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Stoat Hie week 


Management, media 
futures and more 


FINANCIAL TIMES 


Europe'?-. Bossnvss'iNawsDacer' 


INVASION EFFECT ON 

market s 

EUROPEAN BONDS A FRENCH 
RAILS SPURT 


WWWWAIA improve after 
CAUHOCS opening 
*T«£*S3£ p-? fa - 


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: : i-s : .W .'j,: 

Hie way we were: how tiie FT covered DDay. Page 2 


Astra satellite 
group plans £1 bn 
European float 

Soctete Europdenne das Satellites, the Laxemboarg 
company behind the Astra satellite television 
system,' is planning a flotation ejected to value 
it at more thanfltmtfUfcnX The comp any, which 
already broadcasts 50 television, channels over ■ 
Europe, would be floated on the London Stock 
Exchange and a nnmber of other European 
exchanges, probably before the end of next year. 
Page 23 .. . _ 


SMtdrf/ H wiw Mew York i 

Saatchi &Saatchi Advertising, the US arm of 
Britain's Saatchi & Saatchi advertising group, 
is partmjgTwmpany with its most senior managers 
as. parfitfashafe-upto bring the struggling New 
York operation bach to life. Page 25 

Horn Mitto be Haprfi P#fc GyulaHom, 

■ a king-time' Communist party functionary and - 
now leaderof Hungary's Socialist party, is pcdsed 
to become the country's next prime minister. 
Paget i .i’ 

IKpnbsjqiB BMBtoF roaMn g: Britain’s 
diroctor-general of fair trading, Sir BryanCarsberg, 
te udej - tei ttplry into the practice ctf marfeet- 
making on rim London Stock Exchange, under 
winch stbaaToWng fixms.buy and sen shares 
in puhBcis^iK^ companies. Page 7 

WH SiMLiiiiw US contract Retailing 
. and dis t ribution ‘group WH Smith hasyran a 

at wo^sfourth 

largt^ahport PageM y .. >£ ... 

H«Mi^i»n WcTw^mIm: Hedthcare 
re6imin\MC^tfiafBaiyd^re^^-^aannacenti- 
ca&'pafesinr the firstquarter of ll^accordlng 
toft&ttMjmbMshedatite weekend. Page3 

Mrt rea ritoto B enx Mqwnd» in Asia: German 
cdmniercjfijrvehicte builder Mercedes-Benz has 
_ started protection. of lightduty trucks and buses 
T in Batonffifla aimed at weakening the.Japanese . 
stranglehold cai Asianmarkats. Page 25 

C^^ in^iraUnv^T^ US and other 
western indhstrial nations could achieve higher 
tev^^«nldoynMait^ by tratafagmore people 
to dev^ prptden»olving ddBs, US labour sene' 
tary BobertBeiciisaW. Page 5 . 

Russian dfttrwdiMiuM: Western 
goveaumeutas continuing efforts to support Rossian 
economic reforms, agreed to reschedule $7bn 
in debt ow^ by Russia in IS94. Pages ... 

TafawnraurifevespoBution cMni i Taiwan 
is investigating allegations that Prance's Thomson 
Qjnsumer Electronics and CS-based RCA dumped 
organic wastes hear factory sites in the country, 
polluting soJland grcamdwater. Page 6 . 

European Mo nw ta u y System: The order 
of cumncifis in the EMSgrid is unchanged. The 
Danish krone weakened slightly, as foreigners 
sold bonds, white the French franc continued 
its recent recovery. European elections this week 
could cause fluctuations in tfae gritfc Currencies, 
Page 35 . 





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exchange ntientechanism mea sur ed against the 
weakest currency m the system. Most of the curren- 
cies are permitted, to fluctuate within 15 per cent 
of agreed central rates against the other members 
of the nachardsm. The exceptions are the D-Mark 
<md the gtd^ which mooema£25 per centband, 

Spain witei off un clw r pou ro r riaflnaK 

Spain haswritten offflve partiy-tmttt n uclear 
power stations, whose conotraction was frozen 
10 years ago, at a costo# Pts730bn ($&3bn)- Page 3 

Biuguwni iwtadm tlflws Sergi Bruguera retained 
his French Open tennis title, beatmg ftDow Span- 
iard Alberto Berasategul M, 3-6, ^6, M. Second 
seed Arantsa Sanchez Vlcario of Spain beat Maiy 
Pierre cfFrance 64> Min the women's finaL 

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died of heart fetture, aged 4L ^He was renowned 
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MONDAY JUNE 6 1994 


D8523A 


Bundesbank president says progress towards union must not be set by ‘slowest ship’ 

Tietmeyer warning on EU expansion 


By David Wafer in Frankfurt and 
Phfe Gawith to London 

The European Union could 
disintegrate if it takes in new 
members before deepening mone- 
tary and political ties among the 

wtsHny 12 members. ««w>rdi«g 
to Mr Hans Tietmeyer, the Bund- 
esbank president. 

. Mr Tietmeyer, picking up the 
theme of a multi-track, multi- 
speed Europe, warns today in the 
German newspaper Handelsblatt 
that the Union will fall apart if 
progress towards monetary and 
political onion is oriented 
towards the “slowest ship". 

Mr Tietmeyer said it was 
unlikely a majority of EU coun- 
tries would fulfil the criteria laid 


down in the Maastricht treaty by 
1997. 

“But stability Is more impor- 
tant than the timetable,” he 
insisted, saying that whether the 
union took effect in 1997 or 2000 
was not the decisive factor. 

His hard-hitting remarks 
anipiHy the Bundesbank’s view 
that monetary is appropri- 
ate only fen: a core group of coun- 
tries which fulfil the anti-infla- 
tion criteria, set out in the 
Maastricht treaty . 

His remarks also tend support 
to Chancellor Helmut Kohl of 
Germany who also favours a core 
group of countries pressing 
ahead with, further integration. 

“A monetary union represents 
a long-term community of soli- 


UK backs off Dehaene veto 


The UK gover nm ent is refusing 
to threaten its national veto 
against the candidacy of Mr 
Jean-Lac Dehaene, the Belgian 
prime minister for the European 
Commission presidency, writes 
Philip Stephens in London. The 
move comes amid acknowledge- 


ment in Whitehall that the UK 
may have to accept Mr Dehaene’s 
appointment, although the risk 
of a backlash on the Conserva- 
tive backbenches could force Mr 
John Major, prime minister, to 
ensure that a decision on the 
post is delayed. Page 7 


dartty and risk, which requires a 
corresponding long-term political 
union,” he said 

Mr Eddie George, governor of 
the Bank of England, echoed Mr 
Tietmeyer’s view that conver- 
gence was a priority. In a London 


speech at the weekend he said 
that an early move to a single 
cur re n cy would be a mistake. 

“However appealing the vision 
of a single currency may 
be . . . the absolutely essential 
prior economic condition is to 


establish sustainable conver- 
gence. based on an underlying 
stability in the participating 
member states,” Mr George said. 
“I believe that we have a long 
way to go before that necessary 
pre-condition will be met.” the 
governor said. 

The remarks of the two central 
bankers comes after a sustained 
period of exchange rate stability 
within the European Monetary 
System, following the substantial 
widening of the fluctuation mar- 
gins last August 

Mr Tietmeyer did not specify 
when he thought monetary union 
could be achieved, nor did he 
indicate which countries might 
be able to move more quickly to 
the first stage of monetary union. 


