that 
troops would not be withdrawn 
on August 31 - a statement 
repeated last week by General 
Pavel Grachev, defence minis- 
ter, while negotiations were 
going on. In an interview in 
Izvestiya, General Alexander 
Lebed, commander of the 14th 
Army and the most popular 
militar y man, warned Estonia 
that it was in too weak a posi- 
tion to argue. 

Estonia is the economic suc- 
cess story of the former Soviet 
Union. It has a stable currency 
(the kroon) pegged to the 
D-Mark; gross national product 
growth of around 5 per cent; 
low inflation; trade Largely re- 
oriented to the west and obvi- 
ous signs of enrichment, espe- 
cially in Tallinn. This, it 
seems, will be the larger deter- 
minant the attraction for Rus- 
sian-Estonians to pledge loy- 
alty and an example which 
Russia should wish to emulate 
rather than to trust In spite of 
the rhetoric of tension. Estonia 
expects reality to improve. 


Waigel says dollar is set for recovery 


Economic developments in the 
US had paved the way for the 
dollar to recover on foreign 
exchange markets after hitting 
postwar lows. Mr Theo Waigel, 
German finance minister, said 
yesterday, Reuter reports from 
Bonn. Mr Waigel also talked 
up the D-Mark, saying one of 
the key successes of the Bonn 
government in the past few 
years had been to been to 
guide the currency through 
unification without suffering 
excessively hig h inflation. 

Speaking on German radio, 
Mr Waigel dismissed fears that 
long-term interest rates in 
Europe were bound to follow 
rising long-term rates in the 
US. “There is a certain 


decoupling and I could imagine 
that if developments in Ger- 
many continue - clear finan- 
cial and anti-inflationary poli- 
cies - then an even stronger 
decoupling from American 
interest rates is possible." 

Sending a clear signal to 
financial markets, Mr Waigel 
said the government was draft- 
ing tax reforms for the period 
after the October 16 elections. 
But he stressed that Bonn 
would not raise the federal def- 
icit to finance tax cuts. “Tax 
cuts which lead to higher fed- 
eral and state budget deficits 
would have to be paid for with 
higher interest rates and nega- 
tive consequences on capital 
markets," he said 


Changes in the tax structure 
would be aimed at lowering tax 
burdens for families, boosting 
exemptions for low wage earn- 
ers and easing corporate taxes. 
Mr Waigel also said he 
favoured gradually phasing out 
the so-called solidarity tax - 
7.5 per cent surcharge on 
income tdx bills to help finance 
unification - once economic 
conditions permitted 
Germany would also pro- 
mote a European-wide with- 
holding tax on interest earn- 
ings, but added that he did not 
expect agreement soon. “It can 
hardly be expected that we will 
find a solution in the next half- 
year. But it is important to 
raise this issue,” be said 



Mr Theo Waigel (left) with former Bundesbank chief Helmut 
Schlestngen clear signal to financial markets a>» 


Abkhazia 
looks to 
ties with 
Moscow 


By John Uoyd 

Only the "closest ties" to 
Russia would ensure the suc- 
cessful development of 
Abkhazia, the breakaway 
region of Georgia, according to 
Mr Vladislav Ardzimba, the 
region's leader. 

Speaking to the first world 
congress of ethnic Abkha zi ans 
in the capital of Sukhumi, Mr 
Ardzimba said that Abkhazia 
was a “de facto sovereign 
state”. He said that none of the 
documents be had signed with 
the United Nations or Russia - 
which has provided a peace- 
keeping presence of some 3,000 
troops with UN agreement - 
linked the region with Georgia. 

Georgian troops were driven 
out of Abkhazia last year after 
bitter fighting, especially for 
control of Sukhumi. Since 
then, the region, to Georgia’s 
north-west, has been sealed off 
from the rest of the country 
and the Georgian refugees 
denied re-entry. 

Mr Ardzimba's comments 
are in line with the long-term 
aim of the Abkhazian leader- 
ship to break fink* with the 
Georgian government in T bilis i 
and bring Abkhazia into a 
union - formal or informal - 
with Russia. The Georgian pop- 
ulation, which before the civil 
war had made up the majority 
in Abkhazia, has largely fled to 
Georgia, where its presence is 
greatly exacerbating the eco- 
nomic collapse of the country 
and raising fears of a humani- 
tarian crisis this winter. 

Figures published by the 
Russian statistical office Gos- 
komstat show that Georgian 
industrial output has halved 
over the past year - the sharp- 
est fell of any of the members 
of the Commonwealth of Inde- 
pendent States. Turkmenistan 
the main supplier of gas to 
Georgia, is threatening to cut 
supplies because of unpaid 
bills amounting to $30Qm. 

Mr Eduard Shevardnadze, 
Georgian leader and former 
Soviet foreign minister, is 
under increasing pressure from 
opposition politicians who 
accuse 1dm of capitulating to 
Russian pressure mid of having 
given up the fight to retake 
Abkhazia. He has warned of 
food and energy shortages this 
winter and feces a collapse of 
civil order as the currency is 
rendered increasingly worth- 
less by inflation. 


INTERNATIONAL PRESS REVIEW j 


European parliament prompts pain and pleasure 


EUROPE 


By David Buchan In Paris, 
Judy Dempsey in Berlin and 
Tom Bums In Madrid 


The distinctive aspect of the 
French press and political 
establishment’s reaction to last 
week's installation of the new 
European parliament has not 
been their direct comment 
about Strasbourg's new 
powers. 

French newspapers and poli- 
ticians have joined those of 
other European countries in 
making the commonplace 
assessment that the narrow 
vote of approval for Mr Jac- 
ques Santer as the next Com- 
mission president shows the 
new MEPs intend to use to the 
maximum their powers under 
the Maastricht treaty. 

Despite the low standing 
that parliaments in general, 
and the European one in par- 
ticular. have traditionally in 
the French mind, the reeling is 
that a strong Euro-parliament 
is inevitable, and, maybe now. 


even desirable. 

The real French moan is 
about the splintering of 
France's 87 MEPs into no fewer 
than seven groups at Stras- 
bourg, and the possibility that 
this dispersal means that 
France will not be able to 
make its voice heard. 

Most of the fragmentation 
was a consequence of the pro- 
portional system that France 
uses for European elections. 
But there was a hope among 
some on the government side 
that the 29 MEPs who won 
election on the government's 
RPR-UDF coalition ticket 
would sit in the same Christian 
Democrat group of the Euro- 
pean Peoples Party. 

In the event, only 13 UDF 
made it to the EPP, one stayed 
behind with the Liberals, and 
the 14 Gaullists decided to keep 
some Irish nationalists com- 
pany, for fear the EPP might 
be too federalist for them. 

So, the UDF turned to the 
press to express its anger. Its 
leader, ex-President ValOry Gis- 
card d’Estaing, complained to 


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Liberation that, with only 13 
French members in it, there 
could not possibly be a French 
candidate for the parliament’s 
presidency which will be filled 
by someone from the EPP in 
two and a half years' time. 

In Le Figaro Mr Jean-Fran- 
cois Fonpet contrasted this 
with the way that German 
MEPs were concentrated in 
Strasbourg's two big groups, 
the EPP and tbe Socialists. The 
result he said, would be that a 
German Christian Democrat 
would in 1997 succeed the new 
German socialist president of 
the parliament. “French 
cacophony, German pre-emi- 
nence,” he commented. 

There was no such disgrun- 
tled comment from the Ger- 
man press. The liberal Frank- 
furter Rundschau described the 
debate over Mr Santer's confir- 
mation as “a great moment in 
Strasbourg." The new deputies, 
the newspaper argued, gave “a 
warning to Brussels, its 
bureaucrats, and European 
governments that it can no 
longer be taken for granted. 
Strasbourg has demanded 
more democracy from Euro- 
pean governments” and must 
continue to strengthen the 
European parliament 



Eandelsblatt, the economic 
and business daily, went fur- 
ther, arguing that the “system 
of consensus” for electing the 
president of the European 
Commission must be changed, 
implying that in the end Stras- 
bourg had been facet 1 with a 


Bensch. Hsndtesbkatt 


compromise candidate thanks 
to Britain’s veto. The Frank- 
furter AUgemeine Zeitung, the 
conservative daily, and firm 
supporter of Mr Jean-Luc 
Dehaene, Chancellor Helmut 
Kohl's original candidate for 
the top EU post, believed 


another positive aspect 
emerged from Strasbourg. 

It showed that Germany's 
governing conservatives and 
opposition social democrats 
could transcend party loyalties 
and work together to secure 
the election of Mr Santer. How- 
ever, it too warned that Brus- 
sels will have to face the Euro- 
pean parliamentarians next 
December when the deputies 
scrutinise the credentials of 
the new commissioners. 

The European parliament is 
the “Cinderella" who is now 
“knocking at the door”, said £Z 
Pais, Spain’s leading newspa- 
per, in an editorial welcoming 
the assembly's close vote over 
the appointment of Mr Santer. 

The newspaper said that 
there were now three powers 
on the EU horizon; “a Council 
of Ministers that seems to 
want to control institutional 
democracy; a Commission that 
has to redefine somewhat its 
role but which would do well 
not to consider itself a mere 
executive appendix to the 
Council; and a Parliament that 
we now know has no intention 
of letting itself be treated as 
the Cinderella of European 
institutions.” 


INTERNATIONAL NEWS DIGEST 

Slow end to air 
chaos forecast 


Air traffic controllers in Aix-en-Provence warned yesterday 
that service to and across the Mediterranean would only 
return to normal some time this morning after their three-day 
strike climaxed yesterday, a peak day for people ending as 
well as starting their holidays. A spokesman for the striking 
controllers said the average delay on flights from northern 
Europe to the Mediterranean was five hours. But some holi- 
day-makers were worse hit, with 5,000 forced to spend Satur- 
day night camped at the airport of Palma in Majorca, and with 
services to the island of Corsica also severely disrupted. 

Aix-en-Provence, one of France's five control centres, nor- 
mally handles 2,400 flights a day. Its 11 controllers have been 
refusing to do overtime since July 11, and on Friday started a 
three-day strike, though they are required by law to provide a 
min imum service, allowing 50 per cent of flights through. But 
Nice airport said yesterday only 40 per cent of Its scheduled 
flights were operating. The Aix controllers are demanding 26 
more staff, shorter working hoars and better pay. Despite 
rules that a controller should not have to guide more than 12 
flights at a time, Aix controllers claim they are having to deal 
with more thnn 20. David Buchan, Paris 

More voting in Ukraine 

Elections to fill the final third of Ukraine's new parliament 
were held yesterday. If the remaining 112 seats are won by 
democrats and moderates, they could wrest control of the 
450-seat body from the Communists and their left-wing allies. 
However, democratic organisations have felled to present a 
united campaign. “The democrats have not learned their les- 
sons, " said Mr Yaropolk Kulchyckyj, Kiev head of the US- 
based International Foundation for Electoral Systems. “They 
are again fighting against each other. Communists can slip 
through into the lead." The empty seats are a result of 
Ukraine's inefficient electoral law, which only managed to 
elect 338 MPs in two rounds of voting last March and ApriL 
Many of tbe vacant seats are in metropolitan districts, often 
empty at weekends which could mean a low turnout With 
nine candidates on average per district, even the central 
election commission has predicted these elections will go to a 
second round on August 7. Jill Barshay „ Kieu. 

Eurofighter costs attacked 

Germany's auditing office has criticised the mounting costs of 
the European fighter aircraft, a joint project by Germany, 
Britain. Spain and Italy, according to a leaked report obtained 
by the DPA newsagency. The third internal report by the 
office to the finance committee of the lower house of parlia- 
ment compares the quality of the Eurofighter to the capability 
and efficiency of Russian MiG-29s. It coincides with a dispute 
between Germany’s politicians and industrialists about how to 
finance the project which is already behind schedule. 

Deutsche Aerospace, the German industrial partner in the 
project is seeking an extra DMl Jbn ($765m) from public funds, 
but the defence ministry is hesitant at providing extra financ- 
ing. The project, which is expected to cost DM30bn, is running 
two years behind schedule. -Britain and Italy expect to take 
deliver)' of the fighter aircraft in 2000, Spain in 2001 and 
Germany in 2002. Judy Dempsey, Berlin 

Indian arms talks in Moscow 

A senior military delegation from India arrived in Moscow 
yesterday for talks on co-operation with Russia and possible 
aircraft purchases, Itar-Tass news agency reported. The news 
agency said the delegation, led by air force Commander-In- 
Chief S K Kaui, would meet senior defence ministry and arms 
industry officials during the one-week visit and examine tire 
latest models of Russian combat aircraft. “He [Kaul] is also 
likely to negotiate purchases of MiG-29 fighter-bombers and 
SU-30 multi-purpose fighters,” the agency said, adding that 
India might consider buying a licence for production of the 
SU-30 fighters. The two sides will also discuss modernisation 
of MiG-21 fighters in service with the Indian air force and 
creation of a joint Rossi an-Indian aircraft venture, Tass said, 
quoting an Indian embassy officiaL 
Russia and India agreed to step up military cooperation in a 
joint declaration signed by President Boris Yeltsin and Indian 
Prime Minister P V Narasimha Rao during a visit by the latter 
to Moscow last month. Russia was India's biggest arms sup- 
plier in the Soviet era. but sates have slumped since then. 
Reuter, Moscow 

Zaire suspends bank chief 

Zaire’s new government, alarmed by the collapse of the 
national currency, ordered the Immediate suspension of the 
central bank governor and an audit of the Bank of Zaire. The 
decision to suspend governor Mr Ndiang KabouL an appointee 
of President Mobutu Sese Seko who had held the post since 
February, was announced on national television 'by Mb Mase- 
gabio Nzanzu, information minister, at the wwi of a six-hour 
cabinet meeting. He cited what he described as serious fellings 
and Mr N (bang’s violation of government instructions over tbe 
running of the bank. 

'In tbe past couple of weeks billions of newly -minted Zaire 
notes have flooded on to the black market, sending the zaire 
into a steep slide against foreign currencies and forcing steep 
rises in the price of consumer goods. Launched last October at 
the rate of three to the dollar, the zaire has fallen to L300. 
Reuter, Kinshasa 

Chinese foreign debt mounts 

China's foreign debt increased by 20.61 per cent or $ML2Sba 
last year, bringing tbe outstanding total to $83-5bn, the official 
Xinhua news agency reported yesterday. Of tbe total, 83.79 par 
cent or $70-Q27bn was middle and long-term debt and 16.21 per 
cent or $13.54bn was short-term, according to a report by the 
state administration of foreign exchange control. Financial 
institutions, including banks, were the biggest borrowers, 
accounting for 50 per cent of tbe total, the agency said. China's 
foreign debt service ratio last year stood at 9.7 per cent and 
debt ratio at 94^2 per cent, the report said. 

The World Bank is expected to tend China about $3bn to 
finance construction of 15 projects in the next fiscal year, 
which begins in August, the official China Daily reported. 
Reuter, Beijing 



‘First lady’ among German industrialists 


Grete ScMdtedanz, known as 
the “first lady” in German 
industry, died last Saturday, 
aged 82, her family said yester- 
day. 

“She was an outstanding per- 
sonality among German indus- 
try,” said Mr Edmund Stoiber, 
p rimo minister of Bavaria and 
a prominent member of the 
Christian Social Union, the sis- 
ter party of Chancellor Helmut 
Kohl's governing Christian 
Democrats. “She had ideas and 
concepts, and she forms a part 
of Germany's, and Europe's, 
economic history." Mr Richard 
von Weizsacker, the former 
federal president, described her 
as “the First Lady of German 
industry”. 

As bead of Quelle, Ger- 
many's - and Europe's - larg- 
est mail-order house, there was 
hardly a day this indefatigable 
lady did not take an interest in 


OBITUARY: Grete Schickedanz 


business. She was present 
when, in 1991. Quelle laid the 
foundation stone for its huge 
branch in Leipzig, in the east- 
ern state of Saxony, Donned in 
furs and pearls, and flanked by 
Mr KohL she mused loudly 
that DMlbn (£400m) was a lot 
to invest in Leipzig, and won- 
dered if the company could 
afford it. An aide was said to 
have replied quickly; “Or 
course we have the money!” 
Quelle last year had a turnover 
of DMl7bn. Since unification. It 
has Invested more than 
DM£5bn in eastern Germany, 
and is considered one of Ger- 
many's most successful pri- 
vately-run businesses. 

Bom in FQrth. Bavaria, on 
October 20, 1911. Grete Lachner 
- her maiden name - started 


in retailing at the age of 15 by 
joining Quelle, a company with 
a staff of five founded by Gus- 
tav Schickedanz, who was bom 
in 1895. The coupled married in 
June 1912. 

During the 1930s, the com- 
pany expanded rapidly, despite 
rampant inflation and unem- 
ployment. When the second 
world war broke out. Quelle 
bad an annual turnover of 40m 
Reichmarks. Despite Allied 
bombing of its warehouses and 
its headquarters in FQrth. near 
Nuremberg, the couple decided 
to set up business again in 
1946. The business steadily 
regained its market share. 

It soon became the largest 
most modem mail-order com- 
pany in Germany, priding Itself 
on quality for money and its 


fast and reliable service. 

Grete Schickedanz was also 
driven by a social conscience. 
At the end of the war, she 
founded a textile business to 
provide basic necessities for 
those whose homes had been 
destroyed. 

With Mrs Schickedanz at the 
helm, the group diversified in 
the 1960s and 1970s, particu- 
larly in film processing, fash- 
ion and furniture, and set up 
optician outlets throughout 
Germany. When her husband 
died in March 1977, -Mrs 
Schickedanz continued to man. 
age the business, rarely miss- 
ing an opportunity to shape its 
direction, especially after Ger- 
man unification. She was 
helped by her two sons- in-law, 
Hans Dedi and Wolfgang 
Buhler, the current chairman 

Judy Dempsey 



Grete Schickedanz: head of 
Quelle mail-order group 


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NEWS: INTERNATIONAL 


V" 



Middle East peace process ‘irreversible’ 


Julian Ozanne looks at today’s historic meeting in Washington 


‘Our nation 
is in pieces’ 

Leslie Crawford talks to the new 
president about recreating Rwanda 


Mr Yitzhak Rabin, Israeli 
prime minister, and King Hus- 
sein of Jordan are expected to 
declare before the world the 
end of a 46-year state of war 
and the irreversible nature of 
their peace process, at a meet- 
ing in Washington today. 

The meeting will signify the 
full return of Jordan to the 
western fold after the king's 
support for Iraq during the 
Gulf crisis. Israelis believe the 
peace process will also consoli- 
date a realignment of forces in 
a Middle East dominated no 
longer by the Arab-Israell con- 
flict but by the greater threat 
of Iran and its export of 
Islamic f nnriflm p n ta 1 igm 

The geo-political dimension 
is a significant factor, although 


A US warship carrying ousted 
Gambian President Sir Daw da 
Jawara steamed out of Banjul 
yesterday while the leader of 
the coup which toppled him 
received ambassadors and reli- 
gious leaders, Reuter reports 
from Banjul. 

Diplomats said the US Navy 
tank-landing ship La Moure 


probably more so to Israel and 
the US. Much more important 
to Jordan are the economic 
incentives which are driving 
peace efforts. 

King Hussein has always 
been a moderate and pragma- 
tist in the Arab world and has 
met secretly every Israeli 
prime minister except Mr 
Menachem Be gin, who refused 
to see him. But he has waited 
before signing a peace treaty 
with Israel in the interests of 
wider Arab solidarity. 

A formal peace treaty will 
still take several months to 
complete and will give Syria 
and Lebanon a little more time 


County carrying Mr Jawara, 
members of his family and 
senior officials was believed to 
be heading for Dakar, capital 
of neighbouring Senegal. 

Religious leaders who met 
coup leader Lieutenant Yayeh 
Jam eh said he told them that 
he and Mr Jawara had spoken 
but failed to agree terms for 


to strike their own deals. 

The king has decided to go 
ahead with normalisation of 
relations and implementation 
of joint projects ahead of a for- 
mal treaty, which is only a 
matter of time. Some economic 
measures will be announced 
today as the first steps towards 
integrating the economies of 
Jordan. Israel, Egypt and the 
Palestinians into a Middle East 
common market. 

Unlike Egypt - which in 1979 
became the first Arab country 
to make peace with Israel - 
Jordan and Israel share geo- 
graphic and economic 
resources: the Jordan Valley, 


the president to return. 

Mr Jawara fled to the US 
warship alter young army offi- 
cers on Saturday announced a 
coup against him after what 
began as a rampage through 
Banjul on Friday by soldiers 
demanding back pay. 

Officials said 10 Nigerian 
officers working with the mili- 


the Dead Sea. the Arava desert, 
the water sources of the Jor- 
dan and Yarmouk rivers and 
the Red Sea Gulf of Aqaba. 

Last week's economic talks 
held on the Jordanian side of 
the Dead Sea revealed the 
extent of economic coopera- 
tion which could develop well 
ahead of the peace treaty. 

At present it is even impossi- 
ble to telephone Amman from 
Jerusalem or Tel Aviv, as Jor- 
dan has blocked the lines. 
Opening phone lines and bor- 
ders would be an easy first 
step. Opening the borders 
would also help to fUel tour- 
ism. 


tary had been put under house 
arrest. They included the for- 
mer commander of the 800- 
strong Qamhian army, Colonel 
Boubakar Dada, who was pre- 
paring to leave Gambia. 

The capital Banjul was calm, 
the market was open and peo- 
ple were going about their 
business normally. An over- 


The two sides also discussed 
other possible first steps such 
as establishing commercial 
flights, reopening the Jorda- 
nian b anks which operated 
in the West Bank before 1967, 
and establishing trade rela- 
tions. 

More difficult and expensive 
will be projects like an ambi- 
tious plan discussed last week 
for a joint development strat- 
egy of the Jordan Valley and 
Arava desert from Yarmouk in 
the north to Aqaba in the 
south. The scheme would 
encourage tourism and pre- 
serve the environment, and 
Includes a $3bn project to bring 


night curfew was in force from 
7pm to 7am. 

Officials said Mr Jawara, the 
first of his two wives Lady Chi- 
lele Jawara, and about 14 of his 
19 children were on the US 
ship with the finance minister 
and inspector general of police. 

They said the justice minis- 
ter had been arrested, as had 


Red Sea water to the Dead Sea 
by constructing a canal which 
would generate hydro-electric- 
ity and preserve the water lev- 
els in the Dead Sea. 

Apart from the joint projects, 
US President Bill Clinton has 
also promised to ask Congress 
to relieve S950m of Jordanian 
debt and to supply military 
equipment to modernise the 
king's outdated army. 

Israel stands to benefit 
almost as much from these 
projects as Jordan. But Israel 
is driven much more by the 
psychological dimension of 
peace, and today's Rabin-Hus- 
sein handshake will signify the 
acceptance and increased secu- 
rity Israelis crave in the Middle 
East. 


the information minis ter and 
Vice President Saihou Sabally. 
The education minister, Mr 
Alieu Badjie, gave himself up 
on Saturday morning. 

Mr Jawara was prime minis- 
ter when Gambia won indepen- 
dence from Britain in 1965 and 
became president when it 
became a republic in 1970. 


I t is not often that a presi- 
dent is charged with the 
task of reinventing, as wen 
as rebuilding, a nation. Such is 
the challenge facing Mr Pas- 
teur Bizimungu, Rwanda's new 
president 

Mr Bizimungu is taking over 
a country with half its people 
in exile, and a history of ethnic 
conflict which reached its chill- 
ing apotheosis in the genocide 
of the minority Tutsi ethnic 
group by the majority Hutus in 
April. He believes the only way 
Hutu and Tutsi may live 
together again is by erasing 
the ethnic distinctions which 
divided them in the past. 

"Our nation is in pieces,” Mr 
Bizimungu said at the week- 
end. “We must teach new val- 
ues to the population, based on 
respect for universal rights." 

Mr Bizimungu must try to 
govern with no civil service, 
electricity, running water or 
telecommunications. The only 
institution functioning at pres- 
ent is the army of the rebel 
Rwandan Patriotic Front, 
which installed Mr Bizimungu 
as president last Tuesday. 

Yet he insists he will not be 
a mere civilian figurehead for a 
military regime. “I joined the 
RPF when it launched its 
struggle in 1990," he says. "I 
was their spokesman in Brus- 
sels and 1 led the peace negoti- 
ations with the former govern- 
ment" 

The Tutsi-led RPF has been 
careful to name Hutus such as 
Mr Bizimungu to prominent 
positions in the new govern- 
ment and to include moderate 
political parties in the cabinet. 
It even invited two members or 
the former ruling party to join, 
but they declined. 

Real power, however, is 
expected to remain in the 
hands of Gen Paul Kagame, the 
military commander who 
formed an army of Tutsi exiles 
in 1990 to fight the Hutu dicta- 
torship of Gen Juvenal Haby- 
arimana. Gen Kagame has 
taken the posts of defence min- 
ister and vice-president 
Mr Bizimungu will not say 
how long the RPF-ins tailed 
government intends to remain 
in power. The government has 


hundreds of thousands of dis- 
placed people to resettle. They 
must be housed where they 
feel safe. The survivors of 
Tutsi massacres may be reluc- 
tant to return to their former 
villages. Hutus who have fled 
into exile must be persuaded to 
return. The government must 
ensure security throughout the 
country. It may be a yenera- 
tion before Hutu and Tutsi can 
live together again." 

M r Bizimungu says his 
first priority is to 
persuade millions of 
Hutus who have fled Rwanda 
to return. That task may be 
made more difficult by the new 
government's intention to 
bring the authors of Lhe Tutsi 
genocide to justice. “Impunity 
will not be a condition for rec- 
onciliation.” he says. "Those 
who have killed must face jus- 
tice." 

But with few magistrates 
and a non-existent judiciary, 
the new president admits that 
the task of bringing suspects to 
trial is beyond Rwanda's capa- 
bilities at presen l 
M r Bizimungu. a 44-year-old 
former banker, has moved into 
the former dictator's residence. 
As if he needed a reminder of 
Rwanda's recent bloody past, 
the wreck of the presidential 
aircraft, which was shot down 
on April 6 by unknown sabo- 
teurs. can still be found in the 
grounds of the presidential 
mansion. The assassination 
was used by Hutu extremists 
as a pretext to bunch their 
plan to exterminate the Tutsi 
population and the moderate 
Hutu leadership. 

Mr Bizimungu concedes the 
extremists, now in Zaire, still 
pose a threat to the new gov- 
ernment. In the absence of on 
extradition treaty with Zaire, 
the remnants of the Hutu array 
could yet regroup and restart 
the war. The new government 
in Rwanda is seeking the 
co-operation of foreign govern- 
ments to bring the leaders of 
the former government and 
army to justice, and Mr Bizi- 
mungu hopes to meet Presi- 
dent Mobutu Sese Seko of Zaire 
this week to discuss the issue. 


First meeting for Asia-Pacific forum 


By Victor MaUct in Bangkok 

North Korea's nuclear programme, 
the Cambodian civil war and territo- 
rial disputes over the islands and oil- 
fields of the South China Sea will be 
among the topics of debate today at 
the launch of an 16-member multilat- 
eral security forum for Asia and the 
Pacific. 

But the foreign ministers attending 
the first, three-hour meeting of the 
Asean Regional Forum (ARF) in 
Bangkok say they are unlikely to 
makp substantial decisions on such 
issues until they have reach agree- 
ment on the role of ARF itself. 

The organisation, the first of its 
kind in Asia, is being founded to dis- 
cuss Asian security following the end 
of the cold war. Russia's power in the 
region has diminished with the col- 
lapse of international communism, 
and the US has withdrawn some of its 
military forces from the Pacific, while 
Chinese economic and military influ- 
ence is on the rise. 

All three superpowers are members, 
ARF comprises the six countries in 


Foreign ministers of Asean said at 
the weekend they were ready to 
accept Vietnam as a member, bat did 
not set a date, writes Victor Mallet in 
Bangkok. 

Asean was established in 1987 by 
countries seeking to protect them- 
selves from the spread of commu- 
nism. Vietnam still bag a communist 


the Association of South East Asian 
Nations (Asean) - Brunei, Indonesia, 
Malaysia, the Philippines, Singapore 
and Thailand - as well as the US, the 
European Union, Japan. China, Rus- 
sia, Australia, New Zealand, Canada, 
South Korea. Vietnam. Laos and 
Papua New Guinea. 

The various foreign ministers 
already meet annually for political 
and economic talks, and regional 
security has now been added to their 
list of concerns. 

Mr Clman Leekpai, the Thai prime 
minister, opened this year’s Asean 
meeting by railing for urgent efforts 
to avert any armed confrontation that 
might arise from territorial disputes 


government, but the cold war has 
ended and Asean wants eventually to 
embrace all the countries of the 
region to form a common front on 
economic and security issues. 

Vietnam's entry may be delayed by 
concerns over its willingness to 
implement mutual tariff arts under 
the proposed Asean Free Trade Area. 


in Asia. “The competition for ocean 
space and resources in the South 
China Sea is a particularly worrisome 
prospect,” he said. “A regional arms 
race is another concern, lhe creation 
of some kind of regional arms control 
regime can deter arms build-ups.” 

Some ARF members, led by Austra- 
lia and encouraged by the US. want to 
ensure that the organisation develops 
quickly and begins to take concrete 
measures to improve security. They 
also want officials of the member 
countries to meet more than once a 
year. China, on the other hand, 
favours a slower start for ARF, appar- 
ently because It does ‘not want to 
become enmeshed in multilateral 


negotiations over territorial disputes 
when it has so much clout in bilateral 
meetings. 

Several ideas for enhancing 
regional security have already been 
aired ahead of today's inaugural meet- 
ing. The first is an exchange of 
defence white papers, so that each 
government can understand how the 
others perceive their strategic inter- 
ests and the threats that face them. 

Another proposal is to establish a 
regional arms register, especially 
since some ARF members have yet to 
disclose details of their weapons to 
the United Nations register. 

The need to settle territorial dis- 
putes is likely to r emain near the top 
of the agenda, especially in and 
around the Spratly islands in the 
South China Sea. where six Asian 
countries have overlapping claims 
and China and Vietnam have both 
awarded oil exploration concessions 
in disputed zones. One suggested solu- 
tion is a “joint development zone” for 
oil and gas modelled on the offshore 
zone now being exploited by Thailand 
and Malaysia. 



Cambodians seeking refuge from 
ethnic violence paddle along the Viet- 
namese border yesterday. ap 


Ousted Gambian president leaves on US warship 



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NEWS: INTERNATIONAL 

Democratic leaders assess tactics on healthcare 


F or much of the summer. 
President Bill Clinton's 
ambitious attempt to 
overhaul the entire US health- 
care system had disappeared 
into a maelstrom of detailed 
legislative drafting and behind- 
the-scenes political dealing. 

Even the intervention last 
Thursday by the Democratic 
leadership, with the approval 
of the president to draft a new 
compromise bill does not per 
se. transform the maelstrom 
into a quiet pellucid pond. 

For the task of the Demo- 
cratic leaders of both cham- 
bers - Senator George Mitchell 
on the Senate side and Con- 
gressman Richard Gephardt 
for the House of Representa- 
tives - remains much as it was. 
This is to work to pull together 
a single bill from the heteroge- 
neous versions presented to 
them by separate committees. 

But the different rules and 
traditions of each chamber 
present each leader with a very 
different tactical challenge . 

The Senate's free-flowing 
rules of debate mean that vir- 
tually any amendment can be 
brought up at any time. Mr 
Mitchell wOl therefore try to 


A single reform bill must somehow take shape, report George Graham and Jurek Martin 


produce a single working biU 
(with luck, by the end of this 
week) which could then be 
debated for weeks on the Sen- 
ate floor. 

His challenge is to bring 
together senior Democrats 
such as Senator Edward Kenn- 
edy. whose labour committee 
passed a bill closely resembling 
Mr Clinton's proposal, with the 
finance committee centrists 
who produced a very different 
reform plan relying largely on 
improvements to the insurance 
market, and falling a long way 
short of the president’s goal of 
universal coverage. 

In the House the 
hand-to-hand fighting will take 
place not on the floor but in 
the rules committee, which is 
dominated by the Democratic 
leadership and the chairmen of 
the main committees. This 
committee can decide which 
amendments and which rival 
plans come up for debate. The 
leadership is expected to adopt 
a “king of the MB” strategy, 
under which the last version to 
win a majority would stand. 



Mitchell: weeks of debate 
possible on Senate floor 


eliminating previous versions. 

The timing of a House bOl 
however, is problematic. Many 
members are wary of being 
“BTU-ed" again; they fear a 
repetition of the battle over the 
budget in 1993 when they were 
cooled or coerced into casting 
a difficult vote for Mr Clinton's 
proposed tax on the number of 


British Thermal Units (the 
common measure of heating 
energy) in foels, only to see the 
BTU tax dropped in the face of 
Senate opposition. The House 
may, therefore, seek to open 
debate after, or at least at the 
same time as, the Senate. 

In both chambers, however, 
the employer mandate - a cor- 
nerstone of Mr Clinton’s plan 
under which employers would 
be required to provide health 
insurance to all their workers 
and pay for 80 per cent of its 
cost - is seen as having at best 
an outside chance of survival - 

Senator Kennedy has mooted 
a plan that seeks to gain cen- 
trist support by requiring 
employers to pay only SO per 
cent, and not obliging them to 
cover their workers’ depen- 
dents. Mr Mitchell has 
endorsed this approach in prin- 
ciple. 

Even the backing of these 
two titans, however, still falls a 
long way short of commanding 
a majority. 

The administration ran the 
risk of being left on the side- 


lines in this process, until the 
White House’s strategy session 
with the Democratic leadership 
last Thursday night left some- 
thing of the impression of a 
common purpose. 

Mr Clinton claimed on Fri- 
day that there was agreement 
on the broad principles - guar- 
anteed universal coverage, if 
not necessarily by 1998 as he 
had proposed, quality and 
choice for the patient, empha- 
sis on preventative and pri- 
mary care, and cost contain- 
ment. 

But until then, both be, bis 
wife and a phalanx of adminis- 
tration officials had been try- 
ing to fight fire (the unbeliev- 
able blitz of special interest 
commercials attacking the gov- 
ernment plan) with fire of their 
own. Typical was a speech by 
Mr Clinton two weeks ago in 
Pennsylvania on who has com- 
prehensive medical insurance 
coverage. 

“The politicians have it The 
wealthy have it The poor have 
it. If you go to jail you've got 
it. Only the pihiiflp class pm 



Gephardt: battle will take 
place in roles committee 


lose it. I don’t think that 
makes much sense in Amer- 
ica." 

The understanding with the 
Democratic leadership did not 
prevent Mrs Hillary Clinton 
and other officials from fan- 
ning out aro und the country to 
start a series of bus caravans 
which will converge on Wash- 


ington from all corners to cam- 
paign for whatever bill the 
Democratic leadership may 
produce. 

But the administration role 
for the time being is mostly 
limited to providing computer 
regressions and cost estimates 
for the variations being dis- 
cussed by congressional staffs 
as they try to piece together a 
bill 

That jigsaw work is still dif- 
ficult to complete, for a num- 
ber of pieces are missing. 

One of the principal ones is 
the official cost estimate from 
the Congressional Budget 
Office on foe plan produced by 
the Senate finance committee. 
The CBO is expected to show 
that the scheme foils $80bn to 
$100bn short of financing Itself 
over the next five years. 

This is potentially a damag- 
ing blow to a plan that has 
until now been hailed as the 
most centrist version of 
reform. 

Although some White House 
officials would still dearly love 
to produce a bipartisan bill, 


most have given up all hope of 
winning over more than one or 
two Republicans in the Senate. 
Senator James Jeffords of Ver- 
mont seems the most suscepti- 
ble. though Senator Bob Pack- 
wood of Oregon. Ins reputation 
already grievously damaged by 
charges of sexual harassment, 
may seek to redeem himself by 
working to pass a cause with 
which he has long been associ- 
ated. 

That leaves the administra- 
tion searching for the kind of 
wafer-thin majority that passed 
its budget in 1993, and 
extremely vulnerable to the 
defection of Democrats who 
feel strongly about ancillary 
issues. 

Potential coalition-breakers 
include the tobacco tax. which 
will finance much of the 
Morin's additional costs, and 
the question of whether abor- 
tion should be included in a 
nationally mandated benefits 
package. 

But unlike the budget, where 
individual elements could be 
traded away, the healthcare 
reform has to work as a com- 
plete system - or ft could end 
up making everything worse. 


Key terms and 
issues in debate 

■ UNIVERSAL COVERAGE: The bottom line of the original 
Clinton plan was health cover for all Americans, the only 
exceptions being specific social or religions groups with 
objections to inclusion. Of the four congressional committees 
that approved versions of healthcare legislation, only the 
influential Senate finance committee rejected this demand. It 
opted instead for a target of 95 per cent population cover by 
2002. A commission would recommend mandatory measures if 
this target were not met. However, the Senate in particular may 
take its lead from the committee's failure to back universal 
coverage and P resident Clinton has now signalled flexibility. 

■ EMPLOYER MANDATE: Another cornerstone of the Clinton 
plan, this requires employers to pay the bulk of their workers' 
health insurance costs - 80 per cent In the administration's 
proposals. However, the Senate finance committee also rejected 
this concept, again prompting Mr Clinton to hint at compromise. 
Joint employer/employee mandates have been floated as a way 
of resolving this toughest question to healthcare reform - who 
pays? 

■ COST CONTROI& AH the versions of healthcare reform 
legislation approved by congressional committees envisage some 
form of cost containment measures, such as taxes on expensive 
premiums, fee schedules and cost targets or outright caps on 
how much premiums can be raised each year. 

■ TAXATION: Apart from employer and employee mandates, 
extra taxes have been proposed to pay for health reform. These 
include extra taxes on cigarettes, guns and anun mutton, and 
assessments on some big employers. 

■ HEALTH MAINTENANCE ORGANISATIONS: Organisations 
which offer consumers a range of health benefits for an annual 
fee, largely using medical practitioners under contract 
Consolidation to the healthcare industry and consumers’ desire 
to cut costs are strengthening the HMOs independently of the 
progress of healthcare reform legislation, 

■ FEE-FOR-SERVTCE: The traditional American way of doing 
medicine, where doctors are paid by patients or their insurers 
for each consultation or treatment Specialist (and therefore 
expensive) doctors are already coming under pressure from the 
HMOs and (he more standardised cover they offer. 

■ INSURANCE MARKET REFORM: Under all the bills voted oat 
of congressional committees, insurers will be required to sell a 
standard benefits package. Measures are also planned to prevent 
insurers discriminating against the old and the sick. 

■ MEDICARE AND MEDICAID: Existing government health 
programmes for the elderly and the poor respectively. Current 
versions of reform legislation envisage the abolition of Medicaid 
as beneficiaries take up insurance elsewhere, with the 
government picking up the tab. The House Ways and Means 
committee approved a massive extension of Medicare to those 
who could not buy insurance elsewhere. 

■ ABORTION: A divisive issue both in and out of Congress that 
could sink reform altogether. The administration wants abortion 
cover included in the standard package of healthcare benefits, 
bnt the National Conference of Catholic Bishops, which supports 
health reform, has vowed to fight on this issue. 


Struggle for market share 
puts industry in turmoil 



National health expenditure 

Per capita ($) As per cent trf GNP 



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andQtXip HMftbAModnSnrof ArnwtoB 


Healthcare mergers and acquisitions (1993^4) 


Buyer 

AcquMftar 

■ . brteetUjri 

Merck 

Macfco 

08 

Columbia Healthcare* 

.• HCA 

' 6.7 

Rocha 

: 'Syntax. 

• 53 

Columbia Healthcare* 

Galen Healthcare 

.42 

a Lay 

•pcs- 

40 

SmlthKBae Baechan 

OvfflftHfad Pham. Swvfcjto ' 

■23 

Qf Aquitaine 

Staring WMtirop-' 

r - . 1-7- 

Cofcimbte/HCA 

Medcal Cwfc’Amorfca 

03 


»NMrCaMl*MHGA V. . -s 


By Richard Waters 
In New York 

The US healthcare industry 
has not been waiting on Presi- 
dent Clinton. Every part of the 
healthcare nhain from financ- 
ing through to dispensing 
drugs, is in upheaval, as com- 
panies strive to cut costs or 
fight for market share. 

One result has been a string 
of mergers and acquisitions: 
four deals worth a total of 
$13.5bn (£8.7bn) have been 
announced in the past three 
months alone, making this the 
most active part of the US cor- 
porate takeover market 

The causes for the shake-up 
can be traced directly to board- 
rooms, not to Washington. 

Take Ford Motor. In 1970 
spending an healthcare for its 
workers amounted to 6 per 
cent of the US carmaker’s pay- 
roll costs. Escalating health 
care inflation (costs rose at 
more than double the rate of 
general inflation during the 
1980s) and an ageing workforce 
have pushed that figure up to 
19 per cent US companies, on 
behalf of their current and 
retired workers and depen- 
dents, foot most of the the US's 
health bilL The cost could be 
making them uncompetitive. 

“Mercedes can start up [in 
the US] from scratch, hire a 
younger workforce and not 
have the costs. They have an 
immediate advantage," says 
Mr Robert Ozment, director of 
corporate and employee insur- 
ance at Ford. “The first issue is 
to get national costs under con- 
trol. Then we can talk about 
how you finance the system." 

The drive by companies such 
as Ford to hold down their 
costs in this area, under way 


for some time, has led directly 
to the indsutry’s latest string 
of mergers and acquisitions. 

Companies have used man- 
aged care to take control of 
their healthcare costs. Rather 
than simply paying their 
employees’ever-rising health 
insurance premiums without 
question, they have pursued 
ways to bring down costs. 

In its purest form, managed 
care involves enrolling an 
employee in a Health Mainte- 
nance Organisation. For a fee. 
the HMO provides all the 
employee’s healthcare, from 
prescription drugs to a doctor’s 
appointment The HMO in turn 
keeps costs in check by using 
only certain hospitals or doc- 
tors. or by giving preference to 
certain companies' drugs: this 
enables them to negotiate vol- 
ume discounts. 

HMOs have grown fast, and 
are expected to provide cover 
for (me in five Americans by 
the end of this year. Adding in 
other, looser variants on the 
theme, such as point-of-service 
plans and preferred-provider 
organisations, about half all 
US workers are now estimated 
to be covered by some form of 
managed care arra n gem e nt 

The growing buying power of 
these organisations is the sto- 
gie biggest factor shaping the 
healthcare industry, which 
accounts for about 14 per cent 
of the US economy. Their 
impact is already being felt: 
annual healthcare inflation fell 
from about 9 per cent in 1990 to 
less than 6 per cent last year. 
Drug price inflation dropped 
from an annual 10 per cent to Z 
per cent over the same period. 

The impact of this retotog-in 
of price increases has been felt 
to all parts of the healthcare 


industry: 

• Drug companies, though 
their products account for only 
7 per cent of total US health- 
care spending, have seen some 
of the greatest upheaval. 

Unless a drug carries bene- 
fits that are clearly superior to 
rivals to the market, it is likely 
to be subjected to severe price 
discounting. 

“A lot of research and devel- 
opment spending has gone into 
copying other people’s drugs 
and then changing a molecule 
or two. That really isn't help- 
ful.” says Dr Jay Crosson, an 
associate director at Kaiser 
Permanente, the US's largest 
managed care group. 

The result has been escalat- 
ing price competition, and 
efforts by the biggest compa- 
nies to increase their market 
share and out costs. 

The takeovers have taken 
two forms. One has been the 
acquisition by drugs compa- 
nies of pharmacy benefit man- 
agers, large-scale pharmacies 
which make up prescriptions, 
usually by mail. By controlling 
these distributors, which have 
hr ought down costs in part by 
encouraging doctors to pre- 
scribe cheaper drugs, the man- 
ufacturers hope to be able to 
sell more of their own products 
at the expense of their rivals. 
Merck, Eli Lilly and Smith- 
KKne Beecham have between 
them paid a total of $13bn to 
buy the country's three biggest 
pharmacy benefit managers to 
the past year, two of the them 
to recent weeks. 

The second form of takeover 
has been the acquisition of one 
drugs company by another, sig- 
nalling consolidation in an 
industry which is having to 
adjust from the high-growth 


expectations of the 1980s to the 
prospect of a lower-growth 
future. Sterling Winthrop, pre- 
viously owned by Eastman 
Kodak, and Syntex, a strug- 
gling US company, have both 
been bought by bigger Euro- 
pean pharmaceuticals groups. 

• Hospitals - which account 
for about half all US spending 
on healthcare - have faced 
their own cost pressures. 
Besides the discounts 
demanded by managed care 
organisation, most hospitals 
also face problems of overcapa- 
city. Better control of the way 
patients are handled, improve- 
ments in surgical techniques 
and the growing availability of 
care in the hofo p have all con- 
tributed to a shortening of the 
length of time the average 
patient spends in a hospital 
bed. 

With too many beds to go 
around, some hospitals have 
been dosing wards. The coun- 
try’s biggest private hospital 
group, known as Colum- 
bia/HCA since a recent acquisi- 
tion, has reacted differently, by 
buying up other hospitals com- 
panies. then closing entire 
sites in areas where there are 
too many hospital beds, Colum- 
bia/HCA has improved the 
profitability of its remaining 
sites. 

• Health ltinfotena^cp organi- 
sations and insurance compa- 
nies have also been sucked 
into the restructuring of the 
healthcare industry. United 
Healthcare, one of the biggest 
of the HMO grottos, has itself 
embarked on an acquisition 
spree, buying up local HMO 
companies around the country. 
It recently agreed to sell Diver- 
sified Pharmaceutical Services, 
a pharmacy benefit manag er it 


owned, for &3bn, providing it 
with more cash to continue its 
acquisitions. 

Meanwhile, insurance com- 
panies, responding to the 
change is the market, have 
been busy converting their tra- 
ditional health insurance busi- 


nesses into managed care 
organisations. One result: an 
agreement last month between 
two of ffie country's biggest 
insurers. Travelers and Metro- 
politan life, to combine their 
health insurance activities in a 
new leant venture company. 


Growth 
in drug 
sales 
slows 

By Paul Abrahams 

Pharmacy drugs safes recorded 
either slower growth or 
declines in every significant 
European market during the 
first five months this year com- 
pared with the same period in 
1993. 

The only exception was Ger- 
many, the region's largest mar- 
ket, where safes staged a small 
recovery after last year’s steep 
fails. However, safes were still 
down on 1992 levels. 

The deceleration has been 
caused by healthcare reforms 
throughout Europe, described 
last week by Mr John Robb, 
chief executive and chairman 
of Wellcome, the UK drugs 


Wortd pharmacy drug purchases January-May 1994 In US$m 



H. Anuta 

•fajwr- 

Gammy 

FTanca 

m 

UR 

Spain Him tnli 

Btfgkrn 

Cardiovascular 

3,418 

1.320 

1258 

1.217 

709 

386 

309 

124 

127 

Admen tary/Metabolism 

3.420 

1.623 

933 

640 

559 

426 

256 

150 

101 

Central Nervous System 

3520 

428 

580 

571 

289 

292 

178 

79 

74 

Antwnfectives 

2.108 

1.111 

330 

562 

404 

154 

207 

40 

62 

Respiratory 

2,248 

647 

548 

367 

207 

323 

171 

91 

36 

Muse ulo-S kale taJ 

928 

809 

284 

217 

169 

144 

85 

30 

28 

Blood Agents 

935 

695 

205 

301 

175 

35 

89 

28 

30 

Others 

4.500 

1.818 

1.113 

1.024 

575 

415 

282 

116 

181 

Total 

21.077 

8.451 

5,229 

4,919 

3.087 

2,154 

1,577 

658 

637 

% Change* 

6 

0 

6 

0 

-7 

8 

3 

4 

3 


-Non- hospital mawt only Increase eutudtog currencies Source: IMS Wam a Uonal 


group, as a series of hammer- 
blows. 

Sales in Europe’s top seven 
markets fell from $l9.lbn to 
$18J2bn, although in local cur- 
rencies they rose by 2 per cent, 
according to IMS International, 
the specialist market research 
company. The US market 
expanded by 7 per cent to 
$19.67bn, while the Japanese 
market was static in yen terms 
but rose in dollars from $7.7bn 
to $8.45bn. 

The Italian market has been 
the worst hit to Europe. Year- 
on-year sales fell 7 per cent 


from $339bn to $3n8bn. That 
compares with $4.7hn for the 
same period in 1992. The mar- 
ket is set for farther falls this 
year once the Italian govern- 
ment has decided on additional 
price cuts, possibly as large as 
10 per cent 

The French market, which 
was growing at 6.5 per cent 
during the first five months 
last year, was static to local 
currency terms but fell in dol- 
lars from $5.l8bn to $&9bn. 

In the UK, where sales were 
up 11.6 per cent during the 
first five months last year. 


market growth decelerated to 8 
per cent in sterling as price 
cuts and government controls 
on prescribing began to bite. In 
dollar terms, sales increased 
from $2.017bn to $2.154bn. 

to Spain, last year Europe's 
fastest expanding market at 
13.6 per cent, growth fell to 3 
per cent, to dollars, the market 
declined from $1.817bn to 
$1577bn. 

Market growth in Belgium 
fell from 5.8 per cent to 3 per 
cent, while to the Netherlands 
sales growth dropped from 13.4 
per cent to 4 per cent 


Study urges stronger trade rules 


By Guy de Jonquferes, Business Editor 

A fresh outbreak of trade warfare is likely 
unless stronger multilateral trade rules 
are drawn up quickly in the wake of last 
year's Uruguay Round agreement, a 
study* commissioned by a tr ansa tl an tic 
group of business and labour leaders and 
academics warns today. 

The study, published by the British- 
North American Committee, implicitly 
criticises the thinking behind current US 
trade and industrial policies as one of the 
main challenges to the General Agree- 
ment an Tariffs and Trade. 

The conclusions arc firmly endorsed by 


the committee’s joint chairmen. Sir David 
Plastow, chairman of Incbcape, the Brit- 
ish services group, and Mr John Heimann, 
a former US comptroller of the currency 
and senior executive of Merrill Lynch, the 
US investment hniUr. 

The committee believes the principles of 
the multilateral trade system are threat- 
ened by a growing belief among policy- 
makers that economic advantage is best 
achieved by promoting national champion 
industries and other monopolistic and oli- 
gopolistic forms of competition; enthusi- 
asm for this so-called New International 
Trade Theory is strong among senior 
members of the Clinton administration. 


Though the theory offered some vain- 
able insights Into international trade, pol- 
icies based on it might not deliver the 
expected benefits. 

Such policies were also likely to distort 
markets and provoke retaliation nnlesK 
further multilateral agreements were 
reached soon to liberalise non-tariff barri- 
ers, curb subsidies, reform anti-dumping 
regulations and restrict cartels. 

* Unfinished Tasks . ; The New Interna- 
tional Trade Theory and Post-Uruguay 
Challenges, by Prof P M Scherer and Dr 
Richard Bejous. £ 10 . British North Ameri- 
can Committee. 35/37 Grosvenor Gardens, 
London SWlW OBS. Tel: 071-828 6644. 


Salmas to play on trade 
expertise in WTO fight 

Aides say Mexican president will emphasise 
his political experience, Damian Fraser says 


P resident Carlos Salinas 
will launch his campaign 
to bead the new World 
Trade Organisation after 
Mexico's August presidential 
election. 

Advisers to Mr Salinas say 
that for domestic political rea- 
sons be will make no public 
pronouncements on the posi- 
tion until September. He wants 
to avoid accusations that he is 
putting personal ambitions 
before the country’s interests. 

However, aides have outlined 
the sort of campaign he is 
expected to run. He will 
emphasise his record as presi- 
dent of Mexico, which makes 
him the best known of the four 
contenders, his long experience 
and interest in international 
trade issues, and his belief that 
the WTO should not be side- 
tracked from its main objective 
of promoting free trade and 
reducing protectionist barriers. 

The Mexican government 
expects the US to back Mr Sali- 
nas's candidacy. It also reck- 
ons Latin American countries, 
apart from Brazil which has 
its own candidate, and Argen- 
tina, will as they have already 
promised, support the Mexican 
president. Mr Manuel Tello, 
Mexico's foreign minister, was 
in Chile this week drumming 
up support lor Mr Salinas. 

Mr Salinas believes that 
"point number one on the 
agenda is to make the WTO an 
efficient and effective institu- 


tion to promote freer trade in 
the world." As head of the 
WTO, he would have “to make 
sure the multilateral system 
and Uruguay Round work 
properly" 

Mr Salinas hag reservations 
about incorporating strict 
labour and environmental 
standards in world trade laws, 
as the US wants. An aide said 
Mr Salinas believed the link- 
ages between trade laws, envi- 
ronment and labour conditions 
needed to be studied further, 
and that agreed-on standards 
“should never be an excuse to 
build protectionist barriers." 

President Salinas sides with 
most developing countries to 
believing that the best way to 
protect the environment and 
labour rights is by promoting 
trade and raising the incomes 
of poor countries. 

Nevertheless, under the 
North American Free trade 
Agreement, Mexico bowed to 
US pressure and agreed to 
accept fines or sanctions if 
found not to be enforcing some 
of its own labour and environ- 
mental laws, to the Nafta nego- 
tiations, President Salinas was 
more willing to subject 
enforcement of Mexico's envi- 
ronmental laws to US and 
Canadian scrutiny than 
enforcement of domestic 
labour laws. 

An aide stressed that Mr 
Salinas would sat an agenda on 
the so-called new issues in 


agreement with WTO mem- 
bers. Mr Salinas, he said, had a 
“deep knowledge” of both first 
and third world countries, 
which mi gh t Tnflke it easier for 
him to appreciate the different 
interests of participating coun- 
tries, and build a consensus 

among members. 

The long drawn out negotia- 
tions over Nafta have made Mr 

Salinas familiar with the key 

issues of international trade. 
He was closely involved in the 
Nafta negotiations, personally 
taking many of the key deci- 
sions on where to give ground 
to the US, and the same kind of 
hands-on approach could he 
expected if he was given the 
WTO job, the aide said. 

"He combines a unique fea- 
ture of being able to deal with 
the broad issues and also to get 
into the details." Mr S afinas , 
who has doctorate in political 
economy from Harvard Univer- 
sity, has been dealing with 
trade issues since the mid- 
1980s, when he spearheaded 
Mexico's entry into Gatt while 
budget minister. 

Although Mr Satinas has 
pushed through Nafta, and sev- 
eral regional trade agreements 
between Mexico and other 
countries and Latin America, 
his emphasis would be on a 
multilateral approach to free 
trade. His aide said he would 
seek to ensure that regional 
agreements are consistent with 
Gatt articles. 


Strikes 
poser for 
Mandela 

By Meric Suzman In 
Johannesburg 

South Africa’s new all-race 
government of national unity 
is struggling to cope with a 
week-long wave of labour 
unrest, and there are fears that 
new strikes may break oat, 
damaging international inves- 
tor confidence. 

The spate of industrial 
action has been sparked by a 
1 0-day-long strike by 15.000 
workers at food retailer Pick 'n 
Pay. Over the past few days a 
number of smaller wildcat 
strikes to the private and pub- 
lic sector have also broken out. 

The newly aggressive atti- 
tude among workers is being 
fuelled by raised expectations 
resulting from the economy's 
return to growth alter a four- 
year recession, and the beM 
that the new government wm 
be much more sympathetic to 
wage demands than its white- 
led predecessor. 

The African National Con- 
gress, which won the April 
elections, has st rong links with 
the trade union movement. 
However, the government Is 
tom between its natural sym- 
pathy for the strikers and its 
need to reassure bustoesanen 
and foreign investors about its 
commitment to a stable busi- 
ness environment and low 
inflati o n. 

However, violent clas&es 
between strikers and police 
officers have led to accusations 
by workers of government ban 
faith in its labour relations pol- 
icy. 


FINANCIAL TIMES MONDAY JULY 25 1994 



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6 


FINANCIAL TIMES MONDAY JULY 25 J9V»4 


NEWS: UK 


Companies ‘switching to foreign banks’ 


By John Gapper, 
Banking Editor 


Dissatisfaction with UK banks has led 
to many British companies switching 
to foreign banks such as Citibank, 
Commerzbank and Credit Lyonnais 
during the past 18 months, a study 
says today. 

The analysis of 243.000 companies 
by Barclays de Zoete Wedd. the bro- 
ker, says foreign hanks have 
increased their market share by about 
10 per cent Yet it finds that the rate 
of switching slowed in the first half of 
this year. 

Not only have foreign banks gained 
strongly, but they have attracted a 


slightly higher proportion of low-risk 
companies, measured by credit qual- 
ity. 

The analysis of companies m busi- 
ness-information group Dun & Brad- 
street's corporate database is the first 
to measure the practical effect of com- 
plaints about standards of bank ser- 
vice horn small companies during the 
past two years. 

However, the study points out that 
only about 2 per cent of companies 
change banks each year. 

Barclays lost most, with a net 1,591 
companies leaving. Lloyds lost the 
biggest proportion, with 2A per cent 
of its corporate customers switching 
to other banks. 


National Westminster Bank was a 
very small gainer of both high-risk 
and low-risk companies. Both Scots 
banks were net gainers of low-risk 
companies, with Royal Bank of Scot- 
land also losing high-risk companies. 

Midland lost a net 232 customers in 
the first half of fast year, falling to 69 
in the second, and 48 in the first six 
months of this year. 

Barclays stood out in all three half- 
years as the largest net loser of cus- 
tomers. 

Meanwhile, analysis by BZW shows 
the finan cial health of British compa- 
nies improved sharply in the second 
quarter of this year as the economic 
recovery took hold, according to a fur- 


thur study published today. The anal- 
ysis of 360,000 UK companies contri- 
buting more than 75 per cent of 
Britain's gross domestic product finds 
a marked reduction in the number 
which are considered to be in a risky 
condition or in significant danger of 
collapsing. 

It is further confirmation that the 
recovery is gathering pace. Figures 
last week showed that the GDP was 
3.3 per cent higher in the second quar- 
ter than in the sam e period of 1993 - 
the first time since 19S9 that growth 
exceeded 3 per cent. 

The upturn in credit quality was 
particularly marked in the south east, 
south west and East Anglia. 


CBI survey sees 
little change in 
investment plans 


By Gillian Tett, 
Economics Staff 


Most British companies have 
not adjusted, their investment 
criterion for low inflation and 
interest rates, in spite of warn- 
ings from the UK government 
that this is stifling business 
investment, a new business 
survey has found. 

The Confederation of British 
Industry survey shows that 
significant proportions of com- 
panies still demand that invest- 
ment projects should either 
yield a rate of return above 20 
per cent, or else pay back the 
investment within three years. 

Most companies assume that 
the government will not 
deliver its inflation target. 
Their average prediction for 
inflation is 5 per cent, com- 
pared with the government’s 
target of bringing it below 2.5 
per cent by the end of the par- 
liament 

The survey is likely to fuel 
the government's appeals to 
companies to lower inflation 
expectations to boost invest- 
ment. currently running at rel- 
atively modest levels in spite 
of the overall pick-up in manu- 
facturing. 

The report says that uncer- 
tainty about demand appears 
to be the key constraint for 
business investment, although 
it admits that another factor is 


companies' scepticism about 
inflation targets. 

The report, which surveyed 
almost 500 manufacturing com- 
panies. found that two fifths of 
companies that use a nominal 
or real rate of return to assess 
investment projects were tar- 
getting hurdle rates in excess 
of 20 per cent 

Meanwhile two thirds of 
firms who use “payback" 
assesment are targeting rates 
of two to three years. 

The pattern varies, with 
almost one third of rarnpanipa 
using a nominal rate of return 
methods prepared to accept a 
return of less than 11 per cent 
A fifth of companies using this 
method have lowered invest- 
ment expectations in light of 
low inflation. 

However investment apprais- 
als have remained unchanged 
among two thirds of companies 
using a payback assessment 
and half of those companies 
using real rates of return, 
adjusted for inflation. 

Mr Sudhir Junankar, CBl's 
associate director for economic 
analysis said the results 
showed “long term investment 
in the UK still depends largely 
on the achievement of a more 
stable macro-economic envi- 
ronment.'* The Bank of 
England said the survey bore ' 
out the results of its own infor- 
mal survey this spring. 



Mounted police and some in riot gear moved in to disperse civil liberties demonstrators yesterday after they attempted to scale the 
gates outside the prime minister’s residence in Downing Street. Violence flared in Whitehall as an estimated 18,000 banner-waving 
protesters from all over Britain marched from Hyde Park to Trafalgar Square for a rally against the proposed criminal justice bill pa 


Blair in strong defence of the family 


By PhHip Stephens, 
Political Editor 


Mr Tony Blair, newly-elected 
leader of Britain's opposition 
Labour party, yesterday 
eschewed the leftwing liberal- 
ism of his party *s past in 
favour of a strong defence of 
the family as a central compo- 
nent of social cohesion. 

In a further step towards 
repositioning his party in the 
political middle ground, the 


Labour leader said that “com- 
mon sense" rather than ideol- 
ogy would be the driving force 
behind its approach to social 
policy. 

But he found himself under 
strong attack from the Conser- 
vatives over education policy, 
with ministers saying that 
Labour would Ignore the 
wishes of parents by returning 
grant-maintained schools to 
tbe control of local authorities. 

Mr John Major, the prime 


minister, intends to use a 
speech later this week to argue 
that Mr Blair's election has not 
closed the gap between the 
Conservatives and Labour on 
the key issues of individual 
choice and responsibility. 

Mr Blair, in comments likely 
to irritate the left wing of his 
party, emphasised tbe need for 
government to recognise the 
family as “the essential stable 
social unit" 

In his first lengthy television 


interview since his election as 
leader he attacked the Conser- 
vatives for “stigmatising” sin- 
gle parents, most of whom bad 
not chosen to bring up their 
children alone. 