However, it is the Benelux coun- 
tries and Germany and France 
that have achieved most, so for, 
in coordinating interest rate pol- 
icy and establishing exchange 
rate stability, although only Lux- 
embourg fully meets the tough 
convergence criteria. 

Mr Tietmeyer’s remarks repre- 
sent an implicit rebuke to those 
who believe the union can simply 
take in new applicants without 
first deepening integration 
among the 12. 

The European Union had to to 
become deeper at the same time 
as it became broader, Mr Tiet- 
meyer said. 

Delors faces fight on EU bonds. 
Page 22 



Just like Ike: A statue of former allied field commander General Dwight Elsenhower, unveiled yesterday 
in Bayeux,lfarmiuidy, watches over the crowd commemorating the 50th anniversary of D-Day PkwBM> 


China 
plans ways 
to bridge 
57km sea 
channel 


By Toiiy Waflcer and Shi Junbao 
in Baling 

Hhina plans to b uild what would 
he the world’s longest sea-cross- 
ing project - a chain of bridges 
and a tunnel, linking the Shan- 
dong arcd Uandong peninsulas in 
the north-east ctf the country. 

Feasibility studies, expected to 
take several years, have already 
started on the Yn60bn ($6Jbn) 
project to bridge the 57km Behai 
channel, said an official in the 


Liaoning gnve m ment- 

Work is unlikely to begin 
before early in the next century 
and the project would take about 
10 years. Meanwhile, Liaoning 
and Shandong are planning a 
YnLSbn train ferry Unking the 
two provinces. This would run 
between Dalian, the main port in 
Liaoning, and Yantai in Shan- 
og. Both are important ports 
and railheads connected with. 
Caiina’s interior. 

The ferry is expected to be 
operational by 199S, and would be 
capable Of handling 10m frinnas 
of freight a year. Capacity would 
double by 2005- 

The plans to bridge the Bohai 
channel and Improve transport 

between Tjannmg and Shando ng, 

two of China's most important 
provinces; reflect a new drive to 
boost economic development in 
the north-east 

The official China Business 
Weekly reported last month that 
efforts were under way to 
improve the economic integra- 
tion of the Bohai rim which 

encompasses 680^00 sq km and 


indudes the provinces of Shan* 
drmg , Shanxi, Hebei and Liaon- 


Continued on Page 22 


Europe’s soap war 
gets even dirtier as 
rivals trade claims 


By Brorrmn Maddox fn London 
and Ronald van de Krol in 
Amsterdam 

Blue and red striped boxer shorts 
yesterday became the latest 
weapon in the fierce battle 
between the world’s soap giants. 

Procter & Gamble, the US man- 
ufacturer. claimed that one pair 
of underpants, faded and shred- 
ded to the point of indecency, 
had disintegrated during 
repeated washing in the new 
soap powder launched by its bit- 
ter rival Unilever, the Anglo- 
Dutch consumer goods group. 

According to P&G. tests by 
research institutes show that 
clothes are damaged by washing 
in. Unilever’s Persfl Power. 

P&G yesterday circulated same 
ctf tiie institutes' reports and dis- 
tributed colour photographs con- 
trasting the tattered state of 
clothes washed in its rival’s pow- 
der with the pristine, crisp state 
of those washed in its own. 

P&G later admitted the photo- 
graphs were not from the 
research institutes text from its 
own tests. “There was no inten- 
tion to mislead in supplying the 
photos together with the insti- 
tutes' reports,” it said last night 

Unilever rejected P&G’s claims. 
It said its own tests, carried out 
at one of the research institutes 
quoted by P&G, had showed so 


On Friday, Unilever dropped a 
Dutch court case against P&G for 

mating “untruthful and mialaad- 

ing statements” about the proper- 
ties of its new detergent, which is 
sold as Omo Power in continental 
markets. Unilever acknowledged 
its new generation washing pow- 
der could damage clothing usds’ 
“extreme laboratory conditions”. 

P&G also claimed yesterday 
that clothes washed in Persxl 


CONTENTS 


Buttons Itari. 


Power might continue to fray 
even if consumers switched to a 
different soap brand, because 
manganese residues from the 
powder, included to aid washing, 
b ad built up on the fabric and 
remained “active". 

Yesterday in Rotterdam, Uni- 
lever said: “In the huge number 
of articles ctf clothing washed in 
field trials there was no system- 
atic build-up of manganese resi- 
due. Moreover, even if there is 
manganese left cm the clothing, it 
does not later become reacti- 
vated.” Independent institutes in 
France, Germany the Nether- 
lands and the UK bad confirmed 
these results, ft said. 

P&G’s claims are based on 
reports from six European 
research institutes. 

According to P&G, the insti- 
tutes, which tested clothes under 
normal household conditions and 
followed the clothing manufac- 
turers' instructions, all reached 
“similar conctusums”. It quoted 
the British Textile Technology 
Group, based in Manchester, as 
coneludmg that “Persil Power 
results in fabric damage which 
would be unacceptable to a con- 
sumer”. The EMPA Institute for 
Material Testing and Research in 
Switzerland found “strong to 
very strong weakening of the cot- 
ton fibres” after up to 25 washes 
in Persil Power, P&G said. 

Mr Andrew Seth, chief execor 
five of Leva* Brothers UK, said 
yesterday: “it is always possible 
in laboratories to choose test con- 
ditions which will give you the 
results that you plan to get" 

“I am not saying that [P&G’s] 
data is inaccurate, just that it’s 
irrelevant," he said. In separate 
tests conducted by BTTG, Uni* 
lever had been assured that 
“after repealed washing ... no 
physical damage was visible”. 


US may seek N Korea 
sanctions outside of UN 


By Nancy Dime in Washington 
and Tony WaBcer in Bering 

The US said yesterday it might 
seek to organise international 
trade sanctions against North 
Korea over its suspected nuclear 
weapons programme even if such 
action failed to win United 
Natio ns ba cking. 

Mr William Ferry, US defence 
secretary, also confirmed tire US 
had built up its troops in South 
Korea although he said there was 
“DO hnwipriiato dungwr of military 
ermfrnnfartifln "- 

He said cat US television: “We 
are not seeking and we will not 
provoke a war, but, at the same 
time, we wSI not invite a war by 
not hphig ready WeJiave-a com- 
mitment to drfnnil South Korea; 
we are prepared to defend South 
Korea, and we are capable of 
rirfpniting South Korea." 

Mr Perry said Washington 
would consult its European allies 
this week over proposals to 
impose trade and economic sanc- 
tions against Pyongyang over its 
failure to cooperate with Interna- 
tional Atomic Energy Agency 
inspectors. 

Mr Perry said, however, that if 
sanctions were blocked in the 
UN, it was “entirely possible” the 
US would seek formation of an 
allied coalition to proceed with 
sanctions. 

President Bill Clinton has 
already begun to consult Russian 


president Boris Yeltsin. Senior 
US officials believe Russia would 
not block sanctions, and that 
there is even a possibility that 
China, North Korea’s sole ally 
and main source of oil, might 
cooperate. 

Hhina has given no public indi- 
cation that it is becoming exer- 
cised over the crisis. Last week, a 
Hhinp» foreign ministry spokes- 
man said: “At this time, we do 

Seoul on hook of un attr active 

options Page 6 

Editorial Comment — Page 21 

not favour the resort to means 
that might sharpen the confron- 
tation." 

US, Japanese and South Kor- 
ean officials agreed in Washing- 
ton that sanctions were an appro- 
priate response to Pyongyang’s 
refusal to cooperate. The US said 
last week it would begin consul- 
tations in the Security Council 
on “timing, objectives and sub- 
stance of a sanctions resolution 
in the near future” 

The talks between US, Japa- 
nese and South Korean officials 
concluded that North Korea’s 
most recent refusal to allow 
IAEA inspectors to examine fully 
a nuclear reactor confirmed sus- 
picions that North Korea was 
developing nuclear weapons. 

The three issued a statement 
saying that “the situation 


demands that the international 
community, through the UN 
Security Council, urgently con- 
sider an appropriate response, 
inrhiriing sanctions". 

The US had been building its 
forces up in South Korea over the 
past six months, and they were 
now “adequate” for its defence, 
Mr Perry said. However, if the 
situation were to become “more 
dangerous” - if North Korea 
were to move more troops to the 
border - the US would take “fur- 
ther action” 

The possibility that North 
Korea is developing a ballistic 
missile which, could project 
atomic weapons as for as Japan 
adds to the concern of an arms 
race in Asia. 

Mr Perry said sanctions against 
North Korea would have two pur- 
poses: to “establish the integrity 
of the International Atomic 
Energy Agency” by setting an 
example for other would-be rogue 
members, and to force North 
Korea to end its nuclear develop- 
ment programme. 

At the weekend, while much of 
the Chinese press ignored the 
issue. Ta Kung Pao, a Beijing- 
controlled newspaper in Hong 
Kong, gave what was possibly 
the first hint of a sterner 
position. It warned that North 
Korea would not be able to with- 
stand sanctions if they were 
imposed by China, the US, and 
Japan. 



.12 


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26 


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Art 

19 

.Enaqftj hteMl 

27 


Wort Bond MBtats. 
Equsy Watats 


FT Wcrtl AtsuartB . 
MaMpdftnfe — 

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— 26 

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— » 
31-34 

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5h» Hormaoon 36J7 

Wort Stock KaMb 30 


J 


|H' : “ © THE FINANCIAL TBVira LIMITED 1994 No 32,385 Week No 23 LONDON ■ PARIS - FRANKFURT ■ IIEW YORK » TOKYO 


IB 


Blanc paiN 


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T** ultra- Jim *atdi 


Since 1735 there has 
NEVER BEEN A QUARTZ BlANCPAIN WATCH. 

And there never will be. 


Catalogue and video BLANCPAIN SA CH- 1 348 Le Biassus. Switzerland 
Tfel 41-21 845 4fl'*2 Fa* 41-21 84541 88 


I 









LARGEST CIRCULATION OF ANY FINANCIAL JOURNALIN THE EMPIRE 


i jl4»9A4 /iQA/lOAf H w/wfarfgy t 7th </ tftff. J.04A j.irv§m 


Tiropencr 


INVASION EFFECT ON I “SHELL" FINAL isJasalSssJsi! TONE COMMEND ABLY 
MARKETS 2*PERaa$T.NEr on war ne ws 


CALM 


EUROPEAN BONDS & FRENCH R,SE 0F NEARLY 3 

RAH S SPURT : W WARNINGS 

2).fr LJlV L The directur* «>f the “Shcl 

Tran.' port and Trading Cum pa 
*■ — — — aiiiiiiiiiiiT a sfcudiI interim divide 

INDUSTRIALS IMPROVE AFTER jtax isamei. uu i hr Ordinary Mu 

■>n aci-iutm of IW-1. payable 11! 

CAUTIOUS OPENING SSTStll 

. , ... . the final dividend. 

With interest centred on the invasion rather than in- th-- with ;h« 2‘ r p*r own. inter 
vestments the Stock Markets were inclined to be hesitant {"{fijJJ tiwNmit "“for nSToM 
at the opening of business yesterday and the volume of I three preceding year*, 
orders was considerably smaller. Dealers were cautious, {TejfaS 

but as the news came through that progress was satisfactory -an increase <m 1942 of mu 
prices hanlened and the tone became normally calm. ‘ ' *£2^35 ««* t- cmmaa 

British Funds were firm and unchanged but other °ThI a IiS«We 

markets soon regained confidence and went still further I new* came after market limits, *fl til 
ahead. Industrial shares, however, were more subdued nnywtiw* wa* am 
but later came into quiet demand at slightly improving p»im«d a managing director of t 
prices, particularly the ]>opular Steel issues. company. _ ........ ___ g __ 

The most prominent features were provided by Foreign ROLLS-ROYCE PAYS 
Government bonds and French Railw % jes, the former 20% AGAIN 

recurding rises in Austrian. Hungarian, Polish, French and — — » — 

German securities ranging to as high as three points on the KAItNS £-12.031 LESS 
day, while in. the latter instance French Midi. Nord and The Board uf Rolls-Royce has « 
Orleans Railway bonds gained as much as six points. jjjjf r ?' 

Miivcmi'iits in Foreign bonds i “GREY MARKET” Li-t lini-mlvr. the vuw a* 'for ueh 


RISE OF NEARLY 3?« ANCHOR LINES— 

! IN EARNINGS AKSELLS 

The director, .* , he -Shell" ^^^22^3 SSHi 
Tran.-purl and Trading t W , „ lrt . uirt h. And as the hour, 
ail nun uce a second interim ditidend h re #pirils , 

«f tal l** r £1 ro~. At the opening jobbers quoted 

tax leamei. on the Ordinary Mock pr j ctl|l an d anyway nominally 

y n . s * Cl '" , ‘ ni ,,f . I1 IW3 - »»>ahle 12th |;, Wt-r But if thrj . had «riously 
Ju.y. They will n-commend at the lhou ^j ll lh|ll much rttlck wou |d 
annua! meeting that th:e be made C(W|| . in |y wfin ]htrjr d< . pIrte d 

ibe final tmidend. books their hope., were doomed to 

Th-- with ;he 2 r per eem. interim , am . : n 

paid Sib February mkke* 3 per cent.. A" 

tax free, the same a* for each of the creamngly w in the afternoon -it 
three preceding year*. »**- so everybody remirted. a case 

The nc: profit for ihe year to 31-t of mure wonld-be buyers than 
December last i* »iatcd tu be ti-TiWH seller*. One attache to a firm of 
• an inerra-e on 1942 of MUM broker, told me that uf 30 order > 
|=‘2.SS per ecn;.). he executed for clients 26 were 

I»ui-il capital Mnck i- HU.'IIaM. nurchases. 

s 1 " ^"SLSJl With the Second Front m.inopo-, 

new* came after market limits, *a that hsing the fori front of all our 
the ntuuaiion wa* am affected. «*'“*•• ""rmat buaines* was natur- 

31 r. <ie.»rge LeghJime* ha- been ap- ally relegated to the background, 
pm n ini 'a managing director of the The real testing time for market, 
company. will come when peace becomes 

----- ' * - _ practical politics. Then demand for 

ROLLS-ROYCE PAYS Industrial equities will doubtless! 
n n/i7 ana r\r ho a good deal mure selective than 

Zwr/o AlxAIiN of late and gilt-edged stocks may 

♦ - tend to sag and carry other fixed- 

V. \ II \S i'JOJHI LESS interest securities down with them 


FRENCH KAILS ROCKET 


C'Miwp Dot 


IM Jum , pa niciilarly active a firm uaderiwne 


Round the Markets _ 

COLMAN AND 
RECK1TTS 

AMALGAMATED TIN 


-tcvMMi Umj rukJmm* Omllmmw ' was maintained in thi» sruup. BAA. jj. r i,,|. round lh** S'm:k Ex- 

TUESDAY Evening. M^ujoed inurre>i and marked up :« .* rri;cl p t „f the new. 