Mr Blair added that social 
education and training policies 
under a Labour government 
would be geared to supporting 
and sustaining tbe family unit 
But parents would be obliged 
to recognise they had responsi- 
bilities as well as rights. 




being destroyed dt 
the rate of thousands of 
trees j minute, how cjo planting 
just a handful of seedlings make a difference? 

A WWF - World Wide Fund For Nature tree 
nursery addresses some of the problems facing people 
that can force them to chop down trees. 

Where hunger or poverty is the underlying cause 
of deforestation, we can provide fruit trees. 

The villagers of Mugunga, Zjire, for example, eat 
papaya and mangoes from WWF trees. And rather rhjn 
having to sell timber to buy other food, they can now 
sell the surplus fruit their nursery produces. 

Where trees are chopped down for firewood, 
WWF and the local people can protect them by planting 
last-growing varieties to form a renewable foci source. 

This is particularly valuable in the Impenetrable 
Forest. Uganda, where indigenous hardwoods take 
two hundred years to mature. The Markham ia (off a 
trees planted by WWF and local villages can be 
harvested within five or six years of planting. 

When: trees are chopped down ro be used for 
construction, as in Panama and Pakistan, we supply 
other species that are last-growing and easily replaced. 

These tree nurseries are just part of the w ork we 
do with the people nf rhe tropical forests. 

WWF sponsors students from developing countries 
on an agroforestry course at UPAZ University in 
Costa Rica, where WWF provides technical advice on 
growing vegetable and grain crops. 





wmmm 




help is given, 
soil is exhausted 
very quickly by “slash 
and bum" farming methods. 
New tracts of tropical forest would then have 
to be cleared every two or three years. 

This unnecessary destruction can be prevented by 
combining modern techniques with traditional 
practices so that the same plot of land can be used to 
produce crops over and over again. 

(n La PlanacLi, Colombia, our experimental farm 
demonstrates how these techniques can be used- to 
grow a family’s food on a small four hectare plot. 
(Instead of clearing the usual ten hectares of forest.) 

WWF heldworkers are now involved in over UK) 
tropical forest projects in 45 countries around the world. 

The idea behind all of this work is that the use of 
natural resources should be sustainable. 

WWF is calling for the rare of deforestation in foe 
tropics to be halved by 1995, and for there to be no 
net deforestation by the end of the century. 

Write to the Membership Officer ar rhe address 
below to find out how you can help us ensure that 
this generation does nor continue to steal nature's 
capita! from rhe next. It could be with a donation, 
or. appropriately enough, a legacy. 




Britain in brief 


Property and transport companies 
improved most strongly among indus- 
trial sectors, with manufacturing 
companies also stabilising, 

The study follows optimistic state- 
ments from the chairmen of Barclays 
and National Westminster Banks 
about improvements in bad debt pro- 
visions, and BZW will today raise Us 
forecast for banks' earnings this year 
by a total of £385m. 

Tbe fall in the number of companies 
rated as significantly risky for banks 
to lend to is the first marked improve- 
ment in credit quality noted since the 
end of the recession, although quality 
has risen slowly since the end of last 
year. 






Optimism 
despite new 
rail action 


Rail track remains optimistic 
that a deal with the RMT 
transport union can be agreed 
in the next fortnight in spite 
of the start tomorrow of the 
first 48-hour strike in the 
dispute over signal workers' 
pay. 

A senior Rail track 
representative said at the 
weekend that it was 
“unthinkable" that the weekly 
strikes would stID be 
occurring on August 12, the 
earliest date by which the 500 
RMT signal supervisors could 
join the strike. 

Tbe supervisors are being 
balloted on joining the strike 
and the result is expected by 
August A. If they do so it will 
become much more difficult 
for Railtrack to maintain the 
25 per cent to 30 per cent 
service it hopes to run over 
the next two days. 


Insurer to 
test salesforce 


The salesforce of Royal 
Insurance, one of the UK’s 
largest insurance companies, 
will tomorrow sit examinations 
to assess their professional 
competence at the request'of 
Lautro, the industry's 
regulator. 

Royal Insurance's derision to 
re-test its 1,000-strong 
salesforce on their knowledge 
of products and the financial 
services market follows a visit 
by Lautro in May. which found 
weaknesses in the company’s 
training schemes. 

Lautro, which will run 
further checks in the aut umn , 
asked Royal Insurance to 
reassess its salesforce and 
strengthen its supervisory 
programmes. 

Royal Insurance's move 
highlights increased vigilance 
by regulators about standards 
of selling in the life insurance 
and pensions industry. The 
Industry has been accused of 
using high-pressure sales 
techniques. 




Transport 


emission to rise 


Transport will overtake power 
generation as the sector 
emitting the greatest amount 
of carbon dioxide by the end of 
this decade. Yet demand for 
transport fuel will slow if the 
government sticks to Its target 
of raising road-fuel duties by 5 
per cent in real terms every 
year, according to a study of 
energy and the environment 
by Cambridge Econometrics, 
the Cambridge-based 
consultancy. 

The study found that while 
emissions from power 
generation will decline in tbe 
years ahead, those from 
transport will continue to rise 
- particularly from road 
transport which accounts for 
more than 90 per cent of all 
transport emissions. But the 
rate of Increase will slow. 


Salary gap 
‘narrowing’ 


The salary gap between male 
and female executives in the 
UK Is narrowing fast, 
according to the latest 
quarterly pay survey by pay 
and benefit consultants 
Sedgwick Noble Lowndes. 

The survey also finds that 
the downward trend in 
executive pay rises has been 
reversed and that executive 
pay increases are now nearly 
50 per cent higher than the rise 
in average earnings, which is 
3.75 per cent. 

The news of the narrowing 
pay gap for women executives 
follows recent figures showing 
that the number of women 
managers in Britain’s top 
organisations is falling. 

Figures from the Institute of 
Management showed the 
proportion of female senior 
managers and directors had 
fallen from last year's 10.2 per 
cent to 9.5 per cent 

The latest figures show that 
in the past 12 months the 
average increase in women's 
base salary was 5.4 per cent 
compared with 5 per cent for 
Their male counterparts. A 
year ago the average rise was S 
per cent for women compared 
with 5.4 per cent 

The statistics, drawn from a 
database of 5,199 executives in 
407 companies, show a 
consistent pattern over the 
past four years, with women 
receiving up to a fifth more - 
in relative terms - than men in 
their pay awards. 


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7 


FINANCIAL TIMES MONDAY JULY 25 1994 

1994 witnesses the birth of a new Group 
combining tradition, care, culture, and value - 
in fact, the best of Italy. The “Cirio” Group 
is born - a Group 

built around the 
name of a great 
Italian entre- 
preneur with a 
constant commit- 
ment to quality. 

The Group 
gathers together 
companies and 
brands as pres- 
tigious as Ala, 

Berna, Cirio, 

De Rica, Matese, 

Optimus, 

Polenghi, Solac, 

Stella and Torre 
in Pietra. 

Each of these 
names has been 
contributing, 
over the years, to 
Italy’s industrial 
and economic 
development. 

Each has built an 
international 
reputation by 
remaining true to 
their consumers 
and to a common 
cause: a love of 
the land and an 
infinite respect 
for its fruits. 

It is this cause, 
maintained and 
developed 
through the most 
advanced tech- 
nology, that, beginning today, 

makes the “Cirio” Group a world- 
wide industrial and financial reality 
that Italians can be proud of. 


And it’s impossible not to be proud of i 

“Mr. Cirio” who, so many years ago had the in- | 
spiration to protect high quality tomatoes in a 

practical tin. 

The same man who 
created a prece- 
dent in Italy by 
transferring pro- 
duction from north 
to south, demon- 
strating, through 
investment, the 
unity of the nation- 
al territory. 

We are also proud 
of “Mr. Polenghi”, 
who, all those 
years ago, ration- 
alised milk pro- 
duction by intro- 
ducing selection, 
quality control and 
hygiene, from cat- 
tle feeding to the 
milk preserving 
process. A demon- 
stration, once 
again, of how indus- 
try and agriculture 
go hand in hand. 

It all started 
between 1860 
and 1870. Since 
then, after endless 
technological and 
scientific advan- 
ces, nothing has 
changed. We have 
retained the same 
devotion to food 
and the same 
creativity and 
dynamism. That’s 
why we say with pride, that in the 
“Cirio” Group, it is not difficult to 
recognise a piece of Italy we love. 

It is a true Italian portrait. 



The Cirio Group brands are: Ala, Berna, Cirio, De Rica, Matese, Optimus, Polenghi, Solac, Stella, Torre in Pietra. 






8 


FINANCIAL TIMES MONDAY JULY 25 !*>94 


★ 


M A IV A G EM ENT 



The successful restructuring of the Russian flagship company could act as a catalyst for change : 


B it by bit, Russian reform 
is ceasing to be a matter 
of exclusively macro- 
economic and political 
consideration and is 
being devolved to the enterprises 
and to their managements. The 
changes which Russian managers 
most now usher in dwarf, in their 
scale, anything likely to face their 
western counterparts. But if Russia 
is to succeed, these western coun- 
terparts will be increasingly drawn 
into the great drama which sur- 
rounds the integration of Russia 
into the world economy. 

Privatisation has passed through 
its Gist stage - in which almost 
three quarters of the state property 
were pushed out higgtedy pvggledy, 
into private hands through the 
medium of privatisation vouchers 
issued free to every citizen. A sec- 
ond stage, the period of strategic 
investment and company restruct- 
uring, is set to begin. Within this 
process, there is a small group of 
massive, flagship companies where 
a successful restructuring would act 
as a catalyst for change far beyond 
their own Omits. 

One such is El, the Zavod Imena 
Logacheva or Factory Named after 
Ligachev (its founder) - once called 
Zis, or the Factory Named after 
Stalin. It gave its name to the vast 
limousines built since the 1920s for 
the state and party elite; It was the 
biggest lorry producer in the former 
Soviet Union; it produced smafftop- 
of-the-range buses; it made a wide 
range of engineering products for 
other plants; it had a large, white- 
goods division. Says Alexander 
Vladislyavlev, its present chairman: 
“It got the best the cream of the 
Soviet engineers; it got the best 
equipment When the state decided 
to set up another big truck plant 
(Ramaz, in Tatarstan] Zil engineers 
went out and did it” 

It was politically privileged and 
untouchable. Its long-serving direc- 
tor, Yevgeny Brakov, was a member 
of the Central Committee of the 
Communist Party. In his office next 
to the Zil museum, where the 


W hen Roger Feraley heard 
that the bid for London 
Transport’s advertising 
arm had been referred to the 
Monopolies and Mergers Commis- 
sion, be wept. Far from feeling 
embarrassed about his outburst the 
managing director of British Trans- 
port Advertising wrote to the FT 
last week and told us all about it. I 
was so surprised to read his letter 
that E phoned him up to ask 
whether this was his idea of a joke. 
On the contrary, he said, he had 
been angry, incredulous and disap- 
pointed, and had shed real tears. 

In so doing; he broke the ultimate 
corporate taboo. I have just done 
some research into tears in business 
and found barely a wet eye any- 
where. Robert Maxwell was con- 
stantly sobbing, but then he was 
always a law unto himself. It is said 
that Freddie Laker was close to 
tears when Laker Airways collapsed 
and that Sir Kenneth BerriU had a 
lump in his throat when he failed to 
be reappointed as chairman of the 
SIB. I have also heard that Michael 


steady progress of the enterprise 
from workshop production to vast 
combine was displayed, he was first 
among the country’s industrial bar- 
ons. He was sure of the first call on 
resources, his products were on 
every state farm, in every army 
division, in many homes - and 
beneath the bottoms of the Politbu- 
reau members as they were 
whisked to and from the Kremlin 

Its crash has paralleled that of 
the Soviet Union and in its own 
way is as spectacular. The writing 
might have been on the wall when 
Brakov was put up by the party to 
oppose the upstart renegade Boris 
Yeltsin, when the latter ran for the 
Moscow deputy’s seat in the USSR 
Supreme Soviet elections of March 
1980 - and received 392,633 votes 
against Yeltsin's 5.118,745: it was an 
early sign that the Party-state web, 
without which Zil had no meaning, 
was beginning to unraveL 

With the ending of the Soviet 
Union in December 1991, the tolling 
of the bell for Zil grew louder. It 
suffered from the 1992 cuts in the 
defence budget - nearly half its 
trucks went to the military. It suf- 
fered as agricultural subsidies were 
hit - the other half went largely to 
the state and collective farms. Peo- 
ple bought fewer fridges, as more 
and more of their disposable 
incomes went to buy the produce 
which went inside them. The gov- 
ernment tended to buy from Mer- 
cedes, and the nouveau riche would 
rather be seen dead than in a SI 
(which do. indeed, make good 
hearses). By 1993. the crisis was 
upon it 

Instead of restructuring, Brakov 
went back to his Bolshevik roots: in 
early 1994. with many of his work- 
ers part-time and their pay drop- 
ping, he encouraged them to picket 
the White House (government 
offices) to demand state aid. His 
point was partly taken - though it 
did him no good. Both the federal 
government and the Moscow City 
government became alarmed. Zil 
was just too big. too well known, 
too prestigious to go belly up. It was 


Green of Carlton was damp eyed in 
the 1980s on discovering that he had 
lost the BSB contract But all of 
these tales are years out of date, 
few and far between, and none 
amounts to a good public weep. 

There are examples of grown men 
blubbing openly in politics and 
sports, often to advantage. Bob 
Hawke, the former Australian PM, 
greatly increased his popularity by 
sobbing over everything from 
domestic difficulties to the massa- 
cre in Tiananmen Square. 

Even more famously, Paul Gas- 
coigne, the footballer, showed him- 
self to be a human being when he 
broke down on receiving a yellow 
card in the 1990 World Cup. 

But businessmen? Never. The 
only time they seem to cry is when 
seriously frustrated: when they 
have missed an aeroplane, or can- 
not make a foreign bureaucrat do as 
they want Earlier this month I saw 
an executive in black tie close to 
tears at Victoria station having 
learnt that trains to Glyndebourae 
were not miming. 


the equivalent of Chrysler, of Rolls 
Royce. The market could not be 
allowed to decide its fate. 

From the latter half of 1993. Rus- 
sian ministers began voicing con- 
cern about Zil: Alexander Shokhm, 
the deputy premier for economics, 
used a visit to Washington to ask 
the International Finance Corpora- 
tion to get involved The European 
Rank of Reconstruction and Devel- 
opment was also coaxed in. Yuri 
Luzhkov, the Moscow mayor began 
to exercise the rights and responsi- 
bilities, which a 25 per cent stake 
held by Moscow City Council fol- 
lowing privatisation gave him. He 
promised to assist and did so by 
taking over the 500,000sq m of 
apartments it owned - and with 
these the kindergartens, the rest 
homes and the cultural and leisure 
facilities it ran. 


But this kind of relief was a pal- 
liative. The change had to come 
from wi thin - and at the tig). Fol- 
lowing government pressure and 
behind-the-scenes dealing, Zil’s 
main shareholders - Moscow City 
Council AMO Bank, the Mikrodin 
finance group and its workers and 
managers (who hold 40 per cent of 
the shares) - gathered in Moscow’s 
Luzhniki Stadium and elected a 
new board of directors with Vladis- 
lyavlev (representing the Moscow 
City Council) as chairman. 

Vladislyavlev is a man of power. 
A former member of the Central 
Committee, his post-Soviet career 
has been built up in tandem with 
that of Arkady Volsky, head of the 
Russian Industrialists Union, whose 
deputy he is (Volsky was once the 
leader of the Communist Youth 
League, or Komsomol in ZQ). Now, 
he says he is focused on being a 


By shedding these sort of impo- 
tent tears, businessmen look fool- 
ish. By contrast, to cry at critical 
moments in a company's history 
could add a certain something to 
the occasion and might encourage 
others to be more understanding. 

It would, of course, be intolerable 
if executives cried at the smallest 
setback. Displays of emotion can be 
a form of manipulation - and there 
is enough of that in office life 
already. But on big occasions tears 
could be called for. If Graham 
Hearne of Enterprise Oil had wept 
on losing the battle for Lasmo, peo- 
ple might have been sympathetic 
rather than carping away about 


company chaimian - an d doctor. 

As the international financiers 
who are now huddled round Zil 
attest he has moved with speed. In 
doing so, he has demonstrated the 
mixture of flamboyance, use of 
Soviet-era connections, partial 
grasp of current management prac- 
tice and inside-government horse 
trading which is bound to be repro- 
duced in other big Russian restruct- 
urings. 

First Vladislyavlev capitalised on 
what was already partly in place. 
The US companies Caterpillar and 
Paccar, keen to enter the Russian 
market, had already moved to form 
joint ventures. Caterpillar had cre- 
ated a joint venture to make fuel 
systems, and is interested in joint 
production of trucks through its 
joint venture Novotruck and 
engines through a similar entity. 


Novodiesel; Paccar is to make 
heavy trucks with Novodiesel 
engines. Talks are also going on 
with General Motors and Renault 
Zil offers these companies an exist- 
ing manufacturing base for joint 
ventures. 

Next, he is constructing a struc- 
ture where the monolithic combine 
will be split up. A holding company 
is being created, which will wholly 
or partly own subsidiary companies 
- of which Zil Manufacturing will 
retain the engineering heart of the 
enterprise, and other divisions will 
service and market the products. He 
has formed an international mar- 
keting alliance with the Avtotraktor 
export group, which has rather mor- 
ibund subsidiaries abroad and 
which still retains, he says, a core 
of professional staff 

Soon after his election as chair- 
man, Vladislyavlev moved Brakov 


how he must drop one of bis posts 
as chairman or chief executive. 
Femley's tears may not influence 
those hard-hearted pen pushers in 
the DTI and at the MMC. But they 
show he is a human being who is 
not afraid to admit as much. 


It has only just been drawn to my 
attention that Harrods, the tourist 
attraction in Knightsb ridge, does 
not let shoppers in to buy its pricey 
goods unless they are suitably 
dressed. On the face of It. this 
seems a bizarre policy. Surely Har- 
rods knows that the customer is 


aside - he is now a vice-president in 
charge of marketing - and pro- 
moted Valery Saikin, a production 
man, as general director. The pro- 
motion of middle managers to 
senior positions - he says they are 
“the best people available in Russia, 
in the first class” - is going ahead. 

His flamboyance and imagination 
shows in his willingness to comple- 
ment the deals with foreign part- 
ners with the appointment of a 
high-profile “consultant". Currently 
he is trying to secure the services of 
Lee Iacocca. the former Chrysler 
c hairman , among others. “They 
should come here and teach the 
people in Zil what they know. We 
need a special institute for teaching 
marketing and sales. Zil never had 
to sell anything before.” 

Vladislyavlev has also used his 
pull within government. He has 
secured promises of off-budget sup- 
port and tax breaks and is arguing 
strongly (as did the previous man- 
agement) for increased tariffs to 
protect the Russian car industry. 
The government, anxious for the 
flagship, has committed itself to 
assisting the continuation and 
upgrading of the gas guzzlers. They 
will order 24 each year, and put up 
some $70m (£45m) a year for remo- 
delling. 

This, the “masterplan", is still 
sketchy and raw, still being devel- 
oped. Vladislyavlev and the Russian 
government are pushing hard, try- 
ing to persuade the international 
financial institutions to commit 
money, make connections. He has 
won admiration for his bustle and 
energy. But will it work? 

The doubts centre round the 
sheer size of the task of restructur- 
ing and the political risk attendant 
on getting it wrong. SI is. as Vladis- 
lyavlev says, a supreme product of 
the Soviet era. Shorn of any market- 
ing or finance skills, it has to 
acquire a new culture from scratch. 
Its Ion? design is archaic (they are 
still petrol driven) and its once cap- 
tive markets wholly or partially 
destroyed. The International 
Finance Corporation, which helped 


king, and that those in shorts and 
vests deserve the same fawning ser- 
vice as ones in suits and designer 
frocks? It is all very well for pubs to 
specify no work clothes, as they do 
not want souvenirs from the bund- 
ing site on their upholstery. But a 
pair of designer jeans with a rip on 
the knee does not hurt anyone. 

I now see this is a naive reaction. 
Harrods has explained to me that 
lady customers were offended by 
"sweaty hairy men with their arm- 
pits or crotches on display”. The 
store also pointed that something 
urgent had to be done given that 
"shopping at Harrods is the most 
pleasurable thing that many of our 
customers do all week". 

Leaving that remarkable asser- 
tion to one side, Harrods is on to 
something. The image of a business 
is dependent not just on its own 
actions, but on the customers it 
attracts. Just as shops can reason- 
ably tell customers not to smoke, 
they should also be able to insist on 
any other standards they see fit. If 
people do not like it they can 


claims John Lloyd 

restructure Skoda in the Czech 
Republic (a large but still easier 
task), is hesitant; so is the Euro- 
pean Rank for Reconstruction and 
Development. 

“What they need is a white 
knight which would take the job of 
restructuring, put in some of their 
own money and tough out the oppo- 
sition. But this is so high risk I 
don’t see that coming.” says one 
senior official - speaking, as almost 
everyone does on this touchy issue, 
on grounds of anonymity. 

There is also some question as to 
why the two Russian finance com- 
panies, AMO Bank and Mikrodin, 
win not put up the required cash 
for restructuring. Here one sees a 
now familiar problem: foreign 
finance asks why it should invest if 
the Russians are withholding, while 
the Russian companies, unsure of 
tire nature of the risk, watch for- 
eigners to see where they will 
invest before committing their own 
funds. And ZD waits. 

Yet Vladislyavlev, with a good 
international contacts book and the 
ambition to “make sure my grand- 
son, who loves to work with his 
hands, will work in Zil when it is a 
great Russian company selling to 
the world”, continues to push its 

rTaims- 

He is offering 10 per cent of the 
stock (whether existing shares or a 
new issue is not clear) to a large 
international finance house for 
$60m, with a seat on the board 
thrown in - a price which, as 
another international finance offi- 
cial says, “is either a tremendous 
bargain if it can be saved or a com- 
plete waste of money if it can’t". 

Russian restructuring is still in 
the realms of faith. Investment is 
increasing: a few manufacturers, 
led by Percy Bamevik of ABB 
Brown Boveri, are leading the col- 
umn of western investment into 
working plants. Everyone, from Vic- 
tor Chernomyrdin, the prime minis- 
ter. down, trumpets success over 
the horizon. A successful manage- 
ment revolution at Zil would bring 
the horizon much closer. 


always take their custom elsewhere. 

The foci that Harrods’ dress code 
has been greeted with such suspi- 
cion shows that the customer-is-al- 
ways-right mentality has gone too 
far. Sometimes the customer is a 
damn nuisance and 1 admire the 
companies that do not stand for it 


Well done also to Standard Char- 
tered for its fine and upstanding 
declaration that It will withdraw 
from any country that relies on 
bribes or unethical business prac- 
tice. I shall be fascinated to see how 
it gets on. The bank does business 
in a long list of countries where i 
had always thought large and small 
backhanders were part of the cost 
of being there. If Standard Char- 
tered stays in those places, that will 
be proof that stories of corruption 
are overdone or out of date. Alter- 
natively, it just could mean that no 
such international operation should 
make sweeping declarations of that 
kind and hope to live by them. 



DESERT ISLAND 
MANAGER 


Max 

Hastings 

Max Hastings, editor-in-chief of 
The Telegraph Group, would be 
happy to swap his Isle erf Dogs 
office for a desert island. A 
country lover at heart, working 
in London is tha bane of his life. 

Who would you take with you? 
Jeremy Deedes, Bill Deedes’ son 
who is editorial director. Jeremy 

is my narmy and I rely on him 
not to do anything foolish. I ‘ 
can’t think of anything he would ' 
hke less than to be stock on a 
desert island with rqe. but about 
three times a day I ran, into 
Jeremy’s office saying “crisis, . 
BaMrick, crisis?. 

An additional office item, along 
with a phone and fax? - 
Fd be tost without a word . 
processor. When 1 was a 
teenager and bored in the . 
s umme r holidays my father . 
would often talk of the challenge 
of a blank piece of paper. I didn’t 
understand what he meant then, 
but I do now. But Ids most . 
modem journalists 1 can’t do it 
with a pen and paper any more/ 

Would management from an . 
island work? 

I would use the fldta lot Tha 
editor 1 worked for longest and I 
most respected was Charles - 
Wlntoia- on the Everting 
Standard. Charles was a great 
one for rule by abrupt memo and 
in some ways I mimic his memo 
style - both the nice ones and . 
the nasty ones. 

Confined to an Island, what 
would you miss? 

The stimulus of seeing an 
enormous number at people. At ; 
weekends whan l don't see ‘ 
people one complains of the 
phone always ringing, but then 
one thinks what waujd ithe like 
if the phone didn't ring. •’ 

What wouldn’t yon miss? 

London. One of tha&ghest. ; 
prices one pays for doing a job 
like tins is having to work in an . 
office in London. Canary Wharf - 
certainly has nothing to toxwtth ■ 
civilisation as ter as 1. .. 
understand it ‘ . ; . ■* ... 

What would your take to read? - 
At tije very least Fd a&fc to take 
toe ’complete TroBo^ 

Something to drink? . . .. 

Afiewcase8 ofwtofi. gUrtoe tost . 
■' six nsmtox flat iwasRfitor ctf 
TbeDafiy TefegraphXnever ■ 
drank at hmefttima. TSiese days -■ . 
Tdratopr suJ&rU» ’ ' • 
coeoBeq;ue»»(rfhavH^adrink 
that WhEpntfpihhmch antis* . 
everyone h&vmgF^r^ I don’t .. 
lEeljeakrosJl thi dk I th as .. " 

beammarewaa^ 

And to eat? . 

Fxn an mflarimmeafatf^vqre. rd. 

■ tike the fishing that I agiM do • 
on the faSbutBI betoriyifl . 
couldn't have meat anymore. • . 

Would you survive bn au fclahd? 
Living rough never bothered me. 

I spent 16 yeans wanting aronadv 
the World's Wflflerneea-isas . - 
fareign eonespraufent mid was 
Sue. I also do abate prepara ti on. 
My tether .was cast away on a 
deseriislandhyaSuudaijr- 
oewspaper and became ffl with . 
scurvy and nearly died. He 
hadn’t done primer research: 

Yen can take just Ode 
newspaper 

The Dally Mait'It is very. • 
entertaining and prgfeg ri b ns tfly 
run. I’d also want the Spectator V 
send Country Life to see what fcvV 
happening, to house prices: 

Christine Buckley 


When tears are good for business 

,„cv JP 
KELLAWAY 


Zil was just too big, too well known, too 
prestigious to go belly up. It was the 
equivalent of Chrysler, of Rolls Royce. 
The market could not decide its fate 


Auiain • ■ ivaib 


• uunfuiii»^-uipjui*rinii.pti 


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COMPANY NOTICES 


THE FIRST MEXICO INCOME FUND 

Curacao, Netherlands Actflks 
Annual General Mating ol SJurchoWen 

Notice is hereby gives Uur the Annul Ocoeral Meeting of SJarehg Wets of THE FIRST 
MEXICO INCOME FUND N.V. scheduled for July 5. IW4 at 3.UU pjn. (Netherlands 
Antilles lime) at the office of (be Corpora don at John B. Goniraoeg 6, Willemstad. 
Cunean. Netherlands Antilles was postponed. 

A new meeting has now been ealkd to be bcM on Augui & l*U si tbe office of the 
Corporation u John B, Gorsuawcg 6, WiilanH&L Curocw, Netherlands Antilles at 3JKJ 
p.m. The Agcaia remains unchanged SUnrchnldces who hove already sent in dwir proxy do 
no* nerd to do this, ag ai n. 

The Agenda and Admu! Report !<*» may be obtained from the offices of the Corporation 
and from the faying Agent mentioned hc wwfa. Sharehohfcn tvill be admitted lo the 
meeting on presentation of tbeii shmawtificato or vouchers, which may be obtained from 
the Fsytog Agent. 

Waiemflod. Cannae. Netherlands Antilles. July 20. IVM 
MEES PIERSON TRUST (CURACAO) N.V. 

BcteAaa* 

MEE5PTERSON N.V. 

Kedrin 55. 

1012 KK Amsterdam, 

The Netherlands 

MEESPlfiRSON TRUST (CURACAO j N.V. 


s 


FT 


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FINANCIAL TIMES 


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BUSINESS 
TRAVEL DESK 

Due to the summer holiday season, the 
Business Travel Classified Section has been 
temporarily suspended. 

It will resume on 

Monday 12th September 1994 

For advertising information call: 

Julia Copeland: 071 873 3559 
or Graham Fowles: 071 873 3218 

Fax: 071 873 3098 & 

One Southwark Bridge. London SHI 9HL p 






FINANCIAL TIMES MONDAY JULY 25 1994 


9 




WO R KING LIFE/SPORT 


FINANCE 


Classic way to cut 
driving costs 

Come the summer and out come 
cars which are usually kept 
lovingly polished in the garage and 
away from the rain. Vintage 
Jaguars, classic Alfa Romeos and 
peak condition Jensens are as much 
a part of the traffic in the summer 
as newer Toyotas and Fords, except 

that their drivers look as if they are 

enjoying themselves more. 

If you are waiting for August l to 
buy your new M registered car, 
think again. Classic cars are not 
only beautiful; they also offer a rare 
combination of luxury while saving 
their drivers money. 

Like property and One art. classic 
cars were another of those 1980s 
“overvalued" assets. Prices have 
fallen, which Is good news for 
someone considering buying one 
now. One advantage is that, 
through careful choice, a classic car 
could cut your company car tax bill. 

The new system of company car 
tax which came into effect in April, 
is based on the list price of the car. 
Employees pay tax on 35 per cent of 
the manufacturer's list price of the 
car when new, plus the price or any 
accessories and value added tax. 

One concession is that the Hst price 
is reduced by one-third for company 
cars which are four or more years 
old at the end of the tax year. 

Forget classic cars which are 
worth more than £15,000 (and which 
are over 15 years old) - they will be 
taxed on their open market value. 

However, Maurice 
Parry-Wingfield of accountant 
Touche Ross points out that if the 
car is worth less than £15,000 and is 
over four years old. the benefit will 
be taxed according to the original 
car price and then reduced by 
one-third because of the car’s age; 
“For less than £15,000 there are 
many commendable vehicles 
available. Who would balk at, say, a 
1973 Mercedes 350SL convertible 
which has a list price of a relatively 
paltry £12,500 and a value in the 
region of £13^00?” ha says. 

A higher-rate taxpayer choosing 
this car would pay £1,167 in tax, less 
than half the amount they would 
have to pay - £2,492 - on a Mazda 
MX5 L8i S. which has an original 
list price of £17,800. Although the 
Merc's running costs may be higher 
than for a new car, Parry-Wingfield 
points out that one fo the biggest 
costs when running a car is 
depreciation and. since the 
depreciation on the Mazda is likely 
to outstrip that on the Mercedes, 
the saving should offset any 
increase in r unning costs. 

Even if you are not choosing a 
company car but want to buy one 
for your private use, a classic car 
still retains an important 
advantage, in terms of lower 
insurance premiums, over other 
cars. Some motor insurers are 
prepared to charge lower rates as 
long as the car is old (usually over 
15 years) and not driven too 
frequently. The most common 
mileage band is for a maximum of 
3,000 miles a year, although some 
policies allow up 6,000 miles. 

There are a number of specialist 
insurers and brokers, including 
Norwich Union which has a 
Collectors' Vehicles policy (0603 
622200 ): John Scott and partners 
{0252 725555). KGM Motor Policies 
( 0SI 530 7351); Hall & Clarke (081 908 
5611 ) and Bain Clarkson (0384 
455011). 

Scheherazade Daneshkhu 



LIVING SPACE 


Mail order route 
to French 
house design 

Back in 1901, the Ladles Home 
Journal offered its readers the 
chance to buy a house - or rather 
the architectural plans for a house, 
designed by Frank Lloyd Wright, 
then a rising star of American 
architecture - for a $5 fee. 

Trois Suisses, the French mail 
order catalogue, is now following 
suit by marketing a mail order 
house of its own, designed by 
Philippe Starck, the superstar 
French architect, for a slightly more 
substantial fee of FFr4J)00 ($932). 

Starck is the man who sold half a 
million lobster-shaped lemon 
squeezers for Alessi and whose 
design flair turned the Royal ton 
and the Century Paramount into 
the hippest hotels in Manhattan. 

His mail order house has only been 
on the market since June but, 
judging by the first flurry of orders, 
seems set to be another success. 

The house, says Starck, is the 
“type of place I wanted to live In as 
a child, but didn't" It is a simple 
wooden construction on two floor 


with windows and a verandah all 
around, that looks like a modernist 
mixture of a Chinese pagoda and a 
Russian dacha. 

Starck has built his own version 
of the house in a forest on the 
outskirts of Paris. His “leettle 'ut in 
the woods” appears in the Trois 
Suisses catalogue. It looks stunning. 
His original Charles Eames chairs 
and fin de siMe Venetian mirrors 
help: but even without them it is 
easy to see the appeal of the 
artisanal wooden facade and of the 
dear, bright rooms with 
light streaming through the 
windows. 

Trois Suisses reckons that it 
would cost FFrl.lm to build the 
house with the verandah and 
FFr850m without 'Hie only hitch is 
that so for, it has only cleared the 
design with the French planning 
authorities. Anyone who fancies 
recreating Chez Starck in another 
country will have to begin by 
battling with the bureaucrats. 

Alice Rawsthorn 


READING MATTER 


Biographies for 
the beach 

For those considering recent 
biographies for a good summer 
read, a spate of lives of French 
literary masters should provide 
some predictably intoxicating 
blends of art sex and money. 

Graham Robb's Balzac (Picador), 
the first English biography on this 
subject for 50 years, tells the 
splendid tale of the author who 
coldly calculated that "each night of 
love cost half a volume”, an 
equation which did not disturb his 

contemporary Standahl who, 
according to his biographer 
Jonathan Keates (StendahL Sinclair 
Stevenson), boasted of his sexual 
exploits by marking the dates of his 
conquests on his braces. 

Moving on a few decades, but still 
in the same spirit or restless 
decadence, Joanna Richardson’s 
Baudelaire (John Murray} tells the 
tragl-comic story of the improvident 
youth who inherited a fortune at 21, 
only to blow much of it on an exotic 
mistress who gave him the syphilis 
from which he died; there are 
parallels with Mallamfe. who, 
according to Gordon Millan's 
account ( MaUarmA : A Throw of the 
Dice. Seeker & Warburg), also failed 
to reconcile his tormented existence 
with the radiant purity of his 
poetry. 

But who needs 19th century 
French glamour and scandal when 
there remains a Kennedy to write 
about? Joe McGinniss's The Last 
Brother, the Rise and Fall of Teddy 
Kennedy (Little, Brown and 
Company) observes that the man 
who was probably never fit for 
presidential office in the first place 
was further and fatally handicapped 
by the guilt-driven revenge of the 
American press who belatedly 
recognised their inadequacies in 
exposing the foibles of Teddy's elder 
brothers. 

It is a long way from the quiet, 
unsophisticated life of Joseph 
Chamberlain. Peter T. Marsh's 
astute life ( Joseph Chamberlain: 
Entrepreneur in Politics, Yale 
University Press) sees Chamberlain 
at the centre or many of the 19th 
century's greatest social reforms, 
but denied the ultimate prize of 
prime minis terial office in Britain 
by his errors of judgment and 
changes of mind - the archetypal 
politician of great influence but 
little power. 

Another forgotten man in need of 
rehabilitation is Giuseppe Mamini, 
the neglected theorist of Italy's 
Risorgimentxz Denis Mack Smith's 
eponymous volume (Yale University 
Press) attempts to redress the 
balance of praise which has usually 
been lavished more unreservedly on 
the mare glamorous Cavour and 
Garibaldi. Any man who manages 
to be admired by both John Stuart 
Mill and Friedrich Nietzsche... 

The outstanding biography of the 
last few months is Lyndall Gordon's 
Charlotte Bronte: A Passionate Life 
(Chatto and Windus), a radical 
reappraisal of a woman more often 
seen as a waif whose timid genius 
was destroyed by years of hardship; 
Gordon instead offers a portrait of a 
fierce survivor who managed, 
imlifcft her sisters, “to die with 
h uman love on her lips". 

Peter Aspden 


BUZZWORD 


Federal 

If the EU is not converging, its 
terms of abuse are. As the battle 
raged between “anti-federalist” and 
“arch*federalist" last month. 
Jacques Santer, Commission 
President elect, was recast as a 
“non-entity" by the UK press, 
translated by El Pais, the Spanish 
newspaper, as “un don nadie” (17 
July). 

Federal means “government in 
which two or more states constitute 
a political unity while remaining 
more or less independent with 
regard to their internal affairs" 
(OED). That, especially the “more 
or less" part, leaves scope for 
debate. The word derives from latin 
Mere (to trust) andjbedus (treaty); 
the Latin foederatus means “bound 
by treaty”. The word evolved into 
the medieval French federation and 
then into English- 

Federal ism has become a label 
applied by nationalistic British 
Conservatives to anyone who 
believes in European convergence 
or the ceding of power to Brussels. 

“Spot the federalist” has become 
one of the main pastimes of British 
euro-sceptics. Anyone tarred with 
the federalist brush is deemed 
untrustworthy by the British right 
wing though scant attention is paid 
to what the term means. 

So last month's search to replace 
Jacques Delore turned upon 
whether the candidate was regarded 
merely as a “federalist”, a 
“centralising federalist" (Jean 
Luc-Dehaene, the initial candidate) 
or a “decentralising federalist” 
(Santer's variety, according to John 
Major). 

Why is federalist, for a British 
Conservative, a term of abuse, but 
often a term of approval for many 
Continental Europeans or 
Americans? 

Federalism stems from the US 


EBWWBEU, IN tNCLtfn 
'fEDERALlST’ 15 
AL.WIA* SftIP WITH 
, A SLIGHT SNEER. 



and France in the 18th century, ft 
has European roots but an 
American upbringing. Strictly it 
dates from the 1730s in America 
under Washington, Adams and 
Madison, creators of the US 
governance. The latter wrote in 
Federalist Papers: “The powers 
delegated by the Constitution to the 
federal government are few and 
defined” (26 January, 1788). The 
architecture of the period (1780-1800) 
is even known as Federalist 
Andrew St George 


SPORT: LAURA THOMPSON 



Keep betting 
in the dark 


[ n 1961, the year that murder- 
ous upheaval in South Africa 
was putting the country 
beyond the pale as far as lib- 
tl democracy - and, later, cricket 
was concerned, a small social 
henval was taking place in 
itain. On May 1 the first legal 
ting shops were opened, and a 
ssage was printed on the cover of 
■ Sporting Life from Home Secre- 
y Rab Butler to all those who 
re waiting, in their metaphorical 
ps. for their first race to the 
jkmaker. Within its dry para- 
ipbs. Butler's statement conceded 
it off-course gambling had 
rome so rife it could no longer be 
iorcd. "The old law had fallen 
d disrepute" - yes indeed, what 
h policemen directing likely lads 
the nearest illegal betting shop, 
1 informing street bookmakers, 
a manly and bribe filled hand- 
ike, that later that day they 
;bt be arrested. The Betting and 
imng Act was a sensible and 
lit piece of legislation, which 
nitted the existence of certain, 
ipfullv Improper, human 
nulses and which, by admitting 
to, ensured that they did as little 
in as possible. 

>r course, the first betting shops 
not set themselves up next door 
Harrods and proclaim thpir trade 
h decorative shop window dis- 


plays. They were legal, but they 
still had the aspect of something 
illegal; they were covert chambers, 
made puritanically uncomfortable 
in order that people should not be 
tempted to linger in them. 

And yet by 1968 there were ova- 
ls, 000 of these murky little places. 
Today around £4bn a year is gam- 
bled off-course on horse racing, and 
around £1.6bn a year on greyhounds 
(os well as all those other bets on 
whether, say, England will ever win 
another test match.) Of the 10 per 
cent tax that is paid on these bets, 
the Treasury receives 7.75 per cent 
the government that gave grudging 
life to the first betting shops also 
gave to Its successors a magnificent 
annual present 

In 1986 the importance of gam- 
bling was again acknowledged 
when legislation was passed allow- 
ing betting shops a tentative entry 
into the smart, spry, designer world 
of the late 1960s. They were permit- 
ted to serve refreshments, which 
encouraged people to stay in them 
for hours at a time, and to show five 
races on television (previously, 
punters had stared at the wall and 
listened to a stream of conscious- 
ness voice-over, which passed witn 
surreal ease between Red Rum s 
third Grand National win and the 
3.36 at Hackney Wick). 

The shops also began to install 



Clear view: the government is pushing for this transparent image 


carpets and shiny frontages and 
smooth lighting. Some of them 
became very comfortable indeed. 
Behind their darkened windows lay 
what was, for many, the perfect liv- 
ing room: coffee, cigarettes, a seat 
in front of your favourite TV pro- 
gramme and a feeling, even during 
the hours when the world around 
you was at its busiest, of absolute 
seclusion from that world. 

And, for all the agreeable physi- 
cal changes that have been wrought 
upon betting shops, it is in that 
unchanging sense of seclusion that 
their attraction truly resides: that 
sense of apartness from the bright 
streets in which people walk with 
no knowledge of the gamblers' con- 
trived, complicated and personal 
communion with the future. Out- 
side the betting shop, into which 
daylight never intrudes, what do 
those people in the real world know 
of the alternative world that the 
gambler has fabricated for himself? 

What do they, with their one 
Grand National bet a year, know of 
the terrible hope placed in that 
horse running at Lingfield, the one 


that showed such improvement last 
time out, the one that the gambler 
has singled out as his horse and 
that wOl maybe infuse him with 
emotions that soar and rampage 
and have little, in the end, to do 
with the desire to win money? What 
do they know of the gamblers' 
world, of Its rigid codes of behav- 
iour, of Its addictive rhythms, its 
.terse camaraderie, its supreme 
'pointlessness, its powerful reality? 

For all of us, life is an attempt to 
control our fete within the unpre- 
dictability of its existence. But the 
gambler does this in his own way. a 
way that is compressed, dramatised, 
specialised and, above all, intensely 
private, because it is he who 
chooses the arena within which he 
will battle against the odds. 

This privacy, or self-containment, 
is something that he relishes. That 
is not because he is ashamed, but 
because he is actually rather proud. 
And if he wants to keep his gam- 
bling hidden behind the darkened 
windows of the betting shop, then 
he should be able to do so. 

However, the government has 


decided that it is time to dabble 
again in betting shop legislation, 
and has advised that the occluded 
glass which separates gamblers 
from the world outside should be 
replaced with something cheerily 
transparent It is a ridiculous idea, 
partly connected with the contem- 
porary urge to sweep all atmo- 
sphere out of every Institution; but 
mainly concerned with getting 
more people Into betting shops by 
attempting to conceal the difference 
between gamblers and non-gam- 
blers. 

That is an impossible thing to do. 
My prediction is that the bright new 
betting shops will lose more cus- 
tomers than they attract The day 
that 1 walk into Ladbrokes to find 
that the shrewd, squint-eyed old 
boys have gone home to watch Tele- 
text and da their business over the 
phone, and the place is full of 
women sipping tea and placing £2 
each way on Housewives Choice, 
ridden by Lester Piggott, is the day 
I shall know the late 20th century 
has destroyed yet another of Its 
links with a more fascinating past 









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STYLE 


Travelling light 

The surprising thing about packing 
a holiday suitcase is that the 
formula hardly changes from year 
to year. 

The more practised you become 
the less likely you are to take 
dozens of things that never get 
worn. There are certain rules which 
always apply to a two-week 
sunshine holiday. The first is you 
never need anything that dressy 
(and that Includes jewellery). The 
second, that it helps to keep your 
clothes in a choice of two or three 
colours. (Black and white being the 
most obvious). 

A formal evening dress with 
stockings and stilettos looks 
somewhat out-of-place, even banal, 
in a mediterranean setting. You can 
tell a practised traveller by the way 
she saunters out to dinner in a 
white t-shirt and white trousers, 
accessories consisting merely of a 
pair of strappy silver sandals and a 
few brush strokes of bronzer on her 
cheeks. 

The sunmmer sales in Britain are 
full of floral viscose dresses (short 
and long) which can be dressed up 
(those silver sandals) or down with 
a t-shirt underneath and espadrilles. 
Look for the Ghost label (Whistles, 
Harrods, Liberty ) and you will find 
the perfect weight fluid viscose 
crepe in ample solid colour dresses, 
elasticated waist trousers and long 
line, loose-fitting tunic tops. Flyte 
Os tell (A la Mode and Liberty) and 
Betty Jackson (311 Brampton Road) 
are designers with a similar 
philosophy. 

Do you really need shorts? Yes, if 
you plan to play tennis and other 
athletic pursuits. No, unless you 
buy shorts that are tailored to 
flatter ( Calvin Klein at Selfridges, 
Levis or Emporia Armani). A sarong 
skirt, or piece of patterned fabric 
(for glamour you can use a large 
Hermes silk scarf) tied round a 
swimsuit and knotted at the waist 
is far more stylish as an alternative. 
Cooler too. 

Always plan to take items which 


double as something else, like the 
silk scarf that can be worn as a 
hairband. over the head if visiting a 
church or as a mini sarong - even 
ns a bodspre:id if you hate the 
rented villa ftirnishings. 

Classic shirts always present an 
ironing problem which is why 
simple tank-style swimsuits, which 
work as bodies for the day. are far 
less like hard work. 

Glamourous plunge-neck styles 
(black is always best) can double as 
an evening top. The brave can take 
this years' three-triangle bikini 
because at least it takes up no 
packing space. 

Shoes are the most bulky item, 
but the way they transform the 
image of an outfit is paramount. 

That crease-resistant viscose 
dress says one thing worn with 
trainers, another when with 
espadrilles and changes further 
with delicate strappy sandals. Good 
sunglasses with Polaroid lenses, a 
sunhat that will survive the 
journey, and a bag which works for 
the beach and the market and 
doesn't look like the formal leather 
one you take to the office are all 
intelligent investments. 

Illustration: Left : slip dress by 
French Connection. £ 44.99 at 
Fenwicks. Crochet bag by Ursula 
Beaugesle from £25 in Broims Sale, 
23127 South Molton St Wl. Centre: 
crapped ribbed top. Jeffrey Rogers. 
£1599 in Fenwicks Sale. Sarong 
skirt in side, £59 Austin Reed Sale, 
103-113. Regent Street, WL and 
branches. (0800585 479). RighV 
Sunglasses by Cutler and Gross. 
Kmghtsbridge Green, £79. Viscose 
crepe tunic £70 and elastic waist 
trousers £80 from a selection by 
Ghost available at Whistles. 12, St 
Christapher.s Place and branches. 

Espadrilles £9.99 Laura Ashley. 
0628770345. 

Kathy Philips, beauty director of 
Tatler 


CONTRACTS & TENDERS 



GOVERNO 

DA BAHIA 

ED(TALDEOQM30flR£NCtANTHVMCt0NALN l 03jB4 
RBHJBUCA FEDERAT1VA DO BRA5L 

GOVERNO DO ESTADO DA BAKU 

SECRETARJA DE BCRGIA 7BANSPORIES E COMUMGACOES - 5ETC 

DEPARTAMENTO DE ESTRADAS DE ROEMGEM DA BAHIA - DERBA 

AVISO deuchacAo 

O DEPARTAMENTO DE ESTRADAS DE RODAGEM DA BAHIA, alravta da 
ComfesSo Permanent da Lieftactea, davttamerte auftxuada polo Dntor 

Ganri conlonmpoittrta N* 59501, taz saber aos ifarassados qua tart 

raaiEar XONOOHRENCIA OVTERNACIONAL* ptua oonrancAo de smpresas 
MpedaHzadas an obras rodov&fas para ExaaicAo dot Swvicas de 
MeChwamorto e PavknenlacAo do Radio BA O0 1/275 - SANTA CRUZ DE 
CABRAUA - BELMONTE, com 49,80km de eodanste. O rocebimorto das 
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reunites da Dlratoria Gecal do DERBA. no 2* andar da sua sede, abrade no 

Centro Artukib&alivo da Bahia - CAB. munidpia Salvador - BA. Ossamcaa 

obieio deote EdtaL podarto vlr a fazar pane da un avanual financtemano do 
Banco taammaricano de DasanwMmerto - BIO, demo do Pro^ama da 
DasenwMmanio do Twbmo do Nontesie - Pnxfan*. o ipal enoortrahsa am 

de negodacto. Podarto psniripar dean fctafflo. empresas brasBelras 

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Paulo Potto Model 
Preeideraa da Combsfto 


OEMAIS MENBROS; 
GflRuy LemosCouo 

Joed Beranw 

Robeno Barreto Poraira 


CBWTMCNIO OE ESTRADAS DC RODAQEM DA BAHA • DERBA. 

COM 9 &AO PERMMENTE DE UCrTApAQ. 

CBNTnO ADMMSTHATIVO DA EMMA - SALVADOR - BAHA ■ BRASH. 
CEP 41 . 74 MOO . RAX: [ 071 ) 3714073 . 




<K> 

SECRETAMA DE ENERGIA, TRANSPORTES E COWJMCApOES 


LEGAL NOTICES 

A dnUi btraMva Bectlwr 
Cantnay ornio: Dmcu Ijccy ftwd Services 
Unlied. Rcgtatned Haber 2S2I8A&. Fonecr 
H i m pa y names Johnclfen Umlled. KLdm of 
beanos: Frozen food wMeakl/dnftiiiul'in. 
Trade dHaffiadon: 11 Date of spponUn*ni of 
Atkakolativc Rcusucn: Lt kit I9M. Nunc uf 
pentad app nm tin g At AdmipiilralWc Receivers; 
Uajdt Bak lie JoM Admin btrslta RcccherK 
E M Stand fofficc bolder number 7925) 

N J Vooeht lufTke holda main 63?>>. 

Caupcra A Lybrand, 

PO Box JbLOretanl Han. 
lOAfkai Piece 
Mjhbtoac. Kent MEN 5DZ 


To Advertise Your 
Legal Notices^ 

Please contact 
Tina McGorman 
on 071 873 4842 
Fax: 071 873 3064 





10 


FINANCIAL TIMES MONDAY JULY 25 1 


<LM hafts flights 

~- 7g? KUBBoyal 

Mf n »««» 

fcy U ******* ha® 

/ / suspended 
^ // Hat flights to 

■ =£-J Lapon, ffioe 

and Manets because of 
the three-day strike fay 
French air traffic 
coidroflers. 

KLM usually oper a te s 
taro fflgfats dally to each of 
the three southern French 
d estinati ons. 

KLM is advising 
passengers to fly to 
alte rna tive a sp u rt s sach 
as Paris atd Geneva, 
before eocnpietaig ihefr 
Jocmey fay train. 


St Louis train 

St Louis, Missouri, has become 
one of a few US cites to ran a 
train service from the airport Wo 
the city, writes Danfef Green. 

The airport is one of the 10 
busiest in the US and the city is 
homo to the Anheuser-Busch 
brewing gfent as we$ as 
Monsanto In chemicals aid 
McDormeU Douglas in 
aerospace. 

Me&ofink runs from 5am untfi 
past midnight Its 
air-conditionecJ trains rtn every 
eight minutes in peek periods 
and every 15 minutes at other 
times. The Journey takas 34 
minutes and the fare is Just SI. 


Air freshness 

A study in the August issue 
of Consumer Reports 
magazine found that almost 
a quarter of commer ci al 
flights do not meet a basic 
standard far air freshness. 
About 25 per cent off 
ffights tested had carbon 
(floxide levels higher than 
1,000 parts per million 
parts of air - the “comfort 
threshold" for wentBafion 
set by the American Society 
of Heating, R ef riger atin g 
and Air Conditioning 
Eng inee rs, 

Although the magazine 

tested 44 Jet models, ft 

cited only taro as veering 
notably from the average: 
the Boeing 757, 


which had comparatively 
high carbon dfoxkte levels - 
1,552 ppm In one ease - 
and the Boeing 747-400, 
which had comparatively 
low levels. 

The air in most of the 
planes tested had levels 
between 600 and 800 ppm. 
There were no pronounced 
cBfferances between 
aufines 

The problem, according to 
ao-fine employee unions and 
researchers, is that newer 
model planes recycle as 
much as hah of their 
wentaafion air, instead of 
providing 100 per cent 
fresh air, as older models 
did. 


Mozambique unrest 

Mozambican solders, 
disgruntled over pay, stopped 
and plundered cars travelling to 
Maputo from South Africa on 
Friday, poficeand border 
officiate sakt 

Wilfie Reynecke, of the South 
Afncan Department of Home 
Affairs, said the sotefiere were 
stopping care on the road from 
the Lebombo border post near 
KomaSpoort 

The unrest is the latest ha 
spate of mutinies m recent 
months by government soldiers 
and members of the former 
rebel m o vem e n t Rename. 


Border jams 

Road traffic between 
Hu n gar y and Austria came 
to a virtual standstill on 
Saturday as Hungarian 
border guards stepped 19 
passport and customs 
checks following a bomb 
Mast to Budapest 

Austrian customs officials 

said Hungarian barter 
guards were checking the 
documents and belongings 
of mry person, regardless 
of nationaKty, leaving and 
enteri n g the country. 

This was creating 
kflometre-fong traffic Jams 
cm both sides of the border. 


Likely weather in the leading business centres 


Mon Tue 




Hong Kong 


Umten ^ 28 ®p25 fg) 

Frankfurt 32 32 ^ 33 




tew York 


W:Wr&fr. 


L Angelas £2)26 ^31 34 

«** 


3f 


Zorich ' . \ P 1 *, 30 ■ 

Mcodmum temperatures m Celsius ' 

mhxnuUan 9uppWHl by Umoo Conaiit at the Nothwtandft 


T ravellers to Kiev need not 
be too disheartened by 
Ukraine’s dismal interna- 
tional image. In spite of the 
dire economic data, you will not 
starve in the country that was once 
the bread-basket of Europe. Neither 
is there any need to buy chocolates, 
cigarettes or perfumes in duty free 
before you leave - they are plentiful, 
and cheaper, in the kiosks lining 
Kiev's main streets. 

Nor, however, should you expect 
all the comforts of home. Bring wads 
of cash in small, unmarked notes 
(but beware of keeping it in a money 
belt, which is more likely to bring 
you to the attention of local hoods 
than offer protection) and all the toi- 
letries you need, and be prepared for 
intermittent hot water. 

Arrival at BorispiL Kiev's interna- 
tional airport, offers the business 
traveller a useful lesson about 
Ukraine: the Soviet system is gone, 
but no effective mechanism has 
emerged to take its place. 

There is the odd improvement. 
Entry visas, which once meant 
standing in long queues outside 
Soviet embassies abroad, can now be 
purchased with relative ease and 
often less expense ($50) at the Ukrai- 
nian border (unlike in neighbouring 
Russia). However, be prepared to 
spend a long time waiting in Kiev's 
dingy airport A letter of invitation 
from a Ukrainian organisation, 
while not necessary, often expedites 
the process. 

Foreigners who do not speak flu- 
ent Ukrainian or Russian should 
expect to pay $40 to 350 for a taxi 
ride to the centre of town. Once a 
deal has been struck, Ukrainian cab- 
bies tend to be honest and safe. But 
you may find it reassuring to 
arrange to be met by your hosts at 
the airport - this, in any case, is the 
Ukrainian custom. 

The worst part of your visit to 
Kiev will probably be the acoommo- 


Chrystia Freeland offers advice for a trip to Kiev, and says 
you’ll need stamina to cope with Ukrainian hospitality 

Hosts with the most 


datiom the Dnipro and Kbreshchatik 
hotels, on the city’s main street, are 
centrally located and fairly inexpen- 
sive (about $120 a night), but the 
rooms can be dreadful - small, with 
uncomfortable beds and disintegra- 
ting bathrooms. The Intourist-Rus. 
on a hill near the centre of the city, 
is a bit more comfortable and has 
fax machines and photocopiers, but 
the bill is more than $200 a night. 

If your visit has any connection 
with a government institution, try to 
wangle a room at the National HoteL 
Once reserved for high-ranking com- 
munist officials (before indepen- 
dence it was known as the October 
Hotel, as in the October Revolution), 
the National offers a glimpse of the 
lifestyle of the ancien regime. The 
hotel boasts more marble than the 
European Bank for Resconstruction 
and Development in London, and an 
abundance of chandeliers. It Is safe, 
comfortable and centrally located. 

Unless you have travelled widely 
in the former Soviet Union or are 
visiting Kiev for pleasure, it is best 
to hire both an interpreter and a 
driver. Find the interpreter first 
(best of all, do so before you arrive), 
and ask her or him to negotiate with 
one of the municipal cab drivers. 

The interpreter should cost $50 to 
$70 a day, and the car about $40 a 
day. Businessmen with Moscow 
offices sometimes bring their Rus- 
sian interpreters to Kiev; if possible, 
it is better to hire someone local. 
While almost all Ukrainians speak 
Russian, most official functions are 
conducted in Ukrainian, a language 


your Russian translator will only 
hazily understand. 

Ukrainian business etiquette is 
mysterious, but vital to master. Con- 
tracts are often awarded not to the 
company which promises a slightly 
better deal, but to the people who 
convince their Ukrainian contacts 
that they are basically good guys. 

To demonstrate your affable and 
trustworthy nature, expect to spend 
a long time with your Ukrainian 
counterparts while consuming large 

Contracts are often 
awarded to the people 
who convince their 
contacts that they are 
basically good guys 

quantities of alcohol and food. The 
ritual routinely begins at 7 o'clock in 
the morning and goes on past mid- 
night. Your reward for holding out 
on the first day is to begin the whole 
process again at sunrise. 

Women, who should expect flam- 
boyant hand-kissing and regular 
comments on their physical charms, 
enjoy a rare advantage in this 
regard. Pleading feminine delicacy, 
they can generally avoid the worst 
of the bacchanalia. 

If you are left to fend for yourself, 
or manage to prise yourself away 
from the overwhelming hospitality 
of your hosts, Kiev has a small but 
growing number of fairly decent res- 
taurants. The best pizza is at Arle- 


chino. the pizzeria in the Nika super- 
market-restaurant complex in front 
of Kiev's -mam market. For a more 
formal, but fairly expensive, meal 
(about 340 a person) try the Apollo, 
just off Khreshchatyk, the city's 
main street, or Del Mario, an Italian 
restaurant on vulytsia 1 Ukrainian 
for street) Saksahanskoho. not far 
from the train station. 

Tsian Deng, a new and remarkably 
good Chinese restaurant on Gorky 
street about 10 minutes from the 
centre of town, offers a respite from 
heavy Ukr ainian food and the homo- 
genised Italian dishes which are the 
main fare in Kiev's hard-currency 
restaurants. A word of warning - 
leave your Ukrainian friends at 
home, since only the most cosmopol- 
itan Kiev palates have discovered 
the pleasures of oriental cuisine. 

A charming, and surprisingly 
affordable, way to entertain Ukrai- 
nian partners is by renting one of 
the boats that cruise the Dnieper, 
the big river which bisects Kiev and 
has been one of Ukraine's main 
trade arteries for more than a mil- 
lennium. To rent a boat for an even- 
ing should cost no more than $500 
and groups often take 36-hour 
cruises up and down the river at 
about $60 a head. 

As the moon rises over the river 
and Kiev's desolate industrial sub- 
urbs give way to a verdant country- 
side. you might forget about the end- 
less bureaucracy and unpleasant 
bathrooms. Don't bring up the con- 
tracts. though, until your party dis- 
embarks in Kiev. 



. .. . ... hT'teaiin 

James MB 

Word on the street: conditions in Kiev are better than many visitors expect 


US warns 
against 
Russian 
flights 

The US has warned the public 
not to travel on successors to 
the Soviet-era airline Aeroflot 
The government had earlier 
warned its own officials 
against travelling on Russian 
airlines. 

David Johnson, a spokesman 
for the State Department said 
no specific Incidents prompted 
the warning. 

The department last Monday 
made public a notice that the 
US Embassy in Moscow had 
Issued to US government offi- 
cials operating in Russia. 

It noted that “travel within 
Russia is often unreliable", 
adding “domestic air travellers 
must often cope with unpre- 
dictable schedules and difficult 
conditions, including overload- 
ing'. The statement said “gov- 
ernment officials working in 
Russia are instructed to defer 
routine air travel". 

It warned that until the US 
Federal Aviation Administra- 
tion has completed its evalua- 
tion of the Russian civil avia- 
tion system “only official air 
travel deemed important and 
absolutely necessary to the US 
government should be under 
taken on Russian air carriers”. 

“Private Americans may 
wish to consider this informa- 
tion when making travel 
plans," the State Department 
said. 

But Johnson stressed air 
travel on Russian lines by US 
citizens is not forbidden. 


Fan; 











financial times 


MONDAY JULY 25 1994 


11 


MEDIA FUTURES 




s!'., 

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Moose, salmon and fibre-optics 


New Brunswick's broadband 
imdlimedta network 


By Bernard Sbnon In Saint 
John, Now Brunswick 

N ew Brunswick is not 
the sort of place 
where one expects 
to find a Ministry of 
State for the Electronic Infor- 
mation Highway. With abun- 
dant forests and waterways, 
the eastern Canadian province 
is best known for salmon fish- 
ing, moose hunting, and high 
tides ht the Bay of Fundy. 

But if New Brunswick Tele- 
phone Co (NBTel) and North- 
ern Telecom, the Toronto- 
based telecoms equipment 
maker, have their way, New 
Brunswick will soon gain rec- 
ognition as a pioneer in the 
unfolding world of multimedia. 
The aforesaid ministry of state, 
which was created last Febru- 
ary, is set to play a significant 
supporting role. 

Northern and NBTel are 
partners in a C$30Om (£i42m) 
project which aims to bring a 
range of video-fm-demand ser- 
vices to 400 homes and to six 
schools in Saint John, the 
province’s commercial centre, 
within the next 12 months, and 
to 60 per cent of all phone sub- 
scribers in the province by the 
end of 1998. “Everything we 


learn here is going to be used 
worldwide," predicts Chat Cot 
pttts. Northern's manager for 
New Brunswick. The bulk of 
the ftmds will be used to buQd 
a broadband network based on 
the province’s whoDy-digltal 
phone system and an existing 
fibre-optic network which con- 
nects the main centres. 