The Stock Exchange took the fr ^ B S/lL fusion of th.- (online., t 

news of the long-expected invasion ^ *L“?,“ l l ® l L*®‘' , L '*htaraa , a up started. na> "He of relief 

of the Coniine ni with commendable ^ 6U al ^ John” Bruwn harden^ mingled w.th quiet confidence, 
calmness. Dealers i were inclined at anew to fits 3d. Cannnn Iren FmjiiHrui. There wa- no trace «f excitement, 
the opening to take precautionary improved ut life 3d and Th«*. W. Ward prices, . xcept th»se .*f -bares in 
measures by >hadmg quotation* B l traded up to 36* W. while British w hich there has beru built up » 
down here and there, but as the. Steel Con>i ruction* made 12> and nn-ition. remained firm, 

investing public proved equally iBrishtside Foundry 34*. Howard and "Z “ ' V mm 
phlegmatic there was no «.*!ling:BuIliMiah fell h«k *d to Sis ftL In ClieL rfol CuaMann 
panic or pmuure whatever and •J®* 1 ' .Trwde«»r issue* iLrilllSlli The One o'clock broadcast was 

the fraction* 1 recessions were ei^ffvoaSi received by the House in a Mm 


restored. Ctofa“,d profoundly impressive Many more 

I Cilt-Hged remained firmly at- B f in ,; lW l ineJ dry mf n than usual stayed in the Stock 

their overnight figure, but natur- gp ( a Textiles and price* yielded Exchange to hear the news, 
ally, the volume of business showed >UK htly to oo-asumal >ak*. Fall- or After the news and lunch, prices 
a decrease in view of the diversion &J were shown in Paions and Baldwin* ^rartod to harden in those markets 
of interest from investments to at TV* and in Bowing Cottons at 31* fid. ...i,..-,. nreviously there had been a 


Movements in Foreign bonds > 
showed AuMi'iau Four and a-lla'fj 

S t Cents, another j higher a! tiUi. 

ungariau K»ur and u-JIaif per 
Cuit*. and Tolaud K»ur and 

■-Half per Cent-, both up i at 16 
and 3U1 respectively. Frmch Four 
per Cent. ■ British) were a point 


DEALINGS 

MYATKM KNT 
EXPECTED 


per vent. > British) were a p*nni 
better at 9 and Seine Four.- added a 
further 3 points at 62 to the pre- 


point Although the letter which the Banklaere mg: ne- making bus 
■It'd a •* Knaland ha* sent <mi in oinncctiunl£1.13.'i2U4. Yesterday the XI 


A AM AO • nr oe a xooa aui mure selective imn 

ZNr/o AOrALW Ilf lute and gilt-edged stocks may 

♦ - tend to aag and carry other fixed- 

K \liNS £-12.(KU LESS interest securities down with them 

Th. Boer, I of Rollh-Royce k» *- *« t«npor.ry l«nr ImL 

cidvd to recommend a first and final Anchor Lin— 
dividend of 20 per cent. (4* per « «f Anchor Lines furnished .the lead- 

5iS Ifeiuic L». L y f.r «S^.f inn'i nc of the r wHi enc t of eron 
the three preceding years. pnmmvttt recent specu- 

Xei prulii for 1013. after providing Wiv* fmvwinics. On some caution- 
fur excess profits lax. is announced a* remarks as to the shipping out- 
£3I4;M4 ijCmG^Uo). a decrease of look by an Elder Dempster director. 
£42.(131. Anchor* were quoted early at the 

The v.-uetl capital of this car and pr icv uf 49s-ol*. 

^-.-?? a, vLL , S!S!S.fc^j5 i S*- m- Durin * lhe »ft*«ouii influential 


Vious^day * rise «[.- P" ,n - ■ , umlvrsiood that whro the “ gentlemen * ■»* ■ “*t ff» ,n “ “ lf | 

ttvre atM ..j-rw-nieDi" aimed at i- tu be brought nDnDTVTlili'lX/'Fli'lf'Q 11 rrown on diy. Their recent 


German securities were also ., ::rw . nwnl - alulw | al j. lu 5^ brought npAP TTtf TiTP WFTiTfX * crwri1 on < 

* or * ii ,t ' ^ a ! l !‘ inn. operation a formal announcement DICUx IM 1UC< vVEifilk & peak was 56s bid. 

and a-Half per ( eats, marking up Wl :i be fortheuming from the REVENUE » «- Br.u.jr. 1 

2 at 8i and 64 respectively. Pota*h aii;h..riiir*. MlT . ^ AMrtb Bvwwcry j 

Sevens moving up J at 33., and the The London Stock Exehanae ha* for “ ven , *L the, . r . current buying | 

Six and a-llaif per Cent*, gaining a long time observed a "gentlemen* POT A !< llr i2ll.OI-M)l 4 price of 89*. which 1* near their 
two point* to 33. .agreement " that it will not gram per- ot f29jDl5.617. against highest since 1937, Ansella Brewery. 


two point* to 

FRENCH I 
ShwpCnu 


of seller* in spite of the high »nd |ralber ^ver,' at‘s* fid. while the Fw- regarded. And the House took it aa 
attractive level* to which prices ifcmd 2(fe 4.',d. Bm Hail , real bull point that Hitler fcu 

have risen. , I made 12* TJ.d and Hield Bro*. 4*. assumM i command of his army. 

Home Rail* wen* under? (amiably! Ratoks a* a group were undecided. 

S in with the monopolising of the line*! Both Courtauld* and British Celancse J. and J. Cobnut 
r military purpose* in-lead uf more landed 3d easier. J. *„,{ j. Col man share* were 

remunerative Irattc, but even here the Lntlr animaium wa* shown anions , . UBpr im- to 

falls were fractional, being no more Sroas and Fitlvimiinc -hares, where *upenOT tj 

than lower at the mort. Strangely ! U rattan Warehouse* were in good de- the general condition*, andleit 
enough Foreign Rails were busy and mand and rose lid tu 21* 2d. (irtit with a lj« on the day. _ Tnu W* 
better. Argentines having quite a good Universal* were favoured around due, of course, to the increase in 
day. while French Rails were again a 22* W : d. Debenham* continued to be the dividend, making 17 per cent, for 
prominent feature, some issues putting bought at ft* T' t d and upward* and 1943, compared with 16 per cent for 
on a* much a* 6 points, which, added TW Wallis nut ou 4',d further at ^ previous year, a* announced in 
to previous rises, makes them more 9* 4.’,d. Maple* were absorbed freely Tlir p ci V1 vnn Tiwfo ve*terdav 
than ten points up in so many day*. upU»27* W' ; d and Waring and Ciltow ™ s, 1 u n oi 

The total marking* were lower at were done at Us 7',iL morniug. The price l> now M* oo. 