Northern is the overall proj- 
ect manager and systems inte- 
grator. It will also supply the 
fibre-optic transmission equip- 
ment and the high-capacity 
asynchronous transfer mode 
(ATM) switches required for 
broadband services. 

NBTel has gained a reputa- 
tion as an unusually entrepre- 
neurial utility. All its 300.000 
customers have access to voice 
mailboxes as part of their basic 
phone service. BCE, the Mon- 
treal-based telecommunica- 
tions group which controls 
Northern Telecom, also has a 
41 per cent stake in NBTel. 
“We're small enough to have 
ideas and big enough to exe- 
cute them,'’ says John Mac- 
Donald, NBTel 's chief execu- 
tive, whose business card 
includes his electronic-mail 
and Internet addresses. 

Talks are under way to bring 
New Brunswick’s two main 



THE WORLD’S 

SUPERHIGHWAYS 


cable- TV companies Into the 
project. About 83 per emit of 
the province's homes are 
already wired with the coaxial 

cable required for cahle-TV and 
broadband signals. Everyone 
would prefer to avoid the cost 
of overlapping infrastructures, 
and the inconvenience to con- 
sumers of two set-top control- 
lers - one for cahle-TV, and the 
other for multimedia services. 

MacDonald likens the ideal 
broadband syst e m to a single 
highway or airport used by 
competing trucking companies 
and airlines. He says that 
“we’re open to any proposals to 
accelerate deployment of the 
network and bring down 


costs.” But he adds that If we 
cant come to an accommoda- 
tion (with the cable compa- 
nies), we have to secure our 
future, and they have to secure 
theirs." 

The core of the new multime- 
dia service will initially be a 
library of educational videos 
provided by Magic Lantern 
Communications, a Toronto- 
based distributor. 

An electronic shopping mall 
and a range of government ser- 
vices will also be available 
from the start Viewers will be 
-able to choose winch advertis- 
ers' promotions they want to 
see, and to charge purchases to 
a credit card using the interac- 
tive service. Northern hopes 
later to add an “intelligent 
agent” which can be pro- 
grammed with the shopper’s 
personal profile (size, colour 
preferences, and so on) and can 
search the database tor com- 
petitive prices. 

The foch ufl on of government 
services stems from the strong 
support which information 
technology has received from 
the New Brunswick authori- 
ties. The province’s premier, 
Frank McKenna, is widely 
regarded aa one of Canada’s 
most forward-looking and sen- 


sible politicians. McKenna, 
who often jokingly introduces 
himself as NBM’svice-presi- 
dent for marketing, has latched 
on to the “information high- 
way” both as a means to 
attract investment to his prov- 
ince, and to Improve govern- 
ment efficiency. 

A pilot project in two towns 
allows redidents to sit at a sin- 
gle computer terminal to pay 
property taxes, renew car 
licences, buy fishing permits, 
or apply for a birth certificate. 
Entrants to the annual lottery 
for moose -hunting; licences 
have in the past submitted 
their bids at a government 
office. But this year’s “Moose 
Draw” was contorted entirely 
by touch-tone telephone. 

Northern and NBTel are con- 
fident they have the technol- 
ogy to meet the deadlines for 
their video-on-demand service. 
They are less sure however, 
what services customers will 
want, and who will pay for 

fhfrm 

The partners have already 
begun organising focus groups 
to help determine the cftnhwt 
of their services. A market 
research or media consultancy 
may be brought in for advice. 

Services will be charged on a 


transaction basis, rather than 
at a fiat rate, such as that used 
for cable-TV. Northern and 
NBTSI recognise, however, that 
viewers may not be thrilled by 
the idea of paying to enter an 
electronic shopping mall or 

government office. 

Much of the financial burden 
is likely to ten on advertisers 
and other businesses, at least 
in the early stages. Among the 
ideas being floated is to refund 
the fee for opening an elec- 
tronic shopping catalogue once 
a purchase is maria. Consumer- 
oriented businesses, such as 
McDonald's, the hamburger 
ntwHw, pniilrt hqnr| Out a “ smar t 
card” with every purchase, to 
be used, say. fix- one hour of 
multi media viewing. 

Content and financing issues 
raise more questions than 
answers just now. In the fast- 
evolving world of multimedia, 
there is no guarantee that the 
project will be a success. But 
Northern's Colpitis confidently 
predicts that “when the capa- 
bility is there, all the entrepre- 
neurs and marketers are going 
to come out of the woodwork 
anH roakf * this thiTtg hum.” 
Other articles in Uds series have 
been France (July 4). Japan 
(June 13) and Italy (May 30). 



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equipment 






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rax* co-axial 
terminal 



Panamsat raises stakes 


By Andrew Adonis 

Panamsat, the private satellite 
operator which competes with 
Intelsat earlier this month 
launched the first of three new 
satellites aboard a French 
Ariane rocket from Kourou in 
French Guiana. 

The launch of Panamsat His 
a key step in the company’s 
aim to establish Itself as a 
global operator competing not 
just with Intelsat, but with 
smaller regional satellites such 
as Astra in Europe. 

In November Panamsat H 
will be followed by Panamsat 
m, which will cover the 
Atlantic, and next April by 
Panamsat IV, winch will cover 
the Indian Ocean, acting as a 
bridge between Europe and 
Asia. 

“The three satellites will 
give ns between six and seven 
times our existing capacity," 
says Fred Landman, chief 
operating officer, from 

P anamsa t* b haariqnartgrsrin 


Greenwich, Connecticut *Tt 
will put us in a far stronger 
position to erode the hold of 
Intelsat on this market/’ - 

Panamsat boasts a cast of 
blue-chip clients, from . 
international telecoms 
operators such as KDD of 
Japan to most of the main US 
broadcasters. It has already 
signed up 12 customers for 
Panamsat S, although the 
satellite will not be operational 
for another few weeks. 

What is the key to 
Panamsaf s appeal? “We are 
private enterprise to outer 
space,” says Landman. “We are 
customer-oriented, and have a 
rapport with more than 300 
users with spedaHy-tafiared 
services.” 

He expects the satellite 
market “to explode" in the 
next two years. “When we 
started as the first private 
international system inl986, 
the world was one big satellite 
monopoly. But the telecoms 
and broadcasting Industries 


upon which we depend have 
themselves opened up to 
greater competition since then, 
opening up an array of new 
opportunities for us." 

Broadcasters account for 
two-thirds of Panamsaf s 
revenue; the rest comes from 
telecoms operators. “I expect 
that balance to continue " says 
Tankman Hfi sees significant 
telecoms opportunities in 
developing regions - Latin 
America, Africa, Eastern 
Europe, Asia - where fl*pd 
infrastructure Is either 
unavailable or not of sufficient 
standard to provide the quality 
of communications required by 
the corporate sector. 

The total cost of the three 
satellites will be $720m. It is a 
hefty sum to recoup, 
particularly with the lavtnch of 
other private systems such as 
Orion. But Panamsat points to 
a committed investor base, 
boosted recently by the 
Mexican broadcasting 
company Grupo Televisa SA. 



Interactive boom for US 


Panamsat g to launched from French Gniana on July 8 


By Raymond Snoddy 

Interactive digital media will 
expand sharply in the US, and 
be the fastest growing sector 
nf Hw communications 
industry over the next five 
years. 

The forecast of annual 
compound growth of 11.7 per 
cent to a total of $22j5bn by 
1998, compared with fl24bn 
last year, comes in the eighth 
aitmipi Communication! 
Industry Forecast by Veronis, 
Suhler, the US investment 
hank, published today. 

I ntera c tive digital media 
consists of entertainment and 
information that Is 
distributed, or soon will be, in 
digital form. 

John Suhler, president of the 
investment bank experts 
growth tn of the interactive 
media industry “will continue 
to be explosive over the next 
five years”. 

Veronis, Suhler expects the 
number of on-line households 


in the US to triple to lO-Sm 
over the five year forecast 
period, with subscription 
spending for services rising in 
tine from $407m last year to 
91.51m in 1998. Spending on 
educational software is 
expected to more than double 
to $888m by 1998. 

According to the report, 
consumers will spend $&2bn a 
year by 1998, buying products 
from televised home shopping 
services. This is a 9.6 per cent 
average growth rate, although 
it compares with 132 per emit 
over the previous five years. 

Overall the communications 
industry WED continue to 
expand in the US, and 
spending by both advertisers 
and consumers on products 
and services will reach 
S3Q8.5bn by 1998, a compound 
jmwnfll rate of 6.6 per cent 
over the next five years. 

Advertising spending win 
grow by no less than 5 per 
cent in any of the next five 
years- 


Other highlights from the 
report include: 

• Television broadcasting 
spending to increase to 
$34.7bn, with the erosion of 
network audiences ending and 
the networks holding their 
market share. 

• Total radio advertising 
growth to double at a 7.1 per 
cent rate over five years, 
reaching $l3.2hn by 1998. 

• Cable spending to reach 
327.41m, growing at a 4.7 per 
cent annual rate. 

• Total spending on 
newspapers (advertising and 
circulation) to total S602bn by 
1998 - a 82 pet cent compound 
annual rate. 

• Spending on books to reach 
$32hn by 1998 - expanding 7-2 
per emit over the next five 
years. 

1994 Communications Industry 
Forecast from Veronis, Suhler, 
350 Park Avenue, New York, 
NY 10022 212-9354990. Price 
$500. 


Post haste for barcoded mail 


By Alan Cane 

The Royal Mail is planning to extend to 
the whole of the UK a scheme - at present 
on trial among a number of its larger 
customers - which promises dramatically 
to simplify mail addressing and sorting. 

The s chem e initially involves adding 
extra characters to existing postcodes so 
that each code will identify a single, 
unique address. 

The nub of the Royal Mail development, 
however, is the transformation of the 
extended postcode into a new kind of 
barcode which can be read by special 
electronic s canner s at rates of up to 30,000 
items an hour. It is thought the target for 
completing the conversion is the early 
part of next year. The barcodes wifi be 


chiefly of benefit to high volume, bulk 
man customers. Mailsort customers who 
presort their past already qualify for a 2 
per cent discount for barcoding 30,000 
items or more. 

Conventional barcodes, widely used on 
products and packaging in industry and 
commerce, comprise printed columns of 
bars of varying width. These can be read 
optically to yield information about the 
product or contents. 

The Royal Mail barcodes are different in 
form, consisting of patterns of lines of 
varying length which can be printed under 
control from a personal computer. One 
advantage is that the barcode reading 
machines are able to recognise the pattern 
despite the presence of, say. advertising 
materials on the packaging. 


Barry Jeeves, customer barcoding 
consultant to the Royal Mail, quoted in the 
current issue of the magazine PC Week, 
says the Mail has essentially developed its 
own. barcode based on an existing US 
standard. Conventional barcodes, he says, 
were not quick enough. There were 
problems with low quality printers and 
materials. 

There are some 25m domestic and 
business addresses in the UK. Existing 
postcodes identify a group of about IS 
addresses and are adequate for existing 
sorting systems, which are based on 
machine recognition of phosphorescent 
dots printed on the packaging. Customer 
should benefit greatly from keying in a 
nine character barcode instead of several 
lines of address. 


ARCHITECTURE 


Image projector’s image 

rnlin Ampr y assesses Channel Four’s new building in London 


T elevision is every- 
where and it is some- 
times difficult to 
imagine it coining 
from any specific place. In. 
these days of virtual reality, it 
cornea as a surprise to realise 
that TV channels need con- 
crete headquarters and solid 
bases for their activities. 

Opened earlier this month, 
the new Channel Four building 
in Westminster follows hot on 
the heels of the new ITN bund- 
ing in London, designed by Sir 
Norman Foster. Britons see 
ITN in all its transparent glory 
every night on “News at Ten” 
- toe image of efficiency arid 
focused energy grvra a certain 
boost of confidence to the 
broa dcasting of the news itself. 

When TV -am began its short 
life in a converted canal-side 
warehouse in Camden Town, it 
chose as its architect the jocu- 
lar Terry Farrell who could not 
resist a sunrise-shaped 
entrance and a row of break- 
fa si egg cups along the para- 
pet 

Those jokey days are over 
and Channel Four took the 
appointment of its architect. 
Sir Richard Rogers, very seri- 
ously. Channel Four held a pri- 
vate competition and 
appointed a design committee 
to oversee the process and 
select the winner. 

The composition of any jury 
is usually what determines the 
result and when you have 
Nicholas Sente, director of the 
Tate Gallery, Michael Manser, 
a former president of the Royal 
Institute of British Architects. 
Michael Grade and Sir Richard 


Attenborough cm the Jury you 
can expect a fellow member of 
the modernist establishment, 
of a certain age, will be 
appointed. At the time of the 
competition (1991) I recall the 
much more adventurous 
scheme, by Bennetts Associ- 
ates, which reached the short- 
list but did not win. 

The winning design by Sir 
Richard Rogers shows how 
middl e age has tempered the 
grtremism of his early years 
when the Pompidou Centre, 
■which he designed with Renzo 
Piano, was the first b uildin g to 
expose all its pipes and ducts 
on the outside of the facade. 

This was seen as some kind 
of a breakthrough and 

announced the birth of the 
style known as high-tech. As is 
often the case with the promo- 
tion of architectural styles - a 
great deal depends on the per- 
sonal charm of the architect. 
Richard Rogers has always 
b ee" a fervent evangelist and 
hag used his personal charm to 
sell his particular brand of 
mertianistic modernism. It is 
interesting to see how he is 
modifying his fine, and in all 
his public utterances about 
community architecture he 
wins to sound close to some 
of the views of HRH The 
Prince of Wales. 

Channel Four’s new head- 
quarters occupies two and a 
baif acres rai Horseferry Road 
in Westminster, just behind 
the concrete horror of the 
Department of the Environ- 
ment's headquarters in Mars- 
ham Street 

The site had been ear 


marked 20 years ago for a 20 
storey post office building and 
work had already started an 
the construction of a ten metre 
deep basement This below- 
ground work was utilised by 
the architects to provide a 
home for “no-day light func- 
tions” such as the main studio 
and the preview c i nema. As 
part of the p lanning deal, nego- 
tiated by Westminster City 
Council, half an acre of the site 
is a public park and children's 
playground. 

T he plan of the build- 
ing is a large “L" 
shape, with the 
tewnritte ctf the build- 
ing, at the joint of the “L", 
befog occupied by the curved 
entrance area, boardroom, and 
restaurants. It is this curved 
element that is the most spec- 
tacular part of the building 
and is really the only part of 
the desig n that seems to bear 
Richard Rogers’s signature. 
The curved curtain wall, sup- 
ported on a. spider’s web of 
steel, is something that all 
architects have tried to do 
since Norman Foster's Willis 
Faber Dumas office building hi 
Ipswich curved so sinuously on 
its site. _ 

It is the component manufac- 
turer who must take much of 
the credit for the success of 
gfljppt'hin g as striking as Chan- 
nel Four's curved glass wall- It 
was made by Eiffel in France 
(who made the famous glass 
pyramid in the Louvre), 
Permasteelisa, an Italian 
cladding manufacturer under 
the direction of Massimo CoV 


omhan, mad e the curtain wall- 
ing on the office blocks which 
have a rugged toughness about 
them. Massimo Colomban is 
one of those brilliant Italian 
designer/bnslnessmen who is 
currently founding a school to 
train architects in the 
“perfecting of component engi- 
neering”. 

Channel Four has really 
gained a fragment of a Rogers 
building - the excitingly 
curved entrance area and the 
fift tower and stack at meeting 
zooms - the rest of two blocks 
is routine offices. Indeed, one 
of the blocks wifi be let Chan- 
nel Four has spent £62m on the 
site and the building. Con- 
struction costs are some £39m 

which, allowing for the special 
needs of a TVbuilding, is not 
for from the average for a good 
qualify office block in central 
London. 

Channel Four has provided 
. London with a modest but stri- 
king gyample of late modern- 
ism - a kind of calmed, high- 

tech banding. The particularly 

good thing Is that it has stayed 
in the centre of the dty. not 
gone wandering off to Dock- 
lands and has provided some 
housing for sale and a park on 
toe site. 

In image terms the new 
headquarters is much more 
workmanlike than Lord Reith’s 
grand Broadcasting House. By 
concentrating all the architec- 
tural excitement at the 
entrance, Channel Foot’s new 
HQ is rather like TV itself - it 
promises a lot of sparkle but. 
once you pass the entrance the 
building, is pretty routine. 


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BUSINESS RESEARCH 

CENTRE FTV7W4 , 

liwr Ok. Southwark Bridge. Lund™ SEI 4|U I 

M. Nrt OTI-RM JUU hi* Mi.. 1171*73 j 


Numter 

Td 






12 


FINANCIAL TIMES MONDAY JULY 25 1994 


Still sitting tight in 
the electric chair 




C/3 


.1 


Seventy this week, Lord Weinstock explains 
to Bernard Gray why, as custodian of GEC’s 
history, he is still shaping its future 




T his Friday Lord Weinstock, 
managing director of GEC, 
will be 70. Yet there will be 
no great fanfare or party 
at GEC; no gathering of 
the great and the good. “No, I shall 
enjoy a quiet dinner in Salzberg with 
my friend Riccardo Mud. the conduc- 
tor. His birthday Is the day before 
mine and we bare done the same 
thing for the past 12 years." 

The juxtaposition of calculating 
businessman and contemplative 
music lover is only one of die ten- 
sions in Arnold Weinstock 's charac- 
ter. He is a cultured and retiring man 
who has taken difficult and painful 
decisions in a tough industry. He lives 
well but abhors waste in his business. 
He is an ardent racehorse-owner who 
is too busy working to watch them 
run. He keeps a vice-like grip on 
every important financial detail of 
GEC, yet is none the less prepared to 
put his most valuable assets into joint 
ventures when the strategic need 
compels. 

To him there is no contradiction 
between the private man and public 
manager. “I do not see the difficulty. 1 
enjoy living well but it would be 
wrong to waste the company's 
money.” 

He also Has some singular ambi- 
tions. On Desert Island Discs last year 
be confessed that in bis youth he bad 
dreamed of being an ice hockey 
player, but now he wishes he were a 
conductor. 

For his sins, however, he is neither 
an ice hockey player nor a conductor 
but the custodian of a large part of 
Britain's electronics industry, and has 
been for a generation. His views about 
the company’s future are inevitably 
tied to the way he has developed it 
since he brought together the three 
great UK electrical companies, GEC, 
AS and English Electric In the late 
1960s. 

At 70, he is well past the normal 
retirement age for a chief executive, 
but the board has just asked him to 
stay on as managing director for at 
least a further two years. As a result, 
the next phase of the GEC’s develop- 
ment is in the hands of the man who 
has shaped its recent history. 

Weins tack's long occupancy of the 
British electric chair has sparked 




plenty of controversy, both by the 
aggression with which be formed the 
modem GEC. and his apparent stolid- 
ity since. 

Observers have lionised and vilified 
him in almost equal measure. To look 
back through the contemporary 
accounts is to watch an inexorably 
shitting pattern. Weinstock was the 
man with the marketing flair who 
would save consumer electronics, the 
man with the management vision to 
integrate Britain's sprawling hi-tech 
industrial base, the man with the 
grasp of detail to keep profligate engi- 
neers on the straight and narrow. 

But as the glow of technological 
promise faded, GEC seemed to fade 
with it Arnold Weinstock was made 
to carry the weight of disappointed 
expectations. If only GEC had been 
more adventurous in cutting edge 
technologies. If only the company had 
not leaned so heavily an government 
contracts. If only GEC had used that 
Legendary cash pile. If only Arnold 
Weinstock hadn't been so cautious. 

Weinstock turns aside brickbats in 
much the same way that he declines 
bouquets. There is, however, a tight- 
ness around his eyes when critics are 
mentioned which suggests that the 
barbs do strike home. 

These people do not understand 
our industry. We have taken some 
f ailin g poor businesses which were 
deeply in debt and turned them into 
successful rich companies. And we do 
spend money. We have spent £2bn on 
acquisitions in. the past seven years 
and £406 m of our own money on 
research and development last year 
alone.” 

The arguments have become so 
entrenched on both sides that the bat- 
tle takes on a weary familiarity. 

Critics say that GEC has abandoned 
the technological high ground; Wein- 
stock argues that he wfll make any- 
thing for which there is a profitable 
market The charge is laid that he has 
retreated from the market to cosy 
government contracts; he points out 
that external forces such as the 
relentless advance of the Japanese in 
consumer electronics have in part 
shaped the company's direction. 
Weinstock seems to feel the pain of 
criticism, and there is a hint of resid- 
ual disappointment that the compa- 


ny’s achievements, and his own life- 
time's efforts, are not better recog- 
nised. 

For all that, his personal style has 
not changed in a quarter of a century. 
The functional office in Stanhope 
Gate. The telephone with a bank of 
direct dial lines to contact any of his 
senior managers instantly if there is a 
problem. The monthly reports from 
150 subsidiaries which stress key 
financial ratios, all of which are scru- 
tinised by the managing director per- 
sonally; many are annotated in red 
felt tip pen, often with brutally direct 
comments. 

Tm not the kind of manager who 
can grasp a situation and make a deci- 
sion in the same kind of very impres- 
sive instinctive way that Jules Thorn 
[founder of the now 'Hiam EMI] did. I 
must have the data to make a deci- 
sion." 

On the future of GEC and his own 
succession Weinstock is moderately 
candid. There are some things I still 
need to do. I need to sort out our mix 
of industrial businesses and put some 
more things into joint ventures. For 
that it is important to know the peo- 
ple who will be your partners.” 




Baker; not 
spooked by 
French films 


environment in the EU” and 
obtaining "a level playing 
fieur for US Rims. At last . 
year's Uruguay Sound, 
members of the Gait rejected 
US attempts to even French 
markets to more US films. 

"I don’t think [the Uruguay 
Roondl closed any doors: it 
just failed to open the door 
solidly,” Baker says- "We will 
work with every government 
within the EU to convince 
them to open their markets." 

After Europe. Baker plans to 
torn to Asia, where video 
piracy and abuse of 
intellectual property rights are 
reported to be rampant 


[.S 


H is vision of the company in 20 
years is a detailed develop- 
ment of the present rather 
than a radical shift or a new strategy 
for a new millennium. “In power engi- 
neering we are second only to ABB 
and we will prosper further. Electric- 
ity is not going to be replaced, and we 
can meet future demand.” 

The list continues. GEC has a good 
position in telecoms, albeit in a much 
smaller market than Its partner Sie- 
mens. Defence electronics will hunker 
down for the tough times ahead - he 
still hankers after a joint venture to 
pool his business with BAe. 

And though Weinstock wants to 
keep working he accepts that he will 
eventually have to move over. There 
is enough talent in the businesses to 
take over. Other people will come for- 
ward with their own ideas, but I 
would like to retain some kin d of con- 
sultative role, I think that would be 
useful." 

There has been much speculation in 
the City that he would like his son 
Simon to replace him, though many 


investing institutions would strongly 
appose the idea unless Simon could 
demonstrate that he was the best can- 
didate. 1 did nag Simon to join the 
company when he was at Warburg. 
But 1 know he would not want to do 
the top job if there were opposition to 
it He has a very different personality 
from mine and acts in a very different 
way.” 

Also in the race are the three men 
recently appointed to the board: Peter 
Gershon. who runs GPT. the telecoms 
business; James Cronin, managing 
director of GEC Alsthom power engi- 
neering; and Roy Gardner, head of 
GEC-Marconi, the electronics arm. 
The other much-touted contender is 
David Newlands, GECs finance direc- 
tor. If one of the candidates rises 
above the others in the eyes of the 
board and the City, the succession 
may be smooth. But the company is 
not home yet 

There are at least some signs of 
change at Stanhope Gate. Until 
recently a chipboard wardrobe which 
must have cost all of £50 at MFI stood 
in the comer of the modest waiting 
room. No-one in living memory had 


ever hung a coat in it Now it has 
disappeared, though its imprint can 
still be seen clearly in the hard-wear- 
ing beige carpet The room has even 
been painted and GEC’s smart 1960s 
logo hangs on the walL 

Some things, however, r emain the 
same. Profile writers have always 
moaned that no matter how hot the 
day or how long the interview, they 
are never offered refreshments by 
Weinstock. 

They still go thirsty. As I left his 
office on a sticky July day Lord Wein- 
stock wished me a speedy journey 
back to the FT. I explained that the 
train strike had emptied the streets - 
so much so that I had arrived for the 
interview 20 minutes eariy and had 
gone for a cup of coffee around the 
comer. 

Lord Weinstock misheard me 
slightly. "You got a cup of coffee 
here?” he asked, his eyes bulging with 
astonishment. "They should do a 
Bateman cartoon - the man who got 
a cup of coffee at GEC!” Whatever 
else he lacks at 70. the custodian of 
Britain’s electrical industry has a 
finely developed sense of self-parody. 


William Baker, just appointed 
as president of the Motion 
Picture Export Association of 
America, is more used to 
busting international crime 
syndicates than breaking 
down trade barriers, writes 
Jeremy Kahn. 

But the 54-year-old former 
FBI agent is confident his law 
enforcement experience will 
serve him well as the 
second-in-command of the GS 
motion picture industry's 
vocal and powerful export 
lobby. 

Baker heW increasingly 
important posts during his 26 
years at the FBI, at one time 
overseeing a $750m budget 
and. directing all of the 
agency’s criminal 
investigations with the 
exception of counter- 
espionage. He also spent two 
years attempting to overhaul 
the public image of the CIA, 
oversaw the FBFs 
counter-terrorism operations 
during the Gulf War and 

received numerous 
distinguished service awards. 

Retiring from the FBI in 
1991, Baker was hired by Jack 
Valenti, the president of the 
US Motion Picture Association 
- whose colourful antics 
earned him the nickname 
"Happy Jade” - to head the 
anti-piraqy division of its 
export lobby. Valenti, in his 
tom had checked him out: 
"William Webster [former FBI 
and CIA chief] told me be was 
probably the finest executive 
he ever encountered." 

Valenti credits Baker with 
"totally reorganising” the 
anti-piracy division in the past 
three years and was therefore 
his "first choice" when 
looking for a replacement for 
Myron Karlin, who steps down 
as president of tile export 
association after nine years. 

Baker says his first goal will 
be “addressing the post-Gatt 


Todo bom’s hot 
line in Portugal 


Luis Todo Bom’s climb to the 
top of the Portuguese business 
world has earned him a 
reputation as a strong-willed 
administrator with a low 
tolerance for complacency, 
writes Peter Wise. 

These qualities will be much 
In demand in his new post as 
president of Portugal Telecom, 
the country’s largest company, 
measured by number of 
employees, which was created 
through lari mouth's merger of 
three state-owned 
telecommunications utilities. 

Todo Bom. 46, laces the task 
of forging these unwieldy 
companies with different 
cultures into an attractive 
competitive enterprise; next 
year up to 30 per cent of 
Portugal Telecom will he 
floated in the country’s biggest 
ever privatisation. 

He will not countenance 
resistance in his attempts to 
reshape the sector. Todo Bom 
is known for driving people 
hard. Former associates say 
his aggressive style means he 
is rarely challenged in the 
boardroom. 

Like several other prominent 
Portuguese, Todo Bom, 
originally a chemical engineer, 
began his career at Sines, a 
state-run oil industrial and 
port complex that has proved 
something of a white elephant. 
Very much a politician - he Js 
now a vice-president of the 
governing centre-right Social 
Democratic party - by 1983 he 
had been appointed head of the 
Tourism Fund, which 
dispenses government grants. 

Later, he served as junior 
industry minister from 1985 to 
1987, and has since held a 
number of administrative posts 
in public-sector companies, and 
was appointed head of the 
now-extinct Telecom Portugal 
at the beginning of this year. 


GREEK EXPORTS S.A. 

T.B.A. 

ENATIONALfSAHO 

INVITATION FOR EXPRESSIONS OF INTEREST IN PURCHASING 
THE ASSETS OF THE THREE COMPANIES UNDER LIQUIDATION 
DESCRIBED BELOW AND BELONGING TO THE PIRAIKI-PATRAIKI GROUP 


7 


m 


Pharaonic Insurance Company 


GREEK EXPORTS SA., based in Athens at 17 Panepistimiou Street, as special liquidator of the PIRAIKI-PATRAIKI group 
companies which have been placed under special liquidation (within the framework of article 14 of Law 200Q/91 concerning 
denationalisation) and by decisions No.7815/1992 and 1083/1992 of the Athens and Patras Courts of Appeal respectively, and 
following instructions from the I.R.O. (which, according to article 22 of Law 2198/1994, is the essential Creditor of ail of the ' 
PIRAIKI-PATRAIKI group's companies and takes the relative decisions) and in accordance with paragraph 11a of article 46a of 
Law 1892/1 990 as supplemented by article 53 of Law 2224/94. 


INVITES 

interested parties to express their interest in purchasing the assets of the three PIRAIKI-PATRAIKI group companies under 
liquidation and described below, by submitting within twenty (20) days from today a written, non-binding expressions of interest. 

Interested parties can express their interest in purchasing elements of the assets of one, or two, or aB three of the PIRAIKI- 
PATRAIKI group companies under liquidation as follows; 


i 



a) PIRAIKI-PATRAIKI COTTON MANUFACTURING COMPANY SA. (HOLDING) 

b) PIRAIKI-PATRAIKI CHALKI DA WEAVING MILL SA 

c) PIRAIKI-PATRAIKI PATRAS SPINNING & WEAVING MILLS S A 

The expressions of interest to be submitted must not concern and will not be accepted with regard to the claims of the companies 
under liquidation against the other companies of the PIRAJKi-PATRAJKJ group because these claims are not transferable. 
Expressions of interest must be submitted separately for the assets of each company and will concern their separate operational 
and business unities and any elements of their assets which do not serve their business operations for the transfer of which there 
is no possibility of making separate offers. 


SUMMARY INFORMATION ON EACH OF THE COMPANIES UNDER LIQUIDATION 


1) PIRAIKI-PATRAIKI COTTON MANUFACTURING COMPANY SA is based In Athens and is engaged mainly in trading the 
products of the group's other companies. The assets of this company are; 

a) A modem building complex for storing and distributing the group's products, built In the Varibobi area of Attica. 

b) Stock in warehouses in the Attica area and in the group's warehouses in Patras. 

c) Immovables in the areas of Patras, Attica, Thessaloniki, etc. 

d) Claims against customers, furniture, etc. 

e) The PIRAIKI-PATRAIKI trade mark and other trade marks of the group's products are exempted from the company's assets In 
accordance with para. 20 of the above-mentioned article 46a, as supplemented by article 53 of Law 2224/94 since they will be 
transferred to the group's companies which have been using them for many years. 

2 ) PiRAiKl-PATRAJKi CHALKIDA WEAVING MILL SA maintains a weaving mill with 260 looms in the Municipality of ChaHdda (on 
a plot of land 43 stremmas in area which, however, is not operating at present) 

3) PIRAIKI-PATRAIKI PATRAS SPINNING AND WEAVING MILLS S A maintains in the Patras area (on a seaside plot of land 208 
stremmas In area) a vertical industrial spinning and weaving complex which includes a) two spinning milts, b) two weaving mills, c) 
a dyeing installation, d) a finishing installation, etc. 


I 

gjgjjUlJ 

mjqcjfl 


SL THE FIRST 

^ Private Sector Insurance Co . . 
# IN EGYPT 


BOARD MEMBERS 


Mr. Mounir Ghabbonr CHAIRMAN 

Mr. Mohamed Rashad Helmy DEPUTY-CHAIRMAN 

Me Ibrahim A. Kamel 

Mr. Mohamed Megdy Zied 

Me Sal ah E. Mahmoud 

Eng. Oasi N. Sawiris 

Dr. Nader N. Riyad 

Dr. Raouf K. Ghabbour 

Mr. Tharwat Abdul Shehid 

Mrs. Fakria Abdul Hamid 

Mr. Farouk Abdel Moneim 

Eng. Housam About Folouh 

Mr. Abed A Abed 

Mr. Tewfik Bibawi 

Mr. Badie Shenouda Rizk 


V 


t 


A\c V 


OFFERING MEMORANDUM 


CAIRO OFFICE 

GIZA OFFICE 

2U Talaat Harb Street 

14, Wizaret H Zeraa Street, 

Tel: 393 1646/393 4005 

(HI Batal Ahmed Abdel Aziz Extension) 

Fax: 390 7897 

Tel: 3615960/61 -3615683 


The Liquidator has drafted an Offering Memorandum for each of the above companies which includes a foil description of the 
enterprises and their activities, as weii as ail the elements to be transferred which constitute the assets which will go to the 
purchaser who is pronounced the highest bidder. 

it also contains the terms of the sale and all useful information of a general nature for the prospective buyer. 

The total assets of the companies for sale shall be listed in detail in the Offering Memorandums with their separate operational 
and business unities as well as any elements of the assets which do net serve business operations, for the transfer of which 
separate offers can be submitted as defined in paragraph 11a of article 46a of Law 1892/90 as supplemented by article 53 of Law 
2224/94. 




RifUfeSdurce- Now available.., . New FX service! 


TJv owcncul trot tar ihr lertonc ikwk« 


Market-Eye 


London stock exchange 




Copies of the Offering Memorandum will be available to interested buyers at the offices of the Liquidator as soon as they have i 
been drafted. ' 


Interested buyers will also be able to have access (following a written undertaking of confidentiality) to any other information j 
| they may ask for and may visit the company offices. 

We note, finally that the announcement of a public auction for the highest bid shall be published within the time limits 
! prescribed by law and in the same newspapers. 

For additional information, Interested investors may apply to: 

GREEK EXPORTS S A 

17 Panepistimiou Street, Athens 105 64, Tel. +30-1-324.3111-5 
Fax: +30-1-323.9185 and to the 

INDUSTRIAL RECONSTRUCTION ORGANISATION (I.R.O.) 

234 Syngrou Ave. Athens 1 76 72. Tel. +30-1 -952.5540, 

Fax: +30-1-956.8788 - 956.3285 


IWFlfMmcfatf ’nme&pfans fa fttbtisfc aSa 


j'-t- '".vj-Vf’-.T V * 


Ssn- 


Hi* FT ranches more twshmu people with property mspernMtty In the UK than any other newspaper mut man Motor 
European dcdatannofcars on hwhiaae pramteea/rites randtog BntfMHaatfiaga newspapers.* 

For a Ml editorial synopsis and (totals of arnOaMe adrarthenmnt poslttoas, please contact 




PAT LOOKER Tet 061 834 9381 Fax; 061 S32 9248 
Ruanda! Times. Alexandra Battflqe*. Queen Street, Manchester M2 OF 

* V-* tame l»0. BBS 1UQ 


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FT Surveys 






FINANCIAL TIMES MONDAY JULY 25 1994 


13 




BAYREUTH 

l^etireliy atopQoaton^t with- 
. ■Ranter, butthawah interest this vor 
fe« newpiDducflonbr -t* 
^^tV/^IOchncrand ■ 
Lewne.ftsmoa 
cwwoversiaJ.aspeet may we8 turn our 
la be the designs at Gentian Suetiafor 
.RoedtowJohn 
Tompnson 

W.iXwos. 

as Wofsjn, 

and Wo^ang 
Schmhfifc* 
the new 
SbgfrfedL 
Last year's 
"Tristan and 
teokte'ta 
revived with 
Sorted 
Jerusalem 
andWattraud 
Meier. 



ROYAL ALBERT HALL 

Nobody worftf to 
more dfiSgtrted than - 
..EthalSmylhatthe-hkgh 
•profile women- 
ramposara tow been 

anJoyingtWsyeqr.' : .'. 

JeHtoas'a suffragette 
andafarger-thar^fa - 
P*wna«y&toont» 
wmtgofflngmHer 
pyjamas <rrtfie 
SusSmasedeserfl Ethel 
Smyth dated 
cxnvarttei and fought 
to actdevs her musical . 

: antttoo* Next 
.Sunday tire BBC 
Proms present a 
concert performance - 

c* her most successful 

work, the opera “Tha 
wreckers", first staged 
in Leipzig In 1936, 



ARTS 


THE LYRIC 

Jdsette Sfencxt 
(right) takes Ihe title 
■rate in teen's The 
tody from the. . - 
Sea’. This role, 
ptayedby. 
actresses fTOm 
Dussto Vanessa 
nodpravo^ls 
one of teen's 

.VMil.ri ■ n 

(llOfit'PRnilfQ 

s bates of . 
tertonthity: a • 
women frigid 

wfthfii - 
..meroagai 

haunted by 
tire terrifying 
dahn* df a past 

lover, unable to give hersdtf to the 

husband she loves. The production 

cones to. the Lyric. Hammeremflh, 
* from the West Yoritshire Playhouse. 



SALZBURG 

Ranch theatre tfiroctor 
Patrice Chenrau rarely 
ventuas Into the opera 
house - but when he 
does, people take 
notice. That is what 
makes this summer's 
new production of 
“Don. Gtovamr such 
an appetising 

prospect. Sabfaug 
Festival's theatre 
programme continues 

.to gather strength: 
if • Luca Roncortfs staging 
of PirandaSo’s "The 
Mountain Giants" 
opens the festival 
tonight white Peter 
Slain (Srects- 


“Antonyand 

Cleopatra*. 



IHE SOUTH 
BANK 

The Deep South comes to 
London tWs week when 
the South Bank Centre on 
the Thames is anfivened 
both Inside and out by the 
Festive! of the America: 
South. Music takes pride 
of place with banjo greats 
Bee Ralph Stanley bringing 
mountain style BtoegraSs 
and guitarist Robert Ware! 
the sounds of New 
Orleans. David Roussave 
(tefi) and the ReaSty 
Company provide donee 
backed with gospel 
singing, and there era 
ptays from both Wack and 
Appalachian drama 
groups. Al this eref an 
Bvis Presley exhibition in 
the Festival Hofl foyer, too. 


Days of 
hope 

Jackie WuUschlager on images of 
the post-war American dream 



Benign propaganda? Four generations of an Ozark farming family, photographed in 1948 by Nina Leen: Traditional American family values are here.’ 


I t was the best known photo- 
graphic exhibition of all time. 
From 1955, when it opened at 
New York’s Museum of Mod- 
em Art, through the 1960s, when it 
toured the world, more than 9m 
people saw Edward Steichen's show 
The Family of Man. 

Its images shaped the conscious' 
ness of a generation: Eugene 
Smith's two children in “The Walk 
to Paradise Garden". Andreas Fein- 
inger’s crowd scene on Fifth Ave- 
nue, Robert Doisneau’s kissing cou- 
ple in Paris. Its message of peace 
during the cold war drew unprece- 
dented queues of visitors in the US, 
Berlin, Tokyo. When, two weeks 
before he died in 1963, John F. 
Kennedy made a legendary speech 
on the family of man, he used the 
term given popular currency by 
Steichen's show. 

Now, in a bold and imag inative 
move, the exhibition has been recre- 
ated and set up in a permanent 
home at the centre of Europe. At 
Chateau de Clervaux, an airy castle 
near Steichen's birth place in Lux- 
embourg, the monumental black 
and white prints are bung, as In 
1955, around scenes which cross cul- 
tures and races. 

Steicben described the 503 images 
culled from more than 10,000 photo- 
graphs as "a mirror of the essential 
oneness of mankind throughout the 
world". His selection shows a pas- 
sion for vivid h uman involvement 
'* the excitement of a first glance, a 
pair of clenched hands, a sprawl of 
legs at a dance, a boy spearing an 
v i antelope. 

] ‘ Yet time has also proved his criti- 
"> cal acumen, for every picture on the 
wall is a consummate work of art 
Cartier-Bresson, Brassai, Bill 
Brandt Diane Arbus - the names 
which moulded 20th-century pho- 
tography are all here, making this 
show not just a historic reconstruc- 
tion but the story of an art form. 

Forty years on, it is the emotion 
and optimism of the pictures that 
catches you breathless as you walk 
into the opening sequence of lovers: 
in an En glish meadow, in an Italian 
wood beside an abandoned bicycle, 
as part of a New Guinea tribe, at a 
Louisiana dance hall. Crowd scenes 
pull you in - sw&nky faces from 
five tiers of the Paris Op6ra, boast- 
ful children in a Brandt street 
scene. 

Exquisite compositions such as 
Doisneau’s picture of a policeman 
watching a woman watch a couple 
embrace by the Seine, ask you to 
join a circle of voyeurs. All pure 
sentiment and familiarity hold sway 
- witness Eugene Smith’s children 
in a brightly lit garden, an image of 


hope and love so emotive that at a 
recent trial run of the exhibition in 
Tokyo, many visitors wept openly 
over it. Steichen captioned Smith’s 
picture “a world to be tram under 
your footsteps", and today it is a 
vision of the 1950s American dream 
that we respond to it (It is no coin- 
cidence that the imag o made one of 
Ford's most successful motor car 
advertisements.) Like many works 
here, it is stamped with American 
icons - sports car, roller coaster, 
test-food joint. 

Ralph Crane's shot of six teenag- 
ers speeding down a tree-lined ave- 
nue in a 1940s convertible, Robert 
Frank’s line of college girls devour- 
ing 20 -cent hamburgers, breathe 
that mix of exhilaration grid banal- 
ity which was mid-centuiy US life. 

Cumulatively such pictures 
announce a faith in youth and prog- 
ress, in New Deal prosperity and 
the pioneering American spirit 

T he beginnings of teen culture. 
Rock Around the Clock. Lol- 
ita. West Side Story, were the 
family of man's contemporaries and 
Steichen, like Humbert Humbert 
and Old World emigres in love with 
the New, was perfectly placed to 
celebrate the grandeur of young 
America. At the centre of his show, 
like'an altar piece, he placed a giant 
Ansel Adams* California landscape. 
Surrounded by the bars and play- 
grounds on every day Main Street, 
it is a homage which recalls the 
vast journey from motel to motel 
that Humbert Humbert made across 
the country with Lolita. 

These comparisons crystallise 
how this show has dated in the best 
possible way. For the family of man 
is not a general balanced view from 
five continents hut an artistic 
expression fixed in time and place. 
Its images unfold like the grand 
scenes of history, and what gives 
than the lasting quality of myt h is 
that, like Rembrandt's portraits of 
Flemish burghers or the Velas- 
quez's Spanish nobles, they distil an 
inescapable sense of their age, and 
yet out of that precision emerges 
so mething universal 
All this is clear with hindsight, 
which also makes apparent what a 
splendid exercise in benign propa- 
ganda this exhibition must have 
been during the cold war. 

Symbolically, its first stop in 
Europe was Berlin, where It was 
greeted with fervour by a public not 
long liberated from the blockade. 
Even a quintessentially German art- 
ist like August Sander seems in 
Steichen's persuasive American 
context denationalised; his “The 
Hod Carrier”, an oppressed German 


worker resembles an entrepreneur- 
ial mid-westerner. In the same way, 
Brassai's famous duo the Members 
of Big Albert's Gang, plus dTtalie, 
here set among clean-living Ameri- 
can teenyboppers, loses its Gallic 
menace and wit 

This exhibition will come increas- 
ingly to resemble a mid-century US 
export A key prop is a ballot box 


stuck over with photos of individu- 
als voting in Turkey, Japan, France; 
behind it a huge frame features a 
United Nations meeting. In the 
groups of families from around the 
world, it is now easy to detect a 
sense of US superiority - Talcott 
Parson's influential essay The Nor- 
mal American Family" appeared 
the year the exhibition opened. 


Yet Steichen’s images are large 
en o u gh for this not to matter. In his 
last sequence, a screen showing 
elderly couples forms an entrance 
to a final room plastered with 
motifs of playing children. 

Of course, traditional American 
family values are here - respect- 
ability, monogamy, the safe social 
order of grandparents and grand- 


children. But this intimate section 
also invites us to place ourselves 
between youth and age, to ponder 
our own family, society. Each 
viewer will take from it something 
different - which is what makes 
this exhibition so rewarding. 


The Family of Man, Chateau de 
Clervaux, Luxembourg. TeL-929656. 


Recital 

A legend 
in search 
of form 

T he celebrated German mezzo 
Brigitte Fassbaender is 
already something of a leg- 
end: since making ber debut in the 
early 1960s. she has sung many of 
the great memo roles in the world’s 
leading opera houses, and recently 
she has also turned her hand to 
directing opera. 

She is admired on the concert 
platform and. as the reception she 
got at the Wigmore Hall last week 
shows, she has a devoted following. 

Her artistry has always been 
highly individual, but in this recital 
her opening group of Mahler songs 
disclosed some worrying manner- 
isms. Fassbaender's instrument is 
perhaps not as flexible as it was, 
and hardens under pressure. 

Of course, great interpretations 
are not made on sheer vocal beauty 
alone; but the occasional lapses of 
intonation would have mattered 
less had she brought a sense of life 
- vital in Mahler - and been less 
free with dynamics. The opening 
Rhemlegendchen had a Weill ian, 
coarseness about it and she missed 
the radiance of Liebst du um Schtm- 
heit. At least she captured the 
lonely desolation of another RQck- 
ert setting, Ich bin der Weltabhan- 
den gekommen. 

Indeed: her approach seemed 
wholly better suited to Aribert Rei- 
m ann ’s stark Eingedmkelt cycle, 
written for Fassbaender and premi- 
ered by her last year, here receiving 
its first UK performance. 

A setting of nine short impres- 
sions of Auschwitz by the poet Paul 
Celan (pseudonym of the Ro manian 
Paul Antsohel who lost both his 
parents in a concentration camp), 
the cycle succeeds as a powerful 
lament where the horror of its sub- 
ject can defy description. 

Emgedunkelt is set for a lone, 
imacmmpanipd voice and Fassbaen- 
der delivered the mournful declam- 
atory lines with incisive eloquence. 

The second half of the programme 
brought a reminder of Fassbaen- 
der’s diversity and was pure, unal- 
loyed pleasure. In two early Berg 
songs. Wo der Gokbregen steht and 
Feme Uder. she found the sense of 
line missing from her Mahler, and 
allowed the beauty or her voice to 
come through. The programme 
lightened up with Milhaud’s cheeky 
Trois chansons de n£gresse, Fass- 
baender caressing the lines like a 
chanteuse and her pianist Wolfram 
Riegen (who had been excellent in 
Berg’s four Op 2 Lieder) coming 
into his own with the swinging 
accompaniments. 

Fassbaender put everything into 
her final group of Weill Songs, 
delivering such numbers as Namas 
Lied, Wie lange noch ? and Berlin im 
Licht with pungent vocal utterance. 
These seemed to say the most about 
Fassbaender's art today. 

John Allison 


INTERNATIONAL 

Arts 

Guide 


■ BERLIN 

Crazy for You, the musical based on 
Gershwin's Girl Crazy, runs daily 
from tomorrow till Sun at the Schiller 
, Theater (2548 9241) 


■ COLOGNE 

Ahrin Ailey American Dance Theater 
opens a two-week season tomorrow 
at the PhHhaimonie (0221-2801) 


simmer, some of them free open-air 
events. The international music 
sales at Theatre de Verdure 
continues with a jazz/Java evening 
on Wed featuring Marcel Azzola, 
Marc Fosset and Patrick Caratini 
Trio, followed by the Golden Gate 
Quartet (negro spirituals) on Fri and 
the Hetston Jazz Band from England 
on Sun afternoon. The Monday jazz 
series at Cour de I'Hdtel de Vlfle 
continues with American tenor 
saxophonist Johnny Griffin tonighL 
The classical music series, also at 
Cour de I’Hotel de Ville, has the 
Geneva Chamber Orchestra 
(Stravinsky, Strauss and Mozart) on 
Thurs, followed on Sat by an 
evening of chamber music with 
Andras Schrff and friends (022-786 
5545/022-312 4353) 


■ HAMBURG 

• Maxmilian Schell stars as 
Professor Higgins in My Fair Lady at 
the Deutsches Schauspielhaus. daily 
till Aug 7 (040-248713) 

• Katharina Thafoach's production 
of Brecht's The Threepenny Opera, 
with music by Kurt Weill, runs from 
tomorrow bH Sat at Ttedis Theater 
(040-322668) 


■ MUNICH 

OPERA FESTIVAL 

Tonight's performance is Le nozze 

di Figaro with Pamela Cobum, 

Alison Hagley. William Shimell and 
Alan Titus. Tomorrow, Fri: La tfavtata 
with Cheryl Studer, Francisco Araiza 
and Thomas Allen. Wed: Bavarian 


State Ballet in John Neumeler’s 
production of The Nutcracker. Thurs: 
Die Mefetersinger von Numberg, 
with Bemd Wald, Eke WHm Schulte 
and Nancy Gustafson. Sat Der 
Rosen kavaJier with cast headed by 
Felicity Lott, Jeanne PHand, Barbara 
Bonney and Kurt Moll. The season 
ends on Sun with a final 
performance of Meisterslnger 
(089-221316) 

MUSIC 

Gasteig Tonight Lionel Hampton. 
Tomorrow: Vladimir Chernenko 
conducts St Petersburg 
StaatskapeJIe in works by 
Rakhmaninov and Tchaikovsky, with 
piano soloist Arkady Zenziper. Wed: 
Joshua Redman Quartet and Ron 
Carter Trio (089-8409 8614) 
Bayerischer Hof Wed: Betty Carter. 
Thurs: Arturo Sandoval (089-299901) 

THEATRE 

The Kammerspiete has just unveiled 
a new production of Otearma, David 
Mamet's celebrated two-hander 
about political correctness and 
sexual harassment Directed by 
Dieter Dom, the play can be seen 

tomorrow and daily except Wed 
between Aug 1 and 14. This week's 
repertory also includes 
Shakespeare’s King Lear and The 
Tempest (089-2372 1328) 


■ NEW YORK 


THEATRE 

• Three Tall Women: a moving, 
poetic pi ay by Edward Aibee, 
dominated by the huge, heroic 
performance of Myra Carter. She, 
Jordan Baker and the droll and 


■ FRANKFURT 

• New York Hariem Theatre 
presents Gershwin's opera Porgy 
and Bess tonight. Wed, Thurs and 
Fri at Frankfurt Opera House 
(069-236061) 

• The next jazz concert at 
Palmengarten is on Thurs. featuring 
the song and guitar duo Silvia 
Droste and Michael Sagmeister. 


■ GENEVA 

The city of Geneva organises a 

series of concerts throughout the 


delightful Marian Seldes represent 
three generations of women trying to 
sort out their pasts (Promenade, 
Broadway at 76th % 239 6200) 

• Angels in America: Tony 
Kushner’s two-part epic conjures a 
vision of America at the edge of 
disaster. Part one is Millenium 
Approaches, part two Perestroika, 
played on separate evenings (Walter 
Kerr, 219 West 48th SI 239 6200) 

• Laughter on the 23rd Floor NeO 
Simon's 27th Broadway play, about 
a group of writers trying to come up 
with a new show, Is one of his fkrest 
comic efforts. Directed by Jerry 
Zaks (Richard Rodgers, 226 West 
46th SI 307 4100) 

• Carousel: Nicholas Hytner's 
bold, beautiful National Theatre 
production from London launches 
Rodgers and Hammerstein towards 
the 21st century (Vivian Beaumont 
Lincoln Center, 239 6200) 

• Tommy: a musical written and 
composed by Pete Townshend, 
based on the 1969 rock opera by 
The Who, about a withdrawn young 
boy who becomes a Pinball Wizard 
(St James, 246 West 44th SI 239 
6200) 

• Kiss of the Spider Woman: 
Vanessa Williams has taken over 
Chita Rivera's starring role in the 
long-fuming Kander and Ebb 
musical directed by Harold Prince 
(Broadhurst, 235 West 44th SI 239 
6200) 

• Guys and Dolls: a top-notch 
revival of the timeless musical fable 
about the gangsters, gamblers and 
good-time girls around Times 
Square (Martin Beck, 302 West 45th 
SI 239 6200) 

• Crazy for You: the musical 
based on Gershwin’s (Sri Crazy 
recently passed Its second 


anniversary on Broadway. A 
highlight of this glitzy entertainment 
is Susan Stroman's choreography 
(Shubert, 225 West 44th St 239 
6200) 

• Tony ’n’ Tina's Wedding: a 
wedding at St John's Church, 61 
Christopher Street followed by a 
reception at 147 Waveriy Place, with 
Italian buffet champagne and 
wedding cake (279 4200) 

• Damn Yankees: the big musical 
hit of 1955 is back in its first 
Broadway revival, with Victor Garber 
as the Devil and Bebe Neuwirth as 
Lola. The director, Jack O'Brien, has 
extensively re-written the story, 
about a baseball fan who sells his 
soul to rescue his favourite team 
from a losing season (Marquis, 
Broadway at 45th SI 307 4100) 

MUSIC 

The Lincoln Center’s Mostly Mozart 
Festival runs daily except Sun till 
Aug 20. Tonight’s chamber music 
recital is given by Joshua Belt 
Christian Zacharias and Garrick 
Ohtsson. Armln Jordan conducts the 
Mostly Mozart Orchestra in Mozart 
and Haydn tomorrow and Wed. The 
programme on Thurs consists of 
three Mozart piano concertos, 
played by Heldne Grimaud, Robert 
Levin and Cecil® Ucad. Jordan 
conducts again on Fri and Sat with 
pianist Menahem Pressler and cellist 
Ralph Kirehbaum (875 5030) 


■ STUTTGART 

LUDWIGSBURG FESTIVAL 

Jessye Norman gives a song redtal 
on Thurs. The nod concerts are on 
Aug 6, when PhHippe Entramont 


gives a piano recital and Christoph 
Eschenbach joins the Houston 
Chamber Players in music by 
Poulenc, Strauss and Brahms. Other 
forthcoming events include a 
concert featuring Mstislav 
Rostropovich as ceQo soloist on Aug 
7, song recitals by Edith Wiens and 
Simon Estes on Aug 13, the 
Cleveland Orchestra under Christoph 
von Dohnanyi on Aug 25, the 
Pittsburgh Symphony Orchestra 
under Lorin Maazel on Aug 28. and 
cellist Yo Yo Ma in redtal on Sep 2 
(07141-939610) 


■ VIENNA 

• The Roman rain In the park of 
Schonbrunn, the former residence of 
the Hapsburgs, provides an open-air 
venue for Vienna Kammeroper's 
summer productions. Le nozze di 
Figaro runs dally except Wed till SaL 
Don Giovanni follows from August 9 
to 27 (513 0851) 

• Vienna's summer concert series, 
Klangbogen Wien, runs till August 
30 at various venues throughout the 
city. This week's events include a 
Mozart and Stravinsky programme 
conducted by Yehudi Menuhin at 
the Konzerthaus tomorrow, a 
concert of Mozart arias at the 
Rathaus Arkadenhof on Thurs, and 
an opera concert with the 
Phitiiarmonia Romania on 

Satat the Minoritenkirche 
(4000 8410) 

• Rims of legendary opera and 
concert performances conducted by 
Bernstein, Karajan and Bdhm can be 
seen free of charge at Rathausplatz 
each evening till the end of August 


ARTS GUIDE 

Monday: Performing arts 
guide city by city. 

Tuesday: Performing arts 
guide city by city. 

Wednesday: Festivals guide. 
Thursday: Festivals guide. 
Friday: Exhibitions Guide. 

European Cable and 
Satellite Business TV 

(Central European Time) 
MONDAY TO FRIDAY 
NBC/Super Channel: FT Busi- 
ness Today 1330; FT Business 
Tonight 1730, 2230 

MONDAY 

NBC/Super Channel: FT 
Reports 1230. 

TUESDAY 

Euronews: FT Reports 0745, 
1315, 1545, 1815. 2345 

WEDNESDAY 

NBC/Super Channel: FT 
Reports 1230 

(TODAY 

NBC/Super Channel: FT 
Reports 1230 

Sky News: FT Reports 0230. 
2030 

SUNDAY 

NBC/Super Channel: FT 
Reports 2230 

Sky News: FT Reports 0430. 
1730; 




14 


FINANCIAL TIMES MONDAY JULY 25 1994 


Samuel Brittan 


The recovery is now 
near worldwide 



There is now 

r v&jk strong evidence 
■^Sw that recovery is 
worldwide. It 
started in 
North America, 
where It has 
already 
reached the 
margins of safety, then spread 
to devaluing European coun- 
tries and is now reaching hard- 
currency countries such as 
Germany and Prance. 

Japan is the most doubtful 
prospect; but even hete there 
are signs that the economy is 
slowly adapting to the over-val- 
ued yen by domestic demand 
expansion and even more strin- 
gent cost-control by exporters. 

The developing countries, 
which in previous cycles 
danced to the tune of the older 
industrial world, are now a 
sustaining force. They did not 
experience the last recession 
and are now growing at twice 
the rate of the countries of the 
Organisation for Economic 
Co-operation and Development. 

Indeed, the OECD has 
revised its projections upwards 
for the first time since 1991. 
Oxford Economic Forecasting, 
in a more up-to-date compre- 
hensive survey, has higher pro- 
jections still. The surprise ele- 
ment has been the strength of 
continental Europe, especially 
Germany. While at the start of 
the year many analysts were 
expecting no growth at all in 
that country, OEF is now proj- 
ecting all-German growth to be 
2J2 per cent in 1994, rising to 
2.9 per cent in 1995. 

Forecasts are merely a way 
of articulating present indica- 
tions; and OEF is very frank 
that its revised view is based 
on “glowing widespread survey 
evidence across the European 
continent”, especially indus- 
trial confidence and production 
expectations. 

The present business cycle 
has much in common with that 
of the 1980s. Each downturn 
has engendered a desperate 
belief that the world has 
entered a long-term depression 
phase; then there have been 
mutterings that recovery will 
not create new jobs; and finally 
concerns about inflationary 
overheating have re-emerged. 
It is, of course, nonsense to dis- 


UK output passes previous peak 

UK Real GDP (1990=100 



connect output and jobs. 
Unless newly employed work- 
ers produce nothing or nega- 
tive amounts the two must go 
together. Unemployment has 
fallen in the US and the UK. 
where output has been rising 
briskly; and the OECD expects 
it to level off in Europe as 
growth returns to trend. 

In the Group of Seven coun- 
tries, total demand in cash 
terms - measured by nominal 
gross domestic product - is 
now growing by about 5 per 
cent a year. Because of surplus 
capacity and associated com- 
petitive pressures, the Inflation 
rate in these countries has 
fallen back to 2 per cent, leav- 
ing room for normal growth 
plus modest catch-up of about 
3 per cent 

So long as nominal demand 
In the main countries grows at 
about 5 per cent a year, the 
world economy is largely 
self-correcting and unlikely to 
experience an inflationary 
take-off or a spiralling depres- 
sion. Demand growth did, how- 
ever, dip perilously low in the 
last recession. In 1993 it was 
only 4.1 per cent in the G7 
countries. In Germany demand 
growth was 2'4 per cent and in 
France IV* per cent. Sound 
money economists could per- 
fectly reasonably warn about 
demand deficiency last year, as 
they did at a corresponding 
point in the 1980s. 

At what stage does the risk 
flip over to being one of excess 
demand leading to renewed 
Inflation? Eddie George, gover- 
nor of the Bank of England, 


mentioned three contingencies 
in which interest rates might 
have to be raised at his June 8 
meeting with Kenneth Clarke, 
the chancellor. The first was 
"if the pace of activity picked 
up more rapidly”. The second 
was “if cost increases threat- 
ened the prospect for prices a 
year or two ahead”. Third, and 
more implicitly, he might want 
to tighten policy if the growth 
of MO did not decelerate in the 
coming months. 

Nevertheless, the governor's 
standpoint could be guyed as 
saying: “Shoot it if it moves.” 
The latest flash indicator for 
the second quarter does indeed 
show UK output rising fairly 
briskly - 2.7 per cent for non- 
oil GDP in the year up to the 
second quarter. (The North Sea 
oil sector is part of the econ- 
omy. but it is so erratic that 
output trends are best mea- 
sured without it.) Indeed, non- 
oil GDP has only just passed 
its 1990 peak. If capacity has 
been growing at a normal rate, 
this suggests that the margin 
of slack is now about 10 per 
cent - surely more than the 
safety leveL 

All the indicators the gover- 
nor mentioned do, indeed, need 
to be monitored and many 
more. But some framework, 
such as nominal GDP, or nomi- 
nal domestic expenditure, is 
required to put them together 
and provide appropriate 
weights. Otherwise, he will be 
playing into the hands of the 
bond-market commentators 
who want to resolve all doubts 
in favour of tightening policy. 



From left, Horst Kdhler of the German savings b anks association; BZW’s Peter Middleton; ING’s Cees Maas; Michel Wbereau of BNP; Whstenrot’s Gert Haller 


M r Gert Halier, the 
swashbuckling 50- 
year-old state sec- 
retary at Ger- 
many’s finance ministry, has 
been made an offer he could 
not refuse. Mr Haller, who acts 
as deputy to Mr Theo Waigei. 
the finance minister, in inter- 
national monetary affairs, is 
leaving to join Wustenrot, the 
privately owned German build- 
ing society and banking group. 

Mr Haller's departure, to 
take effect in January, will 
mark the second important 
switch at the ministry within 
18 months. His predecessor. Mr 
Horst Kdhler, who held the 
post since 1990, departed last 
summer, also aged 50. to 
become head of the German 
savings banks association. 

The job changes in Bonn 
illustrate how. across Europe, 
frontiers are becoming more 
fluid between senior financial 
positions inside and out of gov- 
ernment. International finan- 
cial deregulation, fast growth 
of capital markets and sophisti- 
cation of banking groups like 
WQstenrot are increasing 
career opportunities beyond 
the public sector. 

Since Mr Kdhler took over at 
the German savings associa- 
tion last August, two other 
middle-ranking civil servants 
have joined him. “They find 
the work more interesting, of 
course,” one Bonn official says. 
“Financially it has to make 
sense, but we are not talking 
about a 300 or 400 per cent pay 
rise. What seems to be most 
important is that the pensions 
are properly sorted out” 
Germany is not the only 
country where higher private- 
sector salaries and more free- 
wheeling lifestyles exert a 
strong attraction when budget- 
ary pressures are squeezing 
dvfl servants' pay. 

In the Netherlands, where 
there is more traditional inter- 
play between public- and pri- 
vate-sector financial jobs than 
in Germany, board members at 
Dutch banks can earn up to 
five times the annual wage of 
FI 200.000 (£73,500) earned by 



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A look at life from 
both sides 

FT writers on the trend for Europe’s top financial 
staff to switch between public and private sectors 


L»ufou EC$, 


top civil servants at the 
finance ministry. 

And Sir Peter Middleton, per- 
manent secretary at the UK 
Treasury between 1983 and 
1991, is thought to have 
increased his salary of £98^10 
between threefold and fivefold 
since becoming chairman of 
BZW, the investment banking 
arm of Barclays Bank. 

Departures of European 
financial civil servants to 
senior positions in banks do 
not represent a new trend. But 
officials now seem willing to 
take up private-sector jobs at 
an earlier stage in their 
careers. 

This may presage a shift to 
greater flexibility in employ- 
ment between the government 
and bumness sectors, s imilar to 
the “revolving door" in the US 
where senior Washington func- 
tionaries traditionally rotate 
between government and non- 
government posts. 

Mr Haller's departure from 
the Bonn finance ministry 
marks a welcome break from 
the general picture of “regret- 
table impermeability” between 
the public and private sectors 
in Germany, according to Mr 
Fritz von Gadow. an executive 
at the DQsseldorf office of 
Spencer. Stuart, the interna- 
tional personnel consultants. 

He says Germany has too lit- 
tle US-type flexibility. “It’s 
unfortunate that real life isn't 
represented in the ministries.” 

As for suggestions that Mr 
Haller would have been better 
advised by going to a higher- 
profile bank. Mr von Gadow 
says Wustenrot is a respectable 


address. “They have their own 
bank and are in every sense a 
big financial services group.” 

Until now in Europe, regular 
switches between finance min- 
istries and banks have been 
mostly confined to countries 
like France, with a tradition of 
state ownership in banking. Mr 
Marc Vienot, chairman of now- 
privatised Soctete G£nerale. Mr 
Michel Pefaereau. chairman of 
similarly privatised Banque 
Nationale de Paris, and Mr 
Jean-Yves Haberer. former 
chairman of Paribas and Credit 
Lyonnais, all held senior jobs 
in the French finance ministry. 
After several years of privati- 

'It’s unfortunate 
that real life isn’t 
represented in 
the ministries’ 


sation of banks and industrial 
companies in France, there are 
now signs that relationships 
between the public and private 
sectors are becoming much 
less cosy. Last week the Paris 
government announced it is 
phasing out the practice under 
which civil servants are 
allowed to retain Indefinitely 
their ranking while working in 
the private sector. 

In countries without large 
state-owned banks, moves 
between the helm of public and 
private sectors have been far 
less automatic than in France 
- but they now seem to be less 
exceptional Mr Karl Otto Pohl, 
president of the Bundesbank 


between 1980 and 1991. resigned 
at 61 to join the Cologne-based 
Sal Oppenheim banking group 
- the first Bundesbank chief 
not to go immediately into 
retirement on departure. Mr 
Pdhi’s resignation was partly 
caused by divergences with the 
government over policies on 
German unification, but it also 
reflected his desire to increase 
his salary. 

Another example or a side- 
ways move conies from Portu- 
gal Mr Manuel Pinho. 38, cur- 
rently director-general of the 
Portuguese Treasury, will 
leave this summer and is 
expected to take up a job at a 
so far undisclosed private 
bank. 

After working for the US 
bank Manufacturers Hanover, 
as well as Credit Lyonnais, Mr 
Pinho moved to the Portuguese 
finance ministry to carry out a 
radical restructuring of Portu- 
gal’s borrowing programme 
during the past two years. His 
spell In government will cer- 
tainly stand him in consider- 
able stead. 

“When I ring someone in 
government I know they are 
going to take the call because 
they know who 1 am," says one 
Portuguese executive who 
spent a spell as the head of a 
civil service department before 
moving into private banking. 

Another man with experi- 
ence of life in both public and 
private sectors is Sir Douglas 
Wass. now 71, permanent sec- 
retary to the UK Treasury 
between • 1974 and 19S3. He 
holds three nonexecutive 
chairmanships - Equity & Law 


Life Assurance, Nomura Inter- 
national and the NCM credit 
Insurance group - and is on 
the board of three interna- 
tional trade and insurance 
groups. 

Sir Douglas warns that offi- 
cials who move relatively early 
from public- to private-sector 
jobs have a greater chance of 
success. “The culture in gov- 
ernment is one of risk aversion 
and propriety of decision tak- 
ing. In the private sector U is 
risk orientated ... My own feel- 
ing is that a successful transfer 
after the age of 40 or 50 is rare. 
One becomes too en g rain ed to 
become a successful entrepre- 
neur." 

Experience in the Nether- 
lands underlines this argu- 
ment. Mr Cees Maas, 47, for- 
merly treasurer-general (the 
top civil servant) at the finance 
ministry, left In July 1992 to 
join the board of Internationale 
Nederlanden Groep (1NG 
Group), the big Dutch financial 
services company. Mr Maas's 
predecessor. "Mr Pieter Kor- 
teweg, who departed in 1986, 
aged 44, has since headed 
Robeco, the Rotterdam-based 
group of international invest- 
ment funds. 

Mr Dick Meys, now 51, was 
director -general for the budget, 
another senior job at the minis- 
try. until the late 1970s. He is 
now a board member at ABN 
Amro, the Netherlands’ biggest 
bank. 

The present treasurer-gen- 
eral at the Dutch finance min- 
istry, Mr Henk Brouwer, is 
himself 4a He came to the job 
after a long spell In the civil 
service followed by two years 
working for Philips, the big 
electronics group. If the trend 
towards an American-style 
“revolving door" picks up 
momentum in Europe, Mr 
Brouwer's job path may mark 
the shape of careers to come. 

By David Marsh and Gillian 
Tett in London. Michael 
Lindemann m Bonn. Ronald 
van de Krol in Amsterdam. 
John Ridding in Paris. 
Peter Wise m Lisbon. 


LETTERS TO THE EDITOR 

Number One Southwark Bridge, London SE1 9HL 

Fax 071 873 5938. Letters transmitted should be dearly typed and not hand written. Please set fax for finest resolution 

Steps to meet product safety obligations 


Prom Mr Brian Bateman 

Sir, Stephen Sldkin and 
Nigel Miller CStay Secure on 
Safety", July 19) rightly point 
to changes in the law on prod- 
uct safety which affect all in 
the supply chain. They stop 
short of advice on how to meet 
the new obligations imposed 
by the general product safety 
regulations, however. 

The UK has an excellent 
record of product safety. Manu- 
facturers have taken great care 
to meet and to exceed safety 
requirements. Part of the rea- 
son for this impressive record 
is our commitment to safety 
standards and to product 
marking showing that stan- 
dards have been met. 

The British Standards Insti- 


tution (BSD, established by the 
engineering profession and 
industry, was the world’s first 
national standards body. The 
BSI kitemark, well known to 
consumers, has been around 
since the 1920s and provides 
our independent assurance of a 
product’s conformity with 
standards. 

They point to the one 
defence under the legislation. 
A producer who took “all rea- 
sonable steps and exercised 
due diligence" could demon- 
strate his care to avoid the 
offence. The surest way for 
manufacturers is to: 

• Have the products “type 
tested”. This will tell whether 
the design is safe. 

• Manufacture under a qual- 


ity management system to 
ensure that specifications will 
be consistently met This helps 
ensure that each individual 
product meets the same crite- 
ria as the original design. Such 
a system also involves the 
keeping of records which assist 
in answering questions which 
may arise. 

• Ensure that the criteria for 
any legal marking require- 
ments are satisfied. 

• Consider using a product 
certification scheme, such as 
the kitemark to give purchas- 
ers confidence. 

It is also essential for the 
future that the UK continues 
to make a full input to Euro- 
pean and international stan- 
dards- These will increasingly 


be used as benchmarks of best 
practice by the courts. Indus- 
try must make its views 
known on all relevant stan- 
dards, through participation in 
BSI's work as the UK represen- 
tative in European and inter- 
national forums. 

With the Local Authorities 
Co-ordinating Body for Food 
and Trading Standards, BSI Is 
holding a conference in Octo- 
ber on the role of standards in 
assuring product safety. I hope 
that many of your readers - 
and your contributors - will be 
interested in participating. 
Brian Bateman, 
director, product certification, 
British Standards Institute, 

2 Park Street, 

London WlA 2BS 


Sid could help Germany 
develop ‘equity culture’ 


Pram E H Clausson 

Sir. David Waller's report 
(“Resisting the bait of equity 
ownership". July 14> misses 
two points when he Lists 
actions to overcome the lack of 
an “equity culture” in Ger- 
many. 

First, the leading German 
banks must create incentives 
for young people to become 
involved in stock exchanges. 

For decades these banks 
have erected ever higher barri- 
ers for young newcomers to 
these exciting markets. I imag- 
ine the bankers consider the 
short-term casts too high and 
they have failed to recognise 
their primary long-term 
responsibility. Without a 
broadly based participation. 


starting with the young, I can- 
not see an "equity culture” 
developing in Germany. 

Second, several decades ago 
the German government cre- 
ated the Volksaktie when sell- 
ing, for example, Volkswagen. 
If the government decides 
again to sell off state enter- 
prises such as Lufthansa and 
Telekom, I hope it will look to 
the UK and learn from its 
series of successful privatisa- 
tion programmes. 

Sid could be very useful in 
helping the German govern- 
ment and banks to develop an 
“equity culture" in Germany. 

E H Clausson, 

The Penthouse, 
m Leigtiam Court Road. 
London S W16 2RF 


Vocational training needs 
to perform a giant leap 

iiVwm JLf»- m nnW anirii 


From Mr Ken Ruddiman 

Sir, Your article (“Staying on 
ryin mean missing out", July 
20) gives a timely reminder to 
young people to take a 
long-term view of what they 
can do when they leave school 
at 16. 

In a society which is biased 
towards the immediate, and 
with a government opposed to 
planning, there is little exam- 
ple to follow and the modern 
apprenticeship is seen by many 
as yet another small step for 
training when clearly a giant 
leap is called for. 

The lack of demand you 
highlight is matched by sur- 
plus supply - technical col- 
leges mothball or eliminate 
potential training provision in 


construction and engineering. 

While the government vehe- 
mently denies a stop-go policy 
in the economy, you supply 
clear evidence of it in an area 
which Is crucial to long-term 
consistent growth. 

The twin-track approach 
does not work. We are not Ger- 
many. We do not have parity of 
esteem between the academic 
and vocational routes, and 
until we do we will always 
have an under-achieving, 
under-resourced, Division Two. 
which attracts few and is dis- 
missed by many. 

Ken Ruddiman. 
principal. 

The Sheffield College. 

PO Box 34% 

Sheffield 82 2YY 


Individuals must meet the cost of a civilised society 


From Mr A AUcock 

Sir, David Parker eloquently 
puts the case for differential 
pricing within a privatised post 
office (Personal View. July 14). 
It is tempting to accept this 
argument, which is based on 
the demand for economic effi- 
ciency and correctly appor- 
tioned costs that are suppos- 
edly necessary in an 
unregulated, competitive mar- 
ket, and also on the inappropri- 
ateness of cross-subsidisation 
of one element of society - In 
this case rural dwellers - by 
another. 

Even in highly competitive 


markets, however, it is often 
the case that pricing is not 
directly related to costs in a 
rigid sense. 

Where a company wants to 
increase its market share it 
will undercut the competition, 
taking greater profits from 
areas where it is better estab- 
lished and more secure. This 
happens on a national and 
International basis and is 
cross-subsidisation of one ele- 
ment of society, or country, by 
another by business itself. To 
think that cross-subsidisation 
will cease on privatisation is 
wrong. 


As to whether one element of 
society should cross-subsidise 
another anyway, this is just an 
extension of the increasingly 
popular the-indivjdual-pays-for- 
what-he-consumes argument. 

It appears economically effi- 
cient and fair. Taking this to 
extremes, however, encourages 
envy and creates division 
among members of society. 

This Is because it does not 
consider the duty that Individ- 
uals must assume in the main- 
tenance of society at a given 
level of civilisation as payment 
for the benefits that individu- 
als derive from living in such a 


society - these too have a cost 
The attractive and obvious 
simplicity of the arguments 
advanced by economists like 
David Parker are contagious 
and increasingly common. But 
applying them unthinkingly to 
more and more services/prod- 
ucts in isolation is dangerous- 
The application of a wider 
cost/benefit analysis in an 
effort to measure how society 
at large benefits is the real 
challenge. 

Andrew Allcock, 

10 Friars Close. 

Tankertan. 

Whitstable. Kent CTS INU 




FINANCIAL TIMES MONDAY JULY 25 1994 


15 


FENTANCIAL TIMES 

- Number One Southwark Bridge, London SE1 9HL 
Tel; 071-873 3000 Tdex: 922186 Fax; 071-407 5700 

Monday July 25 1994 


Blight plan for 
Air France 


Hr Marcelling Oreja, Europe’s 
transport commissioner, is expec- 
ted to propose on Wednesday that 
Brussels approve a FFrZObn 
(£2.4bn) French government res- 
cue of Air France, the loss-making 
state-owned carrier. Tie case is an 
important test of the EC's state 
aids policy and of Its drive to liber- 
alise air transport K Mr Oreja’s 
fellow commissioners are commit- 
ted to those policies, they should 
scrutinise Ms proposal hard. 

The decision matters because 
the planned bail-ont is by far the 
largest yet in the European Indus- 
try, and because Air France and 
Air Inter, Its domestic affiliate, 
together have the biggest reve- 
nues of any European airline 
group. Furthermore, France’s 
reluctance to open Orly airport to 
competition suggests it is deter- 
mined to continue protecting Air 
France - in violation of single 
market rules and of the EU inte- 
gration Paris claims to faVDUT. 

If Brussels waved the rescue 
through, it would farther blight 
prospects far fair competition in 
an industry already beset by 
excess capacity. For a company of 
Air France’s size to receive subsh 
dies in the amount proposed, and 
an terms not available to private- 
ly-owned rivals, would Jeopardise 
more efficient and profitable carri- 
ers. British Airways is right to cry 
foul on that scare - even If its 
own attitude to competition has 
not always been impeccable. 

In judging tiie Air France case, 
the commission nhimilri aqk throw 
questions. The first is why any 
state aid should be permitted. 
Brussels' policy is to allow trou- 
bled carriers “one last chance” of 
aid before a total cutoff in 1997. 

But Air France has already bad 
more last chanran than most in 
the industry. Three state capital 
injections totalling almost FFrSbn 
ghw> i9gi have failed to cure its 
problems. 

Slimmed down 

The second question is why Air 
France needs so much money. 
Lufthansa, Germany's state-owned 
airline, has recently slimmed 
down radically without. taxpayer 
support. The opacity of Air 
France's published accounts 
makes it hard to be sure that any 
state aid will be used to finance 
restructuring, and not to cover 
operating losses. The commission 

Too much 
to expect 


shnniri not enter**** any proposal 
for government funding unless 
supported by detailed fmangjai 

ni fA wwoftMi or ui oiwmntMin 


information and economic analy 
sis of Air France’s operations. 
t In any case, the company has 
plenty of saleable assets in the 
form of stakes in Air Inter and 
several other profitable airlines. 
Yet so far. it is proposing to dis- 
pose only of its hotel subsidiary. 
State aid on the scale proposed is 
unjustified when the company 
raise c*«b by selling extensive 
non-care activities. By requiring ft 
to do so, Brussels can reduce Air 
France's reliance on the public 
purse while enhancing opportuni- 
ties for competition. 

Forced disposal 

The third question is what other 
conditions - if any - the Commis- 
sion sh ould attach to its 
Alr France's rivals are pressing 
for such measures as restrictions 
on its fleet capacity and the forced 
disposal of unprofitable routes. 
However, imposing ou companies 


purely operational decisions, 
which sbonlH be left to their man- 
agements, is one of the more 
objectionable features of EU state 
aids policy. Such interventions 
shimiri not be necessary if subsi- 
dies are rigorously policed and 
markets work effectively. 

The problem is that narthar con- 
dition is easily fulfilled where 
state-owned Industries are con- 
cerned. Not only are they pro- 
tected by an implicit guarantee 
against bankruptcy, the lack of a 
market for their shares makes it 
unusually difficult to judge 
whether state aid is being granted 
on commercial terms. The right 
remedy is privatisation. Brussels 
should press for any state aid to 
be linlrari to a deadline for foil 
privatisation of Air France. 

Firmness is particularly impor- 
tant because of Ihe French govern- 
ment’s failure to tackle Air 
France's problems. One reason 
Brussels was given strong powers 
over competition policy was to put 
spine into irresolute governments! 
Derisive exercise of those powers 
will not only save Air France’s 
competitors;’ it will help the 
French economy by ending poli- 
cies which have made the carrier 
an international advertisement for 
high costs, poor management, 
indifferent service and institution- 
alised inefficiency. . 


Those who lament the 
short-termism of British Industry 
will find plenty of supporting evi- 
dence in the CHI's survey on man- 
ufacturers' investment appraisal, 
published today. Despite an 
unusually sunny climate for 
investment, many UK companies 
ire acting as if little has changed. 
Che survey does point to serious 
laws in many companies’ criteria 
hr making investments. But UK 
jusinessmen would be short-ter- 
nist indeed if they were already 
letting their fixtures on the end of 
boom and bust”. 

In spite of low inflation rates 
ind the w or ld wide fall in the cost 
f capital, the CBTs study found 
bat most of the companies sur- 
eyed had not lowered their 
equlred rates of return on new 
n vestments. Indeed, many still 
bn for nominal or real rates of 
ver 20 per cent, or impose on 
rejects a pay-back period of two 
•> three years. 

Findings such as these add plau- 
EMltty to the oft-voiced concern 
teat UK companies are missing a 
olden chance to invest in higher 
aparity. Nevertheless, a fair cri- 
ique must distinguish between 
aro different Tuning s 1 *- The first 
i using inefficient methods to 
edde on i nve stments, an tmdeslr- 
ble trait in any economic climate, 
he second is lacking faith in the 
ovemment's triumphant 
mg-term economic predictions. 
Inv estmen t has been slower to 
ick up in the current recovery 
ton in the early 1980s, while cap- 
al expenditure by manufacturing 
ampanies is expected to improve 
oly modestly in 1994. Econamy- 
ide, investment fell less as a pro- 
ortlan of national output during 
le recession than was true in pre- 
bus downturns. For an that, the 
ubdued state of capital outlays in 
lanufacturing is a worry. Are 
igh hurdle rates to blame? 

lurdle of choice 
I n terpreting the ‘‘reqirixed rates 
P return" which companies cl a i m 
> employ is nearly as perilous as 
siting them in the first place. In 
le survey, the CBI makes a fair 
ab at determining each respon- 
ses hurdle of choice: whether it 
i measured in real or nominal 
srms, for example* or before or 
tter tax. Judged by the study's 
ridings, many companies have 
Ben slow to respond to recent 
Tents, but a more striking feature 


of the responses is just how high 
many of the hurdles were to begin 
with. If both real and nominal 
required returns started at over 30 
per cent for many companies. it 
would have taken large changes hi 
inflation or the real cost of capital 
to make a significant dent 

Wide variation 

The sheer magnitude of hurdles 
such as this, taken with the wide 
variation in the companies' 
replies, indicates that something 
piw« fe going on. A sizeable minor- 
ity of companies surveyed 1 b using 
rates vary close to current esti- 
mates of the true* risk-adjusted, 
return on capital. These are likely 
to be companies with an estab- 
lished habit of closely relating 
their internal rate of return to cur- 
rent flnimriwl market conditions. 

Those companies citing the 
much higher required rates of 
return may be trapped in inhospi- 
table local credit markets. But 
they could also be using the rates 
to reflect a wider range of factors. 
A vaguely defined conception of 
the risk involved, for example, or 
to guard against over-optimism, on 
the part of project planners. Obvi- 
ously, these are legitimate issues 
to consider. Bu t us ing the 
required rate of return ends up 
penalising long-team investments. 
If this Is what Ties behind some of 
the high hurdles, the com p a nie s 
concerned would be better off 
adopting other safeguards, which 
would treat projects with different 
tfmia horizons more equitably. 

Ano ther explanation is that the 
penalty on investments which 
tfltp longer to pay off is inten- 
tional. Accustomed to the upa and 
downs of the traditional UK busi- 
ness cycle, managers d e mand that 
new capacity pay off in two to 
three years because that is 
roughly how long they think it 
will be before things turn sour. 
Over time, greater macro-eco- 
nomic stability may change mat- 
ters. On its own, a tow Inflation 
rate «»» have only a limited direct 
effect on required rates of return; 
none at all, if a real rate is used. 
There would be a much bigger 
impact if inflation were to remain 
stable over time, since that would 
imply fewer occasions for govern- 
ment to put on the brakes. By all 
accounts, companies have yet to 
see thing s so favourably. Given 
their tong experience of the oppo- 
site, this is not surprising. 


G ompaq Computer is 
“the company that 
seems to do everything 
right” competitors say 
with a touch of envy. 
While IBM, Apple Computer, DeE 
Comp u t e r and other personal com- 
puter manufacturers struggle to 
keep pace , Com paq goes from 
-strength to strength. 

Last week, the Houston, Texas, 
company reported record second- 
quarter sales of JSLSbn (£l.6bn). up 
S3 per cent from the same quarter 
last year. Net profits for the quarter 
were more than doubled to fZLOm, 
compared with $i02m a year before. 
If salt*? continue to grow at ting 
rate, Compaq win overtake Apple 
and IBM to become the world’s larg- 
est personal computer company 
ahead of its 1996 target In terms of 
numbers of computers $nM . rather 
than revenues, the company is 
already outselling all rivals. 

Smferb, to the market for PC 
“savers” - the computers used to 
boost the performance of office PC 
networks - Compaq has stolen a 
lead with an estimated $2bn share 
of the |5hn worid market. 

With Kighw grOSS wtarg tn ^ t ha n 
any other PC manufacturer and 
among the highest revenues per 
employee in the computer industry, 
Compaq Is also a Wall Street 
favourite. The company's investors 
have seen the value of their shares 
soar over the past two years from 
about 320 to mare than $90 (before a 
recent three for one stock split). 

Compaq’s pe rf ormance is ail the 
more remarkable because three 
years ago the company was in cri- 
sis. Market share was faffing rap- 
idly and profits languished as the 
company struggled in the face of 
fierce competition from small er PC 
makers o fferin g cheaper products. 

In a move that shocked even 
hard-bitten industry observers, 
Compaq's board of directors fired 
Mr Rod Canton, the company's pop- 
ular founder, in 1991 and replaced 
Mm as chief executive with Mr Eric- 
bard Pfeiffer, a German engineer 
who had built up Compaq’s Euro- 
pean operations. 

Mr Pfeiffer h** overhauled the 
company. As other large US com- 
puter companies struggle to adapt 
to rapidly e fomg in g technology 
market conditions, Compaq’s 
almost textbook turnaround could 
provide a model. “I know only one 
company to compare ourselves with 
and that is Compaq,” says Mr 
Enrico Pesatori, a senior executive 
at Digital Equipment, the Massa- 
chusetts-based computer maker, 
who is responsible for restructuring 
the computer systems business. 

“We can no longer characterise 
Compaq as just a PC company,” he 
adds, “ft is a company that has per- 
fectly i nt erpreted the new style of 
computing that Is a nwg i n g , based 
on networks of PCs.” . 


Louise Kehoe on how the US personal computer group 
has, unlike others, produced rapid profits growth 

Compaq, but it’s 
perfectly formed 



For those looking to learn from 
Compaq's return to vigorous, profit- 
able grow th , six main conditions for 
a turnaround emerge from Its story: 

• Swift action. Compaq reacted 
quickly when its fmanriaT perfor- 
mance declined in mfd-199L Within 
six months of the first signs of trou- 
ble, the company had redrawn its 
strategy to emphasise the impor- 
tance of winning market share, 
realigned its management and 
begun restracturmg its operations. 

• Good corporate governance. 
These steps would probably not 
have been taken hail it not been for 
pressure exerted on Compaq’s man- 
agement by ita board of directors. 
Unlike many companies in the com- 
puter industry, Compaq’s nhairman 
is a nonexecutive director, rather 
than the chief executive and all 
other members of the hoard (except 
for the chief executive) are also 
drawn from outside the company. 


This structure “allows the board 
to preserve its rote of supervising 
management," says Mr Ben Rosen, 
Compaq chairman. “In good times it 
doesn’t matter how the board is 
constituted. It is when there is a 
problem, a corporate issue, a strate- 
gic change or a management 
change that it is very useful to have 
a truly independent board.” 

• Cutting the right costs. White 
Compaq was Initially forced to lay 
off workers, the company quickly 
refocused on improving its manu- 
facturing efficiency. Over the two 
years ending December 1998 Com- 
paq quadrupled its production vol- 
umes w hile adding only about 500 
workers, bringing its total work- 
force to just over 10,500. "Our strat- 
egy was never just to cut costs,” 
says Mr Daryl White, chief financial 
officer. The drastic cost reductions 
under way at seme of the largest 
computer companies without mnch 


evidence of efforts to boost reve- 
nues “is very dangerous; they are 
an a downward spiral”, he observes. 

• Willingness to change. “The 
cleverest strategy is useless unless 
managemen t bag the willingness, 
the guts, to Implement it,** says Mr 
Gian Carlo Bisone, Compaq 
vice-president responsible for US 
marketing. “We had to change the 
mindset of the whole company from 
building the bighest-performance 
products in the industry to building 
products that are well positioned to 
take advantage of the ‘Sweetspot’ of 
the market at the right cost, so that 
we could price them aggressively.” 

• Becoming “customer focused”: 
Compaq adopted this philosophy 
earlier than most and moved 
aggressively to make the rhapges 
needed for the term to be meaning- 
ful “The key decision was to shift 
this company from being a product- 
centric company to beaming a cus- 


tomer-centric company," says Mr 
Bisone. Until 1991. for example, 
Compaq sold its products exclu- 
sively through independent com- 
puter dealers (chains such as Com- 
puter i that dominated the PC 
market until the late 1980s). 

Today, says Mr Bisone, “we sell 
computers wherever the customer 
wants to buy them. If they want to 
buy them jn gas stations, that is 
where we will sell them". It has not 
come to that yet, but Compaq PCs 
are sold by mail and tel ep hone, in 
department stores as well as 
through traditional dealers. 

Another radical change for Com- 
paq was to broaden its marketing 
operations. To be profitable at com- 
petitive prices, the company bad to 
increase the volume of its sates. 
That m«nt a d dressing every seg- 
ment of the market. “We have more 
thaw doubled the of the poten- 
tial market we go after,” says Mr 
Pfeiffer. 

• Set aggressive goals. From its 
drive to create cost-competitive 
products in 1992 to its current ambi- 
tions to take over market leader- 
ship, Mr Pfeiffer has always set 
“stretch” goals for Compaq. 

Despite its impressive achieve- 
ments, the history of the personal 
computer industry suggests that 
past success is no guarantee of 
future prosperity. The danger Com- 
paq faces is that its fast rate of 
growth could mean a slip leading to 
a serious setback. 

One of the toughest challenges 
the company faces is how to ensure 
it can meet unpredictable demand 
for its products. Last year, for 
example, its sates of servers were 
limited by parts supply problems. 

In an attempt to overcome this 
problem, the company has encour- 
aged its suppliers to collaborate cm 
“just-in-time” delivery to its Hous- 
ton factory. Parts are stored in a 
warehouse close to the plant, with 
some parts being delivered hourly. 

T o keep up its hectic pace of 
growth the company has 
this year begun Mrpanriing 
its manufacturing facilities 
at all three existing sites - in 
Texas, Scotland and Singapore - 
while also opening a factory in Bra- 
zil and an assembly plant in China. 
Simultaneously, Compaq is develop- 
ing products that will take advan- 
tage of advances in multimedia and 
interactive television. On the corpo- 
rate computing front it is improving 
the performance of its servers to 
challenge CBM and Digital 
Some observers wony that Com- 
paq may be stretching itself too 
thinly. But it remains confident 
“The best companies are those that 
have hit the wall and bounced back 
quickly,” says Mr White. “The 
plank that hit us over the head in 
1991 is still indelibly etched on our 
foreheads," adds Mr Rosen. 


An economic hero for Tony Blair 


I suspect Mr TanyDIair, the new 
leader of the British Labour 
Party, is keen to keep abreast 
of US economic ideas. His 
advisers regard the Cfinton admin- 
istration. for all its failings, as a 
valuable rule model. My advice is to 
steer well clear erf the US economic 
establishment there is little or 
nothing he can team from the Har- 
vard/MTT-types now in charge in 
Washington. Intellectually, they 
have not progressed far from the 
naive interventionism of ihe 1960s; 
and they are recycling old ideas 
under the unimaginative rubric of 
“new Keynesian economics”. 

The kind of thinker from whom 
Mr Blair could gain important 
insights is Professor James Buch- 
anan. the 1986 Nobel economica lau- 
reate, now at George Mason Univer- 
sity near Washington DC. Mr Blair 
should not wony that Buchanan 
rftas Hayak as an important influ- 
ence and considers hfaiwnW ** frmda- 
i mentally a libertarian”. In the 1940s 
British Labour leaders had the cour- 
age to embrace the ideas of Keynes, 
who was hardly a socialist Half a 
century later, Buchanan has much 
to teach social democrats who are 
struggling to come to terms with 
the market 

The aspect of Buchanan’s thought 
that is likely to have greatest 
appeal for Mr Blair is his concept of 


“constitutional economics”. Most 
economists analyse economic deci- 
sions within a pre-existing institu- 
tional framework the subject is 
about “choice within constraints”. 
Decades ahead of his colleagues 
Buchanan began to emphasise the 
broader framework: the “choice of 
constraints” as he puts it Rather 
than trying to micro-manage eco- 
nomic decisions the government 
should focus on the rules under 
which the game is played. Better 
rules can conceivably improve pros- 
pects for everybody. 

The importance of institutions is 
now better understood, ft has, for 
example, became a cliche to argue 
that the Bratton Woods conference 
of 1944 helped promote global eco- 
nomic growth by creating a sup- 
portive framework of rules and 
institutions; 50 years on, politicians 
are be ginning to grasp that a new ■ 
institutional structure is required tot 
today’s quite different financial 
landscape. 

But the ideas of constitutional 
economics can be applied more 
broadly. Take training. than 
planning heavy-banded interven- 
tions, Mr Blair should formulate a 
“training constitution" - a stable 
set of rules and institutions, tai- 
lored to the 1990s, designed to help 
young people help themselves. 

By Labour's undemanding stan- 



M1CHAEL PROWSE 
■ on 

AMERICA 


dards, Mr Blair already seems scep- 
tical of the public sector’s ability to 
work economic miracles. Reading 
Buchanan might greatly enhance 
that scepticism. He is famous (or 
perhaps infamous) within the eco- 
nomics profession for having turned 
the tables on interventionists by 
arguing-canvincingly that “govern- 
ment failure” is a more serious 
threat than “market failure". 

When Buchanan reached eco- 
nomic maturity in the 1950s, most 
of his colleagues were just discover- 
frig the concept of market failure. 
They thought they had scientifi- 
cally proved that free markets 
achieve optimal outcomes only if 
the most demanding conditions are 
met, for example, that economic 
agents have perfect information and 


can make transactions costlessly. 
Since such conditions do not hold in 
the real world, markets necessarily 
“failed". Government thus had 
carte blanche to intervene. 

Although endorsed by the profes- 
sion’s great intellects, it was a non- 
sensical argument Markets fail 
only relat i ve to idealised mathemat- 
ical models that themselves have no 
foundation in reality. The practical 
question is whether there is a better 
alternative. Buchanan argued there 
usually is not because bureaucrats 
and politicians are more likely to 
err than markets. 

In one of many direct hits, he 
exposed the inconsistency of main- 
stream economists' assumptions 
about behaviour in the private and 
public domains. The orthodox view 
was that individuals in the private 
sector strive to maximise their 
“utility" or satisfaction but once 
they cross the public sector's por- 
tals, instantly reinvent themselves 
as promoters of the public good. 

Without denying the posriMHty of 
selfless action In either the public 
or private spheres, Buchanan 
deflated confidence in government 
by arguing that it was more plausi- 
ble to assume that pabtidam and 
civil servants are typically self-serv- 
ing. Like the rest of us, they care 
more about their own careers than 
Ihe nation's welfare. 


Buchanan supported this argu- 
ment with an even more fundamen- 
tal observation. Government is not 
a simple entity that can be 
entrusted to make rational deci- 
sions. Modem democratic govern- 
ment is instead a messy conglomer- 
ate of disparate interests. Building 
on work by Emit Wlcksell the great 
19thoentury Swedish economist, he 
argued that the appropriate bound- 
aries of the state depend in large 
measure on arcane details such as 
voting rules and the structure of 
legislative assemblies. 

Roughly speaking the nearer that 
voting rules approach unanimous 
consent, the greater the number of 
functions that can safely be 
entrusted to government Under 
simple majority voting, the 
favoured approach today, govern- 
ment's scope should be sharply 
restrained, test it trample cm the 
rights of minorities. 

Buchanan is not just a fountain of 
ideas; unlike many well-heeled 
Keynesians, he also has the creden- 
tials of an authentic Labour hero. 
Since Ms family could not afford an 
elite private college he attended 
Middle Tennessee State Teachers' 
College in Murfreesboro, paying his 
way by milking cows morning and 
night The message for the less priv- 
ileged: stop bleating, start working 
and you too may win a Nobel prize. 


Observer 


Caracas 

chestnut 

■ That old philosophical chestnut 
- does something exist ff nobody 
sees it? — has been dusted off in 
Venezuela, where president Rafael 
Caldera's government last week 

giwymtted amnia constitutionally 
guaranteed freedoms. 

Caldera has also imposed foreign 
currency exchange controls. To 
defeat any fbrrign currency black 
market, officials now may levy 


OP to eight years. 

More entertainingly, the 
legislation says fines up to $5^00 
may be imposed on any news 
medium which even mentions the 
activities of a Venezuelan currency 
friarfc markup or cites anything but 
official exchange rates. 

So, not wanting to incur CaMaa’s 
wrath, let’s set the record straight 
You will currently get 170 
Venezuelan bolivars for $L 
Officially. Any other rates do not 
exist; even if the guy who offers 
thpm looks real 


Both barrels 

■ Onward marches the UK nanny 
state, despite a government 
spiritually, if not actually. 


committed to minimising state 
I nterf erence. 

The latest inroad comes from the 
Health and Safety Executive, with 
its first-ever guidance for 
gamekeepers; there are about 5,000 
full-time gamekeepers in the UK, 
with an estimated 28j)00 
part-timers. 

The BSE’s missive drives home 
the message that, far from 
imbrogBoa of the type contemplated 
by D.H. Lawrence in Lady 
Otatterley's Lover, con te mpor ar y 

gua rdians erf winged snanks fi>w> 

much greater hazards from faulty 
or damaged guns. 

Another danger, of course, is 
carelessness during beating; 
something of a Lawrentian trope, 
after alL 


Hard stuff 

■ Democracy has ita costs, as 
Russians are discovering. According 


Jzoestia, the typical Russian male 
now consumes more than 80 litres 
of vodka annually. 

The latest figures, from 1992, 

fryti flato Aw* alnnlinl nfmamrijr fjqrp 

has returned to the levels of 1984, 
the had dd days before former 
Soviet president Makhafl Gorbachev 
launched his anti-booze drive. 

More alarmingly, life expectancy 
far men has droned from 65 years 



- in 1987, at the peak of 
Gorbachev’s crusade - to 59. 
Anyone for lemonade? 


Saintly work 

■ Here's anioe Httte earner. The 
Foreign and Commonwealth Office • 
has placed an ad to flnd a UK 
repre sent ative for St Hetena, to be 
based in the UK. 

The salary, about £20,000 
annually, is not inordinate wealth, 
but perhaps appropriate to the task 
of representing an island measuring 
just 10 miles by five miles. 


Apart from Hisuringthe Federal 
Bureau of Investigation property 
conducts its analysis of Napoleon 
Bonaparte’s nine hairs - the FBI 
has been searching for traces of 
arsenic in the remains of fh*> 
island's most famous inhnhitar^ - 
and overseeing the recent 
introduction of television for the 
5,700 inhabitants, the job might not 
be thought onerous, especially 
given the steady decline of the 
island's fl«* industry. 

Preference will be given to St 
Hdaitons, “but consideration will 
be given to any appropriately 

qualtfift rl Ttrm -talnnftor ” in 

possession of financiad/cammeFcial 
experience and “current knowledge 
of St Helema" (sic). 


Tee-off 

■ Golf, the great uniter. At least 
that's how it might appear to Wang 
Jim, deputy director Of the China 
Golf Association. 

He’s visited Taipei to meet 


talks on the joint development of 
golf courses in China. His host was 
Chan Chung-Kuang, head of 
Taiwan’s golf association. 

Coincidentally, Wang is a son of 
ihe late Chinese vice-president 
Wang Zhen, as well as president of 
China International Trust and 
Investment Carp, one of China's 


leading state cangfomerates. Could 
bare bear an interesting chat at the 
19th hole. 


Out of flavour 

■ By now the whole world knows 
that one of the - more interesting 
chief executiveships is up for grabs. 
Ben and Jerry's, the US ice cream 
company founded by New Yorkers 
Ben Cohen and Jerry Greenfield, 
threw the field open - and has been 
swamped by more than 22,000 CVs. 

But how much will the new boss 
get? Ben and Jerry’s has abandoned 
its egalitarian policy of paying top 
executives no more than seven 
times lowest-paid employees, who 
get an estimated $20,000 annually, 
giving Ben and Jerry 5140,000 under 
the old regime. 

The company Is now hoping to 
make it in Europe, starting with the 
UK. Trying to flog the 
banana-tasting Chunky Monkey to 
Wigan presumably warrants more 
than the peanut-flavoured cheque 
previously on offer. 


Myopic 

■ T5ps from the New YoricThnes 
on how to avoid motion sickness: 
“Look ahead at distant objects or 

the horizon, or at the road ahead If 

you are driving, or dose your eyes." 






mm/m 
mExmes 

A world leader in 
““ flexible connectors 

Tot: 0923 775547 
A Division of Senior Engineering Group pie 



FINANCIAL TIMES 

Monday July 25 1994 



Britain to press ahead with search for peace 


Sinn Fein rejects UK 
proposals over Ulster 


By Philip Stephens in London, 
and WnEarn Lewis and John 
McManus in Letterkenny 


The UK government signalled 
last night that it would press 
ahead with a search for a deal 
between Ulster's constitutional 
parties after Sinn FSin dismissed 
the Downing Street declaration 
as inadequate. 

The rejection by a Sinn F6in 
national delegate conference 
appeared to confirm the London 
government’s view that Mr Gerry 
Adams, Sinn Fein's president, 
cannot persuade Irish Republican 
Army hardline rs to call a cessa- 
tion of violence. 

Amid anger and disappoint- 
ment in London, British officials 
made it clear that there was now 
no question of involving Sinn 
Ffiin in the talks aimed at estab- 
lishing a new political settlement 
in Northern Ireland. 

Mr John Major and Mr Albert 
Reynolds hope to produce in Sep- 
tember a framework document 


for such a settlement. 

Officials dismissed Sinn Fein's 
demand that the London and 
Dublin governments move fur- 
ther to “clarify" the Downing 
Street declaration by diluting the 
veto of the unionists in Ulster 
over constitutional change. 

In its first formal response to 
the declaration. Sinn F6in 
described it as inadequate, but 
said that it would work to over- 
come the obstacles. It said the 
declaration was a “step in the 
peace process” but did “not deal 
adequately with some of the core 
Issues and this is crucial". 

Speaking last night at the dele- 
gate conference, called to 
approve the governing execu- 
tive's response to the declaration, 
Mr Adams said Sinn Fein had 
“recommitted itself today to con- 
structing this foundation, by 
building on the positive elements 
of the Downing Street declaration 
and by seeking to overcome the 
difficulties”. 

However, Mr Adams stopped 


Car short of calling on the IRA to 
end its campaign of violence - 
thereby ending hopes that Sinn 
Ffiin would be able to take part 
in cross-party talks that the Brit- 
ish and Irish governments hope 
will start this autumn. 

The Downing Street declara- 
tion offered a place at the negoti- 
ating table to Sinn Fein If it for- 
mally and permanently 
renounced violence. 

Ahead of the conference, held 
amid tight security in the border- 
town of Letter kenny in the 
Republic of Ireland, there had 
been growing optimism that the 
meeting would decide to call on 
th e IRA to amK iHT ie ft a summer 
cease fire. But Mr Adams said 
yesterday that the IRA would be 
making its own decision on the 
issue. 

Sinn F6in listed 11 aspects of 
the Downing Street declaration 
about which it was unhappy, 
including the so-called unionist 
veto over any changes in Ulster’s 
constitutional status. 


Japan reaffirms support for 
S Korea in nuclear dispute 


By John Burton in Seoul 


Japan reaffirmed its close 
cooperation with South Korea on 
solving the North Korean nuclear 
dispute during a weekend meet- 
ing between the two countries' 
leaders in SeouL 

The visit by Mr Tomiichi 
Murayama, the new Japanese 
prime minister, was meant to 
calm worries in South Korea that 
his position as leader of the Japa- 
nese Social Democratic party, 
which has supported North 
Korea, would affect relations 
with SeouL 

He urged North Korea to aban- 
don its nuclear programme and 
end its isolation. 

Mr Murayama promised that 
Japan would not pursue diplo- 
matic relations with North Korea 
until suspicions about its nuclear 


programme were removed. Tokyo 
would also consult Seoul on any 
negotiations it has with Pyong- 
yang. 4 

Senior members of Japan's for- 
mer ruling Liberal Democratic 
party, the dominant partner in 
Mr Murayama's coalition govern- 
ment, had preliminary discus- 
sions with North Korea about 
diplomatic recognition before the 
talks were suspended in 1992. 

Japan Is willing to provide 
financial assistance for tiie sup- 
ply of safe Light-water nuclear 
reactors to North Korea once the 
nuclear issue is solved, Mr 
Murayama said. 

The new Japanese government 
has offered to spend $lbn on pro- 
grammes to improve ties with 
South Korea, as compensation for 
the forced recruitment of Korean 
women as military prostitutes 


during the second world war. 

But South Korea appeared to 
be cautious about the proposal 
indicating instead that it 
favoured direct payments by 
Japan to the women who had suf- 
fered. 

President Kim Young-sam 
asked that Japan also takes mea- 
sures to reduce Seoul's trade defi- 
cit with Tokyo, which is expected 
to increase to $10bn this year 
from $8.5bn in 1993 because of 
the strong yen. 

South Korea depends heavily 
on Japan for supplies of Indus- 
trial components and machinery. 
It wants Japanese component 
makers to establish production 
facilities in South Korea to 
reduce the deficit. Japanese com- 
panies appear reluctant to do so 
because of South Korea's high 
wage costs. 


European 
job laws 


Continued from Page 1 


focusing on making it easier to 
share child-rearing duties. 

• Greater convergence of social 
security systems. 

The white paper will also dis- 
cuss how to achieve a better com- 
bination of economic and social 
policy. Picking up on one of the 
themes of last year's white paper 
on employment - inspired by Mr 
Jacques Delors, the outgoing 
Commission president - it will 
discuss how to strike a better bal- 
ance between high labour stan- 
dards and job creation. 


Healthcare reform 


Continued from Page 1 


accepted that in tackling “the 
biggest social policy challenge 
this country has faced in 60 
years” there would be “give and 
take and a lot of changes" as 
Congress moved towards a final 
resolution. He said; “The one 
thing that cant change is uni- 
versal coverage and that has to 
pass this year”. 

Mr Gephardt and Mr Mitchell 
refused to speculate on the 
details of their respective bills, 
beyond noting that they would 
inevitably reflect compromises 
between the various bills already 
approved by four congressional 


committees. But Mr Gephardt 
agreed with Mr Gore it was “rea- 
sonable” to expect delays in 
introducing so-called employer 
mandates, under winch compa- 
nies would pay for a substantial 
part of the insurance premiums 
of their workforces. He 
suggested a four to five-year lag 
before full implementation, 
while Mr Mitchell said emphasis 
on introduction by a given year 
would be “misplaced". 

All three also docked all ques- 
tions on the favourite Wash- 
ington pastime of the moment 
— determining what constit- 
utes “universal" medical cover- 


End to 


rate cuts 
in sight, 
says Bonn 
adviser 


By Christopher Parkes 
in Frankfurt 


age. 


The period of falling German 
interest rates is drawing to a 
close, according to one of the 
Bonn government’s most senior 
independent advisers. 

Prof Herbert Hax said on radio 
yesterday that the economy had 
improved so much that further 
cuts in short-term rates were 
unnecessary; the Bundesbank 
also had to be careful to protect 
its credibility. He added that the 
recent weakness of the dollar did 
not reflect real economic condi- 
tions in the US. 

The Bundesbank last week 
appeared relaxed about recent 
rapid growth in the M3 money 
supply measure, saying the raw 
figures overstated the real cast 
However, Prof Hax, who is chair- 
man of the government's council 
of economic advisers, said the 
inflationary danger from M3 
expansion was too great As long 
as money supply was not under 
control the most markets could 
expect were quite small interest 
rate corrections, he said. “It is 
possible that we will have a fur- 
ther small reduction in the 
course of the winter. But I have 
the im pressi on that we will soon 
arrive at the end of interest rate 
cuts.” 

Many private sector economists 
still believe the internationally 
important discount rate will be 
down from 45 per cent to 4 per 
cent by the end of the year, with 
more easing possible if inflation 
falls further in early 1995. 

However, pressure from out- 
side Germany for more cots has 
eased, and the export-led eco- 
nomic recovery appears to be 
progressing smoothly. If these 
conditions continue, the Bundes- 
bank could elect to extend the 
pause instituted after its unex- 
pected mid-May reduction in the 
discount rate. 

This cut was interpreted by 
many observers as an uncharac- 
teristic gamble. A pause to allow 
closer analysis of any inflation- 
ary dangers in the M3 distortions 
could also serve to restore the 
bank's shaken credibility. 

Opinions differ on the timing of 
possible changes, but action at 
the bank's next council meeting, 
due an August 18, is generally 
considered unlikely. 

Any cut too close to the federal 
elections in mid-October might 
draw charges of political motiva- 
tion since Mr Hans Tietmeyer, 
Bundesbank president, and Mr 
Johann Wilhelm Gaddum, his 
deputy, are close associates of 
Chancellor Helmut KohL How- 
ever. relaxing rates after the elec- 
tions might tempt trade union 
pay negotiators to put in infla- 
tionary demands in the 1995 pay 
round, due to start in November. 

The Bundesbank has consis- 
tently warned that pay and pub- 
lic spending must be kept under 
tight control for several more 
years. 


FT WEATHER GUIDE 


Europe today 


Most of Europe will stay hot Only Ireland 
and Scotland will be cooler because of a 
nearby low pressure system. The front 
associated with the low wiN bring cloud and 
rein to Ireland. England will start the day with 
sunny periods aid temperatures will rise to 
22C-28C. A mass of very warm and moist air 
will be present over the Benelux, France, the 
Alps and southern Germany. There wfll be 
some doud and thunder showers may 
develop during the afternoon and evening. 
The Mediterranean will have plenty of sun 
with the highest temperatures in Spain. 
Scandinavia w3l be sunny and warm 
although the far north wifl be cooler with 
some doud. 


Five-day forecast 

The cooler air over the UK will push slowly 
towards the western parts of the continent. 
However, most areas will stay hot with 
thunder showers, especially in the western 
countries. Norway will become cooler and 
unsettled, but Hie rest of Scandinavia will 
remain dry and warm. The Mediterranean wiH 
be sunny and warm. 



. y' ■** loio . -..4* : . 

Warm front .Mk m... CcM (rent -4'.4 Wind aptmd in KPH 


TODAY'S TEMPERATURES 


SrfuaOon at 1? GMT. Tttmpenmints mulniutv for day. Fbn-casis by Malgo Consul! ol tfw tMtefiands 



Maximum 

BtfjinQ 

shower 

31 

Caracas 

shower 

27 

Faro 

sun 

28 

Madrid 

sun 

38 


Celsius 

Belfast 

rain 

19 

Cardin 

cloudy 

22 

Frankfurt 

thund 

32 

Majorca 

SU1 

33 

Abu Dhabi 

ter 

37 

Belgrade 

shower 

31 

Casablanca 

fair 

26 

Geneva 

thwrd 

28 

Malta 

sun 

32 

Accra 

shower 

27 

Borin 

sun 

34 

Ctveago 

ter 

26 

Gibraltar 

sun 

30 

Manchester 

fab- 

24 

Algiers 

sun 

35 

Bermuda 

thund 

30 

Cologne 

fair 

32 

Glasgow 

far 

21 

Marita 

shower 

30 

Amsterdam 

fair 

28 

Bogota 

shower 

18 

Dakar 

tek 

» 

Hamburg 

Mr 

32 

Melbourne 

shower 

14 

Athens 

sun 

32 

Bombay 

ten 

29 

Dates 

sun 

39 

Helsinki 

fair 

25 

Mexico City 

nhoww 

23 

Atlanta 

fair 

33 

Brussels 

thund 

31 

Delhi 

thund 

34 

Hong Kong 

thund 

27 

Mtamt 

fair 

33 

B. Aires 

cloudy 

12 

Budapest 

sun 

33 

Dubai 

fair 

39 

Honolulu 

shower 

32 

Milan 

ter 

31 

B.ham 

lair 

25 

CJtagen 

sun 

tr 

Dublin 

rain 

20 

Istanbul 

fair 

28 

Montreal 

shower 

28 

Bangkok 

shower 

34 

Cairo 

SU1 

36 

Dubrovnik 

Sun 

30 

Jakarta 

cloudy 

31 

Moscow 

fair 

22 

Barcelona 

fair 

28 

Cope Town 

shower 

14 

Edinburgh 

ter 

22 

Jersey 

fair 

20 

Munich 

ter 

30 



Lufthansa Express. 

The best connection in Germany 

Lufthansa 


Karachi 
Kuwait 
LAngeles 
Las Palmas 
Lima 
Uabon 
London 
Lux.bourg 
Lyon 
Madeb* 


cloud* 

sun 

fab- 

sun 

doud* 

lair 

sun 

fair 

fair 

ter 


33 Nairobi 
44 Naples 
26 Nassau 
26 New York 
19 Mbs 
25 Nicosia 
28 Oslo 
31 Pans 
31 Perth 
25 Prague 


ter 

sun 

shower 

fair 

fair 

sun 

ter 

ter 

Cloudy 

sun 


23 Tokyo 
31 Toronto 

31 Vancouver 

32 Venice 
20 Vienna 
37 Warsaw 
28 Washington 
31 Wamngtan 
IS Winnipeg 

33 Zurich 


ram 

rain 

cloudy 

sun 

ter 

sun 

cloudy 

sun 

ihuid 

shower 

lab- 

sun 

fair 

shower 

shower 

shower 

sun 

sun 

ter 

rain 

ter 

shower 


29 

15 
21 

31 
21 
38 

32 
27 
32 

16 
27 

32 

33 
22 
19 

31 

32 
31 

33 
12 
24 
29 



THE LEX COLUMN 


High voltage 


The story that has been, driving 
regional electricity company shares 
higher is largely one of dividend 
growth. Sure, the regulator Prof Step- 
hen Littlechild will curb the compa- 
nies' profits when he publishes his 
new price cap regime next month. But 
given that dividends are typically cov- 
ered three times by earnings and bal- 
ance sheets are debt free, the compa- 
nies should have no problem 
delivering real dividend growth of 5 
per cent or more. 

There is little wrong with this story 
as far as it goes. The professor has 
already softened bis proposed regime 
once in response to determined lobby- 
ing from the companies. The betting is 
that he will give further ground, fol- 
lowing another round of lobbying over 
the past few weeks. The most likely 
scenario is that the companies, cur- 
rently massive cash generators, will 
end up in cash-neutral or modestly 
cash-negative positions. Any treated 
more harshly than this should appeal 
to the Monopolies Commission. It 
would have a good chance of winning. 
Electricity distribution is such a low 
growth industry that it is unreason- 
able to expect the companies to 
become substantially cash-negative. 

Whether they should react to a satis- 
factory regime by increasing real divi- 
dends at 5 per cent a year is another 
matter. Such a rate of increase would 
be not be in line with their ability to 
raise earnings. As a result, dividend 
cover would fall to two or less by the 
end of the century. Instead, they 
should be planning more aggressive 
moves to gear up their balance sheets 
than the small-scale share purchases 
so for envisaged. Investors would do 
better if cash was paid out of the busi- 
nesses now and dividends were then 
raised in Hra with earnings. 


©rare prion relative to the 
FT-SE-A AB-Share Index 



a contineatwide system. A combined 
entity would be better able to plan 
cross-border infrastructure and ensure 
that most lucrative international calls 
were channelled over its networks. 
Bringing in AT&T and/or Unisource 
could advance Telefonica's other 
objective of not being left on the edge 
of the big global alliances now ham- 
mered together by BT, AT&T and 
France Telecom/Deutsche Telekom. 
Given its multiplicity of objectives, the 
Spanish group may try and sell stakes 
to all three foreign groups. 

If debt-laden Telefonica can sell each 
a 10 per cent stake in Tisa for the 
$600m-$700m that is currently being 
handled around, that would be quite a 
coup. Not only would Tisa gain suffi- 
cient funds to build out its franchises 
but Telefonica would also retain con- 
trol. 


recovered many of these deposits 
when German tax rules were changed 
at the start of this year. The risk is 
that they will now lose than again to 
the money market funds. 

Broker Fox-Pi tt Keiton suggests that 
some 40 per cent of retail time depos- 
its could move into money market 
tends over the next couple of years. 
Though the big banks would be able to 
offset some of the higher funding costs 
with commission income from manag- 
ing the new funds, they would still 
experience a shortfall of some 4 per 
cent in net earnings. The natural 
response of Larger banks would be to 
compensate by adding' volume. They 
are well placed to take business away 
from regional institutions which will 
find it harder to establish money mar- 
ket funds of their own. The new tends 
could thus accelerate consolidation in 
the German banking industry as well 
as changing the way business is done. 


Bass 


German banks 


Telefonica 


Telefonica will be parading the vir- 
tues of its international arm when It 
holds its pow-wow with GTE this 
week. The US telecoms operator is one 
of the candidates to take a stake in the 
Spanish group's Tisa subsidiary, 
which consists of shares in a collec- 
tion of Latin American phone compa- 
nies. AT&T and Unisource, an alliance 
of European operators of which Tele- 
fonica. is a member, are also candi- 
dates. 

Strategic considerations will be 
important in choosing partners. A 
link-up with GTE. which also has size- 
able Latin American interests, would 
further Telefonica’s vision of creating 


Next month’s launch of money mar- 
ket funds in Germany will not only 
raise questions about redefining the 
money supply but also promises to put 
pressure on the earnings of commer- 
cial banks which stand to lose cheap 
retail deposits to the new funds. The 
extent of the squeeze on margins is 
hard to gauge but it is unlikely to be 
as severe as that facing French banks 
when money market funds were 
launched there in the late 1980s. That 
was a period of high short-term inter- 
est rates, which made the funds partic- 
ularly attractive to individuals who 
received very little reward on their 
bank deposits. 

Still, there were large flows of Ger- 
man savings into Luxembourg last 
year when money market funds where 
permitted there. That suggests a rea- 
sonably high proportion of bank time 
deposits are footloose. The banks 


It is only a straw in the wind at the 
moment but the pace of discounting in 
the UK beer trade seems to be abating. 
While the big brewers continue to 
fight fiercely over the large national 
accounts, they have become less keen 
to offer wholesale discounts to their 
smaller customers. Such a develop- 
ment is only logical. It was clear from 
Bass's Interim profits in May that dis- 
counting had failed to produce the 
required reward in terms of volume. 
Courage needs a more substantial 
strategy to cope with the looming 
expiry of supply contracts with Chef & 
Brewer and Inntrepreneur. 

Coupled with the warm weather, 
which should do wonders for beer 
sales, that may explain the renewed 
outperformance of Bass's shares over 
the past month. The equity market is 
in for a disappointment, though, if it is 
factoring In much of an increase in 
brewing margins. It is not just a ques- 
tion of excess capacity in the UK 
industry continuing to prevent much 
actual increase in beer prices. The 
supermarkets have shown that it is 
possible to import European lager ami 
sell it - even duty-paid - at competi- 
tive prices. Against that background 
the level of domestic capacity use 
becomes less and less relevant 

Brand development thus remains a 
more convincing strategy than a price- 
based attempt to gain market share. In 
Carling and Tennent's, Bass has best- 
selling lagers. But Whitbread still 
appears to have the edge in focusing 
on brand value. 


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©THE FINANCIAL TIMES UMTCSD 1594 


f4onday July 25 1994 


US to take action on stock options 


GERARD BAKER: 

GLOBAL INVESTOR 

In Japan bond prices had already been under 
pressure for most of the year as the market 
became caught up to global expectations of higher 
inflation. But now the fixed Interest market is under 
attack from the supply side, as Investors tear that 
the new coalition government Is sat to pump up a 

ballooning deficit Page 21 


r 2 


(iron fell. 

*>-•••• • • • • • 

lie t* in Jap 


ECONOMICS NOTEBOOK 
If anybody deserves a prize for 
persistence, it Is Mchel 
Camdessus, managing direc tor of. 
the IMF. He has kept urging an 
Issue of special drawing rights, the 
reserve asset created by the IMF. . 
His hopes are high that he will win 
backing for an SDR issue at the IMPs annual 
meeting In October. Page 21 


By Andrew Jack In London 

US companies are almost certain 
to be forced to take the costs of 

stock options as a charge a gains t 
profits within the next three 
years, under proposals befog con- 
sidered by the US Financial 
Accounting Standards Board. 

Companies will also be 
required by fine end of this year 
to provide sub stanti al additional 
details an their use of finawriwl 
derivatives such as swaps and 
c ur rency hedg in g instr umen ts. 


under a separate accounting 
standard due out in October. 

The standard will require com- 
panies to disclose their account- 
ing policies on der iva t i ves, the 
quantitative effects of these 

iiwJi-niiiflnfcf and what Hifly hope 
to achieve hy their use. 

Mr Dennis Beresford, chairman 
of the board, was confident a 
solution could be found to con- 
cerns about how to measure reli- 
ably the cost of options, the 
shares awarded to compensate 
senior executives. Options are 


widely seen as a form of remu- 
neration which have a cost to 
shareholders. 

Mr Beresfbrd’s determination 
comes hi spite of protest from 
companies. Congress and accoun- 
tancy firms that the proposals 
will Impair financial perfor- 
mance. 

Members of FASB are consider- 
ing about 10 approaches to valu- 
ing options a fter their previous 
approach was attacked for alloc- 
ating them too high a cost. 

However, Mr Beresfbrd said the 


techniques developed were no 
less accurate than those used for 
other uncertain areas in account- 
ing which are already charged as 
costs, such as provisions for bad 
debts or valuation of obsolescent 
stock. 

The revised FASB stock option 
proposals are unlikely to be cir- 
culated qptn the first quarter of 
next year and may still be 
delayed for further consultation. 

The original proposals allowed 
three years for additional disclo- 
sure before forcing companies to 


take the costs of the options as a 
charge. Mr Beresford said the 
revised plans might compress 
this intermediate period into two 
years, so that companies would 
still be required to show the cost 
of options in their profit and loss 
accounts for fiscal year-ends from 
1997. 

Derivatives have come under 
increasing scrutiny over the past 
few months following a series of 
occasions involving their mis- 
management. 

Bankers Trust, Page 19 


Richard Waters reports on how Wells Fargo, the US bank, plans to sustain growth 


BONDS: 

Just when It seemed safe for investors to wade 
back into the US Treasivy market Mr Alan 
Greenspan blew his warning whistle again The 
menace is higher inflation. Page 22 

EQUITIES: 

A fresh tide of corporate results will sweep tfouu^i 
Wall Street this week, but any positive impact is 
Hkeiy to be limited to a few Individual stocks. Signs 
that the worst may be over for the dollar have 
invited investors in the- UK market to celebrate 
growing evidence of strong and accelerating 
economic growth- and subdued inflation. Page 23 

EMERGING MARKETS: 

Brazes new currency, the real, could trigger a 
stock market surge. But while Inflation- is expected 
to fall, political uncertainties surrounding the 
October elections and an overvaluation of the new 
currency have so far prevented a targe capital 
Inflow. Pago 23 

CURRENCIES: 

. With the Bundesbank having set out its stall, . 
attention will revert to US monetary policy, with the 
focus (Mi second-quarter GDP due on Thursday. 
Page 23 

COMMODITIES: 

Tomorrow the Brazilian government wffl issue the 
first official assessment of the damage done to its 
coffee crop by the frosbfof two and four weeks 
ago. Page 21 

INTERNATIONAL COMPANIES: 

Bankers TrusttiaS searieHtfiarpMTn Hs^ Ihcoine 
from seffing derivatives to companies andotfoers to- 
recent months. The New York-based bank said 
profits from what it cafls "client financial risk 
management” dropped to $50m In the three 
months to the end of time, xlown from $1 14m in 
the previous three months. Page 19 19 

UK COMPANIES: 

J Salnsbuiy Is expected to Join battle with rival 
Tesco this week by launching a oounterbid for Wm 
Low, the Scottish supermarket group. Page 18 


M r Carl Reichardt has 
decided to quit while 
he Is ahead. The 63- 
y ear-old Texan heads what is 
generally regarded as one of the 
best-run big- US commercial 
banks, with stock market ratings 
to *n«tnh 

Driven by falling costs and 
expansion into mutual funds and 
other investment products, Wells 
Fargo’s shares have jumped from 
under $15 when Mr Reichardt 
took over to more than $150. 
They are now traefing at nearly 
23 times the hank’s bode value, 
and a multiple of 10.5 thru* this 
year's projected earnings. The 
question now is, what can it do 
for an enema? 