1^18. which compare* with 7.627 Tor After their late rise. Distiller- were “?“• ll should be ma«ea ex 

Tuesday of last week and *^*2 ycHer- 3,1 at 97* 3d. Seager Evan* rencied dividend next Monday, it will prob- 

day. The Financial Time* Mock’ lo 4s* 2d. On the whole. bu>ine*s ably remain, unles* there yhoind be a 
indices showed Government Securities waa quieter aiming BaewmtiE* ana change in the meantime, at 83a 6d 
unmoved at I1£S and Hume Rail* n.l; changes were a matter of a few pence ex dividend. The yield at the present 

down at 69A j either way. Tobaccos, too. hml a quiet pr jce on the increaaed dividend ia 

pi iDnpcAVC I -p AOAIX .dar. hut the leader* held their level* n 0< no r 

tUKOrtAIva. U* vide from Godfrey Phillips. *1 easier 41 ~ m , .. ... 

Prices in the gilt-edged section were 1st 56s 3d. Gailahere were harder at The share* rank among the gm- 
as firm as a rock, with no movement iT.'i. rdged Ordinary stock* in the Indus* 

either way. Corporatwn stack* were; uiiRRKRts (Nuin trial market. J. and J. Cdnun owns 

wanted. Bradford, Cardiff and Crambn ■ t ? K, ° . jointly the capital of Reckitt and 


B .,ic tvivrrn .mission tu deal in ^iare* without the £30x59,000 in the previous week, and $1 unit* are recommended to me by 
. RAILS WANTED ‘prior approval of the tmjTO But ^dhure SrlmLws tfllUMM a broker friend as one of the moM 
W* !!!* is shown in-Uie Latest- Treasury return attractive lock-ups ut their group. 


agreement and the Treasury, through 


Foreign market were not os bullish as’ihr _ ascendant in rather general approximately 33 per cent, of Reckitt 


<ren n - boild- .V .. h* pum'-'h^htr "n! SlOCk E * ehans *^ nMoms glO^M.OOO ' and Exciwl into the burin 

sr^^AV'rK&rsa ..... •**.•&!* 


business should- bear good). 


understanding, have granted jmrwils-j j n ^ financial year to date revenue The Board ha* evidently no objec- 


uf the above -ivur.lu- 

a »w-k .i-iii 

romps ml with nUiv'a 

iliaiia- 

tion.-:— 

I'r.ir 

rrn-v 

R:k- 

71 May 

.ve-;.ly. 

«n w k. 

Au-trian 4'1 ivv. .. ■•** 

•w J 

1 

llunnr:in 4' p.»‘. ll'< 

Ifi 

- i i 

IV.and |1927 1 

4' j p.»-. 2.*» 

•7ji* 

-r -V, 

Kim 1 p-v. iBrt.) 7 


_ .1 

Srinr i - 7,tt 

«2 

- •! 

(U r man .i p.r. 7', 

s 

- 1 

» 4*1 P* i 

It 1 

i 1 

. Puia*h 7 pr- *1 

M , 

_ .»- 

.. .. fi'j pi'- !'• 

'It 


Freni-h Nnrd H p.r. »:i 

71 

• !•' 

.. Orleans 4 p--. . 

-1 

It . 

Midi 4 |x. M 

fin 

•r tf 


nwlo in TllE FINANCIAL TIME* on 
Mumlay last wa* cent not only tlie 
bodiv- repre-vniing the acveptamv 
hnu-v*. mve-lment trusts ami insur- 
ance ulfkv.- but also to the A-soviausI 
Siwk Exchange* and the Provincial 
Brokers Slock Exchange. There i* no 
b»ly eollec lively represent iag the 
1— uing house* and in consequence 


u.diw<wwi. ordiuary capital in issue to 

icu t vn *tf|i noipt no £2.000.000. whereon cash dividend* 
AbHAMl trULUPUiLllB of I7J per cent, have been made 
FIRE ever since that lime — namely, for 

each uf the seven year* ended 
UI TIM T KKIW < K1> September last. 

TKMIMIHAHIIA Available earning? «n the Ordi- 

In a note to the return for May nary capital for 1942-43 further 


Euronean bond* in demand were In*****! «*P to 19*. and added 3d. that interim dividend. per cent, fur 
AuslruSTT*; per cent*- which gained ara ."W> 1 al fo going on '.a Malaya lam the year. Reckitt* stand at 53 and 
nnmhT }*. *FreSS 4 i" TeS'*^ finished a: 35* after dealing* al on the 22J per cent, dividend lhe 
(British) a point up ai 8. Hungarian .**» J**- **! yield is £3 18* 4d per cent. Here 

4!; per rents. belter at Ifi. Poland ' ^n^Vurth^Mhiai^ fihrh/d «*»"» R ,hl ’ dividend should be 
(1927) 4', percent*. ! a higher at 3u .•..u%L C T aV Tak N 9^d. aid Talf Arer deducted from the price next Mon- 
Seine 4 J per ernu. 3 point* up al Ta ‘ ^ dav. it is toierably safe to assume 

ctrhup (ipmun imum showra LtniUlIl ' 1 - . . . j — -r m l. 


INDUSTRIALS RALLY 
Emriy Wmmktmt 

In :hr Imlu-:r at m.iiL.*. n‘.ir« 
la>!y ihviv h.i- h*—: •!. i.,im 


- prom*. inc progressive character the 

B.O.T. INQUIRY SOUGHT liur f a:: to* iV" 10 "•ff 01 bnainon* i* evidenced by the fact 
■Jnu lUDDPPvrroDe ^ naSVffliSu-* * w ' ,rk,nB tblt durinjr the past ten years the 
FOR IMPREGNATORS iSA^&i? l lLi '(iovemment l ™ding profits have swollen pretty 
MIMSTKK roNSIOKIIIMS royalty. Cevemnu-n: export lax. etc.. .'*r«-adil.v frr»m under £400.000 to 


a ware that the shareholders appointed 


in steady demand since the issue of 
the company'* report at the end uf 
last month. .This week they have 
changed hands at over the round £10 
fur the first time since 1937. At a 


print- highe.at 33. * S ^ ' "Trading iflUL for in **,me in The nK-ntimc. 

Dealing in Home Rads wa* small. i?.C*‘" a l!.. a ^ n | a n . ibyV frv Reckitt* and Colmans stand hand- 

with more sellers than buyers Brum S-re TraM in-h».id among the best of the 

Ordinary Iwt *. at 22 and .he Fre- wh i t . h M a: 10! , while industrial companies Ordinary 

ferem-e were , down at 80: wnw» . ghahamalo al*a were wanted, and pul shares. 