Mr Reichardt announced last 
Tuesday that he vrifi retire at the 
end of this year, after 12 years as 

the bank’s fthairiium tmA 
executive. The move dears the 
way for Mr Paul Hazen to take 
over. Currently the bank's presi- 
dent, 54-year-old Mr Hazen has 
already served as Mr Reinhardt's 
number two for a decade. 

Mr Reic h ar d t and Mr Hazen 
.flew to Philadelphia two weeks 
ago to break the news to Mr War- 
ren Buffet, the US investor who 
Is Wells Fargo's biggest share- 
holder. “He doesn’t think people 
should retire - ever,” Mr Rei- 
chardt said. 

. Mr .Buffett's dose 'interest in 
who is at the 1 lifehn of the Safi 
Francisco-based bank is under- 
standable. He bought 10 per cent 
of Wells Fargo’s shares in 1990 
for around fmnm^ and hM since 
taken Ms stake to 12.6 per cant - 
a holding worth slightly more 
than $Um. Mr Buffett last week 
declared himself “more than com- 
fortable with the new leader- 
ship". 

Mr Hazen indicated that he 
intended to confinne with the for- 
mula that made his double-act 
with Mir Reichardt a success. 
"There’s a lot of growth still in 
the basic businesses, 7 he said. 
The next two to three years win 
be agesA increasing WeHs Fargo’s 
market share with a number of 


STATISTICS 


Base lending rates 29 

Company meetings , 20 

DMdend payments 2 0 

FT-A Worid Indcoa 21 

FT Qukto to curandw — 19 
Ftaraisn exchangee 29 


London recent issues 29 

London 9hare sendee . 29-31 
Managad fund service 25-29 

Moray markets 29 

Now bit bond Issum 22 

World stock mkt Indian -24 


Heir steps in to take the encore 




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products: he singles out car leas- 
ing, investment products and 
consumer lending. 

He also talks of expanding 
Wells Fargo's commercial prop- 
erty lending again. Despite the 
market do w n tur n at the end of 
file 1960s, “when yon look at it 
ova: a whole cycle, returns were 
ddSaordmaiy”, he says. 

Heavy commercial property 
lending was nearly the death of 
Wells Fargo. Its $i3bn of loans at 
tiie end of 1990, against share- 
holders’ funds of $3.4hn, made it 
the most exposed big bank in the 
country to the property down- 
turn (its share price halved, to 
around $40, in a matter of weeks 
during the summer of 1990). 

Unlike many others, it (fid not 
rush to liquidate loans. Many of 
the assets recorded as non-per- 
fbnning today yield around &5 
per cent hi n»?h “That's a hell of 
a non-performing portfolio-” 

According to Mr Reichardt, 
over tiie past six months Weils 
Fargo has begun "buying portfo- 


lios - we have been actively 
looking at troubled loans". Inter- 
nal rates of return on those 
investments are in the range of 
20-80 per cent, he sayB. 

Meanwhile, Wells Fargo seems 
unlikely in the near future to 
■take any of the radical steps ' 
being considered last yearra fog 
bank merger, fin* example , or a 
move to give 19 its status as a 
bank holding company alto- 
gether. 


M any US bank chairmen 
talk whimsically of 
dropping their bank 
charters: it would liberate them 
from the costs of the federal 
deposit and insurance fund and 
the equal lending provisions that, 
hankers claim, put them at a dis- 
advantage to non-hank rivals. It 
also "gives the holding company 
greater flexibility in its activities, 
as well greater flexibility in who 
can own it”, said Mr Hazen. 

Wells Fargo got further than 
most in debating the issue. How- 


ever, the alternative that it con- 
sidered - becoming a savings t»h 
loan institution - would have 
brought its own limitations, prin- 
cipally in the form of a restric- 
tion on the hank's ability to 
make commercial Trams. Despite 
this, the issue of whether to give 
up being a bank "is still tme we 
might look at from time to time”, 
Mr Hazen says. 

Nor does Wells Fargo seem 
likely to become involved soon in 
a big takeover or merger. Mr Rei- 
chardt talks with regret of his 
failure to persuade First Inter- 
state, the bank's Los Angeles- 
based neighbour, to agree to a 
merger last year. 

He adds: “1 think that from a 
theoretical standpoint, putting 
together two large branch 
systems like this... and being 
able to take out $400m-$500m 
expenses a year is a sensible 
business proposition.” 

With $54bm in assets against 
Wells Fargo's $52bn and an 
extensive branch system in the 


western US First Interstate 
would have provided a spring- 
board for tiie bank to mount a 
stronger challenge to BankAmer- 
ica. the giant West Coast bank 
created by the merger with Secu- 
rity Pacific two years ago. 

Jilted by First Interstate, Mr 
Reichardt now talks of spending 
the bank's money on buying its 
own shares Instead. With a tier 
one capital ratio of 101 per cent, 
Wells Fargo is well endowed with 
capitaL 

The bank has just approved 
purchases of up to 10 per cent of 
its own shares (though it has set 
no timetable for tiie exercise) at a 
cost of around $800m at the cur- 
rent share price. 

The buy-back programme win 
help to support the bank’s earn- 
ings per share in the short term. 
But it does not answer the bigger 
question of bow Wells Fargo can 
maintain the earnings growth 
that made Mr Reichardt, accord- 
ing to Forbes magazine, "Warren ! 
Buffett's favourite banker.” 1 


This week: Comi 


US CARMAKERS 

GM and Ford on 
the road to a 
tumround 

Confirmation that the tumroundofthe 
big US carmakers is continuing is hkeiy 
to come Later this week, as General 
Motors and Ford report second-quarter 
figures. Chrysler unveiled strong 
results two weeks ago, adding to 
optimism about the outlook for its 
biggest rivals. Ford is expected to 
report a further big step in the return of 

its European operations to profit for 
1994. after three years of losses. General 
Motors, meanwhile, continues to look to 
strong demand in the US and the 
re s t r uct u ring of its North American 
operations to continue its tumround 
there. 

DEUTSCHE BANK 

Kopper must restore 
tarnished image 

Mr Hflmar Kopper, Deutsche Bank’s 
irascible chairman, will be choosing his 
words carefully when he opens the 
German hnnktng sector’s half-year 

reporting season tomorrow. 

Although he enjoys barking at tire 


news 


-XV fS# -" s . -f: 

i i Vi-. ' ;■ ' 



time to start refurbishing Deutsche 
Bank’s public image after recent 
calamities, faftiniWng the hear collapse 
of MetaDgesdlschaft and the Schneider 
property affair. 

u rhiTo m ore wri«hflp g ramnoi 1 m ruled 
out as the German recession unwinds, 
and DM500m ($Sl8.4m) has already been 
seat aside to cover Schneider losses, the 
hank’s recent statements that it expects 
IflM pw wfrinnhifl r far had and doubtful 
debts to fen from last year’s DM&3bn 




Brighter hue despite 
patchy paint finish 

Imperial Chemical Industries, the UK’s 
biggest chemicals group, reports 
second-quarter results on Thursday. 

■ Estimates range from £110m to £L30m 
($201.5x0), against £96m for the same 
period last year. Bfost observers are 
bullish about prospects. Id is 
benefiting from its exposure to the 
buoyant US and Asian markets, and the 
recovery in the UK. The only fly in the 
ftinhnant is ivmiiwmt al Europe, but US 
groups that have already reported 

second quarter results have noted some 
upturn in demand there. 

The continuing improvement in 
demand will mainly help the industrial 
chemicals division and regional 
businesses. Prices for some of ICTs 
im p ortant products - s uch as P VC and 
PET - have been rising strongly in 
mnittiML Brokers Klein wort 
Benson expect the industrial division to 
post operating profits of £35m to £S4m. 


OTHER COMPANIES 

Digital set for a 
fourth year of woe 

Digital Equipment is expected to report 
its fourth consecutive year of heavy 
losses tomorrow. The troubled US 

fn m p m y him said that it Will 
take a $L2bn restructuring charge to 
axe 20, 000 jobs over the next 12 months, 
plus asset writeoffs of $350m-$400m. 
Analysts also predict operating losses 
for the latest quarter of gLOQm or more. 
Digital may also detafl Anther 
di ve stiture plans following last week’s 
agreement to sell most of Us data 
storage business to Quantum, a Sftfaxm 
VaDay disk-drive manufacturer. 

■ Not* Hydro: Norway’s biggest 
quoted company, announces 
second-quarter figures today, with 
anaty nta gr partmg net fnemna of 
around NKrtOQm ($UMLm). Al t houg h this 
is modi lower than last year’s 
NKi2J3bn, when a NKrLSbn 
excep tional gain mas ■inrTnrinri , the ' 
underlying performance will be up 

eTury plyilna fen riving nil, alumini um, 

lertfllser and petrochemical prices. 

■ Semens: The big German electronics 
and electrical group which earlier this 
nvwth tmnrsrmrvA heavy lay-offa and 
forecast a decline in operating profits of 
op to 15 per cent for this year, is doe to 
publish third-quarter results today. 

■ Da Pont and Dow Chemical: The two 
■ rhairrinfll gfemta are expected to report 
advances in second-quarter profits this 
week, r eflecting hi g hw gales volumes in 






an improving economy. Tjat week, 
Monsanto and Arco Chemical topped 
nvwt eaming w pr pri1rtinrm j thanks tn 

the strength of demand from US car 
bousing markets. Du Font is 
expected to report arise in earnings per 
share fram 79 cents to between 
$LOO$LUO, while Dow Chemical should 
see a xpare modest rebound. 

■ Renters Holdings: The UK financial 

information and news group will 
emphasise its and 

high-tech credentials on Wednesday by 
presenting interim results in New York. 
The meeting will be transmitted live by 
satellite to London, where analysts 
expect pretax profits of about £245m 
($379-6m) for the six months to June 30, 
compared with £215m last time. 

■ Creditanstalt: The Austrian hank is 
sdbefe^ed to repost its half-year results 
on Friday amid growing uncertainty 
over the government's privatisation 
plans. 



Standard 
Chartered 
submits to 
HK inquiry 

j By John dapper in London mid 
Simon Holberton In Hong Kong 

Standard Chartered, the US- 
based international b ank i n g 
group, is co-operating with an 
independent investigation in 
Hong Kong into alleged malprac- 
tice hi its bunion dealing ana. 

The bank is understood to be 
forwarding information from an 
internal inquiry into allegati on s 
of corruption and bribery to 
the Independent Commission 
Against Corruption, an indepen- 
dent anti-corruption body with 
police powers, In order to reas- 
sure banking regulators in the 
UK colony. 

Standard said Its investigation 
into alleg a ti ons that employees 
of Mocatta, its bullion division, 
used false expenses claims to 
finance bribes for officials in 
Malaysia and the Philippines 
was continuing, although the 
Malaysian end had been com- 
pleted. 

“We are continuing our inves- 
tigation, and keeping all the reg- 
ulatory authorities Involved 
informed on a regular basis," 
said the bank. The investigation 
would c a rry on for "as long as it 
takes" to sort out the issue. 

Standard could not confirm the 
involvement of the anti-corrup- 
tion commission, but it empha- 
sised that it had started Its 
inquiry after a review of controls 
within Mocatta. 

Hr John McFarlane, the Stan- 
dard Chartered director who has 
taken charge of Mocatta within a 
new division, said last week that 
the bank had told managers that 
it would not tolerate repetitions 
of similar behaviour. 

The Mocatta allegations follow 
the bank's suspension from new 
issue activity in the colony until 
next April because of the 
involvement of its securities arm 
in share price support schemes 
in a series of company flotations. 

The bank said last week that it 
had completed an inquiry in Mal- 
aysia into the disappearance of a 
$10,000 gold coin, which was 
given to a former Malaysian dep- 
uty finance minister as a “sam- 
ple” and disappeared after he 
passed it cm to a consultant Mr 
Stephen Goh, the consultant, rec- 
ompensed the hank after he mis- 
laid the coin. 

Standard said yesterday that it 
had delayed its planned second- 
ary listings in Hong Kong and 
Singapore because of unfavoura- 
ble market conditions. 

It said the decision was not 
connected with the Mocatta 
investigation. 


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Operating earnings profits after 
provisions were down 10 par cent after 
four months, but there is increastog 


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dlvlsi(m.BrokereKleluwortBcaisoiiare 

expecting flat results at £32m, but 

- Tanwt Gnpri is predicting a fall year an 

year, because of a squeeze ou prices in 

the UK decorative market Raw 



analysts that ik 81 ** ground will be mads 
up by the yeawnd, even though last 
year’s record DMSwSbn appear to be out 
of reach. 


have also been rising, putting pressure 
on margins. . . 

Most analysts expect the intoim 

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AMmann MascNnanbau 19 
BCH 19 

BKBfrta 18 

Bankws Trust 19 

CredHeapW Rn 18 

Enterprise C3I 18 

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Gowrings 18 

HUsdown Hddfaga 18 


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Property Trust 
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18 Salnsbuiy (J) 

'• 18 Simon Engineering 
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IS 


FINANCIAL TIMES MONDAY JULY 25 1994 


COMPANIES AND FINANCE 


Sainsbury expected to 
bid for Wm Low 


By David Wighton 

J Sainsbury is expected to join 
battle with rival Tesco this 
week by launching a counter- 
bid for Wm Low, the Scottish 
supermarket group. 

Sainsbury has been examin- 
ing the detailed financial infor- 
mation on Wm Low it bad 
requested and although it is 
thought that it has not yet 
made a final decision it is 
widely expected that it will top 
Tesco’s 225p a share bid. 

By the end of last week 
Law's shares bad climbed to 
265p as the City decided a 
move by Sainsbury was almost 
certain. The shares jumped 67p 
to 236p when Tesco launched 
its bid on July 14. 


Rival supermarket chains 
also expect Sainsbury to over- 
come its historic aversion 
towards hostile takeover bids. 
“Sainsbury cannot afford to stt 
back and let Tesco steal a 
march on it in Scotland. There 
is only one Wm Low,” said an 
adviser to one of its competi- 
tors. 

Sainsbury itself would only 
say: "We are studying the 
information supplied by Wm 
Low and will make another 
announcement in due coarse.” 

Both Sainsbury and Tesco 
are keen to expand in Scotland 
where they have only 5 per 
cent and 7 per cent of the mar- 
ket respectively. 

Wm Low has almost 7 per 
cent with its 45 outlets and has 


a further 12 stores in the north 
of England. 

Sainsbury, which has only 
four outlets north of the bor- 
der, has found it difficult to 
expand with planning rules 
making it hard to find green- 
field sites and competitors bid- 
ding up the price of available 
land. 

Its most northerly distribu- 
tion centre is outside Manches- 
ter and taking over Wm Low 
would give it a ready-made 
infrastructure. 

However, less than half Wm 
Low's stores are thought to be 
appropriate for the Sainsbury 
format and the company is 
likely to be estimating the 
price it could get for the oth- 
ers. 


Property Trust in f 12m 
Chinese joint venture deal 


By Andrew Taylor, 

Constru c ti o n Correspondent 

Property Trust, of which the 
Cheng family of Hong Kong 
holds a stake of more than 45 
per cent, plans to acquire a one 
third interest in a property 
joint venture in Guangzhou, 
China, in a deal worth £l2m. 

The group plans to establish 
a new bolding company in Ber- 
muda which wifi take over the 
existing UK property portfolio 


as well as purchase the joint 
venture stake. 

Shareholders are being asked 
to exchange one share in Prop- 
erty Trust for one new share in 
the Bermuda-based company. 
Property Trust Holdings. 

The stake in the 182,000 sq m 
mirad development, Dong inap 
Garden Plaza, is to be acquired 
by the issue of B shares from 
Property Trust Holdings. 

The net assets of the 
enlarged group following the 


acquisition are expected to 
amount to about £21 .7m, 
according to Mr Anthony 

Ohpng , chairman 

Property Trust's shares were 
suspended pending share- 
holder and court approval of 
the arrangements. The com- 
pany also announced that pre- 
tax profits for the year to end- 
March had fallen from 
to £450.000. It said the previous 
year’s profits had benefited 
from property sales. 


Hillsdown facing pensions probe 


By Vanessa Houkfer, 

The Pensions Ombudsman is 
investigating complaints about 
the treatment of a group of 
pensioners by Hillsdown 
Holdings, the food manufac- 
turer. 

More than 40 former employ- 
ees of FMC, a meat processing 
company acquired by Hills- 
down in 1983, have voiced com- 
plaints that they were treated 
unfairly when a surplus from 
their pension fund was repaid 
to Hfilsdown. 

Hillsdown transferred the 
FMC scheme's assets, totalling 
about £35m. to another Hills- 


down fund in 1989, which sub- 
sequently repaid £18.4m, pre- 
dominantly from the FMC sur- 
plus. to Hillsdown over the 
next two years. 

The pensioners say that 
Hillsdown was unfair in that it 
gave them minimal increases 
in their benefits, in return for 
the transfer of their scheme’s 
assets. 

They also argue that there 
may have been a breach of 
the FMC trust deed, which 
said that any surplus 
not retained should 
mainly be used to increase ben- 
efits. 

Hillsdown says that it 


believes, on the strength of 
independent advice, that the 
transfer of the surplus was 
legal. It also says that it paid a 
suitable package of improved 
benefits to the scheme’s mem- 
bers. 

The complaints were initially 
investigated by the 
Occupational Pensions 
Advisory Services, which 
passed the matter to the Pen- 
sions Ombudsman las* Novem- 
ber. 

The courts have the power to 
enforce decisions made by the 
Ombudsman, who is expected 
to reach a conclusion on the 
matter shortly. 


Insurers 
plan rival 
to direct 
dealing 

By Simon Davies 

A group of Independent 
insurance brokers is planning 
to fight back against the 
increasing dominance of direct 
dealers such as Direct Line, by 
setting op a cost efficient 
insurance company to take on 
their direct rivals. 

The project has been 
launched by the Institute of 
Insurance Brokers, which rep- 
resents about 1,100 members, 
generally small independent 
brokers, and wifi be giving a 
presentation to launch the 
new company in September. 

Mr Andrew Paddick, the 
JIB’s director general, said a 
leading team of industry spe- 
cialists had already laid down 
the blueprint for the company 
and developed software 
designs, and it would be in a 
position to launch by June I 
next year. 

The project is contingent on 
getting financial backing from 
brokers and possibly outside 
insurance companies to cover 
the set-up costs of “several 
million pounds” and the more 
substantial underwriting 
reserves. 

In addition, it wifi have to 
fight concerns over indepen- 
dent insurance brokers selling 
through a captive company, 
which could be open to abase. 

However, there is no doabt 
that the brokers are under 
pressure to stem the tide of 
losses from one of their staple 
sources of business. 

The new insurance company 
wifi have a minimal staff and 
no advertising fees since it 
will be marketed and sold by 
the brokers, who will be able 
to lock directly into the sys- 
tem. 

Mr Paddick said it would be 
able to offer premiums which 
at least matched the direct 
insurers. 

The direct insurers wifi hold 
the cost advantage of having 
no brokerage commissions, 
but this wifi be partly offset 
by their higher marketing and 
sales costs. 

It will be a challenging 
fight Direct Line was formed 
in 1985 but bas already 
become the UK’s largest 
insurer with 1.6m motor poli- 
cies. 


SE completes Warburg inquiry 


By David Wilton 

The Stock Exchange has 
completed a preliminary inves- 
tigation into SG Warburg's 
handling of the purchase of 
Lasma shares during the bid 
from Enterprise OiL 

In the final days of the bid 
Warburg spent £l70m on 
behalf of Enterprise buying a 
10 per cent stake in Lasmo 
from institutions. 

The purchase, at a large pre- 
mium to the current market 
price, brought complaints from 
other shareholders who said 


they were not given the chance 
to sell. 

Swiss Bank Corporation 
complained to the Stock 
Exchange that it had a sell 
order placed with Warburg 
which was ignored when the 
purchases were carried out. 

Warburg bas argued that 
Swiss Bank did not have a 
valid buying order and that the 
dispute concerns a technical 
issue of little significance. 

The Stock Exchange con- 
firmed that the panel formed to 
look into the complaint had 
“reached a preliminary view 


which is now being discussed 
with the parties concerned". 

The stock market raid was 
carried out in an unusual man- 
ner and caused great ill-feeling 
among those institutions not 
favoured. Some pointed to the 
fact that most of the institu- 
tions whose shares were 
bought accepted Enterprise’s 
paper offer for the remainder 
of their holding. 

It would be against the Take- 
over Code for a bidder to offer 
cash to some shareholders on 
the understanding they would 
subsequently accept the offer. 


But some observers believe 
the Fact that most of the 
favoured institutions accepted 
the bid shows only that War- 
burg misjudged the mood of 
institutions. It would have 
been more effective to buy 
shares off investors who 
planned to reject the offer. 

Independent experts believe 
the Swiss Bank complaint con. 
corns a “grey area” In the 
Stock Exchange's rules and 
question whether the outcome 
of the investigation wifi have 
much effect on Warburg's rep- 
utation. 


St James 
Beach £lm 
placing 

St James Beach Hotels, the 
operator of hotels in Barbados 

Which rawig tO rtn* marlwt in 

April, yesterday announced a 
share placing to raise 11. 1m 
Some 900,000 shares have 
been placed with various insti- 
tutions at I20p apiece; the 
shares were unchanged at I22p 
on Friday. 

As foreshadowed in the 
annual results, proceeds will 
be used for the purchase and 
redevelopment of a 14,000 sq ft 
office and warehouse building 
to provide a new headquarters 
and a central storage and dis- 
tribution facility. 


Simon in 
£6.25m sale 
to Norway 

Simon Engineering has sold 
most of the assets and liabili- 
ties of Simon-ERC, part of 
Simon Petroleum Technology, 
to a unit of Norway’s 
Petroleum GEO -Services for 
an initial £5m cash, plus 
a further £L25m deferred pay- 
ment over the next three 
years. 

In 1993 the business sold 
incurred a pre-tax loss of £4.1m 
on turnover of £5Jm. 

It includes Tigress, a soft- 
ware package for oilfield 
appraisal and production 
st udies. 

Proceeds will be used to 
reduce Simon’s debt. 


Lazard plans to 
launch Indian trust 


By Betttan Hutton 

Lazar d Brothers is planning to 
launch a London-listed Indian 
investment trust in alliance 
with the BK Birla industrial 
group and Creditcapital 
Finance Corporation, the 
Indian merchant bank in 
which Lazard bas a 40 per cent 
stake. 

The Lazard Birla fund will 
aim to raise about £LQQm from 
retail and institutional inves- 
tors this aut umn .The UK’s 
first Indian investment trust, 
launched earlier this year by 
Fleming Investment Trust 
Management, attracted £84m. 

BK Birla is one of India’s 
largest industrial groups, and 
has interests in many sectors 
but has not previously been 


associated with fund manage- 
ment Mr Adrian CoIUns, a 
Lazard director, said Birla ’s 
contribution to the fund would 
be advice based on its depth of 
knowledge of Indian compa- 
nies, and understanding of the 
nature of business in India. 

Investments will be made in 
a wide range of Indian equities, 
with a probable slight bias 
towards medium-sized and 
smaller companies. 

A Lazard team has been 
working on the project for nine 
montbs. and believes it has 
now resolved the tax complica- 
tions for foreigners investing 
in India, which has a favoura- 
ble tax treaty only with Mauri- 
tius. Fleming’s India fund 
developed a structure which 
invested via Mauritius. 


Gowrings to 
buy Burger 
King outlets 

Gowrings, the motor trading 
and leisure company, has 
agreed, through its Gowrings 
Food Services subsidiary, to 
buy seven Burger King fran- 
chises, excluding debtors and 
cash, from Grand Metropolitan 
for £3L3m cash. 

The company also said it had 
entered a conditional option 
agreement with Central & Pro- 
vincial Properties for the sale 
of most of the land at Newbury 
for £2.45m. and a further condi- 
tional option, agreement for the 
sale of the rest of the Newbury 
site for £350,000. The site is 
currently occupied by Gowr- 
ings of Newbury. 

Approval for both the acqui- 
sition and option agreements 
will be sought at an extraordi- 
nary meeting on August 5. 


,n;!i 

V 

tfli* 

'A 


CROSS BORDER MSA DEALS 


BIDDBI/INVESTOfl 


TARGET 


SECTOR 


VALUE 


COMMENT 


ExWe Corp (US) 

Tudor (Spain) 

Batteries 

E163m 

Buying ham Bansto 

Motra Marconi Space 
(UK/France) 

Unit of British Aerospace 
(UK) 

Aerospace 

£57m 

BAA concentrating 
resources 

BayariactM Landeobaric 
(Germany) 

KiAcereskedeimi Bank 
(Hungary) 

Banking 

£37m 

Taking 25% In 
privatisation 

Sima Darby (Malaysia) 

Lee Refrigeration (UK) 

Electric appflances 

£21. 7m 

Agreed bid 

FECI (Hong Kong) 

Beverley Group (UK) 

Engineering 

E9m 

Effective men 
' takeover 

Airtours (UK) 

Binknar Holiday (Spain) 

Leisure 

£&Sm 

Complex cash deal 

Omni Insurance (US) 

Unit of SkancHa (Sweden) 

Insurance 

n/a 

Another non-Bfe 
tflsposai 

Hagamoyor {Netherlands} 
Casa Uoberinann 
(Switzerland) 

Joint Venture 

Marketing & 
distribution 

n/a 

HK listing 
possible 

Canal Plus (France)/ 
Bertelsmann (Germany) 

Joint Venture 

Broadcasting 

n/a 

Pay TV venture 

Saint-Louis (France) 

General Azucarera (Spain) 

Food 

n/a 

Stake-doubling talks 


AAfl 

OBCyKAEHMR 

6M3HECA 
C 300 000 
BAMffTEAbHblX 
PYCCKKX 
3BOHMTb 

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Financial bvestia will feature (be week's key Russian and intrnurionai business 
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Roth Swanston at (be Financial Times on 

+44 71 873 4253 or fax +44 71 873 3428 


FINANCIAL TIMES 


NOTICE OF PARTIAL REDEMPTION 
Sanwa International Finance Ltd 
ECU 40mm 9% Guarant eed Notes due 1995 

NOTICE IS HEREBY GIVEN THAT jxirsuam to paragraph 4(b) of the Mima and 
confllkn of too anon mentioned notes. Catena. NA. as Prrietel Paring Apart has 
aata cfofl by to! tor RedsmpSan wi August 23rtf 1*9*. ECU 4.000.000 wtnctSMnount 
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AJyjS, 199* London 


CfTIBANKO 


r 


Weekend FT 

RESIDENTIAL PROPERTY 

Every Saturday the Weekend FT Residential Property | 
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WOOLWICH 
- Building Society - 

ECU 150.000,000 
Floating rate notes due 
1996 

Notice is hereby given that the 
notes wilt bear interest at 
6.025% per annum from 
25 July 19& to 25 October 
1994. Interest payable on 25 
October 1994 will amount to 
ECU 1 53.97 per ECUI0.Q00 and 

ECU1, 539.72 per ECUmOQO 

note. 

Agent: Morgan Guaranty 
Trust Company 

JP Morgan 


TSB Hill Samuel Bank 
Holding Company pic 

(Formerly HUI Samuel Group pic} 

US$100,000,000 Class A 
Floating rate notes 2016 

For the period from 25 July 

1994 to 25 January 1995 the 
notes toil! cany a rate of 
interest of 5.625% per annum, 
interest payable on 25 January 

1995 will amount to USS287.50 
per USS10.00Q note and 
USS?. 187.50 per USS250.000 

note. 

Agent Morgan Guaranty 
Trust Company 

JPMorgan 


Signal 


© 130+ software applcadore O 
Q BT DATA FROM SI 0 A DAY O 
O Signal SOFTWARE GUIDE © 
CaJ London » *4+ (0171 231 3556 
t» your gide and Signal prica fat. 


Weekly Petroleum Argus 

‘The unique source ter oil industry ne ws, comments and 

priCes _ Petroleum Argus _;~ 

CALL NOW (or a .-SEE TRIAL to this newsletter 71} 359 2792 


Up to rao, ooo, ooo 
Holdings of 1992 (UK) 
l imite d 

H.fnl. Hatriing. i’Lk) 

Floating Rate Note* due 2000 
£85,000,000 of which ara being 
issued as the Initial Tranche 
For the period from July 2L 1994 to 
October 23, 1994 the Notes will carry 
•n interest raw of 5453(3% pee 
annum with an Interest amount of 
£T4,24&89 per£L000£W0 No to. 

Tha relevant interest payment data 
will be October 2L 1594. 


n 

Banque Paribas 


us.soaooo.ooo 


MARINE MIDLAND BANKS, INC. 

Floating fate Sebo rtte aed 
Capital Notre do* 1999 

For the dm* month* 23th My, t9W (o 
25* October, 1904 the Notes wiO 
cany an Interest Rale of 5K» pa- cere, 
per unnum with & Coupon amount of 
U.S. 5E3J7 per U-S. SXMXXL totems 
payment one 23th October. 199*. 
HSBC bmms Banking Limited 
Interest Daenmrcmoo Agent 


COMPANY 

NOTICES 


REPAP ENTERPRISES INC. 
US £200,000^)00 FLOATING 
RATE NOTES DUE 1997 

For the period 19th July 1994 to 
19th October 1994 the Notes will 
cany an interest rate of 7.6875* 
per annum. 

(USS 3386.94 per USS 250.000). 

Agent Bank 

Barclay; Bank PIC 
BGSS Depository Services 

168 Feucfaurch Street 
London EC3P3HP 



Templeton 



1660 Luxembourg 


iourg 


Notice 


Shareholders are hereby informed chat the extraordinary general meeting of shareholders held on 
22nd July 1994 has decided (i) to merge Templeton Indonesia Fond into Templeton Far East 
Fund (ii) id merge Developing Growth Slock Fond into Templeton Smaller Companies Fund and 
(iii) to introduce Class A and Class B shares distinguished by ibeir commission structure. In 
addition, tbc name of the sub-fund Templeton American Fond is changed to Templeton 
Pan-American Fund. 

Ail existing bearer shares will be designated as Class A shares. 

No bearer shores will be available from 1st August 1994 in Templeton Haven Fund Class A nor 
issued in Templeton U.S. Government Fund Class A, Templeton US. Dollar Liquid Reserve 
Fund Class A and Templeton Deutsche Mark Liquid Reserve Fond Class A. Only registered 
shares will be available in Templeton Haven Fund Class A. Templeton U.S. Government Fund 
Class A. Templeton U.S. Dollar Liquid Reserve Fund Class A and Templeton Deutsche Mark 
Liquid Reserve Fund Class A. 

The names of the sub-funds which offer bearer shares are as follows: 

Templeton Global Growth Fund Class A 

Templeton Deutsche Mark Global Growth Fund Class A 

Templeton Smaller Companies Fund Class A 

Templeton Global Infrastructure and Communications Fund Class A (from September 1) 
Templeton Pan-American Fund Class A 
Templeton European Fuad Class A 
Templeton Far East Fund Class A 

Templeton China Gateway Fund Class A (from September 1) 

Templeton Emerging Markets Fund Class A 
Templeton Global Utilities Fund Class A 
Templeton Global Convertible Fond Class A 
Templeton Global Balanced Fund Class A 
Templeton Global Income Fund Class A 
Templeton Deutsche Mark Global Bond Fund Class A 
Templeton Yen Global Bond Fund Class A 
Templeton Emerging Markets Fixed Income Fund Class A 
On 1st August, 1994 (i) shares in bearer form in Templeton Indonesia Fund and Developing 
Growth Stock Fund will be exchanged for shares in bearer form in Templeton Par East Fund 
Class A and Templeton Smaller Companies Fond Class A (The exchanges will be dealt on the 
basis of the net asset value per share of the relevant classes calculated on that day): (ii) shares 
in bearer form in Templeton Haven Fund Class A will be exchanged for shares in registered 
form and (iii) shores in bearer form in Templeton American Fund will be exchanged for shares 
in bearer form in Templeton Pan-American Fund Class A. 

From 1st August 1994, the shareholders are invited to present their old bearer certificates to the 
Banque Internationale & Luxembourg, 69 route d'Esch. L-2953 Luxembourg for exchange against 
new Class A certificates. 

After 1st September 1994 only the new share certificates will be of good delivery on die 
Luxembourg Stock Exchange, 

The Board of Directors 



ECU Tam tenant PLC 
29 Chasten Pta« 
Ptfr wte 
London OWfXBMU 
Tri: *71 240 0088 
F«C +71236069 


FUTURES J. QPTiONS BROKERS 


ROUND 


EXECUTION' ONLY 


NOTICE OF REDEMPTIO N 

MORTGAGE SECURITIES (NO, 3) PLC 
£117,000,000 Multi-Class Mortgage Backed 
Floating Rate Notes due 2035 

Notice is hereby given that, pursuant to Condition 5{cJ of the 
Notes, the Issuer snail rode cm: 

£7.400.00 per Class Al Note 
£0.00 per Class A2 Note 
£0.00 per Class A3 Note 

on the next Interest Payment Dale, being July 29, 1994. 

MORTGAGE SECURITIES (NO. 3) PLC 

Paled; July 25, 1994 


Futu reView " £ - r, ‘ ' 1 " 

zer.-.-a o? ” C': : . Ac.- 

“ ~. ?ri ’=• r>:. fis-.vs =C syl '-!*.* .-V 

- '■ 

Tcicph-jr-c C.T.-.3 Smv or Rory :,ua-:hu- or .'Lci'.rrr; 27--.-S2 0?K- *a*: JIv; 


• 1 r.r 




SUNKYONG INDUSTRIES LIMITED 
US$50,000,000 

FLOATING RATE NOTES DUE 1996 

(Redeemable at the option of Noteholders hi April 1986 and AprB 1997 and et 
the option or the Issuer on any Merest payment date faffing fa or efter Apr* 
1996) 

In accordance wtm the provisions of tha Notes, notice Is hereby gfoan as tofcws; 

-Interest period: July 21 St. 1994 fa OOcbet 21st, 1994 

■inierest payment date: October 2 1 st, 1994 

'Merest rate 5.125% per annum ’ -.~V 

* coupon amount US $ 3,274.31 per notool US $a50J»0 - 

Aflonito* 

“ HQU ' 1 5fuw»«w«^i 


HICHtCl 

LAURIE 

Tel: IT7I 493 7050 
Fmt 07| 499 «79 


| We arrange kum up to uori Una to Value. 
Mas enmpcuUve aod taoMc tern* for 
quilny UK co mmerci al propeny A 
•Jevckjpracnn Ofnrank uf lira. 
CumuL Kirharri ne GMzea 


PROPERTY] 

FINANCE 







FINANCIAL TIMES MONDAY JULY 25 1994 


19 


\ 


COMPANIES AND FINANCE 


Weak quarter for Bankers Trust 


% 

.'a* 


By Richard Waters 
in NowYorfc 

Bankers Trust has seen a 
sharp fall In its income from 
selling derivatives to compa- 
nies and others in recent 
months, in the wake of leases 
reported by some of Its custom- 
ers. 

The bank, which has been 
the leader in using derivatives 
to devise risk-management 
products for companies and 
investors, attracted consider- 
able adverse publicity when 
Procter & Gamble said it had 
lost $157m on financial instru- 
ments bought from the bank. 
The company added at the 
time that it was considering 
suing Bankers Trust over the 
loss. 


The New York-based bank 
said profits from what it mile 
“client financial risk manage- 
ment” dropped to $S0m in the 
three months .to the end of 
June, down from $U4m in the 
previous three months, as reve- 
nues in the area ffeU by a third. 
During 1993, profits averaged 
$84m a quarter. 

Ur Tim Yates, chief financial 
officer, said the bank believed 
its share of the risk-manage- 
ment business had remained 
stable during the period. The 
decline reflected an overall M- 
o£f in the use of derivatives, 
particularly more complex 
instruments which carry 
higher profit margins. 

Meanwhile, Bankers Trust 
failed to record the sort of 
rebound in profits from trading 


in 

analysts had expected. 

During the first three 
months of the year, it earned 
revenues of only $14m from 
trading, and repeated a loss in 
the area of warn. 

In the second quarter, reve- 
nues rose to $12£m, while prof- 
its reached $52m - still well 
behind the $405m revenues of a 
year before. 

The hank added that a signif- 
icant part of the trading profits 
in the latest quarto: stemmed 
from the recent Brazilian debt 
restructuring and its hnlrfftigg 
of Brazilian bonds. 

Mr Yates declined to disclose 
how much Bankers Trust had 
earned from this single event, 
or even whether 11 would have 
showed a trading profit with- 


out the Brazilian; debt restruct- 
uring. 

Bankers Trust blamed the 
weak trading figures - which 
echoed trading figures pub- 
lished by other US banks in 
recent days - on poor condi- 
tions in the flnawnini markets. 
“Pure proprietary trading, 
while it has improved from the 
first quarter, is still in a diffi- 
cult environment,” Mr Yates 
said. 

Overall, the bank's after- 
tax. profits for the second, 
quarter fell by 28 per cent to 
$181m. or $2.09 a share, from 
$25 Lm, or $2.90, the year 
before. 

Half-year net Income was 
$345m, or $359, compared with 
$481m, or $554, in the Gist six 
months of 1993. 


Fund charge puts PaineWebber in red 


By Patrick Hamraon 
in New York 

PaineWebber Incurred a net 
loss of $25- lm in the second 
quarter of 1994 after the US 
securities, firm was forced to 
take a charge to cover the 
injection of $34m into one of its 
mutual funds to repay inves- 
tors for losses on mortgage- 
backed securities. 

Last week, two executives at 
PaineWebber involved in the 
management of the troubled 


$lbn short-term government 
bond fund resigned over the 
matter, ftnfl the firm brought 
in an outside money manage- 
ment group. Pacific Investment 
Management, to act as a con- 
sultant in the running of the- 
fund. 

Even without the cost of the 
fund bail-out, the s eco nd quar- 
ter was a difficult period for 
the firm, with pre-charge earn- 
ings of $9Jm falling well short 
of the $59 An reported for the 
same quarter a year ago. 


The sharp drop in earnings 
during the quarter came 
against the background of a 
15.7 per cent decline in reve- 
nues to $579 hl 
R evenues fell because 
demand for PaineWebberis 
broking services from retail 
and institutional customers 
and for its underwriting ser- 
vices from companies 
municipal authorities were 
either flat or substantially 
lower compared with the same 
quarter of 1993. 


Also, the firm earned 
considerably less in the 
period ($9L7m against $l8L9m 
a year earlier) from the 
trading of its own capital on 
US and foreign securities 
markets. 

In this respect, PaineWebber 
was no different than other big 
Wall Street firms, which all 
saw their revenues and profits 
fall in the second quarter 
because of the slowdown in the 
once-booming securities 
industry. 


Expansion for 
French lift 
truck group 

By Andrew Baxter 

-- Manitou BP Group, the world’s 
largest producer of rough-ter- 
rain lift trucks, is expanding. 
■” into Germany by buying the 
wheeled loader division, of Ahl- 
■*" wiaww Maschinenbau, the medi- 
um-rized German cons tr uction 
equipment producer. 

The deal, for which terms 
were not disclosed, is an 
_ important move for Manitou, 
which is quoted on the French 
samnri rnarlnrf: and had group 

turnover and net profits of 
FFrl.25bn ($230m) and 
FFr42. lm respectively last 
v year. 

The takeover will give Mani- 
... tou additional turnover of 
FFrtOQm a year. 


Slowdown at Quaker Oats but 
Kellogg ahead despite tax rise 


By Richard Tomkins 
in New York . 

Quaker Oats warned of a profit 
standstill but Kellogg reported 
a S per cent increase in net 
Income in separate announce- 
meats from the two US break- 
fast cereal manufa cturer s . 

Chicago-based Quaker Oats, 
recently the subject of bid 
Speculation, said earnings in 
the fourth quarter to June 
would be “about even” with 
the $1.30 of last year's compa- 
rable period, even ignoring the 
effect of a previously-an- 
nounced restructuring charge. 

The company blamed the 
slowdown on ' disappointing 
Hal es in Europe, resulting from 
poor economic conditions, and 


the effects of hyperinflation on 
its Brazilian business. 

Quaker Oats said that its US 
businesses were doing well, 
with higher overall volume 
coming from Its Gatorade 
sports drink and cereal prod- 
ucts. 

It said it expected to report 
higher profits and earnings per 
shar p for the full 1 y ea r, 
excluding the restructuring 
charge. . 

hi May, the company said it 
would be taking a pre-tax 
charge of between $iiom and 
$130m in tire fourth quarter to 
cover the cost of consolidating 
some of its US and interna- 
tional operations and reducing 
employment 

Kellogg reported a 14 per 


cent increase In pretax profits 
to $24&5m for the second quar- 
ter to June, but a higher tax 
charge reduced tiie increase to 
6 per cent at the after-tax level. 
Net income rose from $l42.7m 
to $151~5m. 

Sales rose by nearly 5 per 
cent to $L62bn and earnings 
per share by nearly 10 per cent 
to 68 cents, reflecting stock 
repurchases. FOr the first six 
months, net Income was 4 per 
cent ahead at $335.4m. 

Kellogg aaid operational 
improv ements and cost-cutting 
boosted the results. The com- 
pany has lost market share in 
the US over the past few years 
and this mo n th replaced the 
head of its North American 
ready-to-eat cereal business. 


Chairman 
of Lac 
Minerals 
steps down 

By Be rna rd Simon in Toronto 

A shareholder revolt has 
farced Mr Peter Allen to step 
down as chairman mid chief 
executive of Lac Mineral*, the 
Canadian gold and base metals 
producer which is in the 
throes of fighting a hostile 
takeover bid. 

Hr Allen had become a light- 
ning rod for shareholders' dis- 
satisfaction since Royal Oak 
Mines, a much smaller but 
more aggressive Vancouver 
gold producer, came forward 
with a C$L4bn (USSZ.Oibn) 
takeover offer this month. 

The r ationale b ehind Royal 
Oak’s bid was that Lac, which 
has radios hi fbmaafa, the US 
and Chile, was not realising 
its fall potential under exist- 
ing management. 

Mr ADat’s departure throws 
another obstacle hi front of 
Royal Oak, whose bid, consist- 
ing largely of its own shares, 
was already considered a long 
shot 

Lae shares are expected to 
rise sharply on the Toronto 
stock exchange today. They 
diinbed by 37 cents to CS1&38 
on Friday before Mr Allen's 
resignation was announced. 

The shares are widely held, 
mainly by US and rjmnfliam 
institutions. Many have made 
their displeasure with manage- 
ment known in recent weeks 
by tentatively tendering their 
shares to Royal Oak. 

Mr Allen, aged 54, said: “I 
have listened very carefully to 
Lac’s shareholders and their 
concerns about management I 
am not prepared to let person- 
alities define this takeover 
fight and distract from the 
fundamental economic issues 
at stake.” 

Mr Jim PHblado, a non-ex- 
ecutive director and former 
head of Canada’s biggest secu- 
rities firm, will take over as 
T.flc chairman acting i*hf 
executive officer. 

Mr PKUado said the board 
would prefer Lac to remain an 
independent, widely-traded 
Canadian company. He plans 
to present that case to share- 
holders this week. 

However, he said the board 
would keep its options open 
should another bid material- 
ise. 


FT GUIDE TO WORLD CURRENCIES 


The tsbta below gtvws lh» latest avatabta rsttw of tatfhraige [romdec^ against four kty currencies on Friday July 22. 1994. friaoma coses the rata la nambiaL Mattel rotas are the average of ixiylng and seBng rates exospt wtiera 

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22 JUy 1884 Doted Khpdam 80788882 Unkad States 6150377 Gaonaqy 0W152121 Japan Y1151B7 


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A WOULD OF COMFORT 


Foreign exchange losses 
limit increase at Telmex 


By Dentin Fraser 
in Mexico City 

Te&fonos dfi Mexico, Mexico’s 
largest private company, 
reported net profits of .439bn 
pesos C$L29bn) for the fust half 
of 1994, a reduction in real 
terms of 0.7 per cent over the 
am e period last year. 

Telmex profits were 
adversely affected by the rise 
in interest rates and weakness 
of the peso, which caused Hw> 
company to report losses on its 
foreign exchange dealings. 
Without the exchange loss, 
profits would have increased 
by 1 SL 8 par cent in real terms, 
excluding tax adjustments. 


Second-quarter profits grew 
by m per cent compared with 
the same period last year, with 
exchange losses lower than 
expected at iS&m pesos. The 
result was better than most 
forecasts and Telmex stock 
posted gains on the stock mar- 
ket 

Operating profits rose by 12.6 
per cent in the first half to 
6.04bn pesos, and sales by 122 
per cent to l&84bn pesos. Reve- 
nues from domestic services 
grew by 19.4 per cent to &35bn 
pesos, while national 
long-distance revenues 
increased by a mare modest 1 A 
per cent to 4A9bn pesos, after a 
cot in longdistance tariffs. 


“We are starting to see evi- 
dence of a re-balancing 
between local and 
long-distance revenues,” said 
Mr Ricardo Peon, an analyst 
with Baring Securities. 

The company says it is going 
to face competition in its 
long-distance market from 
1997, and in preparation is 
seeking to make itself less 
dependent on long-distance 
revenues. 

Telmex reported further 
progress in its efforts to 
expand Mexico’s telephone sys- 
tem, with lines in service 
increasing to 7.996m, up 124) 
per cent compared with June 

1993. 


Sale by BCH raises Pta55bn 


By Tom Btans In Ma drid 

Banco Central Hispano (BCH), 
the large Spanish bank which 
has been squeezed by nar- 
rowed financial margins, has 
raised Pta65hn ($423m) through 
the sale of an 18 per cent stake 
in Cepsa, the domestic petrol 
refiner and distributor. BCH 
did not name the buyer but it 
is understood to be smm Com- 
pany, an international fund 

■ma m flg M hy Mor gan flrwiMI. 

BCH said the proceeds from 
the disposal would be injected 
into its core hanking business 
and would help to Increase its 
net interest hw«nw>. 

The disposal reduces BCETs 


holding in Cepsa hy half to 18 
per cent but under the terms of 
the safa, it retains the fall vot- 
ing rights of its former 36 per 
cent holding. Cepsa’s other 
main shareholders are the 
French EU-Aquitalne group, 
with 33 per emit, and IPIC of 
Abu Dhabi, with 10 per cent 
The sale forms part of the 
bank’s strategic plan to gRm its 
industrial portfolio to release 
funds that will underpin its 
flagging profit margins. 
Although BCH has the largest 
volume of total assets in the 

domestic hanking sector, anil 
also the largest branch net- 
work, its return on assets is 
well below that rival groups. 


The bank’s net interest 
ftinomu shrunk by 443 per cent 
last year, although operating 
profit was up by 11.8 per cent 
due, in part, to mostly non-re- 
curring foreign exchange and 
debt trading income. BCH is 
steeling itself for a sharp drop 
in treasury-based profits this 
year and posted disappointing 
first-quarter results with an 
1 L 8 per cent fall in net attrib- 
utable profit . 

BCH, which was advised by 
J.P.Morgan of the US in Its 
Cepsa disposal, earned Pta3,425 
per share for its equity In the 
refiner, a price that was con- 
sumed good for the bank by 
analysts. 


Rodier to take helm at Pechiney 


By David Buchan In Paris 

Mr Jean-Pierre Rodier, a 
47-year-old board member of 
the Franco-Belgian Union Mhx- 
ifere, is likely next week to 
become president of Ffichiney, 
the French state-controlled ahi- 
mmr nm and packaging group. 

Mr Rodier, named to the 
board of PficMney by decree on 
Saturday, is expected to he 
endorsed at next week's cabi- 
net meeting as the group’s 
president. He will replace Mr 
Jean Gandols, pgchiney’s long- 
serving president who has 
resigned in a bid to become the 
head at the Patronat employers 
federation later this year. 


The government chose Mr 
Rodier over several more 
Bmtor candidates, because of 
his experience, with Union 
MInttre since 1991 and before 
that with Metaleurop, in the 
volatile non-ferrous metals 
industry. His wiaiti fttiaiiMig a 
will be to prepare far the priva- 
tisation of Pfichiney, which last 
year lost FFr980m ($18Qm) on 
faffing sales but hopes to break 
even this year with the recent 
firming In the world price of 
aluminium, which had been hit 
hy cheap Russian supplies. 

The government's political 
dflemma with Ftehiney, which 
is on the list (tf 21 stateowned 
companies for sale, ia that if 


the group were to abandon alu- 
minium in favour of concen- 
trating on its more profitable 
packaging activities, its centre 
of gravity would shift to the 
US, where in 1989 it bought 
American National Can. 

The government has also 
been considering giving P6ch- 
iney a steady source of cash by 
letting it take over Compagnie 
Nationale dn RhAne, which 
manages a series ofhydro-eLec- 
tric dams ou the Rhfrne. But 
this plan has run into opposi- 
tion from local politicians and 
from Electricity de France, 
France's monopoly distributor 
of electricity, and would 
require fresh legislation. 


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No. of employees Dander 50 □»BIOO Oarer 100 
- I ilrssdy ase ontfna □ Yes ONd 





HUSH PERMANENT 
BUILDING SOCIETY 

Nodes!* hereby given that dteinsd iiianiliHv- 
ideodoe de Hah taen BnOfiag Sock*/* 
£3* Bonds 1999 is payable os Uhh Aagoa 
1984. The record dele Car this p ur pose (a 
detiaed is Article 4 ot the Term sad 
OmBfeea «rfih« Benda) la 2MhJ<r SW-Tba 
Bonds will go cx -dividend oa 10th A*fM 
1994. Paynems will be pasted on M Angutt 
1994 s«l will be rffonrd through Bank of 
teart.»flgbaadua Department. 4rh Floor, 


4, " boMa 

OUfaR Mac Ctethjr 
Semtaiy 


CANON INC YEN3SmM()A» 
fLGAUNG RATE NOTES DOE M 

DnEUrtBASB:£4»pa. 

mEUSTREIDDi 

IB0M2SW8H 

7024LHJJM 

DflEUST PAYABLE PER 
TGM MEW NOTE: 

irreuiANKtunmiBoiBUQSA. 
AGENT BANK 



A JOWT STOCK OMHW - KMMM.Y A BANK OF NMIOHM. MTEFE8T 
rasBamo omca nstOA wa wins m. i 
HBAOOmCCMUAN,nAZ2HCOROU3IO-eMnTNJL90Di|)ODLOOIUU 


Msterea tains *mm Om m 


assess zz&sssss&sr*' 

CALLING OF AN EXTRAORDINARY 
SHAREHOLDERS' MEETING 

Wo rknm it opipactnno to infirm tho aharaholdan of Cndito UaBano that, 
on tho basis of the number af requosts for entrgpce tickets to the 


which eomiroe the validity cat tho Mootings may not be reached either 

during the fint or aaamd eaffing* ft Ig thonfim ttoot probaUa 
that a third calling wfll bo made on: 

Friday, July 29, 1994 at 8*00 pan. 

in Genoa in Via Dante No. I 

Milnn, July 25, 1994 








FINANCIAL TIMES MONDAY JULY 25 1994 




reenxnbieaq 

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PM Pod 


- *EVM| 

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Fad 
Mdnn 
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1 131 
9,90 
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857 
057 
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065 
967 
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96B 
960 
1151 
11.82 
1X69 
IS 47 
1761 
1761 
17.97 
13.90 
I960 
1X86 
1765 
1856 
7X47 
146£ 
I0.«3 
1040 
10.43 
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1X47 

1W7 

19.47 

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1647 

1464 

7454 

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2323 
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CONTRACTS & TENDERS 


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Pod 

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Fed 

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petal 

pro* 

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MMi 

0MWB 

CMtrtl 

am 

10.40 

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0100 

9.80 

632 

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082 

9.52 

0260 

900 

932 

9.62 

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982 

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B.fla 

9. 82 

9.82 

0330 

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882 

982 

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0830 

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9.82 

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9.51 

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10.49 

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1050 

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0700 

17JSB 

17.85 

2015 

Or jo 

18.66 

2SM 

2532 

0000 

11.27 

23.04 

28.48 

OSH 

I7J18 

2397 

2093 

0000 

HUH 

24.1/ 

28.78 

0930 

17.54 

SOM 

2021 

1000 

1939 

28-34 

3082 

1030 

1938 

3L27 

3096 

1100 

1637 

34-JO 

3700 

1130 

2239 

42.19 

44332 

1200 

2838 

4222 

4490 

1230 

2aJa 

4211 

44 81 

1300 

2934 

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44.0J 



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1040 

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17J8 

3079 

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35.99 

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18.70 

2D 70 

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17.90 

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INTER-AMERICAN DEVELOPMENT BANK 
ODB) 




The IntwAmwtCBn Oovqlofxnent Bank (Bonk), b hurtling ouptosalom of Inures! bom 
M na Banai accounting rwwa vitahbig to be conaknoti to conduct toe flnaretal mja d too 
Bank, lira funds undv Us ddnmlslrailofl and fti pcnditxxetarod fends, for toe fiscal yeara 
iSSOftraugti 1989. 

Expressions of (ntrewB must indude stateroerfa canaiming toe Mowing requcemcnts, n 
toe order reauesud; 

1 . The firm; a) s ■ pubfc a m wn fing firm headquartraed In a Bank member coumry and 
has mm operating for a minimum of 10 years; b) has an international operating 
kifrestivcture; c) operatea under common standards and poifcme woridiaddK d) has formal 
continuing education and poor review programs and 0) h03 Itw attoty to render accounting 
sendees In ad major financial cantata of me worid. 

2. A general background of toe firm Inducing a description of ownership and sbuctura 
TOca Wpaa lng tta rational and inumeflanai oparadana- 

X The non has toe aWity fo conduct audits under US generally accepted auditing 
standards and Issue au® opinions on financial ssaaemraxg ranch naira been prepared to 
Wntorfflitir with US generally accepted accounting principles. 

«. The fcnr Is experienced win a* fOng raqiSremerts esucitsned by too US Seanttes 
and Exchange Co mn fc d on (SEC) (prorida a fist o< toe fritfe largest oud* dents requetng 
Hhigs with the S6CJ. 

6l The Ann has toe afiWv to: a) service toe needs of the Bonk at its headquanos in 
Washington, PC. USA; b) provide services hi cMes where toe Bank has ns country ottens. 
end G) provide pratesstonal support to connectton wtn bond issuances to capital markets 
worldwide. 

a The Bnn 6 anpertenced to audtong irejWnabprjBl banta ancVor stoHar tosiitunons. 

HapBes (fl copies) must be adrkessed to toe attention at Ms Marfiyn Hickson. Procurement 
and Contnicta Section. (rar-American Deveiopirient Bank, i3t» New York Avenue. NW. 
Washington. DC 20677 and muto be recewed at toe Bank no boar than Wednesday. August 
17. 1994 at SdXt pm. n is lira responstiHy at toe firm » ensue Bnraty dafiuwy of toe pre- 
duaSflcador matertato. The Bank w* lake no resportslMty tor late or mtsstog defivenea 
Baaponses received alter toe prescribed date end Amo aril not be consUemd and wU be 
returned. Incomplete or Inadequate responses, lack at response or misrepresentation to 
ftHponrfrg to too above requrrerTKirks wC Ofcjquatfy Ok firm bom any further corcadoraicn. 
The Bank, el its option, may lake the necessary steps to verify any of Die toJormation 
provided to response to these preo nU B a u to n requtremama. 

This does not cortstfiuU efiher a Request far Proposal or an Oder to contract ana does no: 
create any obftgatton on me part of toe Bank. 


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BIAO-CI 


ANNOUNCES THAT IT HAS PURCHASED 
ALL OUTSTANDING SHARES OF 
BANQUE REAL DE COTE DTVOIRE S.A. 
FROM BANCO REAL S.A. / BRAZIL 

Abidjan, 25 July 1994 


CONFERENCES & EXHIBITIONS | 


AUGUST 4-7 
THE NEC AUGUST FAIR 
With a ibeme of 'Antique* For Everyone 1 
this fair will consist of 600 Exhibitor* 
showing a broad range or antiques, fine art 
ami objet d'arl. Alt exhibits will be 
examined by ibe iionarary Veiling 
Cummiuec. 

Open 2pm-9pm (4 Aug) I tam-Spm 
<5/6 Aug) 1 1 aoi-6pm (7 Aug). 

Enquiries: Linda Culture - 
Centre Exhibitor* Tel: 021 767 2760 

BIRMINGHAM 

September! & 2 

FT WORLD AEROSPACE AND 
AIR TRANSPORT 

Thu conference w{U focus ou the 
challenges lacing the indiMry in the next 
century, how it Is ru-nructuring for the 
future to achieve growth, together with [be 
impact nf government policy. 

Enquiries: Financial Times 

TiH; OH 1-673 000(1 Fax: 081-673 1335 

LONDON 

SEPTEMBER 8-9 
VALUING INTERNATIONAL 
COMPANIES 

Thi« event responds r« ever increasing 
pressure to place realistic values on 
companies in a variety of contexts. 
Company Executive*, hankers and other 
professionals will study valuation 
techniques in practice and the possible 
problems encountered in real life 
scenarios. 

Contact: Acquisitions Monthly 
Tel: 071 S23H740 Fax: 07! 581 4331 

LONDON 

SEPTEMBER 11-23 
RETAIL AND WHOLESALE 
BANKING 

2 week residential seminar for bankers 
From the emerging markets. Week I - 
retail banking, payments systems, credit 
assessment A trade finance. Week 2 
wholesale treasury. FX and MM and 
derivative markets- Highly participative 
training, incl. educational visits to 
financial in$liluliutb in Mil weeks. 

£3.200 + V_\.T. fully inclusive. <15*% 
discount 2s) Lywtvxl David IruemslkinaJ Led. 
Reservations by Fax: Wi 56582 1 

LONDON 

SEPTEMBER 12-18 
GCC & BRITAIN '94 

EXHIBITION 

Over 350 of the Gulf States most 
successful businesses will all be under one 
ruoL all ready to (alk business at Olympia 
2, September 12th - LSUi, 1(1.00 a.m. - 6 jOO 
p m. Daily. Far tickcu/informailan 
oaaUcC 

Arab-brilnh Chamber of Commerce. 

6 Udgrave Square. London SWIX HPH 
Tel: 07 1 235 43ftJ Fax; fi7I 243 6688 

LONDON 

SEPTEMBER 14 & 15 
FT NUCLEAR INDUSTRY 

This high-level forum will examine die 
oulliWk for nuclear power in North 
America and Western Europe, asttdaing 
the impact of current government 
muratocia and review gniwth potential In 
the As On-Pad fie region. 

Enquiries: Financial Times 

TeL 0SI-673 9000 Fax:081-673 1335 

LONDON 


SEPTEMBER 19-20 
BUSINESS PROCESS 
RE-ENGINEERING (BPR) 

Continuing aeries of seminars for 
managers charged with designing and 
implementing BPR Initiatives. Presented 
by leading US practitioner and BPR 
author. Proven ‘how- to-do -it 1 
implementation guide illustrated with case 
studies and workshops Coarse book also 
available. Ovei SO organisations in the 
private A public sectors have already 
attended. Repealed November 21-22. 
Codlacc Richard Parris, Vertical Syflcms 
intercede Ltd 

Tri: +44-455-250266 (24 boors) 

Fix: +44455-890821 

LONDON AREA 

SEPTEMBER 20-23 
18TH EUROPEAN 
FEDERATION OF FINANCIAL 
ANALYSTS 1 SOCIETIES 
CONGRESS 

Comprises over 30 separate xcs&ions and 
mure than 70 speakers covering topics 
including the opening up of new markets 
in Asia. Latin America and Eastern 
Europe, Europe sa accounting policy, 
European privatisations, accounting for 
environmental costs and business re- 
engineering. Attendance is open to all 
parlies involved in international 
investment ounagcraenL 
Cuniacr Sharon Pidgcon. CASL 
Tel: 071 486 US31 Fax: 071 935 7559 

EDINBURGH 

SEPTEMBER 21 & 22 
FT RETAILING TOWARDS 2000 

'IV meeting debate the opportunities and 
challenges facing the retail industry, 
considering bad] current issues and (unite 

trends. 

Enquiries; Financial Timex 

Tel: 081-673 9UOO Fax; 08) 4173 1335 

LONDON 

SEPTEMBER 23-25 
EXECUTIVE ENHANCEMENT 
TRAINING 

Personal Enhancement Residential 
Weekend At The Executive Tai-Chi 
International Conference. Key Benefits: - 
Realise your full potential; Enhance your 
business and nuinagpment skills; Improve 
your bealtfa. vitality and fitness; How to 
achieve your goals and Lenm about 
‘Masict* - the bleat concept for Saha & 
QMomer Care. 

Conoct: Oumtcsscnce Business Training 
Tel: +44(01908 322 450 
Fax: +44 <01 2211 213 

MILTON KEYNES 

OCTOBER 3 -21 NOVEMBER 

FT-CITY COURSE 

This course is designed to provide 
participants with an overview of ail the 
workings of the Cily of London, paying 
particular attention tu the banking and 
securities markets. 

Enquiries: Financial Times 

Tel: 081-673 9000 Fax;08I^73 1335 

LONDON 

OCTOBER 4 & 5 
FT INTERNATIONAL 
INFRASTRUCTURE FINANCE 

Saild-OpuRtie- Transfer (BOT) projects 
are act to play an important rale in major 
infrastructure schemes worldwide. This 
two-day event will examine the billion 
dollar business opportunities for 
contractor and suppliers to the industry. 
Enquiries'. Financial Tunes 
Teb 081-673 9000 Fax: 08 1-613 1335 
LONDON 


OCTOBER 6-7 
ACQUIRING & VALUING IN 
GERMANY 

With over 2500 recent cross4»rder deals 
into Germany, this workshop offers a 
forum to acquire specialist knowledge of 
the German market Case study work will 
enable this knowledge to be put into 
practice. Legal, lax. accounting and 
practical issues will be addressed. 

Contact: Acquisitions Monthly 
Tel: 071 823 8740 Fax: 071 581 4331 

LONDON 

OCTOBER 26^27 
BPR 94: RE-ENGINEERING, 
PROCESS MANAGEMENT AND 
PERFORMANCE IMPROVEMENT 

Europe's leading conference and 
exhibition devoted to exploring how to 
apply business rc -engineering strategies to 
achieve quantum leaps in corporate 
performance. Designed to meet the needs 
of your whole re-engineering ream, from 
executive sponsor to those involved in 
planning and imptcmcniiag projects. 
Contact; Business Intelligence 
Tel: (HI 344 1830 Fax: 081 544 9020 

LONDON 

NOVEMBER 11 

CHINA - THE M & A MARKET 

OF THE FUTURE 

An exciting opportunity - a 
comprehensive introduction to the 
emerging Chinese market- Experience an 
overview of China's politics, society and 
economy, means of identifying and 
valuing target companies, tax 
considerations and financing, combined 
with practical alliances experience. 

Contact Acquisitions Monthly 
Tei: 071 823 8740 Fax: 07 1 531 4331 

LONDON 


INTERNATIONAL 


SEPTEMBER 27-29 
DA/DSM EUROPE 94 
Competition in combination with open 
aoress will (area mUhin to introduce more 
advanced technologies such as: 
I T/D A/DS M/SCAD A/AM/FM/O IS/ AM R 
At this conference & exhibition the latest 
developments will be discussal and shown 
by tbe major companies and utilities. High 
level. 

Contact: (VnifiVcfl CAE 

Tel: +31-30-650.963 Ek+3 I -30-650.928 

PARIS 

SEPTEMBER 29 & 30 

FT INTERNATIONAL BANKING 

The conference will provide a to turn ut 
debate tile outlook for banking in the mkf- 
1990a and address a wide range of issues 
of Current concern to tha international 
tank ing cnmnumUy . 

Enquiries: Financial Times 
Tel: 081-673 9000 Fax: 0814573 1335 
MADRID 

DECEMBER 7 - g 
SADC - EUROPEAN UNION 
MINING FORUM 

Organised by the Southern African 
Development Community and Jho 
European Commission. 200 investment/ 
exploration projects from 10 African 
countries io be presented, plus country 
updates on mining sector, trade, 
tswesimwi and policy fesoca. Participation 
free of charge by invitation only. Private 
business meeting to be programmed on 
taxis of matched interests. 

Tel: AGORA raW: +39 6 324 1 719 
iDOM: +32 2 7326366 
Metro Softes: +44 81 6885535 

LUSAKA 



Tropical hirinwd trees ire more 

ratable tn ktgpB dm other nee in thr 
ninUxw. 

High prim bt hudmods ensure tbx 
loggers have act qtnku iboa deomytug 
odor trees dot «md in their wax. 

So J WWF project a Costa Rui 


TO ADVERTISE IN THIS SECTION PLEASE CALL JANET KELLOCK ON 071-873 3503 


bringing dawn scrtij others inrand h. 
Anl boir d rettww a tridiow MUran^ 
l ptili dnagh die snmwn&g trees. 

If dr ranforao ur used wtety, 4ey 
an be used lamer. Help WWF prove 
tba in midbnss Hound Ibe mid, by 
writhtg to the Metnbadup Qffiar title 
(ddreabriow. 


WWF 

Vtorid Wide Fund For Nature 

KnmlrMlvaftM) 

hmanni leomnx. lWs Okd, Wwtei 


THE WEEK AHEAD 



DIVIDEND & INTEREST PAYMENTS 


■ TODAY 
«cCK & HutdMOOn 

Atncn CM BEIk 11 J31* 01 CM2 SO 
Bnuma Bog. See. FRg. fiats Sub. tuts. W 
CU^JIJS 

Brt Ajperts FJUnce FUN ■« VlOS-SKi 

BrrL f-Mts T2N Truu. fG 

Go. Treas. santn re 875 

Bmdon EsUe 5.i75p 

BuritwaPaatUo 

CanenFUN 1M6V8J5I 

Council at to* Cay c# Satlcrd 7*4 Ln. '19 

C..JBH0 

CPC SOM 

Daw a to 

DeOCrt u tiw 71.lt Ua Ln Q2AJ7 tatCS 
Da. WSt 3CP207 CUTS 
Furtsu 3S5°L 1737 Y39M0O 
Deneri EoOreSCPe 
MnoUatCMfi?! ■VSYSOOOO 
Mtwang Sea. 8*«S Db. Z019 tt. 1075 
ITOCHU FR1 1997 YKU10 
Lesesier Crtv Counot 7H H. •» HUSse 
MIC Second Dual Tiuk 10 75p 

SmaB. Cos. tre TsL SL«6 p 
Nippon Ida, 4 Tela. Nt*. -97 S3 U 

Ncnram fetvs. Co ito 
Mcra-, vm «js» nsm sni Ettojw 
Froprrty Partnereftps tSp 
AMDnd LLS. FuRtitig 74ft -B7 S3S250 
n#6 4Ncla'5.:950 
Spat t* mw ;we 5IZ32 
TSH GiB Fund Ptg.IW.Pt QMq 
TS0 HJ Sana* Bv tfld» Ol. FUN '185192.7* 
Wjriwwi BCg. Sec FTWSfi 6euiS7 M 
YTB rn AnPtU A£C. FUN TO S1.22947 

■ TOMORROW 

Brasl 4 VM Bag. Sec HBN W 037.12 
Birina ewg. Soc. FWt ~ae C733JH 
BnL Fund 2' >14 IL Treas. '<8 13.1089 
On. Tieas. Ln i2rts £3.875 
CNA OaBa twosa 
C«rcp Bartt FRN SHOO S68i» 

Dravicn Blue Clop Trtca 5.495 

Ccuneer TsL 13Sp 

Hvere-Quseec frn 3»2 sa+i JS8 

Japan A*. 10% (tod. I99S SSOO 

Uoros BsA Senes A Var. Ratal NS. *98 ei43.il 

Lon. d CIpViKO lJ9p 

Royal Bh.ol Can tot Bond Fd. Ptg. B1 Pt Sd 14 
Ta»4 LvtoAOR SO 3* 7 
Tie Rack 1 73p 

WachiScft Beg. Soc. FRN TO £88.89 
Yo* Meemprtis dip 
Co A87p 

■ WEDNESDAY JULY 37 
Abentoen Tnxsr 0 8p 


UK COMPANIES 


■ TODAY 

COMPANY MEETINGS: 


rWp, Cayzor House. 1 
Tttomas it™ Saeec. E, 12M 
Cnraekti, Eewrtey «na Hart. Bevwte/. North 
HJO 

etraxton BUM Chip Trust. 11 Oeranshra Square. 
EC.. 1201 

Hmm tson. Matfeel.Hun. 12JM 

Pawn screen tntL, Ironmongers' Halt, 

Sratirrtx^Y Puce. Barocan. 6.C, 1300 

Rotto a Notin. Qtaramd Acentaitanta- Hal. 

NUasaM Ptoca. EC- 1300 

Shaitan (MalM Ckp- The Partway Hotel. Ofloy 

Read. Leeds. 1300 

BOAPD MEETWGS 

Pnai. 

Abtnist Scotland tn*. T«L 

Brandon Hbe 

Mariing tndustrtes 

Monydawn, 

krteniRs: 

Bufiougfi 

OfaUcai Computing 

Oeesgs. 

Bamsdeo’s (Harry) 

St Andrews Tab 

■ TOMORROW 
COMPANY MEETINGS: 

Caledonia liwMtmants, Cayser Kcoso. I 
Thomas Mora Street. E. 12.15 
Capa. London Mjnoo Hotel, Dt*a Street 
'toosvencr Square. VV 7300 
COipetrlght. Antoedev Hotae. New Hand. 
Ranham. Essex. MOO 

Castle MB ton, t Norti* StraeL Manchestar. 
300 

Chloride flip. Instates ol Beemod D ufineera, 
SarorPtacdW.C- 11 M 
Cook IWtHm), Partway Avenue. Sheffield. S.30 
Footer (John) & Son. «acX OyturMOa. 
Ousarsttay. eradkad. 1030 
Firtcnan i n ves h iient Trust. Mdtfettiotpe KiS. 
BWwpthorpe Road. Ycriu 1330 
Qearod Lneome bmstanms TnioL Cariix^n 
Suds. IS CorthusMn SaeM. EC . IU0 
Hamhros, 41 Tower to. EC- 1200 
Jenwrokw— hne tBCe-aactx a sstBouse 
Suers. E.C- 1300 

ighv Lime Qrp- Broad walk House, s Appekt 
Suest. EC- 10.00 

Monks l u ve s hii ei i t Trust. Dm fioor, Brecmri u m 
House. 6 Lancaster Place, W.C„ 1030 
Naflonal Powur, Oroovsnor Haul, nek lane. 

W- 17 30 

NORWEB. O-Mox Centre. MsWwWr, 1030 


I 


QX. of Momoal FTK Sertee to TO $1 75J4 
aanv otNon Scan CSLS 
eristd Exeruna ftosl Bp 
Compass 33tp 

QSM Overseas fin. Qtd. figtHsea RaM Its. tJ* 
S1.923.I3 

Hn. R eoerv ah i M Thru. No.1 Meu. 

A5SV Cached FRN TO C1JWL86 

Do. Sow Asset JBoched W) TO DH8.83 

Do. MoJ ™ us Ciara so 

Dp Santor FRN TO Cl .45150 

Op No3 WN'l6Ciji8W8 

Da Sentor FRN '18 C1/1Q340 

CM Finds SA Cv itL Cm Pt R1.4S 

TeMortra de Espana PMt 

■ THURSDAY JULY 28 
A&acui l.tSp 

Mrtous t.lp 

AuSDufia (Common.) 115K Ln C8.7S 
Bradford A Bfiiffiar Bldg. Soc. FRN TO Cl 37.1? 
BnL Fields BWJb Trtos. ul 2000 S4J25 
8SS I2p 

B2W Com. In. Trust l.$P 

Con. tmp. Bank a Comm. CSQJXI 

Can. Pao* CS0JP8 

Da Nao-cm. PL CSO.CC 

Da Sto- Non-Cm. Pt. UIWp 

Do. Stg NathOn. PI (hwr. TlrmM OWS6C7p 

Nadoml ppm 8.7Sp 

SutGfitte SfKehman 8m RCLCnv PL asp 
TOTAL B FFr1125 
Tmofao Co. FRN VS Y68.408 
WoatMi EHckj. 9oo. FRN TO C13L38 

■ FRBAYJULYSS 
Aespnou Fkanmae 3.ip 
AOnxI Hsfter AOR flttUfi 
Aienaep 

AM HA Banks tap. FRN SI2O07 
AM-t-yona t4Jp 
AtxAt MdtalS 12p 

Auto Ftntfng One A FRN 1900 Cl 4710 
Amofto&berSo 

&rtr <U Nova Sootis Rtg Bin Obs. 2000 

£133-38 

Sees 8.00 

Bntdh Akwrys 732a 
BcaanfCtS.no 
Burton G>p. tp 
Chomboitar) A Hr* 45q 
OmmngLNp 

CHcorp BaYdng FRN TO S1337I 

CML Microevstams Bp 

CcRPerritoed Mart. SccuMWS (Na4) FRN TO 

£0340 

Da thaQ FfM 2D2T TlOOS 

Da. (Nat2) Class A FRN 2038 £901 

Dsua ML Finance FRN 2001 Si. 160.4 1 


South West Water, The Gufefix*. Ptvmouth. 
Oman ni» 

Themes WMr. The Bartxcan Cam. E.C- 200 
Votes Qrp- The Capthoma Manchaunr. Cfippers 
Quay. 3titard Quays. MancMnue, 11.90 
BOARD MSTYJQS: 
fit* 


Dnhpa" Foods 
n ami n g Bnerqlnq M e l eti 


Mbye 

Murray ttnMter MMa. Tat 


ABed TextSe Compaidae 
Contktentel Asaotx TeL 
Oosrad Incoma kw. TM. 

UaydS Abbey Lite 
M a a Dual Trust 
Rlfpits 8 leauesiim. 

Shanomtck 
Temple Barker. Tst 

■ W8MESDAY JULY TO 

COMPANY uEETTNOi 

Angki United. Sheffield Moat House. 

Cheetarttod Road Sou*. Sheffletd. 1030 
BtMrii Steri. W oi nw n tor Central Hj*. Stooty'e 
Oats, W e dn e me i. aw.. 1 1.00 
Chertw, The Royal AutomoMa Club, 88 Ml 
Men S.W, 1300 

Cr BUi ley Ckp, Shutton House HuM, Qkxtcester 
Road, Omncaster, Okwca. 1 1 JO 
De La Rue. The Samxy Motol (Fbver Entrance). 
Sint 1300 

Hnwtri Whtthifl Wpe.. Ptioaitx Hnusa 

Chnstopho kutm Rato. Botodan, Essex, turn 

Marshata, Forte Creel Hotel. CCflon VBsge. 

BrtghouM. West Yarko. 390 

latM Power. Ttie Ednba^ti Festival Theolra. 

NJcntoon Sseet. Edtobupti. tlJO 

800 Gqx. 800 Centra Motorway Trsdsig Estase. 

Oektora Hi* Rand, ShapriwL Lnugtibarough. 

Lotos., 1300 

Sta vrt ey Industries, me London Huton Hotel 23 
Portion. W„ >300 

SttrtHo Qrp. Now Bmdd Street Housa No* 
Broad Sheet. F.C. 13J0 
VMNI Water. Afi Nattons Centre. CanfiO. 300 
WhAeerott. The Kokday ton Cmma Ptara 
Mdbnd. Peter SlreeL Manc h ester. 330 
BOARD MEETINGS: 

Finds: 

Atreust P ra te re d Income 
Dyson (JX J) 

Doras Emorpina MerfeMs 

MRteOnX 

mw 


Dartmoor Irru. Trust 30p 

Dow Qicafical SOTO 

Drayton Recovery Trust 4q 

IXahlet A Lon In. That 3p 

Eon Sutray 7,99p 

EMndon Pope & Co A Res VT 9 < Jp 

Ena 8 Sototeti Invs. 8JS« DO. TO C+.TTO 

Exmoor Duaf bin. Trust 29Sp 

OumnsM town Fin Corn fBI1BtSi.lt 

HspoalimlnO. FRN 20DD II90.B8 

Htiene IJSp 

Ht-TCC Stmts t.Sp 

ttopwrewraOBR 

Italy (Rep. oqm« TO 9324 70 

Jams Porter 165p 

ttag&Shnoon ta 

Da X5K Cm. Pig. Pt ItSp 

Da 5» Cm. 2nd PI. l.rip 

Lector (ThanaS) OSp 

Do. A Nco-Vtg. OJp 

London Scown Bank TJp 

MocdWKto Mann DM. A VJto. V». 7.414p 

Do.B3.7Q7p 

Msray Entorprise 0 l7p 

Mtsray Income Tot, 2J4p 

Natwast Bank var. Rye Cap. No. 2000 

St J 1343 

Noe ThrOflmafl u nTVLOJSp 

New Zadand toy. Tn ip 

Oceana ConafiOdga) 2p 

<J»S HL fctapectMn t «p 

PIWUHon A 0«v hn. anp 

Po««Jen &7p 

Powets q nenWL ajp 

Prenser C+a R0.089 

Protean 3>.fo 

Ramoo Encrqy CL9p 

RNar Plato & Oertsral kw. TsL 3p 

Riramow Rubber Eras MS0. >5 

Royti Bar* at Csa F»» Rote DDa. TO *38 7S 

SaeaturyWJ/^j 

Sjtot-QablXi FFrt?1.75 

3t Mi Ptaoe Cepeal i.Sp 

Sec. Loan Fki Nai Class A Mtg- Backed FTM 

'18C75.4I 

Da M an. Bached FRN '18 Cl 6849 
Sstan Htotactou «.Bp 
SMreakneabrm 4Jp 
600 Grp. tp 
Stoddard Sahara 0 (Bp 

Temple Her in*. Tat r» Ox Pt 2.45p 
TMC PJMBJ. Rrst Ftn Ctaes NB.ISSUS No2 
TOC13S48 

Da Farm Ha tern NaS TO C72.98 

Da StMh Fin. Ism Na7 TO C71.98 

Da TTxra Fin. Sow Pay bauo No48 TO C137.12 

Tor to wa arant Tn* ltto 

TraRhmtoa loso 

TR tflgn tscome Dust 1 JSp 

Oa Sunactkmstv i4p 

Thrtty Hdgs. 4^p 

TR Property hw. TturatLSp 


RriMcoaOip. 
Verson ML 


P re m ier Hearth 
RetAenHUgs. 

Sperpe ContoNha 
S pe idto ey M 

Stondonf PftMtHma MdmL 
Thomsen Aetan E et er p i n p Mariista 

■ THURSDAY JULY 28 
COMPANY MEETMCK 

Starita Leisure Qy, n*e Howard Hotel. Temple. 
wc_ nan 

BHttsk T shir onxmirVoi Bum, Wembtoy 
Confirmee Centre. Wran M sy. N.W, 1030 
BH Dtix. Orana H0ML LaMettr. 12 TO 
Calais ML, Now Vtaad Street House. 35 New 
Brood Strooc EC . 1030 
Conm-CfcBcel bra. Tnnt, Mdratnan'e House. 
Alderman's Waft. E.C. 1330 
Dot Qrpi, 30 St Andrews HP. EC- 10.00 
Sdel MdtandaEtocOlctty, Dareqatn. taral 
OufiMIRoad. Northampton, 11.00 
Flofn Onxp, FUotox Centra. Conti* Sam 
W„ 10.00 

Harria (PMfift. The Contra ence Had, 55 Ctimora 
Row. Bk iranraiasL Won Mdtinds. it. 00 
Hogg Robktsort, The Aktwycfi Sufia The 
Wauorf. Aktoych. W.C. 3 . 0 O 
Ktag A Obeorram Hdps* 52 Cantto. EJi, IJ00 
London InduttU, 20 F jil qu a i Rau. EC. 

11. DO 

New Thro gm orton True! | 18 &Q. 155 

Bbtapmsia EC. 1200 

N trdi ei u Foods. The Bar iqu a t ln u Hath The 

GuMial HuS. 1240 

RonaM Renew House. Styti Road. 

Wythrmtomre. Mantousuy. i 30 

rain tint-. Ctompton Horae. Barra Fold Road. 

VMngotes IndusOMd Park. WMtttougtKOn. Bdton. 

11JU 

Si Jerooli Place CopfteL The RovalAutcmctMa 

Otto. 09 PM Mad. 3.W.. 12.00 

Scottish H yd ro O ra cM c, StJtton HotoL Perth. 

IT 40 

TH pntpewy Inv. Trad. 3 Finsbury Aeenra, EC, 
1240 

Unfosta. towroaianeritsl Hoed. Hyde Part 
Comer, S.W.. 12.00 

Vtsteo flk|L, The Midland Held. Darby. 1 00 
waddktoton (Jatxq. Oazm' km. ec.. 12.00 
BOARD MEERNGa: 

Fhtt 

Breda fSMney C) 

Ooratt Awieri crai Snxtoer 
Jersey PhoenU Thnt 


UEFSOSOOS 

toeas Frago fRN 2000 S4&S9 

WntoriHv 4.72p 

■ SATURDAY JULY 30 
Cdtor Alton Ifitijs. Sto 

Natarentie «d* 3oC.3Mtk.Ln.Ti T2.580? 
WMiyeraj 1 1%« «. 'll n.Bt29 

■ SUNDAY JULY 31 
Arthnr 10*6 Chv Pt 9p 
tVyyN * (Jones) 6% Cm PT. 1 Ip 
Bontaks 6W9t Cm P> 1.SC5R 
Brtanrta fitop. Soc. taUPttffltSH 
Bntoh PMmhnm 5% Cm tat Pf. 24p 
Da tn Cm. 2nd PI. 3.1Sp 
DeetaM ETS* Cm P» AAFSp 
Daons Cv. Ra Pt J.Bp 

Rxynn ira Db. - 1 * tsso 

Ftw NatL Fto. fit Cv. Cm. FW. Pt CLSp 

Da n Ct era. Ra Pt 3.5p 

Ftating Jap. On. Turd 5% Cm PL l.tSo 

Hannon OYfH Ol T» L4? 50 

llntoment Eats. I0M>ta 1st Mtg 0a T8GL25 

t K vue rawa y Propa 7.5HC*. Un. La TO tan. 

HopUnsora 5J?5% Cm. PL 2K5p 

HSBC nj&S Sub. ttt H.90P 

todtixl Pap. <A 1+W* LA '16C7TO 

fiUVESCOWCv LM LA HSrtJOOO E4M 

Looda A Htibeck Btog. Soc. I3HM FWS 
ESSfi/9 

Uborty era. Cm. Pt. 2. Ip 

Da 954» tin. Pt 4 750 

Lowe's CM WLD45 

Lynton 102546 tra Mip. 0b. 17 tt I2S 

MAyiU IOVS La 20M C&J73 

McKadvra 8H Cm Pt 2.1p 

New coy A Comm Inv. That RR-Ltntad Db TO 

01117 

NtM AH Cm.Pt 2.ip 

Da 754 A Cm. «. 745p 

Da I ON. B Cm. Pt t.TSp 

pratoad* Donatton Frad UL25K lot Mtg. Ob. 

•is rata 

rrasaac 105 % Cm. Pt E2Sp 
Ptsrregsn Ina Cap. Treat 3*>S Sua Cv. ~09 
SB.' 28 

Rank QrpantaaHon Cv Cm. HO. Pt 4.l29p 
SCECarp S02S 

Soon. Frown kw*. Tlud BMW Db. TO I247S3 

SWpton 8Mg. SPC. KW* PVS U4.J7S 

Smith A Nephew SVtfc Cm Pt. 1 92Sp 

gmrth ttore Cato Cv. Rd. PL 32Sp 

Snvtha ktoustoen lirato Db. -95/2000 CSJB9 

3S U 31. 5to.Pt t48873p 

Toaoa «H Ua Deep OWngrit la TO G 

Tbronio-OamHon SankCSOJO 

nraraert Drip. Oreup ia*H4 Ua La TO QL28 

Waco 8S> Cv. Pt «p 

VMdnw 7% Cm. Pt 2.45P 

□oam Cv. Rd. 2nd Pt 448P 


Warms- 

Admiral 

Ayrshire ktotof Products 
C n lak u ln ttoyx 
Derby Ttutt 
Hem k n FMgUngbiv. 

Orsen Property 
Id 

Jacobs poto L) 

Motor WorM Orp. 

Sphreo kw. Trust 
IMton Inv, 

■ FRIDAY JULY 2B 
COMPANY WERNOB: 

Aseocttood N u raMa Services, 1 BraatM 

Square. SW. 12.00 

BPB tortratrieo. Crosvenor Horae Hotel Pork 
Lane. W . 1200 

Qrakiesa Technology Otp. Exriwnge Houts, 

hniM Street, EC., UL3D 

ChomiMitofai A ML Chuefcray Fountiy. WNod, 

12.00 

Cndg A Rose. 172 Lwm Walk. EdMtUgR 1200 
Fternkiq conpesii t to Brroperan Bra Thito. 25 
Cofxtral Avenue. EC, 12.00 
Noepsend. Kenwood Hsk, Kenwood Ftae& 
ShoflWd. 11.00 

Portsmouth A Sunderiend Newepepera. Echo 
Hnusa Peratywefi. SundeiNM. 1230 
Rodmuns IML. Four Seasons Hrael. HrareSoo 
Place, Park Lana. W, M 30 
Seram Treed, Warnattonri OoMatanee Cana 
On ititqtiortl 200 

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BOARD kCETWOS: 

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Flagstone Htdga. 

John Lraty (tip. 

Rodtant Metal FMsMng 
Sykes (Andrew) Dip. 
in te r i m s: 

Abbey NatiM 
AMctst Lakes 
Lloyds Bonk 

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unless ot h ra w iae «m»ri 
Ptoaso two Reports end noon ra ts Moot 
ixvmaty avaUMe imU appreaattmriy ato woda 
atw the board mooting >0 appora me 
prebrtnary rWvtta. 


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2 . 




Socialist prims ministers don’t 
usually provoke celebrations in 
bond markets, and Japan’s 
new leader is no exception. 

Bond prices had already 
been under pressure for. most 
of the year as the market 
became caught up in global 
expectations of hi ghw infla- 
tion. But now the fixed TTitpra st 
market is under attack from 
the supply side, as inv esto r s 
fear that the new coalition gov- 
ernment is set to pump up a 
ballooning deficit Both fears 
are overdone. 

Although Mr Tomilchi 
Moray a ma, heavily outgunned 
by his conservative coalition 
partners, has abandoned m ost 
of the nostrums of socialist 
theology in a lew heady weeks, 
fiscal policy is another matter. 

Mbit stats have been queuing 
up to prom ise a few trflUmx 
yen of extra spending on every- 
thing from bullet trains to new 
houses, and with ah election, 
likely in the rant year, fiscal 
rectitude is not high on the 
government's agenda. But the 
prospect of a few more public 
works projects should not 
cause too much alarm - even 
the parsimonious bureaucrats 
at the Ministry of finance 
don't object to borrowing for 
the purpose of investing. 

What really worries them 
and the bond market is the 
unresolved debate an revenue. 
Late last year plans were laid 
for a Y6 trillion cut in income 


J 


tax to stimulate the economy. 
As with most Japanese fiscal 
stimuli, there was a strong ele- 
ment of smoke and mirrors. 

The tnnnma tax CUt WBS, If thfl 

MoF had its way, to be offset 
by a huge hike in consumption 
tax - from its current 3 per 
cent to as high 1 as 10 per «wn t. 
The socialists objected, and the 
income tax cut alone was 

That tax cut talcpq pffef* this 
month, and the MoF is back to 
demand its pound of fl«h Its 
case is seductively rfmpip- The 
past few years have seen the 
government’s finances dive 
into the red. From a surplus of 
3 per cent of GDP in 1961, the 
fiscal balance will have 
declined to a deficit of L5 per 
cent tins year. Hardly a case 
for alarm. But take out the sur- 
plus on the social security fund 
and the deficit soars - to about 
5.7 per cent of GDP. 

But few people can. be 
unaware that for the pest three 
years Japan has been experien- 
cing its worst recession since 
Hip 1930s. Measurement of t he 
output gap - the difference 
between actual output and 
trend - is tricky because of the 
tendency of Japan’s rate of 
growth to slow over time, hut a 
conservative estimate would 
put it at around 6 to 7 per cent 

hi other words, the Japanese 
economy has plenty of slack to 
make up, and could grow at 
about 4 pm- cent a year for the 


Global Investor / Gerard Baker in Tokyo 

Balancing the accounts 


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nest five years before running 
into serious capacity con- 
straints. Growth of that level 
would certainly restore the fis- 
cal balance to order. 

But, says the MoF, that 
ignores the longer term weak- 
ness at the heart of the public 
accounts - the unusual age 
structure of Japan’s population 
- youthful now, hut greying 
rapidly into the next century, 
presaging a heavy pensions 


h nrritm n p future 

That, it says, requires a con- 
sumption tex iimrease today to 
avert a debt crisis tomorrow. 

But with the economy 
em er gin g slowly from a long 
recession, to impose a huge tax 
increase now to deal with a 
problem that might arise In 
2010 seems masochistic. Surely 
better to let the recovery float 
the public firannpg hack into 
equilibrium — tfrun what 


to do about the demographics 
A consumption, fay* 
now might well choke off the 
hesitant recovery, creating a 
short-term fiscal problem as 
well as along-torn iw» 

■ Inflation 

ff fears of an excess supply of 
bonds are misplaced, weak 
demand is already a reality. 
Investors have been fleeing 


bonds as global expectations erf 
inflation have spread to japan. 
The yield on Japanese govern- 
ment bonds has risen to 4J* per 
cent from less than 3 pm- cent 
at the start of the year. 

.But it is hard to see how 
world inflation is going to get 
to Japan. 

As noted above, the amount 
of slack to. the ec o nom y Is so 
great that there is little or no 
prospect of a revival in output 


producing an ything more than 
the slightest of upticks in 
prices. Deregulation, moving 
admittedly at a snail's p weft, is 
proceeding nonetheless, and is 
bringing down prices. And the 
rise to the yen’s value is insu- 
lating the country from exter- 
nal price shocks. 

Core consumer price infla- 
tion has decelerated to below 1 
per rant- But thin fe only half 
the story. The figures seriously 
underweight purchases in the 
rapidly growing discount sec- 
tor. Anecdotal evidence sug- 
gests prices may be felling by 
as much as 5 per cent a year. 

Sustained deflation might 
itself create fiscal problems as 
the real value of government 
debt rises. But the current pub- 
lic debt/GDP ratio, at 47 per 
cart, is comfortably within the 
hounds of manageability. The 
attractions of low inflation are 

more Important to the bond 
market than the vague long 
term dangers of oversupply. 

■ Exporters 

With the yen showing scant 
sign of costing back to earth, 
investors might be tempted to 
dump equity in the major 
export sectors, such as trans- 
port, electricals and precision 

fwrtrirmftnfay 

But this could be an error. 
New research by DBS Tokyo 
shows that, despite the high 
yen, many firms raised exports 


last year, and they can be 
expected to do so again. 

The explanation, according 
to Neil Rogers, a UBS equity 
strategist, Hes in the real, as 
distinct from the nominal 
exchange rate. With the excep- 
tion of Europe the major 
export markets for Japanese 
companies have been growing 
strongly. At the same time 
inflation is much higher in all 
of than than in Japan. 

In the major Asian econo- 
mies, consensus forecasts sug- 
gest growth should average 
over 8 per emit this year, with 
inflation above 9 per cent. 
Even in the United States, 
growth this year of 15 per cent 
could be accompanied by infla- 
tion of 3 per emit 

With prices and costs In 
Japan felling, the real appreci- 
ation of the yen is much lower 
than the nominal figure. And 
thw large In ^wmand 

mean companies should he 
able to remain competitive, 
either by raising prices and 
retaining market share, or by 
cutting margins and seeing 
market share grow. 

Meanwhile the deflation in 
Japan that is keeping the coun- 
try's goods competitive is 
likely to depress profits for 
those companies locked into 
the home market The high 
yen may not help exporters, 
bat neither Is it likely to 
depress their competitiveness 
vis*-vls industry as a whole. 


If anybody 
deserves a 
prize for per- 
sistence in 
global eco- 
nomic policy 

malrhig , it fe 

Mr Michel 
Camdessus, 
the managing director of the 
Tntemfltinmai Monetary Fund. 

For as long as anyone can 
remember, he has been pop- 
ping up at meet- 

ing to urge an issue of special 
drawing rights, the IMF's own 
reserve asset 

He has prosecuted his cam- 
paign with a passion that con- 
trasts starkly with the appar- 
ent dryness of the subject. 
Now after many set-backs, Mr 
Camdessus’ hopes are high 
that he win win the backing 
of the Fund's 179 members for 
an SDR issue at the IMF’s 

annual meeting in Madrid in 

early October. 

If he does, it wifi not be 
without a fight. For there is 
nme institution that cares as 
much as Mr Camdessus about 
the SDR. So far, the Bundes- 
bank has been hnpianahiB in 
Its opposition to a general 
allocation of SDRs to all IMF 
members to boost the world's 
monetary reserves. 

But most of the Gkoup of 
Seven large industrial coun- 
tries now seem Inclined to 
give Mr Camdessus at least 
part of what he wants and will 
work for a compromise in 
Madrid. In so doing, they wifi 
signal that the IMF should 
stay in the business of provid- 
ing financial support to coun- 
tries with longterm economic 
problems rather than focus on 
stability in the international 
monetary system and short- 
term assistance to economies 
in difficulty, as recommended 
by the recent report of the 
Bretton Woods Commission. 

The special drawing right, 
or SDR, is a prime example of 
the IMF’s talent for rfnwMng 
its activities and achieve- 
ments in Wand phrases and 
obscure acronyms. 

It sounds baring: an artifi- 
cial “basket" currency, at 
present composed of the dol- 
lar, D-Mark, yen, Stench franc 
and sterling and worth about 


Economics Notebook 

Likelihood of 
SDR iss ue 

j*' ■ S' • •• -J* i ^ 




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’■4 ** *•/:}?•- "r'Z'XT: ^r-.- v .£:^T-V " 

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$1.46. Yet when IMF membOB 
agree an SDR allocation they 
give the Fund the power to 
create its own money. 

IMF members agreed to 
establish SDRs in the late 
1960 b after years of growing 
concern over a potential short- 
age of international liquidity 
and fears that this would stifle 
global econom i c growth. SDRs 
were initially issued to all IMF 
members in 1970 according to 
the size of their hol ding s in 
the Fund. By 1972 they 
accounted for &4 per cent of 
world nan-gold reserve* 

But early hopes that the 
SDR might supplant the dollar 
at the centre of the world 
monetary system have faded. 
The last SDR issue was in 1981 
and, as the chart shows, its 
importance as a reserve asset 

Tint? ripffHnpri ghraw. 

The reluctance of IMF mem- 
bers to allow new SDRs has 
reflected the great changes in 
the global economy shu» the 
early 1970s. Instead of dealing 
with a liquidity shortage, pot 
icy makers soon had to con- 
tend with excess liquidity 
caused by inflationary US fin- 
ancing of the Vietnam War. 


Global capital markets have 
been liberalised over the past 
two decades it possi- 

ble for most countries to sup- 
plement their reserves by bor- 
rowing. Nor does global 
liquidity seem to be lacking at 
present Many monetary offi- 
cials argue that the dollar's 
recent weakness has been a 
symptom of excess liquidity 
rather than shortage. 

But while the monetary 
case for an SDR allocation 
seems feeble, the political rea- 
sons have strengthened. Com- 
munism has ivtilapraH and the 
Cold War b«g ended Bince the 
last SDR allocation in 1981. 
IMF membership increased 
rapidly as former Soviet satel- 
lites and republics joined the 
Fund, leaving nearly 40 IMF 
members without SD Rs an d 
raising a question of equity. 

Against this background, 
Mr Camdessus has been cam- 
paigning for an allocattan of 
SDR36bn (about |52-5bn) to all 
Fund members. This, he says, 
would help newcomers such 
as Russia and other former 
communist states, many of 
which are starved of reserves. 
New SDRs would not be infla- 


tionary in today’s economic 
environment, he says. 

Unfortunately, a general 
SDR increase would benefit 
■wealthy industrialised coun- 
tries more than disadvan- 
taged. However, it would be 
M«tor to agree than a selec- 
tive SDR increase that would 
require a chang e in IMF rules 
and fhf* support of 85 per cent 
of the membership. 

So far the US md other G7 
countries have rejected his 
arguments. But the prospect 
Of halptng R ussia at no cost to 
itself has proven too tempting 
for the US Treasury. At the 
recent Naples G7 summit, 
aides of Mr Uoyd Bentsen, the 
US Treasury secretary, were 
touting the id** 1 of a selective 
increase of SDR15hn to sat- 
isfy the newcomers’ desire for 

fi narw-ft and salve the indus- 
trial powers’ conscience about 
unfair treatment 
However, no-one expects the 
long-standing developing 
country members of the IMF 
to allow the newcomers to 
boost their reserves without 
obtaining something for them- 
selves. Almost certainly, time 
would have to he a general 
SDR increase to win the nec- 
essary 86 per cent support for 
a selective SDR increase. 

Last week, Mr Bentsen 
admitted that a general SDR 
increase was discussed In 
Naples. The way seems open 
for a compromise that would 
include a small selective SDR 
allocation fox new IMF Timm- I 
hers, a rather larger general 
issue and, perhaps, increased 
access for countries in trouble 
to IMF resources that are sub- 
ject to economic policy condi- 
tions. 

Mr Camdessus would then 
be able to enjoy a triumph in 
Madrid »"d declare that the 
IMF has received a ringing 
endorsement from members in 
the 50th anni ve r sary year of 
the Bretton Woods agreement 
that created it 
The risk is that he will have 
established a precedent for 
unnecessary liquidity expan- 
sion, weakening the IMF’s 
counter inflationary creden- 
tials. 

Peter Nonnan 


FT-ACTU ARIES WORLD INDICES 






lih'.-t— "c. 





9 COMMODITIES 


Moment of truth for coffee 


Coffee traders wifi have a 
better idea whether the price 
explosion in *hn market 
over tire pest month is justified 
after tomorrow. The Brazilian 
g ove r nme nt will then tone the 

first ftffieial mawwimanf: of thfi 

damage done to its coffee crop 
by the frosts of two and four 
weeks ago. 

Unofficial estimates have put 
the prospective 1995-96 crop 
(the first one that- will be 
affected) at between 10 m and 
15m bags (60kg each), com- 
pared with the 25m forecast 
before the frosta- But. most 


traders behave the lower figure 
exa g g erate s the extant of the 


The September fixtures price 
on the London Commodity 
Exchange rose from $2^55 to 
$4,085 a tonne as the frosts 
sparked off bouts of near panic 
buying. R has gmed fariwn har-lc 
by $450 but traders have been 
reluctant to push it any lower 
because farther frosts wifi 
remain a possibility until early 
September. ' 

Nevertheless, a forecast 
above . 15m bags tomorrow 
would be hkaly to push the 


price down further. 

Mr dans da Freitas, the Bra- 
zilian National Coffee Depart- 
ment’s director, has given little 
away ahead of the report 
Talking to the Reuter news 
agency last Wednesday he 
played down comments by Mr 
Ehdo Alvares, thejndustry and 
commerce minister, fhat initial 
damage reports were exagger- 
ated. “Thou were some reports 
that were exaggerated, not 
torn the government, which is 
very cautious, but from the 
minister’s own sources," Mr 
Freitas said. “The minister was 


saying that some people were 
saying that the whole country 
was stricken. That did not hap- 
pen." 

Refusing to comment fur- 
ther, he told reporters: “The 
government cannot put out a 
number that isn’t right." 

• Other events this week 
include an international rub- 
ber forum in Jakarta and the 
Mining in Africa conference in 
Johannesburg, both on 
Wednesday, and the publica- 
tion of the international Wheat 
Councfl’s latest grain crop esti- 
mates on Thursday. 


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22 


FINANCIAL TIMES MONDAY JULY 25 Ipyq 


★ 


- _ 


WORLD BOND MARKETS: This Week 



[new YORK 

Richard Waters 

^ LONDON Peter Norman | 

I FRANKFURT Christopher Parkes 

H TOKYO 

Emlko Terazeno ; 


Jrt&iy’s release of advance 
data on the growth of Gross 
Domestic Product in the 
second quarter is the main 
event of the week on the bond 
awket but the figures seem 
unlikely to give much of a clue 
as to the future direction of the 
yteld on the long bond, which 
ended the week still hovering 
at just above 7.5 per cent. 

Wall Street expects GDP 
growth to come in at around 4 
per cent, up from 3.4 per cent 
in the first quarter. The 
pick-up has not been driven by 
consumer spending, which is 
thought to have grown by no 
more than 1 per cent, but by a 
build-up in inventories. 

The growth In inventories 
can be read two ways. 
Manufacturers, wholesalers 
and retailers may simply have 
misread demand during the 
period. If so, production should 
fall off in the third quarter, 

making manufa cturi ng 

capacity constraints less of a 
concern. That would be good 
news for inflation and, by 
implication, the bond market 


US 

Benchmark yield curvs (9*)' 
32/7/94 Ktortfiago «= 

8.0 —— 



-MywkfaavnwMosrvaPtfon 
Swrctt Menfl lynch 


Alternatively, the 

second-quarter inventory 

picture may reflect a greater 
confidence about future 
consumer spending, and an 
intended reversal of the 
long-term trend towards lower 
inventory levels. 

After the Fed chairman's 
growing warnings about 
inflation last week, the bond 
market may decide to mark 
time ahead of next week's 
more significant employment 
data, due on Friday- 


The gilt edged market's 
attention will be focused on 
Wednesday's auction of £2bn of 
conventional 6‘/« per cent long 
dated stock due 2010. The 
auction is the first of stock 
maturing beyond 10 years 
since January and will be 
watched closely for signs of 
interest among international 
investors, who might be 
tempted by hopes of a currency 
gain. 

Although recent indicators 
suggest economic growth 
above the long-term trend, 
worries about inflation are 
unlikely to be sufficiently 
pronounced to upset the sale. 

Hie Issue came at the lower 
end cf expectations in terms of 
size and is likely to meet 
d*» iTiand from such traditional 
UK investors as pension funds 
and insurance companies. 

It also follows a period of 
improving sentiment In the 
market which has seen yields 
on io benchmark bonds drop to 
around &3 per cent from about 
9 per cent six weeks ago. 

The big question is whether 


UK 

Benchmark yield curve i»” 
22/7/94 — Monmagg <= 



•An yUUe aro market convention 
Swire* Mopft Lynch 


the market's fortunes have 
changed for the better or 
whether we have seen a rally 
in a bear market 

Mr Kevin Gardiner, Morgan 
Stanley's UK economist is 
pessimistic and forecasts that 
yields will be back at9 per 
«rnt in December. 

However, Mr Adam Chester 
of Yamaichi International 
expects yields to fall to 8 per 
cent by the year's end, 
reflecting a benign inflation 
environment. 


The Bundesbank’s application 
of the brakes on all three of its 
key interest rates - completed 
last week with a fixed 
securities repurchase rate of 
L85 per cent for the duration of 
its four-week holiday - left 
plenty of options open for the 
autumn. 

Mr Gerhard Grebe, chief 
economist at Bank Julius BSr, 
suggested it also presented a 
risk. In the case of another 
bout of dollar weakness, 
intervention would be the only 
counter-measure at the bank's 
disposal, he said. 

That apart, the Bundesbank 
council left for its vacation in 
an unusually comfortable 
situation. 

Money supply is not half as 
bad as the bare figures suggest; 
Inflation is still on the 
down-track, and the economy 
is beginning to fire on more 
cylinders. 

If these conditions persist, 
the bank could resume Its 
monetary easing at any time 
after the break. While some are 
betting on further moves 


Germany 

Benchmark yield curve (%>■ 
22/7/M — Month ago =* 



'AS yMds aro market convention 
Scurctt IMifl Lynch 

before the October federal 
elections, there Is also a school 
of thought which suggests the 
Buba will wait until later. This 
would avoid any accusations of 
political motivation, and give 
more time for M3 to settle 
down and the bank's 
reputation to recover from its 
recent shaking. 

On the other hqnfl as Mr 
Johann Wilhelm Gadduxn 
hinted last week, the bank 
could decide to sit pat and do 
nothing. 


Japanese government bonds 
are expected to be trapped in a 
range this week as technical 
factors are likely to prevent 
traders and investors from 
taking large positions. 

Although a spreading 
optimism over economic 
recovery and a rise in 
short-term interest rates due to 
active fundraising by banks 
resulted in a net loss in bond 
prices last week, the change in 
traded bond futures contracts 
next month from the 
September to December 
contracts have prevented a 
sell-off. 

Meanwhile, cautiousness of 
over-supply still prevails, and 
market participants will focus 
on a government offering, 
expected mid-week, of Yl,0QOtm 
in 10-year bonds to test the real 
strength of the market 

In spite of previous concerns, 
last week’s YLOObn Tokyo 
Electric Power straight bond 
issue and YlOOhn offering by 
Nippon Telegraph and 
Telephone were well received 
by investors. Traders, however, 


Japan 

BanchmaftyWd curve (%)* 
22/7/M — Month wo 

&3 — • — 



O S years 15 w 

'Ml sihld* am market convention 
Source: Mwdl Lynch 


said the corporate issues were 
priced attractively to draw 
buyers, and that It would be 
harder for investors to absorb 
a large government issue. 

Mr Katsuyuki Nawata, bond 
analyst at Sanwa Bank, says a 
coupon of around 4.4 per cent 
may attract institutional 
investors. He expects a range 
of 4^7 per cent to 4.45 per cent 
on the yield for the No 164 
bond as long as economic data, 
released this week, do not 
betray market expectations. 


Capital & Credit / Frank McGurty 


10 year benchmark bond yield* 


Greenspan deflates Wall 


Street optimis 


ii 


Just when it seemed safe for 
investors to wade back into the 
US Treasury market. Mr Alan 
Greenspan returned to the 
beach, blowing his warning 
whistle again. 

The menace, of course, is 
higher inflation, not to men- 
tion the commitment of the 
Federal Reserve chairman, as 
America's economic lifeguard, 
to contain the danger by lifting 
interest rates whenever the 
central bank sees fit 

It seems the demise of uncer- 
tainty was greatly exaggerated 
in the run-up to the Fed chiefs 
appearance on Capitol HilL 
“What people want is certainty 
and we can only be certain 
they are not going to find it,” 
says Mr Jim Grant editor of 
Grant's Interest Rate Observer. 

Mr Greenspan made sure of 
that in his semi-annual Hum- 
phrey-Hawkins testimony 
before the Senate and House 
banking committees. He told 
them that it was “an open 
question" whether inflationary 
pressures were still lurking 
below the surface of the econ- 
omy, despite the steady 
increase in interest rates since 
February. 


He left bond traders with the 
distinct Impression that a fifth 
move to tighter money supply 
this year could come at any 
time, though he stopped well 
short of saying a rate Increase 
was a foregone conclusion. 

Most analysts now expect a 
tightening will coincide with 
the Fed's next policy-making 
session on August 16. 

After its July policy meeting, 
when the policy was left 
unchanged, bond traders began 
to grow bolder in the convic- 
tion that the Fed had indeed 
achieved Mr Greenspan’s 
stated goal of moving to a 
“neutral” policy stance, one 
which would neither encour- 
age or discourage expansion. 

"The market wants to 
believe what has been profit- 
able for a long time, namely, 
that the economy win oblige 
by coming In weaker than 
expected,” says Mr Grant. The 
big jump this spring In lever- 
aged positions held by primary 
government-bond dealers, from 
8l47.4bn on March 20 to $169bn 
on June 22, shows the willing- 
ness of the market to throw 
caution to the wind, he says. 

Still, the perception that 


monetary policy was on hold 
was reinforced by recent data. 
Business inventories In May 
showed their largest monthly 
increase in seven years, the 
Commerce Department 
reported just a week ago, sug- 
gesting a slowdown in indus- 
trial production in the second 
half of the year. 

With such evidence of a cool- 
ing economy in hand, Mr 
Greenspan had been expected 
to confirm the market's rekin- 
dled hopes and pave the way 
for the bulls' return. 

Had traders revealed a touch 
of naivety? Nonsense, says Mr 
Robert Brusca, an economist at 
Nikko Securities in New York. 
Only a week earlier, Mr Green- 
span himself had described the 
economy as enjoying the best 
of both worlds: moderate 
growth and low Inflation. 

“People thought that alter 
that description, we would 
hear a rather friendly, testi- 
mony last week, which did not 
turn out to be the case,” says 
the analyst, who has been criti- 
cal of what he describes as the 
chairman’s “ad hoc" handling 
of monetary policy during the 
recession and afterwards. “The 


question now Is, who is testify- 
ing: Dr Jekyll or Mr Green- 
span," Mr Brusca quips. 

Other analysts, however, 
contend that the market was 
ripe for a setback last week, 
regardless of the tone and sub- 
stance of the Fed chief's 
remarks. 

Much of the buying In the 
brief rally that preceded his 
testimony came from dealers 
covering “short" positions, 
that is, replacing securities 
they had borrowed and resold 
on speculation that prices 
would fen. Most retail accounts 
stayed on the ridelines or con- 
fined their activity to the short 
end of the maturity range. 

Where does the market go 
from here? With Mr Green- 
span’s cautionary note, bonds 
appear vulnerable. With all the 
short positions driven out, the 
most likely direction is a down- 
ward drift until after the Fed’s 
August 16 meeting. 

Traders say an upturn is pos- 
sible, but unlikely, if economic 
data over the next month are 
perceived as causing the Fed 
policy-makers to delay the 
move for which Mr Greenspan 
laid the groundwork. 


Mr Scott Knous, senior fixed- 
income analyst at Technical 
Data of Boston, expects the 
yield on the benchmark 30-year 
Treasury to spend the next 
month near 7.75 per cent, 25 
basis points above the recent 
low of just under 7.50 per cent 
He describes the overall tone 
as “non-committal". 

But the market will not con- 
fine its perspective to the US 
economic fundamentals. A fur- 
ther cut in German rates, a 
dollar rally and a fall in com- 
modity prices would prove sup- 
portive, traders say. 

The market will need as 
much help as it can muster, 
with some $97bn in fresh sup- 
ply coming up for auction 
before the Fed session. 

Not everyone is pessimistic 
about the outlook, even though 
the Treasury's quarterly 
refunding operation falls in the 
middle of the summer dol- 
drums. “I don’t think the sup- 
ply itself will be a problem if 
the market begins to get some 
signal that will resolve some of 
these uncertainties,” says 
Thomas Poor, manager of 
Scudder’s Global Opportunities 
US Short-Term Income Fund. 


Percent 
12 — - 


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Schlumberger 


SCHLUMBERGER 
SECOND QUARTER 1993 EARNINGS 

New York, New York, July 21 — Schlumberger Limited 
reported second quarter net income was $123 million and earnings 
per share were $0.51, 2% above the first quarter of 1994 although 
24% below the same quarter last year. Operating revenue was 
$1 .64 billion, comparable to the first quarter but down 5% over the 
second quarter of last year. This result was mostly due to weak 
activity in the Middle East, Nigeria and the North Sea, which 
offset the strong growth in North America. For the first six months, 
operating revenue was 1% below the same period last year while 
net income before an extraordinary item was down 17%. 

In Oilfield Services North America, revenue for all product 
lines grew strongly compared to the same quarter in 1993, fueled 
by an 18% increase in average rig count Elsewhere, the rig count 
declined by 5% to pre-oil embargo levels of 1973. Oilfield revenue 
outside North America declined more than the drop in rig count 
due primarily to Ceco-Prakla. The revamping of Geco-Ptakla was 
completed by the end of the quarter and they now have the 
organization in place to develop their business profitably. 

Measurement A Systems revenue in US dollars was down 5%, 
or 2% in local currencies, mainly dne to an activity decline in Gas 
Management in the UK. However, Automatic Test Equipment 
sales increased substantially and Electronic Transactions continued 
to grow. The recently created Asia organization is starting to 
capitalize on the potential of this growing market 

The fundamentals of the oil industry continue to improve. With 
the notable exception of the CIS, world oil demand is up 
significantly. Supply is flattening and even some OPEC countries 
are beginning to have difficulties producing their quotas. We 
believe that this environment will result in firmer oil prices higher 
oilfield activity and opportunities for us to selectively increase 



Produced at print centres tai Tokyo, Now York, Frankfurt, 
Soubrix and London It wfl be road bj Mata* bolnoaa people and 
g o wm e ne ett offldai* In ISO eountriee worldwide. It wfll also ba of 
particular Intaraat to me 130,000 tomtom and manager* in tha 
UR who rood the weekday FT. 

if you wish to reach this Important audience with yoor 
wteee, expertise or products wtflst maintaining a hUta profile 
In connection vrite Wales, call: 

C8va Radford 

Tel: 0272 292569 Fac 0272 225974 

Merehmti House, Wapplng Rood, Bristol 6Sl dRU 


FT Surveys 


tame 

Mwtim 


FT CONFERENCES 

WORLD AEROSPACE AND AIR TRANSPORT 
1 A 2 September 1994, London 
This conference, which has the support of tee Society of British 
Aerospace Companies, b the latest in tha Financial Timas’ mtamatfonal 
series of high level aerospace meeHnga It wU focus on tee challenges 
facing the Industry In the next century, how K Is restructuring for the future 
to achieve growth, together with the Impact of government policy. 
Speakers Indude: Professor Harman Da Crao, Camttt ties Sages; Mr 
Robert L Dryden, Boeing Commercial Airplane Group; Mr Robert Ayilng, 
British Airways; Mr Huns Mbfca, American Airlines; Mr Michael T Smith 
GM Hughes Electronics; Mr Jan Stenberg, SAS, and Mr Eugene Buddey, 
Sikorsky Aircraft. 

THE NUCLEAR INDUSTRY -INTO THE 21 ST CENTURY? 

14 & 16 September 1994, London 
Thto Hgh-Jevel meeting wfll examine the outlook tor nuclear power In North 
America and weatem Europe, considering tee Impact ol current 
government moratorta and tee role of nuclear In the fool mix, end review 
growth potential In tee Asia-Pacific region. The challenges of Improving 
efficiency and safety at nuclear plants in eastern Europe and issues 
related to managing tee fuel cycle wifl also be addressed. Speakers wN 
Include: Rdmy Carle, EdF; The Honorable John Reid, Canadian Nuclear 
Association; Dr Thornes B Cochran, Natural nea o urc oo Defense Council, 
USA; Or YBv-Yun Hsu, Atomic Energy Council, Taiwan; Michael Fdger, 
United Kingdom Nfrex Limited; Professor Jurgls VHemas. Lithuanian 
Energy Institute; Thierry Baudon; EBRD; John Guinness CB; British 
Nuclear Fuels: Mr Jean-Plerre Rougeou, COGEMA and Dr Rachel 
Western, Friends of Hie Earth. 

RETAILING TOWARDS 2000 - COMBINING VISION AND EFFICIENCY 
London, 21 & 22 September 1894 

This year's meeting wffl focus on the need for the retail Industry to exploit 
folly the oppcriunHea teat new markets and new technologlee offer while, 
at the same time, dealing wftfi tee fundamental business challenges - 
mari m Mng pronteMRy; contrcfing costs; managing the property portfolio 
and 'crime busting’. Winning ratal formats wll be teoee that successfully 
combine vision with efficiency. Speakers at the conference, arranged 
jointly with Coopers & Lybrand. Include: Teh Ban Uan, Emporium 
Holdings (Singafxxe) Ltd; George Beeton, Edgars Stores Limited; Jack 
Walker, Megafoode Stores Inc, Mark LWy, The Disney Store Limited; 
Robert Miller, Galleria 21 (UK) Lid and James May, British Retail 
Consortium. 

INTERNATIONAL- BANKING 
Madrid, 29 & 30 September 1994 
Thto major forum, immediately prior to the annual meetings of tee IMF and 
tee Wo rid Bank, w« debate the outlook far banking to the mid-1990s and 
address a wide range of Issues of current concern to the International 
financial community. Speakers taking part Include: Em Wo Botin Rios, 
Banco Santander; Dr H Ormo Rutting. Citicorp; Richard J Boyle, Chase 
Manhattan Bank NA; Dr Joeef Ackermann, Credit Suisse; Egidlo 
Giuseppe Bruno. Credlto ftallano and Or Horst Kohler, Deutsche 
SparkaewrHHYd Gtawatand. 

WORLD MOBILE COMMUNICATIONS 
London, 17 A 18 October 1994 

The Financial Timas *94 conference will focus on the growth of mobile 
communications, tee various leahnotoglea being adopted and new 
operator strategies, speakers indude Dr Herbert lingerer from tee 
European Commfeaton, Mr Charles Wigoder, Managing Director of The 
Peoples Phone Company, Dr Joachim Drsyer, Chairman ol Debits! 
Kommunl katl onatech rtk, Mr Bany A Kaplan, Vice President of Goldman 
Sadis & Co, Mr Tamaa Jufin, Managing Director of Lfnisouree Mobile, and 
Mr Jan Neela, President & Chief Executive Officer of AlrTouch 
International 

INTERNATIONAL INFRASTRUCTURE FK4ANCE-BU1LD-OPERATE- 

TRANSFERPSOTI 

London^ A 0 October 1994 

This major FT conference will focus on bulW-operaJe-transforlBOTl 
opportunities in key growth markets, to Include Eastern Europe, South 
Africa and tha kffiddle East The challenge of financing and managing BOT 
contracts will be highlighted hi recent case studies of major projects In tee 
power, telecommunications and environmental Infrastructure sectors. 
Speakers Include: Sir Atistak Morton, Eurotunnel, Thtetry Beudon, EBRD, 
Dr Jacques Rogozinskl, Banobras, Indor Sud. The World Bank, John 
Hdlthar III, Morgan Stanley & Co UmttwJ, Michael Heath, Nyrwe Network 
Systems Company, George Kappaz, KMR Power Corporation, Mr 
Christopher Nash, Northwest Water International Ltd, Mr Malcolm 
Stephens CB, The Borne Union. 


All 


P 0 Box 3651, London SW12 8 PH, UK Telephone: 081-873 0000,' 

Fasc OBi-era 1335. 


International / Tracy Corrigan and Conner Middelmann 

Latin America sector in the doldrums 


Among the financial markets 
which have been battered this 
year, the Latin American bond 
markets have suffered more 
than most 

As a result, the yield spreads 
available on Brady bonds (cre- 
ated from restructured country 
debt) and eurobonds relative to 
the US Treasuries market now 
appear generous. 

"Investors have attractive 
opportunities for capital appre- 
ciation and total return In this 
asset class,” according to Mr 
Thomas Trebat, head of emerg- 
ing market research at Chemi- 
cal Bank in New York. 

“From a fundamental stand- 
point, the market Is oversold 
and undervalues the long-term 
commitment in Latin America 
to political and economic 
reform,” 

In fact, the spreads available 
on much of the region’s defat 
have ballooned back to levels 
last seen several years ago. For 
example, in Venezuela, the 
worst performer, par bonds are 
now trading at 1,475 basis 
points over the comparable US 
Treasury yield, compared with 
530 basis points at the start of 
the year. 

In recent weeks, the spread 
on its debt conversion bonds 
due 2807 has widened to close 
to 2,000 basis points, from 1,269 
points at the beginning of 
June, as a result of the coun- 
try’s worsening economic and 
financial situation. 


Venezuelan debt is “cheaper 
now than before the Brady 
restructuring in 1990, when it 
was in default and paying no 
interest,” said Mr Aldan 
Freyne, head of emerging mar- 
ket sales at Salomon Brothers 
Europe. 

“Basically, the market is 
looking at the possibility of 
default, though I think that’s 
unlikely,” he said. 

Even Mexican par bonds, are 
now trading at a spread of 520 
basis points - wider than the 
level of 430 basts points at the 
end of 1992 - compared with 
230 basis points at the start of 
the year. 

Argentine par bonds are 
actually trading at a tighter 
spread now than at the end of 
1992, at 730 basis points, com- 
pared with 950 basis points. 
However, the comparison with 
the start of the year, when the 
spread stood at 350 basis 
points, is still stark. 

The question for investors is 
whether current spread levels 
leave room for the sort of tight- 
ening seen In the market in 
1992 and 1993. The general 
view Is that such a bull run for 
Latin American bonds cannot 
be repeated - and not simply 
because investors have been 
badly burnt 

More Importantly, the bear- 
ish environment for US inter- 
est rates Is likely to cap the 
potential performance of l^tm 
American bonds. 


“The market is very much 
overshadowed by the US Trea- 
suries market,” said Mr Peter 
West economic adviser at West 
Merchant Bank. 

“One would have thought 
that Individual countries' sto- 
ries wfll provide some room for 
tightening - for example, 
Mexico - but at the moment 
we are in the doldrums. Just 
because something’s cheap 
doesn't mean it can’t go 
down." 

The other factor constrain- 
ing the performance of the 
market Is the fact iftat the uni- 
verse of investors in Latin 
American bonds has shrunk. 
Hedge funds and mainstream 
fund managers who flocked to 
the market during the bull run 
have pulled out and are 
unlikely to return in a hurry. 

Political uncertainty has also 
made investors reluctant to 
commit funds to these mar- 
kets. But, according to Mr 
Freyne, “things should clear 
up in about three months, 
when the Mexican elections 
are out of the way, when well 
have a clearer idea about who 
will win the Brazilian elec- 
tions, and when the situation 
in Venezuela may have 
improved." 

For the moment, however, 
investor flows are very thin. 
This hag tairi»n its toll on the 
new-lssues sector, where the 
supply of eurobonds has all but 
ground to a halt 


The volume of external bond 
offerings in the second quarter 
of the year fell below $ibn per 
month, according to West Mer- 
chant Rank, 

Volume in the first half of 
the year totalled S&4bn, mostly 
concentrated In the first few 
months before the reversal In 
the US interest rate cycle. By 
contrast, for the second half of 
1993, volume was close to 
SlBbn. 

The effect of the decline In 
capital flows to Latin America 
could be higher domestic inter- 
est rates in some countries, as 
governments and companies 
are forced to step up borrowing 
in their own markets, which 
could, in turn, cause a slow- 
down in growth. 

On the other hand, there are 
some balancing factors. Rising 
commodity prices and the 
strength of the US economy 
are both positive for these 
countries. 

In the coming months, occa- 
sional country-specific news 
and pauses in the upward 
trend in US Interest rates may 
allow short-lived rallies In 
Latin American fixed-rate 
bonds to take place. 

However, in an environment 
of rising interest rates. Inves- 
tors seeking a low-volatility 
exposure to Latin American 
markets may be better off hold' 
log floating-rate notes, which 
have recently outperformed 
fixed-rate bonds. 


NEW INTERNATIONAL BOND ISSUES 


Bcma«w 

USDOUARS 
MKk&Ca 

BUG itn 

ST Haem 375 

Wad Hot* Lot BtSygan I bn 
HLfanaGuirattiM 480 

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100 fag.1937 0-75 101.065 8234 


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Bowti Sfcric teptCorp^ 100 Mc.1899 800 

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upasaroraws 


iEr 






FINANCIAL TIMES MONDAY JULY 25 1 994 


23 




EQUITY MARKETS: This Week 


NEW YORK 


' Investors leave 
Wall Street 
stuck in neutral 

The second-quarter reporting season is 
in full swing, but Wall Street is stuck in 
the summer doldrums. A fresh tide of 
corporate results will sweep through 
Wail Street this week, but any positive 
impact is likely to be limited to a few 
individual stocks. 