2 fst«rrjri¥W-?*i - 1 Auip^r. 

rs'-i" 1 ';. -j" , °. ,I ; , L v DE 5 F . ,RM Tin Minn .,f 

t Poreili R^il- ThfwnSS' In ,h * 0,1 ***" "VfaSTr Algeria share? came into notice on 

;? foreign iuii . wnere Argentine 0V( , r was seen in British l unt rolled .u.. h«i 4 n f g< sa The enmnane 

t.reat Western *_i»r renL debemures . Pre fcren«. which improved to 14> I' : d r i ,> ,£ I.JSSSPVK 

were better a: BJL Wenera Pre- 1 _ lhl[|f buyer* and left off al 14* with a ‘/ ne ut ,he “nfCet tin 

l f * rM rtL- 1 ° P tfS 1 C “Ltf Al ? ! f 1 "'iwOT«y^of 4?U The fomnwa were pruAum at the present tin* in the 
tine Ordinary - higher at 8'.- and the , 5 „ M fbe leader* were very firm, with tmpire. It ..wns mining lease* 
4 w per cent, debenture advanced - to Anglo-Iranian i-tiffening a: 5 Shell «nt 66.6»4 acres. 81 water right* 

• held tu 4',- pending the divuietid. which and seven exclusive prosper ting 
, r Irt” rf P FV^+° bSwr i 5“* - ,r,at,uoce<l after market hour*. licrii.-es, its plarft indwling au 

ii" n23* £; Vrjes T*.HS ‘ , ! or * ,,!d ‘ wdKl dred ** 

bonds at 74 and a fi p..int n-e in ™ ^ M aD<1 0lh4 ' r ^“'nmcnl. 

Orleans and Midi bonds at 61 and 60 A^^EcoadnrUn ai 29* 4'jd and . «he cumpany acquired 

respectively. K#rn a; ^ principal Trinidad 'ho -■‘hara capital uf the Krffi 

RALLIES IN SHIPPING ■ issues remained firm with business in Tin Cumpany. the Nigerian Tin 

Lu. Gain, in R.di. Group T P D - “ n * “ SSiSL ?! 


I a oLx. «!• and Apc * * l *** 94 Amalgamated Tin is £1350.900. in 

Induce Profit-taking _ V AND H. STRONG os slam. 

Busine** in the Mining markets con- The chairman raid at the last 


•he nrnv i. hi,:..- later .n rh«- day reiaxauon ui :n* presen; Tr-incunn* p__ ,w_- 

tSr'^^or^hJ 0 ^to£^rri*fel Muni not 3^W» W OrfiSaS rn r& 

“KTirr-Tr? isS? - *■ " ‘* m S®R 575^38255*117 

from mi* .at pi..i. «.ik i.- an.l to— e* J *l| . r ‘^ l “* cr f ur lher action is — against 44.1, per cent. By means of 

wrre «hn* n am-'.; It -haiv- a* «*li 's •• ri fg/Q q f j if iff | D t/ * Mnml 30 per cent, the dividend was 

a- .o (he sh in> «.• si»-ip. bw .hv nr<pr<n evxo cr/vmioiT /A Cm W D o IJ rtf ilf /fi ft ff made up to 40 per cent, for the tenth 1 

were re.lu.ncl h-. .,v M |. !t .-. The OP P E.K PUK OCVl I lSH European h..nd- and French Rail, successive year. The distribution of 

rl-Ti.f f n ? r -.‘J a r- : . ■-> rilv Fin A.\c LCL FARMERS CORPN. -jHm on mva-iun. ip. I) a one- in -three scrip bonus in 1936 

Timem lr.iu.-i i” ,,K h,WlUl k . ... ... British Photographic lodUMrie*' capi- failed to interrupt thi* remarkable 

T Zii ■. V„v .• jl k Slh HW K-W 11 * I S|I.\RK i:.i scheme. <p 3i regularity. Maybe another bonus is: 

new- wa- la:.- b.d.t.ng J •h.inns-lnira < .. t.-, * .Z 1 ,"*■ 2?™**', r ^ - , how the flllUIClfil PtiSltlOII t* Oltc of: 

f«r a few -.1 u .. .tv*. ^ r T strength. Almost £800.000 is 

'" ta ‘ t-r,,,K ’ ,n ' Mr .William .Herbert Allan AchiK Ssrre -latemen: -liow;ng effect in gilt-edged atock*. i 

' ' ' ..._ Jli-iirr. uf N'onlu-m air Ihmo. .if reorganisation plan. if. 1) fibt Blarlfl 


SrJBlUTSSZ ? Amalgamated Tin Cimpimy'ji m«i- 

P««Ttakig w« riiSd a^SS Sh£ gf « iM« h A% , S ,r 

ping share*. Later Mr. I'hurchiir* ? ld ■™>i_ ra seurs on Jmunnes- ended 31st March. 1943, the cumpany 

changes on the day were fairly m«MrfiSL*2jSS[ .. tv D .iscussifms had been taking place 

between gains and losses. The!”*™ ^ wilh ^ GtrtrernmeBi f«r payment !.. 

Finanoal^imc* Indusiriai index wa- . he *“* ? f oeenpaimn of Rome. the company of compensation for un- 
0.1 off at 135-U Atrvcan and European* were par- lor 

1 rirnlarlv favoured bv iho Tan. Trod .WOI*Ing Of |t* pn*- 


European h..nd- and Frmch Rails Miccr**.ira y«r. The distribution of 
Hjiarc on inva»iufi. « p. |) * M^in-tiirif *cnp bonu* in 1936 

BriiL-h Photographic Indu-trie** capi- failed to interrupt this remarkable 
i :ii scheme, ip 3i regularity. Maybe another bonus is: 


Bank shares were quiet with narrow I twalarijr favoured bjjr. dw Cape and rti 
change*. In the Home group. Idovd* closed , higher at 3 .... Lydenbnrg-, pgnjw*. renoerea necessary in order 
“A" marked up to 62s ?*id: District !hw»w. eased !». to 2* 1 ;,. Western B»Jnninni randy of tin. 

“A" receded fid to 94s and West. Reef* «" tar Johan nenborg The company paid an interim drvi- 

, minsters finally were 3d off ax 93s flfi.[aemaat. hot showed no quotable change “end of 6 per cent, and a final of 
after nuikiognt 94* 3d. Yn 7x*nuKCE.ju 3:.- West Wits con tin tied a firm 9 per cent., both leas tax at 5s 10 d 
Britannic changed up to 18’-. Allas to 1 feature at 10!S. in the £. The interim paid last 

14*. and Equity and Law at 80*.. J Central Minings were marked down April wa* less tax at 5s in the £. 

At the outset recently active SHtP-!.!. 1 ® 17 *“* Lraww . to 7,.. General i *ivMan<i «r n , .. 


At the outset recently active Shit- 1 ; 


™ *.iw —J “ '"ft* 

impression that prospect* hod been. Grootvlci, oo Johannesburg demand. *' l|, id he equal to 


_____ Mi-r.vr. ..f Norih.-rn Whu!e»ale Ihiirtv-. >.f reorganisation plan. «y. 3) (Tkff ftsriat 

lr ALL STREET REBOUND S.rmuh.ir ( , re.im« > ry. Puinfries-liue. to Thame* Grit and Aggrcsate* dividend 

Cmttim Uo at Bombay Miivn.ise all ihv -ham. .«f the renwni- 10 px- and bur.u- 2 . p.c. (samel ULVLM'n’ \v«« U.v-w 

‘■"7 w 7 . „ turn si the price of £1 per -hare, free Net profit £20-1 7 i <19.702). Hht KITT .\N|) MINN 

_. n * r Vi u \T‘ :,n * : ^‘.' w 1,1 .•vpease in the *e ; :er.*. Th»> offer t* Standard Tea uf («ylim final p^. Reckitt and Son*, which c wn* about 