Certainly last week's activity 
suggests as much, despite predictions of 
a midsummer rally. 

If the corporate sector demonstrated 
Its profitability In tbe race of a steady 
rise In US interest rates during the first 
half, the argument went, cash would 
start flowing back into equities. 

In the event, several of the market's 
bellwethers turned in outstanding 
performances. Most notably IBM, 
Motorola and Apple. All handily beat 
forecasts and were rewarded with big 
jumps in their share prices. But the 
buying enthusiasm never spilled over to 
the technology sector in general. Even 
worse, Compaq and Intel were 
hammered in spite of turning in decent 
quarterly performances. 

"The market is stuck in neutral, " 
says Mr Gregory Nie, te chnical analyst 
at Kemper Securities in Chicago. 

indeed, investors seemed to be in the 
mood to nit-pick. Take the case of 
United Technologies. It posted net 
income 32 per cent ahead of the 
year-earlier level and in line with Wall 
Street's expectations. But analysts cited 
' _h concerns over tight margins In its 
V automotive components arm and other 
details of the report By the end of the 
‘•vr' _ day, the stock was marked down 6 per 
* cent. 

General Motors and Ford lead the list 
of big companies set to unveil their 


Frank McGurty . ' 


Dow Jones Industrial Average 


370Q 



Source: PT Graptatu 

results this week. Both are expected to 
come in at the high end of expectations, 
but their stocks may not fare so well. 
Ten days ago, shares in Chrysler dipped 
even though the company posted record 
profits. Investors are concerned that the 
recovery in motor vehicles has already 
passed its peak. 

The recent data suggests economic 
growth is moderating, but the stock 
market was reminded last week that 
the Federal Reserve's policy-makers 
were not away on summer holiday. 

With Mr Alan Greenspan hinting that 
interest rates may need to be lifted 
before autumn, the wait-and-see posture 
assumed by many equity investors is 
likely to be sustained at least until alter 
the Fed's August 16 policy-making 
session. 

To complicate the picture, technical 
conditions in the market are not 
favourable, with the relationship 
between advancing stocks and their 
volumes to declining stocks and their 
volumes approaching what analysts 
describe as an “overbought” position. 

“We could easily go sideways for 
quite some time, with outside risk we 
could slip into a second leg of a 
correction,'' warns Mr Nie. “Playing 
your cards close to your vest makes 
sense in the near term.'’ 


LONDON 


UK back on 
course for 
the recovery 

There is a heady feeling of “Christmas 
in August" in the stock market, as 
signs that the worst may be over for the 
dollar have invited investors in the UK 
market to celebrate growing evidence of 
strong and accelerating economic 
growth and subdued inflation. 

The next round of corporate results, 
still more than a month away, is likely 
to bring further gains in dividends and 
earnings. This week brings little for 
markets to worry about with the latest 
Industrial trends survey from the 
Confederation of British Industries 
expected to confirm market confidence. 
And both the Federal Reserve and the 
Bundesbank have now wound down for 
the summer holidays. 

No wonder one leading analyst refers 
to the current UK economic experience 
as “something of a Golden Age”, even if 
he admits that a more negative 
interpretation is that the current 
scenario may not be all that different 
from previous cyclical recoveries. 

The FT-SE 100 Index is now around 9 
per cent up from the low points touched 
at tbe end of last month, so it is not 
surprising that some of the technical 
chartists are becoming nervous. 
Derivative Securities, the futures 
technicians, regard FT-SE 3,135 as a 
"still valid" ceiling for the market at 
present, although the firm is not 
advising clients to sell just yet 
Overbought markets, which Derivative 
Securities judges this one to be, can 
persist in that state for some time when 
the underlying mood is confident 

For the true bear case, on the global 
as well as UK markets scale, nervous 
investors must turn to Nomura 


'Terry By 


OTHER MARKETS 


FRANKFURT 

Worries about tomorrow’s 
results from Deutsche Bank 
and Commerzbank made for 
- nervous trading in the sector 
at the end of last week, writes 
John Pitt. 

Nevertheless, taken as a 
whole, the country's banking 
sector remains attractive to a 
number of brokers. 

Paribas Capita] Markets 
expects the sector to 
outperform the market over 
the next six months, following 
.a period of underperformance 
- over the past year banks 
have lagged behind by 12 to 18 
per cent 

“Over the last six months, 
sentiment has suffered from 


FT-SE-A All -Share index 



Securities, which continues to express 
caution on equities because it believes 
that stronger than expected economic 
growth leads to higher than expected 
inflation and interest rates - casting 
doubts over the widespread optimism 
for corporate earnings growth. 

There is same support from other 
securities houses for Nomura's fears 
that the dollar remains vulnerable, "We 
are still not entirely convinced . . says 
NatWest Securities. But most 
London-based analysts stress that last 
week's renewed uncertainties over the 
dollar and near-term prospects for US 
interest rates have failed to restrain 
bond or equity markets in Europe. 

Decoupling, in fact, appears to be 
here at least. Mr Albert Edwards at 
Kleinwort Benson believes there is no 
reason why US growth and inflation 
should affect non-US markets "other 
than in a marginal and sentimental 
manner". 

However, in spite of the general 
euphoria, there Is still no rush by City 
analysts to upgrade UK market 
forecasts for the year. After a very 
difficult, and often painfully expensive, 
first half to 1994. the mood is that the 
market is back on course for the 
recovery thwarted so far this year by 
the savage collapse in bond markets. 


adverse publicity concerning 
the banks' involvement in 
various scandals,” said 
Paribas. 

It rated Deutsche a buy, 
arguing that the 
MetaUgeseUschaft and 
Schneider involvements were 
likely to prove “special cases 
in the German recession, 
rather than rho rule". 

AMSTERDAM 

Equities have managed to 
remain resilient to the 
turbulence in Europe over 
recent months. With the 
reporting season due to begin 
next week - DSM results are 
expected on August 3 - it is 
possible that strength will be 
maintained. However, 


Kleinwort Benson forecast last 
week that it was difficult to see 
the market c ontinuing to 
outperform the rest of Europe. 

“The limited cyclicality of 
the index and the fact that 
only a modest economic 
recovery is expected in Holland 
is likely to become a drag on 
performance," it said. 

Main taming a neutral 
weighting, Heinwort’s noted 
that the expected strong 
growth in corporate earnings 
had already been discounted. 

“We remain of tbe opinion 
that the current enthusiasm 
for the market’s defensive 
qualities will be short-lived, as 
Investors are likely to turn 
their attention towards more 
cyclically geared markets in 
the coining months,” it said. 


MILAN 

Investors will he hoping for a 
calmer atmosphere after last 
week's political and budgetary 
excursions. However, Merrill 
Lynch warned clients last 
week that the row over 
limiting magistrates' powers 
was unlikely to be the last 
time that the government 
stumbles, given its lack of 
political experience: it did not 
bode well for its chances of 
forcing through economic 
reforms. 

Nevertheless, some brokers 
are positive on the short-term 
outlook, noting that August is 
traditionally a strong account 
as local investors use summer 
salary bonuses to build 
portfolios. 


MADRID 

With renewed optimism about 
the economic outlook 
underpinning the market last 
week, the focus in tbe coming 
week will be interims from 
Santander and BCH. UBS 
recommends the banking 
sector, saying that sentiment is 
set to improve as 
second-quarter results are left 
behind, which will lead to 
increased focus on the banks' 

Cheap f nrvfaranntnk 

TOKYO 

Uncertainty over the yen's 
strength is expected to weigh 
on prices this week, in spite of 
signs of economic recovery, 
unites Emiko Terozono. 


1 International offerings / Antonia Sharpe 

Foreign buyers gear up 
for German privatisations 


For years, the chance to get a 
significant slice of Germany’s 
untold wealth of companies 
has been an impossible dream 
for international investors 
because of the labyrinthine 
cross-holdings and the stakes 
which are held by the coun- 
try's biggest banks and compa- 
nies or by the state. 

But the ever-stronger need 
for capital, which can no lon- 
ger be met exclusively by Ger- 
many's banking sector or, in 
the government's case, by the 
bond market, is causing these 
corporate edifices to dismantle. 

“The big companies and 
banks now realise that they 
have to move with the times 
and they are starting to use 
the equity market more fully 
to satisfy' the requirements of 
capital." says Mr John St John, 
director of equity capital mar- 
kets at Kleinwort Benson in 
London. 

As far as tbe state is con- 
cerned. a considerable slug of 
its assets has already been sold 
off in recent years but more 
privatisations are expected in 
the next year. International 
investors are gearing up for a 
further tranche of shares in 
Lufthansa, the national airline, 
which is scheduled to oome up 
for sale in early autumn. 

In May. the government 
approved plans for tbe progres- 
sive privatisation of Lufthansa 
and promised to reduce its 


With the market finding 
buyers around 20,000-20.500 
levels on tbe Nikkei index, and 
potential sellers around 21,000, 
prices fluctuated in a narrow 
range last week. 

However, analysts point out 
that the yen's strength has yet 
to be factored into share 
prices. 

Although last week's Bank or 
Japan quarterly economic 
outlook was optimistic and 
many of the economic figures 
to be released this week are 
expected to indicate a pick up 
in activity, there is still a risk 
to growth from currency 
movements. 

Barclays de Zoete Wedd 
reckons a 5 per cent currency 
appreciation cuts GDP growth 
by 50 basis points. 


stake in a first step from 51.4 
to 38 per cent by not participat- 
ing in a rights issue. Bankers 
forecast that Lufthansa will 
receive up to DM2bn of new 
capital from tbe operation. 

They also believe Lufthansa 
will not offer the shares to US 
investors, by way of a l-Ha 
offering, to limit the risk of 
excessive foreign ownership 
which could jeopardise its 
national flag carrier status. A 
second tranche to dispose of 
the entire state shareholding 
could be sold before tbe end of 
1995. 

However, tbe government's 
long-awaited privatisation of 
Deutsche Telekom, Germany's 
telecommunications company, 
is expected to be a truly global 
affair with the “book-building" 
process. internationally 
acknowledged as an efficient 
way of getting the best price 
by flushing out all potential 
buyers, playing a central role. 

Market valuations of the 
company range from DMSDbn 
to DMIOObn, which suggest 
that the sale of the first 
tranche of the shares could 
yield between DM15bn and 
DM20bn. But investors are 
likely to have to wait until late 
1995 or even L996 before the 
shares come up for sale. 

Meanwhile, the need for capi- 
tal. either to plug holes in pub- 
lic finances or to pay for 
long-term social infrastructure 


HONG KONG 

Domestic issues are set to 
command greater interest over 
the coming weeks, as the 
interim reporting season 
unrolls and a signal on the 
state of the colony's property 
market is delivered at 
tomorrow's land auction. 
writes Louise Lucas. 

Brokers say fears of a US 
interest rate rise have now 
been largely discounted and a 
clutch of good results from the 
corporates and a show of 
healthy demand at the land 
auction stand to nudge the 
Hang Seng index upwards. 

Turnover is likely to remain 
above the lows of around 
HK$2bn witnessed earlier in 
the month. 


programmes, is compelling the 
west German Lander < states) 
and cities to join in the privati- 
sation drive. 

Ms Ingeborg Elisabeth Buhl 

at Deutsche Bank Research In 
Frankfurt says that, although 
several Lflnder substantially 
reduced the number of their 
holdings in the 1980s. tbe value 
of their assets has risen appre- 
ciably in the last decade- 

"Privatisation has enormous 
potential at Lander level," says 
Ms Buhl, though she points out 
that state interests in shoring 
up regional industrial locations 
and jobs could slow this pro- 
cess. 

Nevertheless, there are over- 
whelming signs that the 
Lender uow regard privatisa- 
tion as the solution to their 
financial needs. Bavaria has 
already conducted several pri- 
vatisations and the next on the 
agenda is the sale of its 33.S 
per cent share in Rhein-Main- 
Donau. the company operating 
the canal linking Germany's 
two main rivers with the Dan- 
ube. 

Meanwhile, Baden -VVQrttem- 
berg plans to sell off loss-mak- 
ing operations, including its 
world-famous spas. 

The wind of change is also 
blowing through tbe board- 
rooms of several of Germany's 
big conglomerates, which are 
seriously considering the sale 
of non-core businesses. 


JM; 


The land to be offered for 
sale is not considered by 
analysts to be especially good, 
but the auction itself will be 
the first since May 26 - when 
developers bid together in big 
consortia to secure two parcels 
of land at prices markedly 
lower than market 
expectations. 

The government last week 
adopted a mild set of measures 
aimed at preventing a 
recurrence. 

Companies due to report 
their results this week include 
Wheelock, the Hong Kong 
corporate empire of the late Sir 
Yue-kongPao, which will 
announce its finals on 
Thursday. 

Compiled by Michael Morgan 


EMERGING MARKETS: This Week 


The Emerging Investor / Patrick McCurry 

Brazil’s stock market hopes ride on the real 


The long-awaited arrival of 
Brazil’s new currency, the real, 
could prove the launching pad 
for a soaring stock market. 
Inflation is expected to fall dra- 
matically, helping the financial 
markets' preferred presidential 
candidate. Mr Fernando Hen- 
ri que Cardoso, and possibly 
paving the way for longer-term 
economic reforms. 

But the continuing political 
uncertainties surrounding the 
October elections and an over- 
valuation of the new currency 
have so far prevented a large 
capital inflow. The real, which 
is linked to Brazil’s foreign 
exchange reserves of nearly 
S40bn. was introduced on July 
l and should result in a frill in 
monthly inflation from 50 per 
cent in June to less than 10 per 
cent this month. 

Local investors are betting 
that tbe real, which is part of a 
government anti-inflation plan, 
will lead to the election of Mr 
Cardoso, the former finance 
minister who negotiated the 


plan through Congress. Mr 
Cardoso, who is regarded by 
the financial markets as a mod- 
ernist. has been trailing Mr 
Luiz Tn&cio Lula da Silva of the 
left-wing Workers Party in the 
opinion polls, although the gap 
has narrowed significantly 
since the real was introduced. 

“A lot of investors are not 
afraid of Lula but of the reac- 
tion to him," says Mr George 
Rexing, a director at the Brazil- 
ian. bank. Banco Indusval, refer- 
ring to estimates that the mar- 
ket could suffer a short-term 
fall of 50 per cent or more if Mr 
da Silva were to win. 

Nevertheless, the relatively 
smooth Introduction of the 
real coupled with a stronger 
showing in the polls for Mr 
Cardoso, has lifted Sao Paulo's 
volatile stock market index by 
about 11 per cent so for this 
month. The bullish scenario 
sees a huge fall in monthly 
inflation, to between 2 and 5 
per cent from August onwards, 
and a grateful electorate voting 


Ten best performing stocks 


Stock 

c«iir)> 

22/7/94 

ScfcM 

1 

8 

f 

CfeflBQf 

% 

Guoco Holdings Phiflipines 

PWfippfrtes 

0.1727 

0.0252 

17.11 

Phiffipine National Bank 

Philippines 

17.2676 

2.3337 

15.63 


Peru 

4.34*18 

0.5447 

14.32 


Brazil 

(L0224 

0.0027 

13.52 


Peru 

7.7960 

0.9103 

1322 


Turkey 

0.4269 

0.0472 

12.44 


Philippines 

1.1006 

0.1176 

11.96 

Banco Bradesco (Pld) 

Brazil 

0.0074 

0.0007 

10.70 


Peru 

32559 

0.2948 

995 

Tetefonos 

Peru 

3.8707 

0.3387 

9.59 


Swec Baring Bacurtfas 


for Mr Cardoso in a second bal- 
lot in mid-November. 

If Mr Cardoso were to carry 
out radical reforms to public 
finances, analysts believe 
shares could more than triple 
in value during his presidency. 

They base the prediction on 
equities' growth in other coun- 
tries where fiscal reforms have 
been made such as Mexico, 
Argentina and Chile. Cur- 
rently, Brazil's stock market 
capitalisation represents about 
25 per cent of gross domestic 
product compared with about 
50 per cent for Mexico. 

Even without reforms the 
Brazilian market has shown 
impressive, if volatile, growth 
in the post Last year the main 
Sao Paulo index doubled in dol- 
lar terms, partly fuelled by a 
net overseas inflow of §5-5bn to 
the capital markets. Tbe poten- 
tial for Brazilian equities has 
attracted the interest of many 
foreign investors, but most 
have not yet decided to take 
the plunge because of the polit- 
ical uncertainty. 

According to Mr Julius 
Buchenrode, head of invest- 
ments at Chase Manhattan's 
Brazilian subsidiary, there has 
been a big increase in recent 
months in registrations with 
the hank from foreign, mainly 
US. mutual funds, pension 
funds and trusts. 

Another worry among for- 
eigners has been an overvalu- 
ation of the new currency. The 
central bank, which has not 
intervened at all in the foreign 
exchange market since the 


first day of the real, has let the 
currency appreciate on the 
open market by 7 to 8 per cent 
roughly reflecting the interest 
rate differential between Brazil 
and Internationa] markets. 

The result of the overvalu- 
ation has been that shares are 
now more expensive in dollar 
terms and there is some 
exchange rate risk for foreign 
investors entering the market 
as most analysts expect the 
dollar to revalue as Brazilian 
interest rates folL Before tbe 
real, the central bank devalued 
the cruzeiro on a daily basis in 
line with inflation. 

The exchange rate risk has 
contributed to keeping over- 
seas investors out of the mar- 
ket and the climb in equities 
this month has been caused 
almost entirely by local inves- 
tors, brokers say. 

The overvaluation could bit 
exporters. Most or the big 
exporters closed contracts 
before the real but smaller 
companies will suffer, accord- 
ing to Mr Ricardo Gallo, a 
director at Bank of Boston's 
Sao Paulo office. 

Another sector that could 
come under pressure is the 
banks. They could suffer 
reduced third-quarter results 
as they will no longer be able 
to make easy profits from 
Interest-free floats. However, 
tbe foil in inflation should be 
partly offset by the introduc- 
tion. of charges for many ser- 
vices. 

Shares that could prove 
attractive are those related to 


Egyptian market set to expand 

Egypt's illiquid stock market is tn for a relative bonanza, writes 
Mark Nicholson in Cairo. Some five public sector companies are 
set to float shares by the end of the year under the government’s 
privatisation programme - moves which should more than dou- 
ble the number of actively traded stocks on the exchange. 

Although Cairo’s bourse lists 674 companies, only 20 or so 
trade actively and only two or three, including Suez Cement and 
Commercial International Bank, resemble anything like “alpha" 
stocks. 

But next month - the launch date remains to be set - Ameriya 
Cement Company should join this elite. The government Holding 
Company for Metallurgical Industries is to float 4m of Ameriya’s 
20m shares in an issue which local brokers say is already 
oversubscribed by orders from local investors and international 
emerging market funds. 

Shares will be floated in two tranches: the first 2m shares, 
open only to individual investors with a cap of 5,000 shares per 
applicant; and the second 2m open to institutional investors 
some six months later. A further 2m shares will be sold to the 
company's Employee Share Ownership Association. 

Banqne Misr, the bank handling the sale, has not announced a 
price, but brokers expect E£27 a share ($8). Management of 
Ameriya, regarded as one of Egypt’s most efficient public sector 
companies, has already promised to pay a E£3 per share divi- 
dend in December based on earnings so far this fiscal year. One 
of Egypt’s newest broking companies says it already has 5m 
orders for the stock, most from overseas emerging market funds. 



consumer spending. Purchas- 
ing power among the poor, 
who did not have access to 
inflation- linked savings 
accounts, is expected to 
increase substantially and 
could boost profits in the food, 
drink and clothing sectors. 

If a Cardoso election victory 
appeared probable, investors 
could start to bring more dol- 
lars Into the market. But this 
would spark central bank con- 
cerns about money supply tar- 


gets as the bank would have to 
issue reals in exchange for dol- 
lars. putting pressure on the 
monetary base, widely 
regarded as the key to the suc- 
cess of the reaL 
If it got out of hand, the gov- 
ernment could attempt to deter 
a large inflow of foreign capital 
by a financial operations tax 
on foreign investment in equi- 
ties. Currently there is just a 
15 per cent withholding tax on 
dividends. 


News round-up 



■ Jakarta 

Jarkata's stock market has 
been a Laggard this year with 
the index dipping 24 per cent 
in the first six months after 
climbing over 100 per cent last 
year, but Indonesia's capital 
markets are likely to head for a 
drastic transformation over the 
next few years, unites Maneula 
Saragosa in Jakarta. 

At the sixth annual Pacific 
Basin capital markets confer- 
ence, held in Jakarta this 
month. President Suharto 
noted that the government 
needed $330bn for its current 
five year development plan, 
and that some 73 per cent of 
that bad to come from the pri- 
vate sector. 

The main test of the govern- 
ment’s commitment to develop- 
ing tbe capital markets hangs 
on abolishing the 49 per cent 
ceiling on foreign ownership of 
listed companies. A similar 
ceiling for direct foreign 
investment has already been 
lifted. 

Some brokers say the ceiling 
could be lifted as soon as min- 
isters return from a global 
roadshow. Others are sceptical. 
“I have been here for three 
years and I have been hearing 
these promises for three 
years." one said. “In any case. 


it will end up as a typical Indo- 
nesian consensus. The 49 per 
cent ceiling will be lifted for 
initial public offerings but will 
not change in the secondary 
market." 

There are however pressing 
reasons why the government 
should lift the ceiling: Lndosat, 
the state-owned telecommuni- 
cations company, will be priva- 
tised later this year and the 
future of other planned privati- 
sations could depend on its 
success. 

lndosat will sell up to S500m 
worth of shares on the domes- 
tic exchange, and as much as 
$lbn worth in New York. 
“There is real concern about 
how lndosat will place this 
amount on the domestic mar- 
ket," said a broker. “If it is not 
a success the whole privatisa- 
tion plan could go on the back 
burner again." 

■ Poland 

The Warsaw bourse will 
start daily trade from October 
l, by adding a session on Fri- 
days. The stock exchange has 
been trading four times a week 
since the beginning of July. 

• Emerging markets coverage 
appears daily on the World 
Stock Markets page 


Dollar stays focus of market attention 


With the Bundesbank having 
set out its stall for the sum- 
mer. attention this week will 
revert to US monetary policy, 
with the focus on the second 
quarter GDP figure due for 
release on Thursday. 

The market will also be 
monitoring the dollar, to see 
whether List week's recovery 
wus simply a technical retrace- 
ment, or heralds a turnaround 
m the US currency's fortunes. 

Last week was characterised 
by a number of senior US offi- 
cials pledging their belief in 
the virtues of a stronger dollar. 
Mr Lloyd Bentsen. the treasury 


secretary, and his deputy Mr 
Larry Summers, were both 
prominent 

Markets were also surprised 
by the degree of attention Mr 
Alan Greenspan, the Fed chair- 
man. gave to the dollar during 

his Humphrey Hawkins testi- 
mony. 

The next step will be to see 
whether the words will be sup- 
ported by action, in the form of 
higher interest rates. 

With most analysts having 
proven too bullish in the past, 
they are understandably 
cautious about predicting that 
the worst of the dollar s 


woes are past. There is general 

agreement, though, that its 

prospects are better against 
the D-Mark than the yen, 
where the trade talks remain 
a potentially destabilising 
threaL 

Investors. however, appear 

to be more bullish about pros- 
pects. Mr Steve Hannah, head 
of research at IBJ Internationa] 
in London, says a recent client 
survey showed that most 
clients believe the dollar win 
be at DM1.65/1.70 by the year 
end. 

Long term dollar bears, how- 
ever, remain unrepentant. 


Swiss Bank Corporation, in its 
latest currency outlook, warns 
investors not to get carried 
away by the dollar rally. "The 
long-term weakness of the US 
dollar is likely to persist,” SBC 
concludes, suggesting that 
Financial markets will start 
buying European currencies 
later this year. 

In the UK the chancellor, 
Mr Kenneth Clarke, and Bank 
of England governor, Mr 
Eddie George, meet to dis- 
cuss monetary policy on 
Thursday. 

There is little expectation of 
a near-term change in rates. 


Dollar 

Against the D-Mark pM per $) 
i.ei - 



Baring Securities emerging markets indices 


Index 

22/7/94 

Week on week movement 
Actual Percent 

Month on month movement 
Actual Percent 

Year io dale movement 
Actual Percent 

World (288) 

Latin America 

.— 157.25 

-1.65 

-1.04 

5.51 

3.63 

-11.16 

-6.63 

Argentina (20) 

102.86 

-4.92 

-4.56 

-0.34 

-0.33 

-12.52 

-10-85 

BrazH (22) 

17496 

0.05 

0.03 

30.40 

21.04 

35.21 

25.21 

Chile (12) 

17997 

-5.02 

-2.71 

-4.39 

-2.38 

32.43 

21.98 

Mexico ( 26 ) 

129.40 

-2.53 

-1.91 

-2.B9 

-2.19 

-31.86 

-19.76 

Peru(16) 

701.53 

46-17 

7.04 

-14.42 

- 2.01 

125.44 

21.77 

Latin America (96) 
Europe 

._,143.90 

-2.32 

-1.58 

6.23 

4.52 

-5428 

—3.54 

Greece (13) 

80.00 

-1.96 

-2-39 

1.48 

1.88 

-0.10 

-3.73 

Portugal (16) 

10932 

-1.72 

-1.55 

8.53 

8.44 

-2.60 

_932 

Turkey (20) 

78.82 

-8.63 

-9.88 

1.28 

1.65 

-82.89 

-51.26 

Europe (49) 

Asia 

92*5 

-3.16 

-3.29 

4.64 

5.27 

-19.39 

-17.28 

Indonesia (22) 

140.99 

0.02 

0.02 

7.33 

-4.95 

-30.05 

-1 7.57 

Korea (23) 

127.87 

-1.08 

-0.84 

-0.62 

-0.48 

17.97 

1R38 

-17.07 

0.49 

-16.25 

-11.50 

7.21 

-9.40 

Malaysia (23) 

209.85 

-2.77 

-1.30 

-1.77 

*0.84 

-43.20 

Pakistan (IQ) 

112JJ3 

-0.12 

-0.11 

-2.68 

-2033 

0.54 

PhiBippinea (1 1) 

270.08 

17.05 

6.74 

0.08 

0.03 

-52.39 

Thailand (24) 

233.25 

0.96 

0.41 

13.46 

6.12 

-30.30 

Tawan (30) 

164.79 

0.25 

0.15 

15.90 

10.68 

11.08 

Asia (143) . 

200.60 

0.07 

0-03 

4.49 

2^9 

-20-81 

as kndoaa m > Mma, January nti ittZaiOO. Sonw Baring smuiih 









FINANCIAL TIMES MONDAY JULY 25 1994 







4.7 _ 

£ = 

5J _ QBtMAHY 

23 LI 
BJ) _ 

13 _ 

1J _. 

« — 
a£ _ 


m 

U 

S.7 

axis 

3.B 

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380 

36 

42910 

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240 

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MS 22 _ 

215 2.1 _, 

IX — 

0.4 Z g*gf 

n *i _ “¥*? 
33 _ 

4.7 _ 

2.1 — 

2.1 _ 

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11 : ** 

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«Tf.1 






-1 154 1D250 «3 

— it* 121 ia 

— 105 BO _. 
J-a) 4050 3530 1.4 

+2 233 1B4 12 
+.10 17.40 10 — 

+30 50 46 2.1 


+2 705 512 18 
+2 132 100 03 


— 247 152 18 

-2 290 1G2 1.7 
+6 258 200 03 
-1 260 190 03 


+7 501 287 03 
+3.60 102 OB 
+1 104 59 1.4 

_ 102 54.10 13 
— 120 8430 18 
+2 225 17S 3.1 

-JO 31 16 

->ffl 21180 12 

+30 128 88 — 


HUMCE(M22/fa4 


AEf 484 +230 B7941920 
Accor 875 -0 768 589 : 

NiUq 8ID +3 806 721 : 

MeHl 828 -2 BIS 541 ; 

fea 283 -530 330 2171 

BC 1.295* +74 1.435 1,140 : 

BNP 268 30 -30 2HJ0 227 
fttcefr 51 S -28 88346320 : 
Bengm 3.115 +203,7502.787: 

BnuM BOS -18 7B7 E81 

cap 1,180 -14 1,400 1,057 > 

Care*+ BIB +101.168 801 . 


CnpGom 17530 -29228X0 16860 
GnMttn (77.10 -5307112016860 — 
CrtOOr 1305 -00 2.1851.711 12 
CUM 1S2 -630 205 132. BO 43 
Oma 1376 +11 1,570 1378 3.1 
OubWI 406 +230 465 346 22 
CCF 22630 -4203009020460 13 
Bfraf 1313 -10 1305 681 S3 

CrLyCI 486 -.10 858 452 X2 
DtoeF 402230-1130 46639130 — 
ONU 520 -7 737 47011.6 

Danuat 5,820 +120 8.160 5300 0.7 
Danmi 803 -iz 1302 762 23 
ODdoF 631 -10 830 810 ._ 

rata 460 +4 476 361 U 

ap __ 644 +4 600 780 2.4 

BwxW 533 -4 746 GI5 3.1 

Eccn fi56 -10 686 509 223 
BIAou 413X0 +5X0 435 384 47 

BOtCl 352X0 +1U0 382 305 _ 

BISan 975 -1 1,127 784 3.7 


Ema* 87W +24 1.03B 810 

Etecu 779* *6 865 733 

E*Mr 725 +0 630 636 

Ba 3.450 -30 3,*B7 2,750 : 

Bnk 2.030 +15 2X88 1,753 

BiflSCS 635* +2 702 584 : 

Butt* 11.70 -3Q U50 82S ! 
Itaa 141X0 -4X0 182 115 i 

Foody 810* +4 839 780 1 

RmU 5,100 -140 6.020 42140 ' 
STMOK 426 -8 578 365 : 

BBOjS 2325 -64 2,754 2X10 1 

Kttwrt 663 _ 1.020 639 I 

EWn 510 -31 046 610 

Kmw 451X0* +8.4048190 388 
MM* 599 +21 680 485 

luwnFr 476 /IQ 471 

MnnOnfl 770 +18 1378 652 

BnPlm 75.10 -130 119 72 

HM 444 +1 570 430 I 


INDICES 



-H 611 11 

tUh 15 
li 14 
+V1IM ll*s 


S 




+h SCI 40 1| 

-Jm 88V ttS 




+** ES38< 


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123(030 2J 
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446 344 St 

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872flan — 
31 IQ- 75 33 
55 42 8.7 

430 SJH 17 
07 
23 
33 

ii 

33 





-6 

K)yo Bank 

+1 

Sumitomo Meta 

-8 

Tokyo Gas 


Is this your own 
copy of the 
Financial Times? 


US INDICES 


JU Jd 

22 21 


J* J* 

22 21 


Jd Jd 

22 21 


Jd 199* Shxcnddn 

20 Mgti Low Ugh urn 


Qmnf (1912/77) 1BBQ99B 18651X7 1861453 2547046 1612 1776065 204 


U 223231 2210951 2881.17 8/2 


49 OnttMnfl/UBQ 20525 20402 29716 294030 3/2 

t* HUnflWBQ 10118 10153 10693 1136.10 3/3 


195730 27* 
B0U0 SS 


CBS TVMnpxl sag 429.1 4216 4233 45430 313 
CBS M Sic (B* 83) 272.4 270,1 2663 26430 3171 


46636 206 
95730 SUB 


GMB /MB430/12/B4) 412XB 41248 41273 460B6 2/2 

Tndsd hdncn/91) 1077.15 107335 107536 122223 172 


36637 22* 
101138 as 


C*t 40 (1/7/86) 


2EXS7 203120 205434 2*8634 3/2 


QsbSEfndCnSS 111674 U1432 110631 1211.10 26/2 


8620(1/1/91} 


W M2B51 164238 92 


Mate Conp (2/1*5) 2706.15 2S4834 2662.46 380637 4/1 


Mudrid* 37353* 373245 372737 397838 359335 3B7836 

<31/1) m pi 77/9*) 

Hdob Bonds 9731 9736 9731 10531 9BL43 10977 

(21/1) (13/5) (18/10/93) 

Itorajfe* 160158 159734 159531 188229 154832 186229 

am mm p®m 

M«* 18110 18218 1823* 22736 17171 25646 

p/i) p*/Bj piasa 

Ol too. Day 1 * high 3786.15 <376X20 ) Uw 3707.19 <388436 ) <Tt»omaca*4l 
Day# high 374248 P744 10 ) Low 37305 <37143* I (flea srift 

Standard and Poor. 


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•SooccEHRSim 


Bowspa pSfla«) 396863 4(71853 403883 4019990 15/7 


27329 27363 Z74SA 322S30 18/2 


UAfe *®fc+{lW5) 383633 3840.48 382935 38719 16/3 

OnptttB+ <1975) <117120 417260 4181.74 46069 23/} 

fothBnSS (4/109 195219 104827 1953.17 218289 1/2 


320936 20/4 
33969 24/6 
105X77 20 7 


45111 45261 45130 48230 43832 48236 

(012) m IMMKI 

526X5 52731 S2B.43 38049 51009 56059 


PGAQen (31/12180) 42408 4301 S 43002 486730 4/2 


GopaftaggnSqa/IA!) 377.79 37430 37150 413.79 20 


SES M-SpgreCK/TS) 551X3 551X5 56439 641X1 4/1 

San* ttfca 

JS9dd(SW76) 2Q473V 20843 211X3 2381 36 4/1 

JSEHX (28*03 63743? 83643 63503 673730 15* 

Ml ten 

taBsO*iEd4n/BQr 93939 93535 90687 97UB HZ 


an t?1/4) (2/2/94) 


174560 74/2 
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HEX Gan«aK2an2/9a) 18343 18188 78173 197200 4/2 


B4adrtd SE (3002*9 30735 30434 30440 35831 31/1 


4430 4480 4431 4X94 4139 4640 

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25034 250X6 24270 267.71 243.14 2B7.77 

03 m (2W9«) 

43X46 43334 <3100 48786 42287 *87 XB 

era <2a*i pom 

71637 71533 71X77 80333 89X79 6B3JQ 

(18/9 ewe fia/3/94) 


FT 


T« Gillian Hon. Rnanciol Tune* [Europe) GmbH. Nlbehingenptajz .1, MU IS FranK/un/Moin, Germany. 
Tel. + 49 69 156 650. Tin. 416193, Fav. + 49 69 596 448J. 


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SBF 2SD (31/lZflCI 135834 136X65 135B36 1S8U0 2* 

OK 40pt/12*7) 3041*1 205X78 204X72 238683 2 12 


1Z8X38 4 n 
1666.18 4/7 


MbamfeiGgn (1/3/37) 14667 144X20 144SS0 160330 31/1 


MZMnpl/1268) 30833 a«L5B 80*24 35927 18/5 

Conn»BnW*n/ia53) 23000 22M4 22802 2465X0 2/5 

(MX 0002*7)? 215026 21)136 213835 2zn.11 18/5 


2731 27* 
214X30 27* 

198832 are 


State Blind (31/12/5® 121131 119&41 1(8738 142334 31/1 
SBC Gael* (1/4*71 934.44 B177B 91231 168X29 31/1 


115737 18 n 
888.16 13ff 


Dow Janas bid. Dtv. Yield 


1*6gawftfliw«r 6486.80 6S77.7B 647430 657770 2V7 


3 & P tral Dhr. yield 
S » P M. P/E ratio 


Jul 15 JUS 

X71 X74 

JU 20 JU 13 
243 2.47 

2337 2233 


JU 1 Year ago 

279 235 

JU 6 Year ago 

248 236 

2272 24 89 


MMa SE01/1Z/BC) 826.71 82634 83031 119*56 18/1 


Hoogn* 

raqsoqpl/r** 916299 911736 918XK t220139 4/1 


BSE 50*419791 


410X3 4104.4 4(103 433X30 31* 


346438 Sfl 


SET 0*4/75) 134B36 134X01 138XSS 175X73 4/1 1196E0 4M 

Drta y 

ttWtf Cmp+tan 1S9G) 214513 2133249 217173 2888X80 13/1 1268636 24* 

anmi 

US Cafta n (tn/705 SZiir B253 6280 B4130 1/2 agioo 4rt 


■ STflMDAnP ua POORS SCO tMWX nm»ES SSOO bmos ndex 

~ Open Sen price dtenge Low Est taL Oponirt 

Sop 453.30 45330 +030 46430 45230 49387 203.436 

Dee 46635 456,00 +0 20 457.00 454.95 282 12501 

Mar 45830 +025 40035 45635 5 2346 

Open teams igjna w» tar pngvieua day. 


To: GHlian Han. Financial Timer ( Europe 1 GmbH. Nlbclrnipenplarz 3. 60310 Frankfun/Maio, Germany. 
Tei + 49 69 156 850. Tlx. 416193, Fa*. + 49 69 59b J4S3. 

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Austria />E5 5,800 France FFR2.040 Nednstin* DFL875 Sv<ofai S&K3Z9) 

Belgium BFR IJ300 Oermany DM750 Norway NOK 3320 Switzerland SFR7I0 

Dnmuric OKK 3300 luly LIT 600.000 Portug^ ESC 60,000 
FmUdd FMKZ2/J0 Luxemboup LFR 13300 Spain PTS633W 
forsub!aii»iansinTuiV*)i,CypfuisCrcwc.Ma)u.pteaseconiaa+32 25l328 16. 

□ BiO | I Charge my American ExpresiVDinen duty 

me I — i Eurotard/Viga AccOiaU. Eimtv Date _ : 



Esptry Date . 


lfartgOBR4k(10ffi^) 43907 <61.14 46X54 61X00 5/1 


GEQOnnlfVUSSt 18EBJB8 1B2122 182638 208X16 2W 

■% 

Comm M <1973 73045 mil 71550 917.17 10/9 
MB Geanl <4/1*4) 11808 lino 11573 131890 1(W 


Emfflaek lOOpBflWW 138740 1371 A4 1367J6 1640.19 3V1 
fire Top- 100 (266*0) 1211^1 1201.85 110X88 131191 Z/2 
(31/12/Bffl M 31151 313® 3K.16 SO 
Balnip En«ip71*a 15725 I57D9 157S5 18X72 14* 


136X48 21* 
114308 21/8 
29026 2V3 
141 jB 21/ « 


■ «W Yomt ACTTVl STOCKS ■ TRADING ACTIVITY 


Stacks Dose Chapa • V*um (nuqn) 


traded price on i 


J* 22 J* 21 J* 20 


88X05 ion 
94400 ltf( 


mu ZB (1615/49) 3048X09 3062292 2078078 2165X61 13* 1738X74 4/1 

mU 300 (1/10*3 29X53 28X55 30X22 31171 13* 28X22 4/1 

Tophi (4/1*8) 183706 185158 1065L49 171X73 13* 144507 4/1 

2MSKOon(4n*q 248X10 230X37 2531A 254X85 6/7 187X33 4/1 


* CAC-40 ar<K34 «pgx WJTURgS (MAT1F) 

Open Sen Price Change Hflh Low 6 sl wL Open inL 

Ji4 2073D 2053.0 -12.0 208SD 2062.0 26JJ70 31,878 

Aug 20S9.S 20E1D -12.6 2091.0 £06X0 - 2,293 

Sep 2091^5 208X5 -1X0 2100.0 2089.0 2.862 26416 

Open rmn sgunas tar pnwtaus flav 


TeMMea 

HcOgnaldB 

Compaq 

fftatams 

BM 

Humane 


XI 20200 41 H +H New YOfk SE 2B1054 264295 267.750 


5465200 26H 2 

5213.700 30H .1 !J®a 

4.183.700 57H +1H NYSE 


1X019 15211 1XQ26 


■Currency ruin or only iu ttdfor rtf roamry in which they on qumrJ Sufr&rriptio* Pncet are o*rtci at rtw ff 
Ruing to prrts. Prices are exclusive irf VAT in atl EC nmntneM except German* and France. FT VAT No. 
DEI 14220192. 

Tonutecrihe totbefTlnNoe* Amertea contact New Vert; T*nS24S06, Fax 3081397. F« Ea*tcout»«T«*ja 
Tel 32W171I, Fax J2951712. 


HUE Gmw4W8a 100148 99X38 1009.72 13I4AB 5fl 9Z633 4M 

“ 3m JUy 16: Taiwan W omtex) Mm ft ; Korea Comp & 949.73. Bane uakiea or ■ a Mw are 100 eroapC Auatnla <41 Ordkoy and 1 Cotreedon- ' tt itLOD GMT. • 

Mntag - HKt flusma Traded. BE120. HEX Gan, MB On, 3BFT30. cflC*o. bn Top- mo. BEO Own* Tommo CmmAteria a A The DJ mat ndo ttiouremcm dart Hgta 
Mnwsti and (MX - M l.OOQ; JSE QoH - 255.7; JSE 26 IrvXotrfat) - 2B43; NYSE M Oomwi -Bat awndad and pores - ia 55 mode wtenma 8 m who! days Worn M to 
Mnrngm. » Treonw. ft Ctaom. M Unanteotilu 1 dS/WK tflet-botao Mdwc A* 12 - 91*623 +arfla durtao 0w day. (D» l^no to bn»*ao m» 


W XT1X300 B1H -1 kwes Tra 

Humane 3053.700 18H +« foes 

Qw Un X364.WB JTh. +>4 7* 

Okap 3210200 40K -x iMamad 

neon x5M.ioo aan +n mnm 

K Hal 2254,100 10V) -vt Ne* Lma 


-1 teues Traded X838 2234 2214 

M ffisa 1,091 987 727 

H Fas 006 1080 1.394 

■* Ibcbangad 779 757 803 

* Mh Vkfa 35 33 31 

-<* NS* Lows 59 85 45 


□ Pimm lit* hoe for note in/nituxm Una ft oaJ 14 mn/i w bmripllni rata, or rates far 
■ Muntry bm Imtrd onpotue. 


I — I ■ country BotlmtpdoppMite. 

f Heatt ipmfr) - 


* fcona# - 4 1*» Rnanelal and Tnuaportatm. 

? * na . dw awteBte m tha NBh*** and lowoet mtoaa modiod during Die An by «mh 
tiw by T nl tafurei marewit an Mghaet id low aia »rejea MMM 0 haamoched 
« pnMow day*e<. f Subfact to ef6cM reedeuwatn. 


Comp«iy 1 . — 1 — 

Attest an I *aalA ttkcoy Fautctal TVamlelKeRife 



Only Pulse comes with 2 hour replacement 

for lost, broken or stolen pagers. Leave it in T , r , * 
a cab, lose it in a rush or under a bus. ^ K Ll LS Jc 
Whatever the unfortunate fate of our pager in — ^ 

your hands, well get you another one within 

[jTH 2 hours if you’re within the M25. Reckless Hutchison 

^ Keeping an eye out for the markets. So asfsol eS. 1 23n n oL rmation ca " free 



Sirmum: — . — , . 

N,i order i* <iWi/atihird OfMOrr, 


Financial Times. Europe’s Business Newspaper. 


i 


























































































FINANCIAL TIMES MONDAY JULY 25 1994 








































































































•i ! 


FINANCIAL TIMES MONDAY JULY 2^ 1994 ★ 




































































































































































29 


POUND SPOT FG?i/yV 


Europe 

Austria 

Belgium 

Denmark 

FWand 

Franc* 

Germany 

Graeco 

Wand 

Italy 


Cloalng 
rc**-Point 

ISch) 17.1785 
60.1778 
P**) 9.3634 

(FM) 8.0559 
Ffr) 8.3403 
(DM) Z4378 
W 368342 
W 1.0143 
M 242024 


?®2** Bid/offer Day* Mid 
_°"«y spread aw. ^ 




One month Three month* One year Bank of 
_Rate %PA Rata MPA Me %BA Eng. Index 




.DOLLAR SPOT FORWARD AGAINST 


Lu *®"t»WB (LFr) 50.1779 

Netherlands (R) 2.7356 

*•*"■0 (Wi> 10.6254 

pDnu 93i (Es] 249973 

SP"*" (Ptnj 201.033 

Sweden (SKr) 11.9600 

9*to*tand (SFr) 2.0658 

UK (Pi 


*ai171 729 
♦0.328 391 
■+0.046S 603 
♦09274 468 
+09339 382 
+0.0140 387 
■*2-386 329 
+0-0009 135 
+133 904 
+0.326 391 
♦0917 347 
+0.0429 221 
+1.051 779 
+1.158 923 
+0.0192 723 
+09194 647 


861 172059 

187 509480 
865 S.6299 

648 8.1190 

424 89885 

390 £4575 

755 371.092 : 
151 1.0288 

143 244194 : 

167 609460 • 

364 2.7513 

288 10.7138 

168 252-281 ; 

142 202.087 ' 
877 12.07BB ' 
869 2.0772 


f?L. - 12745 

SDKT - 0.943598 

Americas 

Argwitina (Peso) 19258 
Braza (RO 1.4317 

c * n “ te CCS) 2.1055 

Meuco (New Peso) 59014 
USA (S) 1.5280 

f’Mfflc'MMiSe East/AMca 

# + i5&aSa (AS) 29813 

Hong Kong (HKS) n.a048 
h¥ * a (R») 47.9013 

Ja P m (V) 160940 

Ma * a VSiB (MS) 3.9585 

Now Zealand (NZS) 29241 
PNSW*** (PmoJ 40-2616 
Saw* Arabia (SR) 5/302 
Snoapom (SS) 29088 
S Africa (Com.) (R) 5.6523 

S Africa (RtV) (R) B9980 

Soidh Korea (Won) 1228.11 
Taiwan (TS) 40.7424 

Thaiand (Bt) 389141 

TSOR IHB far JU 21. BUAObr BfmdM 


+0.0085 739 - 751 19829 19674 


-0.01 254-261 19407 19199 

-0.0005 299 - 335 1X340 14290 

-0.0134 047 - 082 2.1252 »n gqg 

-09312 980 - 0*7 59483 5.1870 

-0.0095 277 - 282 19430 19220 


-09288 803 
-0.0727 021 
-09358 934 
-0.B88 768 
-09252 670 
-0.(008 226 
-09517 730 
-09361 289 
-09122 087 
-0.0019 502 
+0.(054 816 
-1194 522 
-09182 300 
-0.182 826 
to toPacndSpi 


623 2.0911 

075 119184 
091 484040 

010 163.060 
rag 39901 
255 £5521 

501 409601 : 
316 5.7866 

109 £3343 

543 5.6721 

144 79200 

889 124190 

648 41.0893 < 
356 35.8060 : 


17.1752 

03 

17.1633 

04 

. 

- 

1144 

Austria 

(Sell) 

112435 

60.1723 

0.1 

50Z17B 

-03 

502179 

-0.1 

IIOI 

Beigmm 

(BFr) 

328450 

89704 

-09 

99655 

-09 

9.8306 

-07 

116.7 

Dertneric 

WO) 

82560 

- 

- 

- 

- 

- 

- 

82.1 

o-i-i -+ 

nmana 

(F*rt) 

55723 

69437 

-09 

13461 

-04 

£3306 

01 

1094 

France 

{FFfl 

£4585 

2.4375 

02 

24366 

02 

24158 

0.9 

125.2 

Germany 

(D> 

14855 

- 

• 

- 

- 

- 

- 

w 

Greece 

(Dr) 

241400 

19147 

-05 

1.0155 

-05 

1919 

-05 

1049 

katand 

(IQ 

1.5064 

2426.34 

-39 

243099 

-£1 

249294 

-£0 

7Bl2 

aav 

(U 

158198 

50.1729 

Ol 

502179 

-03 

502179 

-Ol 

116.1 

Luxambouig 

(LFr) 

324400 

2.7351 

02 

2.7337 

0£ 

2.713 

06 

120.1 

Nmhartanda 

(FD 

1.7904 

106224 

03 

106329 

-03 

104168 

0.1 

884 

Norway 

(NKr) 

64540 

251.703 

-43 

2S49S3 

-79 

- 

- 


PortugaT 

(Ea) 

161600 

201478 

-2.7 

202338 

-29 

205918 

-21 

854 

Spain 

(Pta) 

131.570 

199015 

-22 

12952 

-24 

129725 

-24 

734 

Sweden 

(SKr) 

7.8406 

2.0643 

09 

2.0611 

09 

2437 

14 

1194 

Swioariend 

(S ft) 

14520 

- 

• 

- 

- 

- 

- 

79l1 

UK 

(Q 

14280 

19754 

-08 

19786 

-07 

1278 

-03 

_ 

Ecu 


1.1989 

' 




" 

“ 

” 

sent 

Afludcss 

- 

1.48088 

- 

- 

- 

- 

- 

- 

- 

Argamfria. 

Faeo) 

04986 

“ 

“ 

“ 

- 

- 

■ 

- 

Bma 

<F0 

04370 

2.107 

-06 

2.1107 

-19 

2.1377 

-14 

862 

Canada 

(Cffl 

14780 

- 

“ 


- 

- 

- 

— 

Mexico (NewPeao) 

£4042 

1-5273 

05 

1.6264 

04 

1423 

03 

634 

USA (S) 

PadSo/Mkfcfia East/Africe 

20613 

CLO 

29626 

-03 

2.0807 

-09 

_ 

A+otrala 

(AS) 

19481 

110009 

04 

11.7996 

02 

119088 

09 

- 

Hong Kong 

(HKS) 

7.7259 

15046 

- 

- 

- 

- 

- 

— 

fade 

(Ra) 

319600 

£0 

149995 

39 

1407 

£4 

1824 

Japan 

00 

917200 

- 

- 

“ 

- 

- 

- 

— 

Ma/tryaia 

CMC 

24907 

2926 

-19 

2.5358 

-19 

24581 

-14 

- 

New Zealand 

(NZS) 

19520 

- 

- 

■ 

- 

- 

- 

- 

PMlppinaa 

(P*M) 

284500 

- 

- 

- 

“ 

- 

- 

- 

Baud Arabia 


£7503 

- 

- 

- 

- 

- 

- 

- 

Sfagapora 

(SS) 

14117 

- 

- 

- 

- 

- 

- 

- 

S Africa (Com. 


a 

“ 

- 

“ 

“ 

- 

- 

— 

S Africa (Fh.) 


a win 

■ 

- 

’ 

- 

- 

- 

- 

South Korea 

(Won) 

802450 


Change ESd/oftsr 
on day spread 

+0.148 410 - 460 
+0421 300-600 
+09682 560 -600 
+09935 873 - 773 
+O.Q56 580 - 590 
+09195 950 - 960 
+396 100 - 300 
-09108 054 - 074 
+1196 345 - 450 
+0.416 200 ■ 600 
+09222 901 * 906 
+09711 530 - 560 
+1.7 SCO - 700 
+197 620 - 620 
+0.0612 368 - 443 
+0.021 515 - 525 
-09005 277 - 282 
-09137 065 - 002 


Day’s mid One month Three ma ntra One year JA Mfcgfin 

high low Rata *PA Rate %PA Bale %PA index 


t cwcuhtad ay ew 

closmo spot rates. 


CROSS RATES AND DERIVATIVES 


EXCHANGE CROSS RATES 

-M 22 BFr DKr FFr dm 


w. Ftanaid ww «ra net Oresty quctM to lha mawc 
tap* IMS - 10D9HL Oflw and MkFfltoB h Mb Mi md 
ituirtod by die F.T. 


-00003 985 - 986 
+09055 360-380 
-09002 777 - 782 
+00009 025 - 058 


09087 09985 
09380 09360 


Taiwan (TS) 26.6848 

ThaBand (80 25.0100 

1SOR ran let JU 21. ad/gdto wmed 
M » knpOM by am* Man* ctoa 


436 - 495 
254 - 264 
500 - 500 
900 - 500 
902 - 912 

513 . 526 
000 - 000 
600 - 505 
112 - 122 
965 - 000 
700 - 900 
000- BOO 
610 - BBS 
000 - 200 
to Gpottabtoi 
d ft ECU M q 


19565 1.3480 
7.7267 7.7250 
319700 319500 
999000 989000 

2JB8B 

19573 19510 
269000 26.1000 
£7505 £7500 
19135 1.5110 
£7005 £6785 
49900 49600 
604.800 802000 
286900 269560 
25.0200 25.0000 
mew arty toe tort ton 
quoted n US curaecy. 


114462 

-94 

114398 

0.1 

11.1618 

Q.7 

1049 

32.865 

-0.7 

324026 

-97 

32 965 

-94 

105.7 

6466 

-14 

£778 

-1.1 

6413 

-99 

1059 

547S3 

-9.7 

64778 

-0L4 

£3168 

-94 

77.0 

64632 

-14 

£4692 

-04 

£447 

04 

10£0 

14962 

-04 

14062 

-95 

14682 

06 

106.7 

241 46 

-1.7 

2*242 

-14 

245.7 

-14 

693 

1.3052 

19 

1403 

09 

1.4941 

98 

- 

158993 

-16 

1597.83 

-as 

163598 

-33 

7£7 

32.88 

-9.7 

32405 

-04 

3296 

-94 

105.7 

1.791 

-0.4 

1.7897 

£1 

1.7856 

0.4 

1059 

£9575 

-0-6 

6462 

-0.5 

£9375 

0.2 

889 

16443 

-99 

16187 

-8.0 

174 

-6.4 

943 

131435 

-34 

13249 

-3.5 

13446 

-2.6 

813 

74S7B 

-26 

74941 

-2.7 

£0486 

-2.7 

7£6 

14517 

04 

14503 

04 

1437B 

1.1 

1063 

1.5273 

04 

14264 

0.4 

1.523 

09 

874 

1.1974 

14 

1.1053 

14 

14072 

-0.7 

1 

14796 

-1.4 

14828 

-1.4 

1.4038 

-19 

82.7 

£4052 

-04 

£407 

-04 

£4145 

-93 

- 

- 

- 

■ 

- 

- 

- 

96.9 

14494 

-04 

14501 

-94 

1.3574 

-96 

66.7 

7.7257 

09 

7.7264 

09 

7.7414 

-09 

- 

31436 

-34 

3148 

-29 

. 

_ 

_ 

98415 

24 

9897 

24 

35.685 

3.1 

152.0 

24815 

44 

2.5702 

35 

29437 

-2.0 

- 

1453 

-0.7 

14548 

-97 

1.6601 

-95 

- 

£7616 

-0.4 

3.7557 

-96 

£7743 

-98 

_ 

1.5104 

1.1 

14085 

04 

19017 

97 

- 

£7148 

-59 

£7431 

-4.7 

39198 

-39 

- 

44137 

-as 

4.6725 

-8.1 

_ 

. 


60145 

-44- 

80845 

-34 

827.45 

-3.1 

- 


Money Market 
Trust Funds 


Boa M CBS HEI 

CAP Maonr MaaBBsstoat Oe U6 
*BF*tti«vnM.ioE&iagiTtoZJD mznoii* 

dtoaWMhM..|<.n -1 **3|s-toa 

OMMHOWicrmtoBB *js -I +jm|j-w 

DnwiMrdndMl +.9S -I 5H4l3-+m 

TM COIF enamel DenKAceaum 

:FEnsttot.UMMEC»Ma rm-saeisis 


Cnrjttl & CO 

wmimom gn-nsWB 

numaMuairaMi . an -® 3im0 

nucMweM* ic io u 1 44?9 - 1 

Dao Haag Bank (Leadart RC PnndB- Ms 
ia<wMGw!.um»iKsnr o/t-soa ism 

QDJK0t 500 475 I 5091 

Iioooi-Cftaao + 23 jw *£| " 

c?jyw-ri09» its 7*i I s*JI Jg 

sawfcsui zrs iw' a**' ® 

Darnnham Tal ne-DanalM 500 AM. 
iPtoia totoirai wna aat-mra+sr 

ciono-sant 7js son | - “3$ 

EI0.OT- 1 Wr I 7 50 I .JITWrtr 

I5.4D0 •itodftraBfl/ea I soo 4*1 1 7 - 7 ' 


un-sa* isis 
- i 4»IVUb 


Cent Bd. of Hn. of Ctarch of Botand* 

? Fora £8*M. (firm ECh &W WI-MBlili 

tod i *85 -I 49*lMH 


Money Market 
Bank Accounts 


AMtranneBankpfc| 

30 Ot* Rd*L Lcroafl EC1 Y a 


u*ty annsato scnKH tn uw«m nw 

ri-taos oso <u» wo “ 

ri.uo-t9.BM isc aes is ® 

EUUMM34.W — *” *3 fK SS 

C75.0»-fflU» 4 50 U» £ 

n 0+000- 4 TO 152S +.78 w 

[SUM- I Hm U M ' rt »to m nw 

HaOfax Bldg Sac AnMRmmtQawtAa 
iiwwHBraiiftenwiMG fteasMB* 

Msferpnadtaton . __ 

E50 JI00 m mow) 598 43* iM 

E3UDgec+8i9» — uo 4121 ;m) ™ 

IIOMOWGMBS — 5.15 M U91 » 

nwoi acagag-— - +ao us I +-»i 

BIUHmSS 1 — F*? 1 U< I 130 1 to 
CZ5JM) B [+8 BU — 475 UO 4J4 Off 

E10HOOat24» 490 138 I 4 581 W 

415 1.18 I +331 ® 


J4.j-.Jj- ---L-i. 


26.6848 -09 28.7248 -09 
25.0825 -39 2591 -39 

» aa ctort ptooam. fcnmrl taw ara n 
XP t+orgsri nombto tofeas Jrt 21. Bi 



e each quatod «> »w nvrw 
» im 1990-100 


FIXED INTEREST RATES 


Mflnd 

tb* 

Methcrianria 

Norway 

Portugal 

Spain 


Switzerland 

UK 


Ecu 

Tan pa 1JX30; 


(BFr) 100 
(DKr) 52.47 
(FFr) 60.17 
(DM) 2098 
OQ 4949 
W £074 
(P) 1894 
(NKi) 4791 
(Eb) 2097 
(Pta) 24.97 
<SKr) 4199 
(SB) 24J2S 
<E) 50.18 
(CS) 2393 
(S3 32.84 
(Y) 3329 
3996 

OanWi Kranar. Rwxh I 


1692 4959 

£721 2949 

10 2923 

£421 1 

8225 2404 

0345 0.101 

£048 0.861 

7.846 £294 

£338 0975 

4.149 1213 

6962 £035 

4437 1.180 

£340 £438 

3460 1.158 

6458 1986 

5541 1£17 

6941 1412 

■agtoi Knmr. md 


£021 4823 

1480 2S31 

1416 2902 

0416 992.0 

1 2387 

0042 100 

0371 8849 

0954 2277 

0408 9884 

0504 1204 

OB46 2020 
0481 1171 

1414 2420 

0481 1148 

0664 1584 

£724 18048 

0795 1898 

Swadtoi Ktowr par ' 


I(1MM) DM 12&.000 par DM 



Opan 

Soto price 

Changa 

High 

LflW 

EetvaC 

Sep 

0.6284 

09253 

-90033 

0.6295 

09233 

67,442 

Dec 

98272 

96259 

-90033 

96293 

98245 

776 

Mar 

96274 

09273 

-90033 

0.6290 

98274 

322 


UK INTEREST RATES 


LONDON MONEY RATES 

•M 22 Over- 7 day* 


One Three Six 

month months month* 


i HUMIC HJTUHBSQMM) 8Fr 12S400 par SRr 


Sep 

97436 

97380 

-90050 

0.74SB 

97382 

Dec 

9743S 

97397 

-90056 

97448 

97375 

Mar 

- 

97424 

-0.0059 

97466 

97420 


32.066 40612 

277 1,071 

2 8 


I (1MMJ Yen 129 per Yen 100 


Sep 

Dec 

Mar 

■ sm 

Open 

1.0139 

1.0200 

liHOFUTU 

Sen price 
1.0161 
19226 
19310 

MS (1MM) £ 

Change 

+90006 

+90008 

+90008 

B2900 per 

Hfeh 

19200 

19273 

19347 

e 

Low 

1.0116 

1.0190 

19305 

EaLvol 

38933 

840 

1 

Open Ire. 
68275 
£160 
787 

Sep 

19224 

1.6266 

+0.0056 

19334 

19210 

31737 

32.152 

Dec 

19240 

19254 

+90066 

19320 

19200 

119 

903 

Mar 

- 

19250 

+90066 

19310 

19190 

8 

151 


Werbrnk Staring 5^, . 3% 5^-4% 5^-6 5^< - ft - 5^ ft - 6 

SartnflCOa - - 5i-5i 5A-S* 5» ■ 5fl SR - Eft 

WuryEflta - - 4J1 - 40 5-4(1 

Bamem - - 9-4fl 8A-40 5A-5^« 

ImM authority depe. 4S • «U - <d - *il 5^,-5 S?* - 5& 53 - 5B 

Dbcout Marictt daps ft - 4 5& - 4fl .... 

UK clearing bank base landing «to S 1 * per cant from Fabnary £ 1994 

Up to 1 1-6 £6 6-9 9-12 

I I 4* .... ^ 

hmh nuoii iimiiim iiMKiD iiwma 

Oeris Of TK dap. (2100400) 1>2 4 3^ ft ft 

Cwt* of TM dap. uxi*r Cl 00X00 klijpc. Dapoti wtoMnni tar cebUi Lpc. 

Art. tandar mb of dUcouX 49640pc. BCOO bad nto Os. Export Unm Mtoa « My Jn 30 
1»4. Aoaed nto tor period M 26. IBM to taB ». 1864. Scheme 1 6 ■ 644pc. Rdmra iato lor 
period Jun 1. TW4 id June SO. 1404, Scftooea IV A V USTOpc. Ranee Heuea Baaa fUn B4po from 
July 1. 100* 

BANK OF ENGLAND TREASURY BOX TENDER 

Jd 22 -ltd IS Jd 22 Jul 15 


HONEY RATES 





•Juhr 22 

Over 

One 

Three 

Six 

One 


right 

month 

mths 

friths 

year 

BtogMn 

S 

514 

64 

5ft 

6ft 

vwdeage 

5 

5)4 

5ft 

S 

6ft 

France 

5% 

SYi 

64 

5ft 

SB 

week ago 

5* 

5ft 

SB 

Sfl 

64 

Germany 

4.90 

4,88 

495 

495 

496 

week ago 

492 

4.88 

495 

490 

£00 

Intend 

5 

64 

5ft 

64 

8ft 

week ago 

5 

54 

5ft 

64 

6ft 

•tofy 

8H 

6ft 

64 

8fi 

84 

week ago 

8H 

84 

64 

8ft 

0ft 

Nethartancfa 

495 

4.85 

498 

497 

£16 

weak ago 

495 

4,65 

490 

5.00 

£10 

*1 *riti nrti i vl 

4 

n 

44 

44 

*4 

weak aga 

4 

44 

4ft 

4ft 

<4 

US 

*i 

4)4 

4« 

5ft 

SB 

week ago 

A* 

4ft 

4ft 

6ft 

6fl 

Japan 

2 

24 

2ft 

2ft 

2ft 

week ago 

2 

24 

2ft 

2ft 

24 

■ SUBOR FT London 





Interbank Fbdng 

- 

4ft 

4| 

5ft 

5ft 

weak ago 

- 

4ft 

4« 

6ft 

5ft 

US DolarCOe 

- 

496 

496 

499 

593 

waek ago 

— 

498 

493 

492 

£48 

8DR Unload Da 

- 

3ft 

34 

3ft 

4 

rndt ago 

- 

3ft 

34 

3ft 

4 



use 


1® 

53 







-•■i' 








KU Unkad Da Md rrtnc 1 mffr S3; 3 ndts SJ: 8 nrt* 8 ; 1 year 
raw n otfarad ratal tor SI Dm eputod to the mato by tour irtawr* 
ttoy- The banka war Bmkare Ihat. Bart of Ttho, Bwctoa and Nadar 
IM M are mom tor the domaatto Moray Fima. US SCOa mdSD 

EURO CURRENCY INTEREST RATES 

Jid 22 3m 7 days Ona TIM 


614. S UBGR IrtMtaa* ttoig 
banks at 11am aaeh mnmg 


Lkitod Dapoafta fN). 


■ PHUDWIUHEff OPTIONS £31460 (cama port 


Striae 

Price 

Aug 

- CALLS - 
Sep 

Oct 

Aug 

— PUTS — 
Sep 

Oct 

1460 

793 

798 

793 

. 

£21 

£47 

1478 

£13 

£49 

598 

£06 

096 

095 

1900 

2.06 

£87 

4.14 

£42 

1.15 

198 

1-525 

198 

292 

£73 

196 

£16 

£70 

I960 

048 

1 22 

1.78 

291 

£62 

4,14 

1976 

£11 

0_Sfl 

194 

493 

648 

£90 


B** on oflar £SOOn £500* . Top acaqitad nta 49637% .48536% 

T«M d epdfcatee tt3aaa eiSTQm tm. tis, of «aout 49848% 49379% 

ToMaHCdM ESOOto ESODra Awrag* yidd 59473% 49064% 

Mb. aceaptad bid E98735 £88.788 Offer at ntf tmdr QOtoi £SOOa 

Mdnani at oin. M 81% 38% Me accept. Hd 182 dm 


Saigian Franc 
Dnfah Krona 
MWf 
Dutoh Qukdor 
nonen itsnc 
Portuguma Esc. 
SpaoMi Paada 
Staring 
Swtoa Franc 
Can. Dote 
US Ddar 
ItaSan Lira 
Yen 

Adan SSkip 
6hort torn raw a 


5A-4U 5 A 
ft-ft 5%. 
4fl-4» 4U- 

4% -4* <V 
6d - 5i 5,'< 
12% - 11% 12- 
7* -7*. 74 ■ 
6%-5% S& 
4% - 4 4% • 

$>2-5% 6fi- 

ft-ft +A 

• 8 - 7>j 6%. 

2% - 2i 2% 
ft ■ ft ft 

a cal tar to* US Dc 


-4S 6%-Sl, 

-ft SH-5A 
m 4H-4H 
-4% ft -ft 
-5 A 5*2-6% 
11 % 12 % - 12 
-Va 7\ TH 
-5A 5%-Si 
- ft ft-* 
-SA 51,-6% 
-44 ft- ft 
■ 6>a 84-84 

-24 21, -24 
-ft 44-44 

DM md Ytov odtoto 


5>2 - 5*1 
tfi-B 
4H-4H 
4^-A 
54 - 54 
12>2 - 12 
ft-7\ 
Si- ft 
ft- ft 
ft-e 

4U-4fl 

84-84 

%--% 
twodW ra 


5^-5% 
6%-6^ 
4B-4U 
6-4% 
Stt-54 
12% ■ 11% 
84-713 
8»-5U 
44-44 

S>4 - 5>t 
Bft-84 
24 -21, 
54-54 


6>,-6 

an -64 

5*0-8 

SH-54 
6-6% 
12% - 114 

ah ■ 8>4 

64-84 

412-4% 
7% -7% 
5*-5% 
94-94 

2B-2U 

5H-5tt 







1SS Off 
im otr 
las car 
131 Off 


isoo ia» 
3 63 2.71, 
1750 281S 

urn 


■ TMHBI 0M0fIH ■UROOOLLAR ( 


FT OUDE to WORLD CURRENCE8 

The FT Guide to World Cuiandea 
table om be fauid tai the Compantae 
ft Rnanca page ki today's edMon. 


■ Pawn Id Mm* York 


PnM» rtaya vat. CUta 10DJSS Put* 1 tUBM. Pmv. dW» opw k*. Cto MUW Put* 608902 


Jtf 32 

— Ckm — 

- Print ctoN 

Etftt 

19Z75 

19235 

lam 

19307 

19220 

Ssffl 

19259 

19221 

ijr 

19225 

19105 



Open 

Sett price 

Sep 

8492 

9478 

Dec 

9414 

9499 

Mer 

9397 

9164 


| $1m print* cl 100M 

tfgh Low Est vol Open b*. 


-004 94.17 9496 170583 432,670 

-005 9392 9361 95.152 325688 







■ US TRBA9URY BILL RTTUItBS ( 


| Sim par 10006 


| UK GILTS PRICES 




Z1 

Vk« And intona Lea Of 

Wk% ton* 

M«t 

ua cay 

MTkft tat hnraa lea QSj 

Not B* Wee£ +J- trn 6 oe af me 

Bator PTtai£ +^ Era 

rka 

af tne 

Ifetot Prtae +J- eb dee at In 


Sep 

■698 

9593 

-094 

9590 

9593 

2919 

21971 

Dec 

9473 

9467 

•094 

9474 

9486 

706 

9961 

Mar 

- 

9440 

-097 

9448 

9490 

47 

1914 


ttortfr* (tiH* up toPrt Tewe) 

EachlZtevcISO* 100*,d -9 1J40 U2«u22 

Tram Bpc 189*17 >0lA -1 19«> MyiTMrtT 

12pc 1985 1DSA -J £350 >25Jy25 

Enfi3pc6a» 80-85. 081* 02 214 Myi *rt 

lO'+ptlBBS 104ft -vl 29D0 JB2UK21 

1dm i2Vpei905£f — 108A -.1 8« Itoi5toi5 

14oc 1080 — HOB -1 770 Ad2Jy22 

15Vpc 1B0813 IMA -6 1.150 K0MO 

Enbl3%pclBK» 111 -2 BOO MylStolS 

Cormrstan IDpc 1090 — 108ft -J 3.+0B My150r1S 

1dm Cm 7pc 1007**— -.7 2J0BB ASM 

Tm 13 loci 9071$ MSA “3 1280 JBZ2422 

Enfi10*2pcifl07 1 07*1*1 -3 3.700 Fa2lAu2l 

Tram aVpc 1997tt 103d -.3 5550 Ml Ml 

Each I5pc1997 T20S -A 030 Ap270t27 

OVpcIOOB 105(1 -4 3JC0 JaWJSriO 

mm7lMGl99B» 08% -3 7650 M30Sa30 

ldmetaMfl054*L- 06U -3 igOWM 

MpC‘06-1 1T9A -.4 070 MyZZMtiZ 

1rtmi5*s*-06tt 120H -.4 035 M30S*30 

bdll^ClPOS 114% -.4 3909 HfiOHUO 

Tram 0> z pc 1003(3 >»5ft 1900 JaiBJyrs 


Bn ta ROM* Tiara 

EKb12%pe»00 11W -.5 3650 

Tram ia%0c 10B0 100% -.4 1252 

Ham 0pc 1000ft 92*0 -9 £000 

CantaMan 10 %w 1B00- ios% -A 1.798 

HamFMMa-BB— — E9® — 2900 

tpcHHlft 103% -5 5950 

Tram 13pc 2000 12ift -A 3.171 

1MC2001 — .— 107(1x4 -9 4908 

7pC D1 ft 83ft -4 3950 

Them* *94 -3 2900 

0%PC2OD2 1D7ftd -9 0927 

8K200m 07ft -8 7900 

1 Ope 2003 104l -6 2903 

• T K" 1 Mock, ft IMm to nan-nwdarne « 


M2BS82B 

UylOMrIB 

PMDAU1D 

Uy22Nv22 


Tram 1 1 *2po 2001-4 — 
CnmmdmB+ j pczao*— 

SiSl 7»«»ft2«W 

^,3 TM*12%pc200S-S — 

1591305 7%pc 2000ft 

2891300 0pe2OOMft 

£41200 Dam llltpc 2003-7 

£41240 Tram 8%pc 2007 ft 

“J, " 13%»: W-0 

IviS — 

24.1 13*1 
219 1200 
1361273 
212 - 

259 1331 OaarniamVaam 

1541306 Dam Bpc 2003 

2121308 ihaaBIMpc 2010 

’JJJS OmrMln 2011ft — 

Tdm £e 2012ft 

Tram 6%pc 2006-12ft- 

Tdmftc 2013ft 

7%0CZO13-15tt 

ham 8%pc 2017ft 

1721264 “ , i* nM7 

1241288 
+7 - 

1 £4 1242 
39 - 

25.1 124* itolatol 
7 A 1290 rpytowiiu lac 

» 7 ' 280 tato-Szpctt 

Z CdwSijpcWift 

21.71349 Tram £ »■«<£ 

4£ - QntbZ’tK — 

31.11201 Tkam.2%iic 

ru E Xucdan bade. «d Bi dMdand, 


114ft -J 1620 
74g -J 543 
107% -6 3412 1 
B»4 -9 £2501 
107ft -9 4642 ' 
123ft -9 2200 
08* -7 3900 
06% -4 2900 
117% -9 £150 
100B ~J £407 
130fi -9 1250 
105* -.7 £321 i 


07 -9 £100 I 
82* -3 4J50 
10SC2 -9 4273 
106**] -6 £150 
78H -9 1900 1 
87* -12 4650 
03%d -9 000 

104%d -1.1 6650 
1323 -12 1900 


47%d -.1 366 

42% -6 1900 

56% -6 110 

35% -.1 06 

209 -1-1 275 

29% -.1 475 

Ctoatog nddrtttom m 


Fn AH 2791230 
Ml DM 25.4 1352 
AplOtf 23212*3 
4pS0c3 191324 
5MpJ)0c 191230 
AplOci 2191318 
i sham in mid* to 


2pc%0 (0791 190% 1200 MIBSilB 721313 

*%oe«ft (135J) 100ft 0.1 000 0p27Oe27 219 - 

2%pe , m (nst IE* -.1 1900 1*240104 1521310 

2%pein (789) IBOft -.1 1900 Uy20Phi20 1341317 

4%K , 0*tt (13691 \0Bft -.1 1J0D0 M210C31 224 - 

SjcW |00S 107% — -lSO9rl0Jy10 1391114 

2%SC'09 (7£* 151% £1 1650 Mj20to20 1£41310 

2%ps HI (7+9)1 MS *1 £1 1950 W3JMS 1171310 

2%pe'13 *63 120X1 — £300 RH0M10 11J133) 

2%pc'10 019) 137* 02 £550 JM8JV20 2091321 

2%pc*20 0B9I 131% 03 2400 7pl0Ocl6 1091322 

2%pe , **ft (B7.7) 100ft 03 2900 Jfl7Jri7 106130 

4%pc'30ft (13111 1O0H 02 1900 A10Jy22 159 - 

(b| Flgma In p amd waa* mow RPl baas far todamg (Ja 8 
tnoMw prior to laaue) and have barn aduatad to raflact rabaalng 
of RPt to 100 to Jmmy 1067. Oomanton toetcr £846. RPIfor 
Novarabv 1083: 1416 and far Jure 190*: 1442. 


Othwr Fixed interest 

AktaqiDav11% 2010 120)0 -J 50 JMJp* 1.12 - 

MmOavtO%pc2DO0— 113* -9 100 W»A SHA 3*03 - 

B1mnl1%pe2012 120% -A « Hyl5Nv1S 4*31837 

fcdnd CM 8%K '10 im -2 303 All on -1485 

Bpc Cap 1096 102 -.1 735 430Jy30 - - 

T3peV-« 111% S 315 W0C1 2691+20 

Hpfca tom* 1BpC 2011. M+E -.S 40Uy31l*30 27.10 - 

Laadi 13Suc 2008 120% -2 40 AplOn 3*033140 

UmpodSSpcted. — 37% -J 9 UafpJaOc 808 - 

LB3PC-20M. 33% -J 20 UeMWa 19 - 

atorrimtar 11%pc2QD7_ 118% 02 0 AC50c25 303 3273 

MtWtajr'B’ 00% 25 Ml Sal 193361 

mrltkM^S%pc2021. 132% a* 00 JCOJySO 1*03 3405 

4%pcL2024 127% 09 SO 7*83 - 

Itolfci&aM Wipe 2006 137 -14 50 Ml SB1 274 - 


BANK RETURN 

BANKING EgAgTMBCT 

I lahlMaa 

CapM 

Piddc dapoatt* 

Bankets deposits 
Reserve and Ottwr account* 


Go wn me nt saourttJa* 

Advance and other account* 
P ramlaa. eoupmant and other i 


ISSUE DEPARTMENT 


Notes in Barddng De pa rt me nt 


Government debt 

Other Gmemmant secuWas 

Other Sacukie* 


WeckieacMy 
JUy 20, 19S4 
E 

14653600 

1A5£578.W2 

1600802657 

£038632246 

6.8026 6 66 55 

1.127A3£70B 

4,110667603 

666,008695 

6488605 

102614 

5.802688655 


1£1 11614605 

£465605 

16120600600 

11616100 

12634686230 

6473699670 

1£12060D600 


Increase or 
deemaae lor weak 
E 

-96685.417 

+7£711643 

+200.440630 


-3685.000 

+268600684 

-90.779632 

+2695423 

+14641 

+177.1 TO, 156 


♦117604,577 

+2695423 

+120600600 


-768630.130 

*886630.139 

+120600600 


Trnrrrr 




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LONDON RECENT ISSUES: EQUmES 

toms And Md Ckrna 


prim paid 
up 


(Dtl) rtgn Low Stock 


FT-6E 100 
FT-SE Md 250 


— T904— Stoca oonpL 

A0 22 Jd 21 Jd 20 Jul 19 AI18 Htfi low Ugh Uw 

T1H7 TTWII »77? 30820 30213 28766 30203 0666 FT-6E BntosBk 100 

yy in 38000 3S07.O 3S744 35609 41826 336£4 4U26 1TO FT-JCBmbsdt 200 


pr.SF 2S 5n „ m «u 380+.7 35892 357&1 3562.0 41002 33624 41007 13769 FT (Mkmy 

FT-SE-A 350 15602 15589 1560.3 15646 15406 17719 14519 17786 

FT-SE Smmcn 1821-45 181£48 1809.10 1004.40 180041 20M2B 177721 !I 5^ 

FT-SE aSS ** TTa 170053 17B32617711S 1774^ im382W.721TO««nra.T*t»re ^^SSidMtom 

FT-6W 46-SfW, 156563 154560 153798 154095 1538.11 178111 144595 176111 6192 PraOaeaaawWKmnm 


JM22JM21JBl20Jai9AI18H(6 Lew W» low 
138740 137164 136790 1301.70 134111 104010 130148 154118 90046 
142420 140795 140767 140464 130197 1007.10 134296 1087.10 03182 
24210 24025 23016 24049 24059 27136 22S56 27139 404 

0343 9145 8171 8399 9493 »7JM 0099 12740 4110 

111.73 111.75 11227 11291 11243 13397 10723 13397 5063 

1BS929 105465 107351 185368 194114 23674170222236740 822.16 
22£7 2322 2329 2311 2366 2779 1859 7347 435 


BASE LENDING RATES 


Aaam & Company . — £25 

Aled Trust Bar* -695 

MB Sark - 695 

•Henry Araaochv. — £25 
BenkofBaroda 625 

Banco BBbao Vtoctfr*— £25 

BarkofCypnm £25 

Bank cd Mend -525 

Bankollnda 695 

SankofScadend 626 

BwctoyiBark -625 

&IB* of Md East 625 

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32 


FINANCIAL TIMES MONDAY JULY 25 194* 


NEW YORK STOCK EXCHANGE COMPOSITE PRICES 


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BRUSSELS 


When you slay with us in 

BRUSSELS 

suy in touch -with 
your complimentary copy 
of the 


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Chanter 8 10 4% 4% 4% 
CKSterl Q£0 8 494 21% 21% 21% -% 

ChnnSh 0X6 13 3024 B% 9% 9* +* 
Chwntbgn 42 47 u8% 6* 6% 
Choteab is 180 i»,^ 10% 10% 
OiBtelK 1 290 % 6% % 

Cheng- Nr 13 1 05 3* 3% 3* +* 
CUps&Te 83164 4% 4 4%+% 

Chfren Cp 56 2397 58% 57% 561; +% 
CHiFfa 12B 12 75 52% 51% 52% -% 
CtatnCp 017 31 Ml 32% 32 32% +% 

QnusLgc 29 6554 26% 25% 26% +1 
OS Tadl 115 464 2* 2* 2* +% 

CtacoSys 1132*67 20% 20% 20% 

OzBaup 1X6 16 5 29*4 28 % 26% -% 

CtaaiHbr 24 151 7% 7 7 

Ota Dr 41 107 12% 12 12 -% 

Ctataeon 7 906 4% 4% 4% -% 
CocaCtara 1X0 17 IB 26% 27% 28*2 +% 
CodaEngy 137 1008 7% B% 6% -% 
CataUam 26 15 11% 11% 11% 

CognnCp 30 245 19% 18% 19 -% 

Cagoas 101 114 li% n% n* +% 

Coherer* 18 79 13 12% 13 +% 

COtaoen 040 73 219 19 10% 18% +% 

Cold Gas 136 14 30 21% 20% 21% 

CiiW Grp 060 9 119 26% 25% 25% -% 
Causa 024 16 449 23% 23% 23% +% 
COSH 0X9 165015 17% 16* 16% -% 
CncdASp 009 39 94A1 17% 16 % 16% -* 
CamnflMHOra 11 111 30% 30% 30% +% 
Canutes are M 441 18% 17% 16 -% 
OanvUteB 395 529 12% 11% 11% 

Coreftm 51 107 11% 11 11% +% 

Catauockfl 47 825 4% 4% 4* 

CanPBp ire 321317 47 45% 47 +% 
Cengten 7 125 B 5% 6 +% 

Qfflfcl 144 1850261111% 10% 11 

OBDbteM 33 651 17% 16% 17% +% 

CteriDota 1081® 7% 06% B% -H 

CtanA 050 22 1706 e2O% 20 26% +% 

enpytato 641212 9% B% 9 -% 

CtedbCp 20 690 45% 45 46% +% 

Cap Of A 43 173 15% 15% 15% +% 

Cracker 8 OXE 27 3801 23% 22% 23% ■% 

DtefCMto 0 688 \l S3 JJ -it 

CtoimHn M 206 4% 4% 4% +% 

Gytogoi 3340G 5% 4% 5% +% 


Stack nr. E iota Me* Lav Uul Qng 

- K - 

K5wU 008 H 11 K21%21% 

KvntelCp 044 5 357 9% 9 9 -% 

hrSlPfOn 7 1664 B 7% 7% 

KfiSySv 072 24 3021 l i 2S 28,’i 

Kentucky 011 14 30 6% 8 6% +% 

Un&d OM 12 112 23 22% 22% •% 

NitataKr r 213 10% 10% 10% 

KLAbEb 51 3261 38% 36% 36% t 7 fl 

knows* gr 2 3007 4% 4 4% *% 

KcS A 1 182 U k w 

Ktenaghc 1333681 21% 2D«i 21% ♦% 
KuSckeS 6 188 I3>2 13% 13% -% 


LaM Fan 012 45 450 S 7% 7% +% 

LamRsch 302148 27% 2C% 37 +% 

LAAOSter 048 16 3&4u38% 37% 38% +% 
Lance Inc 0X6 IS 170 19% 18% 18% 

LanonUfcn 41 1150 32% 31% J< 7 0 -% 

LanopDa. 9 71 6% 6% 6% ■% 

Lawsiw 37 417 3% d3% 3% +A 

LaronS 15 3856 18% 17% 18% +1% 

LnsonPr 040 17 43 23% 23% 23% -% 

LOOS 271 5706 19% 18% 19 -»% 

UUCP 0.16 1 24 4 3% 3% 

Ucmera 16 51 13 12% 12% -% 

Legem CD 14 1342 23% 22% 23 

| LMyMBc 07B 14 204 30 29% 3D *% 

Lite Teta Ore 15 31 17% 17 17% -% 

Utekae 21 90 4% d37 a j% 

LOytudA 028 11 427 13d12% 12% ■% 

Un Br 10G 480ttl27%12S%12S% -1% 

LKdnT 0X2 14 2090 1 5% 14 14% -% 

UndsayM 13 140 30% 29% 30% +’ S 

Unearlee 024 38 2304 45 43% 44% .1% 

LkjtaBu 040 17 7 34% 34% 34% -1% 

iMWHiEp 006 29 43 24% 241* ^4% -% 

Lone Star 21 44 67 0 .}% «% 

LobaD 2522104 32 % 030% 31% -,'i 

LTXCp 21604 3% 2% J% +% 

MOW ore 4 81 31% 30% 30% -% 


MO Cm 005 2115646 24 23 % 23ii -it 

U5 Car'd 17 1758 20% 26 20 -% 

UxNH OXD C 2 13% 13% lV, ■% 

MadtoonCE 1X6 14 14 32% 12% 32% -% 

Maura PWT 13 65 29% 28% 29% -Ifl 

MignaCrp 076 12 176 19% 19% 10% 

UUIBn 10 155 7 6% 6% J, 

Uarcon Cp 27 440 9 % 9% 9% +% 

Marne Dr 15 69 S 7 , 5% S 7 * +% 

Mated Cp 9 21 42 41% 42 

Manned 3 33 ill 1% 1% 

Manana 19 16 BfJ 8% «,% 


MaUBoi 10 155 7 6% 6% J, 

Uarcom Cp 27 440 9% 9% 9% +% 

Marne Dr 15 69 S 7 , 5% s7 a +% 

Mated Cp 9 21 42 41% 42 

Mamies 3 33 111 1% 1% 

Manana 19 16 BiJ 6% 6ii «* 

KedteMdLM II 5 10% >0% 10% 

MarSrt 0X0 11 625 21% 21 21% -% 

Mastac 9 131 B 7% 7% 

Madmlnt 40 745 52% 51% 52% +% 

MarforCp 0 689 5 4% 4% 

MeGltehR»a41 11 16 16 15 15 ■* 

McCbnnic 048 161898 22% 21% 2? +% 

McCawC 49 6871 53% 53% 53% +% 

Madeuhc 016 15 39 12 11% 11% -% 

MeteenoS 048 13 461 22% 23% 22% +% 

MdHtene 024 9 103 7% 6% 7% +% 

Mentor Cp 016 45 20 14% 13% 13% 

MentrG 024 21 1996 11% 10% 11 +% 

Meroatefl 068 It 472 20% 2D 1 , 20*4 ■% 

Mercury G 070 7 339 28 27% 27% 

MenteM 1X8 II 214 31% 30% 30% -ft 

Maud 82164 6% 7% 8% +% 

IMhode A iQ.12 17 311 17% 16% 17% +% 

Urecm 56 465 SO 1 , 29% 29% -% 

Michael F 020 171143(02% <1% >2% +% 
UchMriB 2X0338 368 74% 74% 74% •% 

MboHUi 18 26 4% 3% 3% 

Iflcnape 72051 10 9% 10 +* 


Hcnxom S 529 6% 6% 6% -% 
Iflograh 15 384 5% 5% 5% -% 
Ucipofc (212B 5% 5% 5% 

Hcsn 142006 50% 47% 50* +Z|2 

HUAUM 3611904 41% 38% 41% +% 
HtenHc OS 11 1176 29% S% 29* -ft 
MteuOah 050 30 14 38 35% 36 +% 

IBtrH 052 20 211 29% 28% 28% -% 
Meal 65 24% 23% 24 -% 

Mkntadi 17 5 12% 12% 12% 

Mott told 48 2925 19% 19% 19* +* 
Modem Co 020 17 51 7 6% 7 ♦», 

MuflneMf 052 20 769 26% 27% 28% +% 
Mam OM 329 37% 36% 37% •% 
Mate he 004 30 90 40% 39% 40% +% 
Moran 0X4 10 731 6% 5% 58 -ft 
Mactnee P (036 22 128 29% 29 29% +% 

Mr Coffee 16 61 15 14% 14% -ft 

MTS Sys OSB 10 4 25% lE5 25% 

MHmed 13 414 30 29% 30 

Mycogen 4 967 10% 9% 9% -ft 


ftekma 

Rmn* 

FubncdADfl 


GHApp 8 14 3% <0% 3% -% 

GW Sen 007 2D 334 14 13% 13% -% 

Ortas 0 5 3 3 3 +% 

Ganafle 11 IS 3% 3% 3% 

Guta Co 016153 184 6% 5% 8% +% 

GittBtad 04017 4 17 17 17 

tadyto 17 631 4% 4% 4% ■% 

60tefcPh 3 934 8 d7% 8 +% 

GerarrCp 4X0 38 771 22% 22 22% +% 

Beaus Inc 120 925 3% 3% 3% 

BdDQno 62 BS5 27 26% 26% +% 

Glieon Gt 040 8 69 14% 13% 14% 

Gttfeg'L 012121380 17 16% 16% -% 

QOwlA OJD 16 33 15 14% 14% 

adlBkw 10 6 4% d*% 4% J, 

Good (toys 151202 12% 11% 11% -% 

QdfflteHp 0X0 19 253 22 21% 21% -% 

GradcoSjn 39 133 2% 2% 2% 

Note ore 67 117 21 20% 2D% -1 

taeoiAP 024 10 30 17%d16% 17% +% 

BmwAPh « 182 « dft ft iV 

Pwenans 02202 2% 2% 2% 

BndlMr 587 262 12%tf11% 11% -% 

GTICmp 8 826 11% 10% 11% +% 
OrtflSm B1773u10% 10% 10% -% 


- H - 

Hates A 50 581 5g 5% 5*2 

Hktoeyte 064 B 42 20% 20% 20% +% 

Haper 6p 020 12 12 13% 13% 13% +% 

HB06CD 018 24 2077 26% 27% 26% +% 

Haanhcar 163889 20% 19% 20% +% 
Htttlbcm 0X6 20 228 12% 12% 12% 

HMbhdyn 10 648 B% 6% 6% 

Heddnou 016 1913501 12% 11% 11% +% 

Hettnf 101 10% 9% 10% +% 

HefcnTroy 81716 14% 14% 14% -% 
Hottf* 072 13 322 20 19% 19% +tf 

HogmSya 0.15 23 876 7% 7% 7% 

(Udttc 48 220 11 10% 10% +% 

Hoc* Berf 0X0 8 2 2012 20% 20>z 

Hon* Ofco 072 25 251 iCl 20 20% 

Han tato 044 18 zlOO 27% 27% 27% 

Hantnck 15 1122 15% 14% 14% •% 
HHdita 044362 85 3% 3% 3% *% 

HlHJB ore 18 772 18% 18 16% -% 

Hmfingm axo ia 451 25% 24% «% -% 

HaeoCD 0X6 0 HO 2% 2% 2% 

HutchTech 150 408 27% 25% 27 

HycteNa 18 86 4% 4% 4% +% 


MAC Re 016 11 845 27% 26% 27% +B 

HaSiFhch 072 II 57 16% 10% 16% 

Met Oompt 036 79 919 12% 12% 12% +% 

MnSbn 620 21 36 14 13% 14+% 

Navigator 11 10 16% 1B% 16% 

UK 041104 54 60% 60% 60% -% 

Heieor 17 242 27 26% 27 

NstakGen 20 4729 15 14% 14% -% 

MetakS ID0 1005 7% 7 7ft +ft 

Nemouen 25 3 7% 7% 7% 

Mi|pa 027 20 382 20 19% 19% -% 

NewEBus 060 20 389 ia%d17% 17% -% 
Hewknme 7 513 9% 9% 9% -% 

Mudptelei 309734 41% 39% 41% +1% 
NewprtCp 0X4 12 66 6% 5% 6 

Noble Dd 231507 7% 7% 7% 
Nantaon 056 24 2 54 54 54 -1 

Ndotm 040 25 6289 43% 41% 43 +1% 

Nasanl 13 187 18 17% 17% +% 

NStarlln 4 380 116 5% 5% +% 

NontaiTd 088 12 1706 36% d38 38% 

NW AH 1017103 17% 17% 17% +ft 

NOWl 80615122 16% 16% 16% -% 
Note** 32 1565 35 34% 35% +% 

NPCA 8 iX% dB 6 -% 

MSCCorp 8 10 3% 3% 3% 


nays 45 131 7% 7% 7% +% 

OB Comm 3120229 10% 10% 10% +% 

B total 3 2355 3% 3% 3% -% 

I m a ma 36 93 6 5% 6 +% 

bnmuiogan 3 103 4% 3% 4% 

taped Be 040 33 155 17% 17% 17% -% 

todies 024200 25 14ft d14 14ft 

fed Roe 16 2113 14% 13% 13H -A 

tafenttx 2434495 20% 18% 20% +1% 
tadesMd 0X8 16 77 11% 11% 11% +% 

takpOe* 2324682 19% 18% 10 *% 

UDfdSys 25 2 IGlj 10% 10% +% 

UgtdlM 4 257 1% d1% 1% 
tad 024 II 3081 7 59 57% 57% -XI 

ktott 7 845 2% 1% 1% -% 

Mgnfi 032 22253 15% 14% 1*% J 4 
Ha Tel 21 751 Bit 9% B% +% 

HerfteA 0X4 15 » 11% 11% 11% -% 

Hgpfi 31131 10 ft ft % 

tabulate 4 664 3* H2% 3% 

htodln 4 2 10% 10% 10% -% 

irate 142101 B% 7% 8% +% 

MDafeyQA 13 55 17 16% 16% -% 

tat Res 0X8 19 20 2% d2% 2% +% 

H TOfel 2S 205 4% 4% 4% -% 

tomes? 001 1$ 512 26% 27% 28% +% 

taaagaCP 1 67 2% 2% 2% 

tamed* 15 7 17% 16% 16% +% 

UYofcedO 1.17 39 238214% 213 213 -1% 


-D- 

DWCd# 1518656 »% 23% 24% +% 
DatOni 013 18 3 70% dTO 70% 

DfflSnftb ID 19 2% 2% 2% 

Malta 30 107 7% 7 7% -ft 

DOtacope 14 866 14% 14% 14% +% 


J&J Snack 1« 125 12% 12% i:% -% 

Jesan ta 028 15 7 10% 9% 10% +>, 

JAM aio 30 Z34 35% 33% 34% -1 

Johnson W 60 34 24 23% 24 +% 

JtalK 11 84 14% 14% 14% +% 

JanesMad 01013 21B 9% 6% -% 

JostynCp 1J0 12 76 25% 25% 35% 
JS8FW 0X0 16 85 26% 26% 26% 
Juaotig Oa MIS? 2o% 19% 20% -% 
Just* 016 81000 lT%mO% 10% -% 


- O - 

OChstays 29 63 18 18 18 +% 

Odd Com 15 1526 19% 18% 19% +% 

(Hbftntg 13 569 12%d12% 12% -% 
OtebayN 080 9 41 lC7% 26% Z7% +1 

OhkCs 1.46 6 574 29% 28% 29 +% 

OU Kent T.16 10 113 34 33% 33% -% 

PdHHB 092 16 8 36 1 , <06 36% +% 

Oobancoip 1X0 7 3972 3ld27% 28 -2% 

One Pries 11 122 IS 14% 14% +ft 

Optical R 20 229 22% 22 22 -% 

PadeS 5415936 37% 36% 36% J, 

OAScna 38 152 15 14% 15 

ornouch 0X9 23 11 6% 7% 8% 

OrcMSupp 8 34 12% 13% 13% -% 

PngonMte 031 10 131 5% 5% 5% -% 

Ostap 7 t« 2% 2% 2% 

OsbkfiA 041 47 161 14% 14% 14% +% 

Oshku&h T 050 11 31 10% 10% 10% +% 

OtterTa* 1.73 13 35 31 30 31 +1 


- p - a - 

Para 1X0 13 634 solz 49% 50I2 +42 

PadJutep 056 13 69 13% 13% 13% +% 

PTtam 132 17 165 25% 24% 25% *% 

PtaMH 21 2057 53% 47% 5 2% +4% 

Pmmebc a 19M Ml j m 24% -ft 

Paychet 031 42 779 34 33 34 +% 

PaycoAm 31 173 6% 6% 8% -% 

Pberiesa . 050 44 165 1D»« 1D>4 10% +% 

tan TripT 8 30 14 13% 13% -% 

Pena tag 1X0 22 B 31 30% 30% -% 

Pantakx 072 16 234 38% 37% 38 -1 

tarn* l 15 148 6 5% 5% ■% 

Pentad L 020 24 5 21% 21% 21% 

Part®. H 024 12 162 12% 12% 13% 

PeVOHe 1.12 17 5 32% 32% 32% 

Pharmacy 31 196 10% 9% 10% +% 

I PtaemTdi 23 445 4% 4% 4% +% 

Pirate 048 4 10 9% 9% 9% 

Hamate 271320 13% 12% 13 -% 

Pinkston 42 3T9 17% 16* 16* -ft 

PnmerGp 060 27 400 39*4 38% 39 1 , +% 

noneatfl 0X8 333018 34 33% 33% +% 

PtausSt 012 14 1068 27% 26% 38% -% 

Ponce Fed 5 IDO 8% 8ft 8% 

PUMA 17 2S 6% 61, 6% 

nraLft 009 3 231 7% 6% 7 +% 

Presjttk 139 B75 37% 36% 37% *1% 

Pr/Qst 2311400 15% 14% 15 -% 

Pride Ps 43 256 S% 5% 5% -% 

PrintnH 24 l42u)4% 13% 13% -% 

Rad Oust OZ4 22 10 24% 24% 24% 

Puritan B 012 7 1857 18 17% 17% -% 


W 09 

sort dm. E We hou um late 0*a 

pyramid 4 651 S% d5% 5% -% 

g g 9 12 0 5% 6 

Quakerism )X.62 71 3 I? 7 5 l ’ l 2 1?r fi +5 S 

dual Food 020 16 109 23% 22% K% -% 

auamun raraasi 16% <5,’. 15* +* 

ftirts to 16 157 10% 10% 10ft -i, 

QVGtoc 3013747 45 43% «7 S -% 


IWrbaw 

ID 883 11% 10% 11% 

-% 

Rabys 

4161? 

4% 2% 4% 

^% 

ftoctenm 

3 470 

4% 04 4% 

-% 

Raymond 

25 « 

19% 16% 16% 

■% 

Decani 

16 m4 

18% i?% 16 

+% 

BriJip A 

13 >30 

14% 13% 14% 


Rcpegen 

1 473 

3% d2% 3 

-% 

BepUtasM 

4 336 

3% 3 3% 

»% 

Resrtttaa 

13 29 

a ? 7 i 8 


Dnrcrs 

224 15 2231 

43% «% 42% 

-% 

Rr.tonmc 

0 292 

5% d4* 5% 


RmFet 

060 10 7 

34% 34% 34% 

-% 

Kama*. ■ 

140 201102 0>>4 60 % 60% 

-% 

mugnl 

012 13 63 

6% 6% 6% 

■% 

RachSca 

OK 4 2467 

21% 19% 20 

+% 

Raosndt 

015 32472 

17% 16% 16% 


HuuSn 

ore 12 850 J5% 14% 15% 

+% 

BokdrM« 

23 64 

19I4 18% 18% 


Rouse 

0X0 62 2016 

ure 19% re 


WVhc.t 

OS 191543 16%d16% 16% 

+% 

RSRn 

QfiO 13 142 

22 21% 22 

+% 

RyanFitey 

1112305 

6% <£% 6% 

-% 


- s 



Softra 

196 82127 

58’: 5?% 58% 

+1% 

Sanderson 

030 14 121 u!9% 19 19% 


ScWmtqrAjOX 19 442 26% 25% M% 

+Jq 

SciMcUL 

B 1127 

29% re 29% 


SnSrtm 

12 14*15 15% 1^3 15% 

■% 

Sdos 

615M 

0% 8% 6% 

+% 

sracxCp 

052 B 014 10% 17% left 

V* 

Score Bid 

7 1618 

7% 7% 7% 

-% 

StaWd 

ire 44 3 36% 36% 36% 


S'gau 

1227077 25?( 24% 2512 

+1* 

sa cp 

016 22 773 16% 17% 17% 

-% 

SuwtoB 

030 1 02 

■?& 2 2 


Sdreais 

1 1? IS 28 

25% 24% 25% 

+% 

Sequent 

62 8362 

13% 12% Hft 

-52 

Sramo 

37 56M 

5"e 3ft 5% 

»i% 

ServToch 

12 97 

6% 0 6% 

-% 

5nvFraet 

20 16 

4 3% 3 7 * 

•ft 

Sewiun 

16 40 

>7% 17% 17% 


Shi Med 

084 18 109 

24% 24% 24% 

+% 

SHLSrm 

2 761 

rift 5% 5*2 

+1*4 

Shoroiwod 

29 315 

18% 17% 17% 


StawhUP 

10 350 

11 10% 10% 

■% 

Siena On 

13 78f- 

17 16 16% 

% 

SknaTuc 

2 111 

3% 3% 3% 

*% 

SgmAI 

033 15 8842 

34 d£ 32* 

•1ft 

SlgnaDes 

1 439 

7 d6% 6% 

% 

5lbcriAc 

006 52 40 10% 10% 10% 


SISenVGp 

35 12W 

12% 12% 12% 

■A 

SUimsaa 

056 24 43 

19 19% 19 


SmdbM 

39 235 28% 28% 28% 


SnapplaB* 

51 3797 

20 10% 19% 

% 

SaltwaraP 

02254 

4 d3 3% 

+% 

Sonnco 

056 15 1380 

22 21% 21% 

-* 

soudita 

0X8 ID 886 21% 20?s 21 



SplegdAx DJO 35 1332 17 16% 16% -% 

SUudrMd 040 13 B57 31% 31 31% 

SI Pause 030 10 1033 20% 20% 20% +% 
SfcyN 1 233 1% lU 1% 

Sates 391798 2612 25 25% -% 

Stale Sir 060 16 2487 38% 37% 38 -% 

Sdlbcra 10 952 14% 14% 14% +* 

Sid Rcga 0XB14 17 31% 31% 21% -% 

Sted Tee 0X6 19 310 17% 16% 17% +% 

StoUyUSA ore 43 309 11% 11% 11% +% 

StHH 144 5 20% 20% 20% +% 

Sbrtbra 1.10 13 481 21% 21 21% 

StrudUy 14 2647 7% 7% 7* -ft 

Sbyker 038 244401 31% 30% 30% -% 
SuSvanD 22 219 15% 14% 14% +% 

SumhomaB DBO 27 10 23% 23% 23% +% 

Summit Be OM 14 B59 22% 22% 22% +% 


Summit If 39 600 30 38% 29% -% 

Sin Sport 10 316 4% 4% 4* -ft 

SUriXc 1221967 22% 21% 22% -ft 

SwtftTm 35 120 35 34% 34% -% 

Syaawtae 4520177 42d38% 38% -2% 

SVmantoc 33 8237 13% 13% 12% -% 

Synafcy 040 IS 26 19% t9% I9 1 , -% 

Synerconi 67 187 3% 3% 3% 

Synergeo 110262 4% d4% 4% ■% 
Synene 59 95 14% 13% U 1 , +% 

Synopbes 13 4860 15 14% 14% -* 

SyamSod 012 15 570 13% 13 13% -% 

Syaomto 25 5H1 16% 15% 15% -% 

Systemed 25 649 6% 5% 6ft +ft 


-T- 

T-CNSC 6 333 3% 3% 3% 
TJOWPr 052 161029 26% 25% 26+% 

TBCCp 13 1374 10 9% 9il +ft 

TCA Cable 044 37 1409 23% 22% 22% -% 
TMtttob 1011259 15% d14 15fJ +* 
Tecanoeh 0X0 12 114 49% 47% 48 +% 

Tdmfcc 2 33 8% 8 8 

Tdco Sya 9 131 13 12% 12% -% 

TteOonuiA 31624268 22% 31% 23* +* 
TdebK 74730 5% 4% 4% -1 

Tettoba 34 3118 34% 33% 34 +% 

TehonCp 0X1 81 502 15% 14% 14% -1 

Item Tec 79 354 u9% g% 9% +% 

TewPhADR 0L20 28 1141 27U 26% 27% +% 
Three Com 55 9912 53% 50 51 -1 

TJ tat 022 27 5673 19d17% 16% +% 

Tdkas Med 2 142 3% 3% 3% +% 

Tokyo Mar 034 38 5 64% 64% 64% -i% 

Tom Brown 80 163 15% 15% 15% -% 

ToppsGox 028318 B26 6% 6% 6% -% 

TPIEnter 4 2379 7% 7% 7* +ft 

Trarautd 10 58 11 10% 10% +% 

Tmtek 1X0 10 Z1T 38 37% 38 +% 

Trtore 7 17 2% 2% Z% 

Trimble 57 372 10% 10% 10% +% 

TnasoBBl 1«l 12 530 23% 21% 23 +1 

Tseng Ita 020121310 7 6% 6% -% 

TysWA 0X6 191539 24% 23% 33% -% 


-u- 

USWicr 088 1321760 37% 35% 37% +1% 
Itobb 31268 5% 5% 5% 

UCnfes&s 1X0 13 36 16% 15% 16% +% 

USTst 3X0 12 6 51 50% 51 +% 

United St 040 8 716 9% 9% 9% 

Utetog 024 21 14 27% 37% 37% 

Unkrto 1.40 21 248 39%d38% 38% -% 
USBvrop 0X8 101647 38% 36 26% +% 

US Energy 30 35 5 4% 4% 

US1 Dorp 1.13 o 690 12% 12% 12% rt 

Utah Med 13 638 8% 7% 8 

IHTele* 12 21 u52 51% 52 +1 

USX 13 30 4% dd% 4% 


- V - 

030 37 84 16% 16 16% +% 

70 116 36% 35% 35% -% 

19 3444 18% 17% 17% -% 
32 945 21% 20% 21 +% 

9 98 15% 14% 14% -% 
21 4639 17% 16% 16% +% 
31 7483 14% 13% 14% .% 
OM 17 60 94 94 94 +% 


- w- 

namsr En 0.10 IB 1685 34 23% 23% -% 

WBftnfeeh 73 540 4% «* 4!^ +ft 
WaslMOSBOTS 73361 20% 19% 30% 
HtosmdSLHM 9 571 31% 31 21% +% 

WMfctndA 022 9 303 24 23% 23% -% 

Wausau PM 024 15 322 24% 24% 24% -% 

MHO 2.« 16 36 41 40 41 

WW* B 242 3% 3% 3% 

westo* 072 125676 30ft 29* 30% +% 
Wotft* 7 454 10% d9% 0% -% 

"MPSIA 1 7D7 15% 15% 1S% -% 

WetSeteA 8 8 2% 2% 2% -% 

Wanda 0X6 23 1223 47% 46 47% +1 
WiBSanom a 73 587 32% 32 32% 

wokihanL are i 4 as ia% is% 15% +7. 

wmogl 040 25 556 19% 16* 19% 
WPPGmop 0X8 20 48 3* 3% 3% 
Wyman- GdntLCO 1 279 8% 5% 5% 


-x- Y-Z- 

WM* Cl 1715 33% 32 32% -% 

»** Cap 1 1561 2% <&% 2% J, 

Ttttow 094 282520 19% itfl, 19% +% 
VMiRash 133 248 4% 3% 4 ^ 

aooitta 1.12 9 511 39ft 38% 38% -% 



34 


FINANCIAL TIMES MONDAY JULY 25 1994 


MONDAY 


Israel-Jqrdan summit 


Israel's prime minister, Yitzhak Rabin, 
and King Hussein of Jordan hold a 
summit in Washington, marking the 
rapid pace of the unfolding Middle East 
peace process. 

The meeting will be a public affirma- 
tion that the Israeli-Jordanian peace 
process is irreversible and that Israel is 
on the way to its second peace treaty 
with an Arab neighbour since the 
Egyptian- Israeli accord of 1979. 

A formal treaty, still several months 
away, will be preceded by joint projects 
in tourism, trade, environment and 
regional development Borders, com- 
mercial flights and telephone lines may 
be opened in a first step towards a 
regionally integrated market which has 
been the dream of Shimon Peres, 
Israel's foreign minister. 

The US will encourage and under- 
write many of the projects and has 
demonstrated its support by promising 
to present to Congress a bill to write off 
?950m of Jordanian debt Both Mr 
Rabin and King Hussein will address 
Congress on Tuesday. 


Tl«e Asean Regional Forum, 

bringing together 18 countries to dis- 
cuss political and security Issues in 
Asia, meets for the first time in Bang- 
kok. In addition to the six members of 
the Association of South East Asian 
Nations, among those attending are the 
CIS, China and Russia. The crisis over 
North Korea's nuclear programme and 
the civil war in Cambodia are among 
the likely topics for discussion, but the 
meeting may focus on defining ARP'S 
future role. The forum was established 
In response to the uncertainty in the 
region after the end of the cold war. 


Ecowras, the Economic Community of 
West African States, begins its annual 
meeting in Abuja, leading to the heads 
of states’ meeting on Thursday and Fri- 
day. Ecowas has made little progress 
towards its target of economic and 
monetary union by the year 2000, and 
the main issue will be its joint peace- 
keeping force in Liberia, dominated by 
Nigerian troops. 

Finance ministers will discuss the 
effects of January’s sharp devaluation 
of the Francophone states’ common 
currency, the CFA franc. 


UK tank delivery: Sir Colin 
Chandler, chief executive of the Vick- 
ers engineering company, hands over 
the first completed Challenger 2 tank to 
the British Army in a ceremony at the 
company's Barnbow factory in Leeds. It 
is the first of 148 tanks in the first pro- 
duction run which was supplemented 
by a follow-on order for 259 more two 
weeks ago. When final deliveries are 
complete around the year 2000, the Brit- 
ish Army will have an entirely Chal- 
lenger 2 tank fleet 


Bayreuth and Salzburg begin their 
music festivals. 


Holidays: Costa Rica, Fiji 
(Constitution Day), Spain (Madrid 
only), Thailand, Tunisia. 


Other economic news 


Monday: Japan and the US win 
be key focuses of market atten- 
tion this week, with a spate of 
statistics for economists to feed 
oil Japan's trade balance for 
the first 10 days of June today 
will be watched with interest 
in light of the ongoing weak- 
ness of the dollar against the 
yen. 

Tuesday: On the domestic 
front, Japan's coincident and 
leading diffusion indexes for 
May, published today, should 
provide further indication that 
business sentiment is improv- 
ing. In the US, July's consumer 
confidence data is likely to 
show confidence flattening out, 
albeit at high levels. 

Wednesday: More indications 
about the strength of the US 
economic recovery will emerge 
today with the publication of 
June durable goods data. In 
Japan, June's retail sales are 
expected to show a year on 
year fall, albeit at a slower rate 
than last month. 

Friday: More US and Japa- 
nese data round off the week, 
with Japan's construction data 
expected to Indicate a slow 
pick-up in this sector. US 
advance GDP data are forecast 
to show a rise, year-on-year, of 
3.65 per cent for the second 
Quarter of this year, up from 
3.4 per cent in the first quarter. 


FT GUIDE TO THE WEEK 


TUESDAY 


WEDNESDAY 


Whitewater hearing begins Thai confidence vote 


The US Home of Representatives 
banking committee holds the first con- 
gressional hearings into any aspect of 
the Whitewater affair, which concerns 
Arkansas property deals, loans, and 
President Clinton and hl$ wife Hillary. 
The session will focus on contacts 
between the White House and other 
government regulatory agencies. 

Among those due to testify are 
“Mack” McLarty, former White House 
chief of staff and now senior counsellor, 
Margaret Ann Williams, chier of staff to 
Hillary Rodham Clinton, and Lloyd 
Cutler, White House legal counsel. 

The Senate banking committee is due 
to hold parallel hearings beginning 
either Wednesday or Thursday. 


Thai opposition parties are due to 
launch a no-confidence debate in parlia- 
ment against four ministers in the gov- 
erning coalition, including Prasong 
Soonsiri, the foreign minister who is 
simultaneously hosting a series of 
meetings for the Association of South- 
East Asian Nations (Asean). 

Political commentators predict that 
the government will survive the debate, 
but some members of the coalition's 
Palang Dharma (Moral Force) party 
have threatened to vote against their 
own cabinet ministers because of dis- 
agreements within the party. 


Taiwan courts Gatt: Negotiations 
resume in Geneva on Taiwan's bid to 
join the General Agreement on Tariffs 
and Trade. Taiwan hopes to be a mem- 
ber by the year-end, but Beijing insists 
on being admitted first (see Friday). 


UK economy: The Confederation of 
British Industry quarterly Industrial 
trends survey will be watched for signs 
that the UK economic recovery is trig- 
gering more investment Previous sur- 
veys have a bearish attitude to invest- 
ment in spite of the gradual growth in 
manufacturing. 

Companies' pricing expectations dur- 
ing the next four months are also likely 
to be another key topic of interest in 
light of the recent rise in the cost of 
raw materials and components. 


Wheat heat 

US and Cana- 
dian trade min- 
isters Mickey 

Kantor (left) 
and Roy 
Madaren sit 
down to try to 
negotiate a deal 
which would 
avoid US curbs 
on Canadian 
durum wheat 
exports and pos- 
sibly other commodities. The US Inter- 
national Trade Commission has already 
found Canada guilty of dumping its 
wheat in tbs US. 




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Crisis in Rwanda: humanitarian aid to the refugees being co-otdkwted by the United Nations is not enough to cope with the situation 


Spanish strike: Workers at Spanish 
car-maker Seat, a subsidiary of Ger- 
many's Volkswagen, have called a 24- 
hour strike. They object to a proposed 
IQ per cent pay-cut and the failure of 
management to offer any job guaran- 
tees in return. 


EU social policy: The European 
Commission is due to approve social 
affairs commissioner PadraJg Flynn's 
white paper on social policy at a meet- 
ing in Brussels. 


THURSDAY 


FRIDAY 


WEEKEND 


Talks on Yemen begin 


China discusses Galt terms Bosnian peace hopes falter 


Bangladesh’s main opposition party, 
the Awami League, plans a big rally' to 
press its demand for an early election 
under an interim administration. 


United Nations-sponsored talks 
to help forge a reconciliation between 
North and South Yemen are due to 
start in Paris after their two-month 
civil war. 


UK raH strikes: Signaiworfcers for 
Railtrack, owner of most of the infra- 
structure of Britain's rail network, step 
up their pay dispute with their first 48- 
hour stoppage, beginning at noon. 

Travellers have experienced 
24-hour stoppages on the past six 
Wednesdays. 


John Major, UK prime minister, 
gives European Policy Forum lecture in 
London on The Role and Limits of the 
State. 


UK politics: The House of Lords, the 
unelected upper chamber of parlia- 
ment, rises for its summer recess, 
returning on October 10. 


Glorious Goodwood: One of the 

premier meetings of the English horse 
racing calendar begins today (to July 
30). 



Bank of England tercentenary: 

. A distinguished 

& Old Lady cele- 

“ .. brates her birth- 

day. The Queen, 
leading politi- 
cians and top 
City figures 
attend a service 
of thanksgiving 
in St Paul’s 
Cathedral to 
mark the 300th 
anniversary of 
the date the 
Bank of 
England's char- 
ter was sealed. Unlike most of us, the 
Bank is gaining strength as it grows 
older. Eddie George, its governor, now 
exercises a more powerful influence 
over monetary policy than any of his 
recent predecessors. 


Abiola trial: Moshood Abiola is to be 
tried for treason by Nigeria's military 
regime today in a specially convened 
high court in Abuja. Mr Abiola was 
arrested last month when he declared 
himself president on the anniversary of 
his victory in the annulled presidential 
election. 

General Sani Abac ha has promised to 
start a new transition to civilian rule 
some time next year, but is facing 
mounting opposition and a national 
strike in the vital oil industry. 


Members of the General Agreement on 
Tariffs and Trade meet in Geneva to 
discuss the terms on which China 
will be re-admitted to the world trade 
body. 

Beijing, exasperated by the delay in 
concluding the seven-year-old negotia- 
tions, says it will submit one last trade 
liberalisation offer but is not prepared 
to join Gatt at any cost 

The hard bargaining is expected in 
September, as China tries to beat the 
deadline for Gatt membership by year- 
end. enabling it to become a founder 
member of Gatt's successor, the World 
Trade Organisation. 


Foreign ministers from the five-nation 
contact group on Bosnia meet in 
Geneva on Saturday to decide what to 
do after the failure of the latest, suppos- 
edly final, peace plan. Options include 
tighter sanctions on Serbia, more rigor- 
ous enforcement of “no-fly" and exclu- 
sion zones, and lifting the arms 
embargo for the Bosnian government 


Japanese economy: Industrial 
production figures out today should 
give further evidence that the Japanese 
recession is bottoming out. Analysts 
expect the growth rate to pick up in 
June, after a year-on-year fall of 1.2 per 
cent in May. 


Islamic fundamentalists in 

Bangladesh plan a march to the capital 
Dhaka as part of their campaign 
against Taslima Nasreen. 32, a feminist 
writer accused of insulting Islam. Ms 
Nasreen came to prominence last year 
with a novel, “Lajja” (Shame), portray- 
ing the sufferings of Bangladesh’s 
Hindu minority. 


Taiwanese and mainland Chinese 
negotiators start talks an Saturday in 
Taipei. 

On the agenda are fishing disputes, 
the return of illegal immigrants to the 
iftland and the repatriation of airline 
hijackers. The last round of talks was 
held in March. Five previous rounds 
have been unsuccessful. 


Sailing: Cowes Week begins on 
Saturday (to August 6). 


FT Surveys: Bank of England's 300th 
Anniversary and Tunisia. 


Holidays: Cuba (National Rebellion 
Day). 


Holidays; Belarus (Independence 
Day), Bosnia and Hercegovina. 


UK water pricing: The water 
industry regulator. Ian Byatt, publishes 
his long-awaited price controls for UK 
water companies at a time when last- 
rising water charges have been widely 
criticised. The controls will dictate how 
much companies can Increase prices 
during the next 10 years, taking 
account of inflation and their obliga- 
tions to modernise the water system. 


Lloyds kicks off the UK clearing 
banks' interim results season. Its pros- 
pects are affected by uncertainty over 
its proposed £l.3bn ($2.8bn) acquisition 
of Cheltenham & Gloucester building 
society. 

Pie-tax profits of about £850m are 
expected. 


South Pacific Forum: The 25th 
annual meeting begins in Brisbane bn 
Sunday (to August 2). Delegates will 
consider how the Forum's structure 
and procedures are adapting to eco- 
nomic changes in the region, and its 
relationship with other institutions, 
especially the Association of South 
East Asian Nations and the Ada Pacific 
Economic Co-operation forum. 


Holidays: Peru (Independence Day). 


Real deadline: Today is the last 
chance for Brazilians to exchange their 
old currency, the cruzeiro, for the real, 
which was Introduced on July I. 


Motor racing: The German Grand 
Prix takes place at Hockenheim, near 
Heidelberg, on Sunday. 


Compiled by Patrick Stiles. 
Fax : (+44) (0)71 873 3194. 


ECONOMIC- DIARY 




Statistics to be released this week 


1 34 b r*--; 


Prariotm 
Actual . 


Oay 

Released County 


Economic 

Statistic 


Mcdfan 

Forecast 


We Work With Both Hemispheres. 


J une wasting home gates, , • 
1st todays June ftecte Mange 

June supermarfeetsafesri 


. 4,09m 

' ’teflbo 
-2Ji% 


June M2" 


July consumer confidence 
Johnson Redb ook, J vdy 23 
May coincident irtdx 
May leading diffusion Indx 
June durable goods orders 
June durable shipments 


July 29 Japan 
{com) japan 

Japan 

• Japan 
- Japan 
Japan 
Japan 
Japan 


July agricultural prices 

June unemployment rate 

July Tokyo consumer prices indx 

Ditto, ex perishables 

June nation consumer prices frxfr. 

Ditto, ex perishables 


June construction orders 







June housing starts 


P** tir.-sr;,. 


June construction starts 


June ratafl sales 


. * -4% 


July 23 US 


June household consumption* 

2n d qtr consumer prices buftr* 

2nd qtr consumer prices Ind*** 

Initial claims. July 23 • 

State benefits, Ji£y 16 
M2 w/e July 18 

June Industrial production! . . 
June shipmentsf 
May flx-walghted entp earnings" 
2nd qtr gross domest prod advance 

Ottto, deflator (advance) 

July Michigan sentiment (final) 

June export price bidx 
Jurw Import price Indx 


June unem p loyment rate 

June {oftseehers _ . 

May gross dom product, tac cost' 


June current a/c 


A$1.6bn 


0.3% 

-A$1.42bn 

-ASl.71bfT 


392,000 


During the week... 


Germany 

Germany 

Germany 

Germany 

Germany 

Germany 

Italy 


2nd 10 days July wh'sala price Wd*- 
June Impart prices' 0, 

June import prices" OJ 

May capital a/c 
May long-term capi tal a/c 
July pretim cost erf Bring* -0. 

July prelim cost of Swing** 2J 

June balance of payments 
Jurw trade balance, ex-pay 


'month on month, ryeer on year, tseesonady equated StstfsBcs, courtesy MMS Jnrematfcxw/. 


ACROSS 

l Spot scoundrel breaking into 

safe (B) 

4 Pudding Ingredient is a lemon 
mixture (8) 

10 A woman soldiers imprisoned 
before (7) 

11 Seen pointlessly returning 
duty list to statesman (7) 

12 Fastened pole to abed (4) 

13 Came to light as print 
changed colour (10) 

15 offensive party rejected 
promissory notes (6) 

16 Convinced some (71 

20 Back street opposite (7) 

21 One-sided ten arranging tune 
(6) 

24 Stirring up not cheer a 
Roman driver? (10) 

28 Imitate some female choirs (4) 

28 He turns out to be first easy 
winner (I) 

29 Worry about politician becom- 
irig bore (7) 

30 One carries seme water over 
(8) 

31 Beg for a stewed apple (6) 


DOWN 

1 Breaks stolen picture (S) 

2 Finding accountant exciting 
Is drinking Freely! <9> 

3 See 27 down 

5 Sees poor nurse caught 
accepting perfumes (8) 

6 Order “run round marquee”, 
being all-powerful (10) 

7 Bury famous playwright top- 
less! (5) 

8 Scrape off tar on a red molly 
( 8 ) 

9 Monster water outlet no con- 
servationists wanted (5) 

14 Buzz with detail I raised 
when mortified (10) 

17 Basil and Eric, terribly hot- 
tempered (9) 

18 Oriental man gets drunk in 
secret (8) 

19 Wild boar not supposed to be 
tree-dwelling <8) 

22 One is spotted suffering from 
it (6) 

23 Colour of a companion after 
exercises (5) 

25 One last word before you go 
(51 

27 and 3 down Mistake route 
which gets you on to motor- 
way (4.4) 



MONDAY PRIZE CROSSWORD 

No.8,514 Set by GRIFFIN 


A prize of a Pelikan New Classic 390 fountain pen for the first correct 
solution opened and five runner-up prizes of £35 PeUkan vouchers will be 
awarded. Solutions by Thursday August 4, marked Monday Crossword 
8,814 on the envelope, to the Financial Times, l Southwark Bridge, London 
SEl 9HL. Solution on Monday August 8. 


To be a man is to feel that through one's own 
contribution one helps to build the world. 

SMELT has been helping build and unite the 
world for more than 30 years as one of the 
leading International engineering contractors. 

^ chief . 

SMELT offers a full range of services required In f - 
turnkey construction of a project in the areas of: 

- Process industry - - 

- Manufacturing industry ! ■ * ■ 

- Food processing and refrigeration , 

- Medical projects Hour-,* 

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- Office buildings and tourist facilities - 

The business philosophy of completing projects r> - 

of the highest quality, on time, within budget and ... 
to the clients' satisfaction has resulted In more 
than 1500 projects carried out at home and 
abroad. 


Name- — 


; ' «4rr. 


Dunajska 160 6ft 13 LJUBLJANA Tsl. h.c.: + 386 61 168 1231 *■ ^ 


Winners 8,502 


Solution 8,502 


3. McQuhae, St Remy de Prov- 
ence. France 

RJl. Bell West Hallam, Derby 
Susan Higgins, Erplnghara, 
Norfolk 

I. Kendall, Bournemouth 


H. Piper, Chessington, Surrey 
R.J. Trail. Hlghclufe, Dorset 


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Of broking and jobbing the Pelikan's fowl 
See how siverfly he puts your word onto bond. 


JOTTER PAD