\..rk bto-'k slarKv. ir<>nu\ -i. 'ic -ubjict Li anwnanre- in n-jw. of wi no par.), making 17\ p.c. (3) par.). «5 per cent, of the capital of Reckitt 

invasion m-w* wa.- *h.-i. ..ivl. .i;:d :ne t*»T rent. ..f ihv i->n*l share-. ..r such N« profit £38.723. tp. 3j ami Cohnan. has announced a final 

m.irket s-wn reg.i.-usl . .|U . b. a*ir -mMLr proportion a* the purchaser l niinl K.n-rt .m La* t.ita: revenue drvideml on iu £3£4ftj000 Ordinary 

Buyer* cncvi- ratn ui: p.a.v mav be prepare.1 t*> acvvni. ffflMAH l«2!»4A'iP). Ip. 3). stork of «li per cent, and bonufl 

•hare*. wnich a..a:iica m-w .. The prwe inc.ude- al. r-gh'^ and South Ea-tern tia- reienuc £276.797 1', per cent, (both are unchanged)., 

f V* repre-enuM hv (he -h.ire* and i £274.767). ip. 2i Interim of 5 per cent, and 16 per cent. I 

eluding Motor-, aifean.id •» |-i.n; and nur;:rnlariv all proll:* earned *mee have been paid, so (hat the total dis-i 

mure. Extreme u.ii::- »vr. ivducnt in 51 -| October. 19*7. If the offer become* - c: _■_< " <ttnrL i n AV.. iribution for 1943 will amount to 22 l , 

the final dealing, .,r.l gartered dr- effret.ve She director* w;!l be required £gS2SiaSLJagLlg±2 £ eenL, SutZ-iS SSStu fSrlhil 
clmej were evahru*. »n Amr.it:*. Rs.l* immediately to resign, and they will flow HmwtwU- ifel* tnx* <u-. BtwMd.n* I 

and Liquors, but the c.n>e *a- -lunij rereiv# compensation m the aggregate XJ.TOiS4“UO ss« tfj-a Stn*. Im ^ 

The new, of the mvas.un Uampene.1 .imount of tfoOO for lo** of ^ett The ““ ” iHS to" IRo 1M9 MU 

recent bullish fervoqr on ;ne Rnmhnv Board recommend* shareholdera to Jbm i llli toa lhi ih * «.im 

bur.ioa market and both -liver and gtdd acrepr the offer. - * . iu) m imt in) tin 

declined on bull- unload.ng. - » 1M0 o'IS 

Cotton, nn thr j:her hand, improved Srotrish Farmers rorpnptr'ion. of (Mfu 8 m tw I3S1 L9M-4J 1435 in LVTUK' ivii r> writ at 

on short cover. ng fttbawing th* ne»- <;*.i-guw. formed in 1129. i* a holding 3.4 «4. za.iz Hilr.l.r.t I Kit A>l) («h>rKAL 

ar.l closed firm, with Ju-v 422'« and cnmpnny owning lintrrnhxl all share- u “ ..WL 1 INVESTMENT' 


v.wmiu» were wwi in onween =s euieasen to i ,.- lunu (.on sow pany to De in a strenr financial 

and 22- fid and left off at 23* 4 '.d. -weakened lo 13* fid and Spaarwatrr position. n ’ 

Elder Dempster, after changing down and Wit Nigel were both l!jd off. 

^L'V* "kf? W .d with a 1 in the Diamond group, Consolidated Aldlll nnif 

aetjossofPd. Onwit Lute* closed lower South-West Africa* receded a few i - ... " - 

at 62*. after being down to 01* fid. (peace farther to 38e l!«d. De Been ik.-kvtiv . 

triemu Tram, asam wen faviNared: Deferred marked ar lfi;i fur the A w,, F«Al lA.\ ( ON\ LIITIVf* 
at their higher level of 46* and City of Registered share, and op to 39 for the INTERN \I. Iji ivc 

BA. Tram* marked, at- 36* fid. < Bearers. ' -n^ . ~ 

Braxilan Traction* were hesitant at 1 With the except Ion of Rhodreian Mmwry of Finance 

first around 2S. but rallied later to[6deciioa Tnuu, which hanlened 3d to linn ^ of 370 mil- 
26’.. Provincial Tract km nude 6* 9dL 12* 19JriL movements m the Rhodesian «wraal Bond* not 


21s fid. bnt Primitiva Holdiiig* changed and Gold Field* Rhokilin were lower . ^ interest on th* new bond* would 
down to S* fid. Eteetnc Supply by UJd apiece. **.? — P«v oent. instead of 4 per chl 

riiires flashed firmer, with Calcutta A rather harder tone wa* in evidence wrtha curreoey of43 years and annual 
Eiectnc* 40, after opening at 38* fid. to West Africans. Ashanti were * CCB Btul * t ! v * . *mkiog fund of 1 per 
Anumg Moran. RoUs-Soyce «wr lowered fid ta 60s fid on news of a According to Infomatioa «- 

k.*,.. *• im - J , 1 m , _tC I M I : . - .• eVITHL *— m A -~T 


ar.i cuisrd firni. with Ju-v 422'* and company owning lintrrdal all share- 

September til', i auaic-i >e*trid.iy‘- Scottish Farmers Dairy fornanv 8i|iitw ,o? 


c!»-v of July 42! '« and SrptriiiDet n^asgowl ami L'nited Dairte* iScoi- , *3L*44 

412', ». I in.il. l-«ue<| canital t« £107^1 in £t - - 

Editorial reament Page 2 Col l «'* *»«•*, which la-t changed hand- •« ■ 

* — . “ — ■ i;’.i-gow as to*. Dividend forth* year »a . ^ • a. 

*-lrl- , T V iVII 3 I'‘* OcttAer. 1943. was 6 per rm:.. V>PMf ■■■P ■ ■■ 

ItRr.AT N. AMI >. MflHI;> ; P .. ; JX . agais-l 4 per cent, for 1941-42 

Urea: Norshem and Snu'.hern S:ore- .w-l r..l for each of the two preerdms GOLDEN MORSE SHOE 

ha* -iniarrd a final d:t.den.i of l« per PVPER'AL CHEMICAL .. 

cent., making j tnt.ll i»f l»'t Pit .eat. The di:rvt»r* are Ale--!-. J B || ND | A-‘« *ND GENERAL TRUST 
for thr tear F«hru.m. r.'l * K-i H r-I-Vi u-h*irn:.irl ii Sirui-e*- ViDDtE \MTwATERSRAN3 

I'.iit.iJ the d »' r.Lut r w «* !■* inr i». t a.i-«n"i'»> W-r Br*-m ’R'L'iTiVA mQlDiNCS 

«en: f*.r :».e fu.. )vji, a, agj a,: 4., r:i H >!.( •• *■■»», fi'u. Uua.Ji.. CA . »h»iCan TOwnsmipj 

for 1 MO- 41. .jnd Jane, Young. |ia:C<HAVS (C bARKERj ... 


>1 P Subject to audit, a final dividend of 
si J " percent, (against fi 1 , per cent.), ten 
< 2 . j/jji tax at 9s 7d (ume). on the JMLflOO 
Ordinary stock is proposed by the 
Electric and Ctaperal Investment Com- 
pany. making. w»;h the intrnm of 
|-7 Per cent, paid on 1-: January. 10 per 
joniL (again-t 9 per ernt.) for the year 
ended 31*t May. 1*44. 


r.K. ( OMMODITV INDEX 

T**> 4*1 Jaw J1SP U**fe U* JUT 

Xut. XD JiwIUJ Irer i*> ..2000 

ftM Utfe tot. IflU-MQ. 


better at 5%. in advance of the I localised fire having temporarily do- wrexest fired does dmUrpIt- 

preiimmary figure*. Rrieigh Cydes|iarbod operetlOM. KwaJm eased 3d to JP" the Gcwerniuent intends to modify 
unproved fid to T9s 9d. London 26*. but Amalgamated Banket. ttaat °* tbwr present commitments. 
General Cob mode Is 4«L Bremang. Grid Coast Main Beef. Gold 

Radio shares were inclined re reset Coast Selection* and. Kenongs were aw iv .vn n . 

to small offerings and E. X. Cole on marked up iHtf'm redi ease. MAMIN AND R.\RK\ 

sale* mdured ov. the late rise were la .Australians. Sons or Gwalia Mason aad Butty is navinir a Hvmt 
down Is at 3% 4'jd. Dsccascamc hack, i mproved 3d re 24* fid. but Golden and final dividend of j per cehL. Im 
fid to 34* 9d and the anpemrancs of ajHoroe Shoe. Gold Exploration of An*- tax. an ib £163.172 capital tanimt 
seller or two depressed Pfailco re 13* 9d. 'units. Parings and Wiluna were a nil for the two preenktur «ar>* The 
E.MJ. after dunging down re 33* 4',d shade easier, while Gold Mine* of Kal- dj* iribution is for DM3, m nhwfa period 
firmed up later to Mt Triples Glass goorlie were 3d .ower on the day. Of net profit wa- CL7I\ asaim-i £4 iav 
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ranted from 81* to S3* fid with bu*ine*- :• £1. (ml South Kintx Thai Syndi. way-, etc. Tru- n- s .>M n | *han-. mi 
recorded Up to 63* fid. 'i'* and Trwwb were *ach 3.1 UiWrT. irv lUnted llfe-le* and beater i£li ai 

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FPfANdtAJCi TIM£S MONDAY JUNE 6 1994 


NEWS: EUROPE 


KK-Kitk 1 



Agreement on $7bn will help reforms 

Russia wins deal on 
rescheduling 



By teyta Bouiton In Moscow 


Western ■ governments, 
continuing efforts to support 
Russian economic reforms, 
* 51 r* \ m . agreed at the weekend to res- 

WtftLA^A M A \y h chedule $7bn in debt owed by 

* ; ’ u TJ Russia in 1954. 

The deal reached in Paris 
‘ - reschedules over 15 years with 
■ . three -years' grace debts 
1 ? .' towards the Paris Club of cred- 
?■. itor governments, which are 
, ' owed more than half of Rus- 
, * ,; i sia’s $80bn foreign debt 
, a ‘ ‘ Russia urgently needs to rea- 
chedule its foreign debt to get 
round the burden of loans of 
■•J *., which a significant proportion 
1 fall due around this year. The 
« »' International Monetary Fund 
\ - i 5> has calculated that Russia, 
' r “ which has overestimated its 
J f * trade surplus Gar this year, has 


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This year’s obligations 
indude ?14^bn owed in prind- 
pal payments, plus $6bn in 
• j L interest - a burden partly alle- 
viated by this weekend’s 
rescheduling agreement 


'Sm*. . 

‘OrTs 

* i •*!:• THE FINANCIAL TIMES 

T>.i, Pub&hrd bjr The Rnawif Tkna {Enrone} 
Fnmkmn 



«$■*- Thr J»i 
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'*■> Adminl-RoKiuUU- Strasse Ji, 63263 
v v Nm-Isenbnrr fowned by ' Hfirxiiet 
ih. v InteraaQomll. ISSN: 1S&4 0174-7363 

■* R«pon»Uc &fi»r Ridnid Lemberi. do The 

. 1 Time! Limited, 

Number One SoodnraA Bate Laadcn SEI 
:r. WL. UK. Sarebolden oftoFmaodai Tam 
(Europe) GmbH are: The financial Times 
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Company it uxacponKd muter the tews of 
Enured and Wdea Chaiman' D.CM. Bed. 


FRANCE 


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".A 


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Knob, F-^5044 Put* Cental 01. Teksbm (91) 
4297-0621, Fu (0(> 4297-0629. ftmterSA. 
Cl New! Edair. 1S2L Rue de Cane, F-59100 
Rouhriz Oedet LHStor Rkbaid Lambert 
ISSN: BSN -ir4S47a Cbdooun Phriten 
No 67S03D. 

r ■" DENMARK ■ .-.-‘l 
Financed Uses (Scandnavia) Ti^ Yknet- 
- ikafted 42A.J7SJ16i CopenhiittuK. Ta.> 

. . Phone 3J U 44 .41. Fta . 


Mr Sergei Dubinin, the act- 
ing Russian finance minister 
who negotiated this weekend's 
agreement, told reporters in 
Paris he expected “fairly diffi- 
cult negotiations on the 
rescheduling of all our debts 
on a long-term basis” this 
autumn. 

Western governments and 
multilateral organisations such 
as the IMF are expected to 
bring new funds to Russia this 
year. But a rescheduling agree- 
ment with western commercial 
banks, which are owed another 
$26bn, continues to elude Rus- 
sia for the second year in a row 
because of Russia's insistence 
that hanks should not be able 
to seize state-owned assets if it 
defaults on repayment. 

Until a proper rescheduling 


deal can be reached. Urn banks 
have routinely rolled over 
every three months payments 
owed by Russia. 

A third category of creditors, 
traders who have not been paid 
for goods supplied, have been 
left to fend for themselves to 
squeeze whatever payments 
they can out of the Russian 
government 

While the governments say 
they do not want to write off 
Russian debts in order to pre- 
serve its ability to borrow new 
credits in the future, the banks 
are simply, waiting for Russia 
to come round to their point of 
view, confident it will need 
western / bank finance in 
future. 

Russia has allocated $4.lbn 
for debt servicing this year. 


Pledge on German 
immigration laws 


By Judy Dempsey in Berfln . 

Germany’s Free Democratic 
party will seek to introduce an 
immigration law if Chancellor 
Helmut Kohl's governing coali- 
tion is returned to power after 
the federal election in October. 
Germany is one of the few 
countries in the European 
Union which bag no immigra- 
tion legislation. 

During its three-day con- 
gress in the northern city of 
Rostock which ended yester- 
day. the FDP also agreed , hi 
principle to reform Germany’s 
outdated 1913 citizenship laws, 
and give foreigners easier 
access to voting in local gov- 
ernment elections. 

Under current legislation, a 
child is granted automatic citi- 
zenship if one of its parents is 
German. This excludes over 
6-5m foreigners living in the 
country. ... 

The need to reform Ger- 
many's outdated laws received 
a boost after Ms Cornelia . 
Schmalz-Jacobsen, head of the 
Ptoderal Office for the Problems 
of Foreigners, was elected by 


the congress to the FPD presid- 
ium, the top echelon in the par- 
ty’s organisation. 

“It is high time we intro- 
duced change," said Ms 
Schmalz-Jacobsen, who has 
rampaignpri for a reform of the 
law and dual citizenship. “How 
can we integrate foreigners if 
we do not give them rights? 
Germany, in any case, is de 
facto a country of immigration. 
It is time we faced up to it" 
The Bundestag, or lower 
house, last month threw out a 
bill allowing dual nationality. 
Mr Kohl’s CDU and even some 
FPD deputies opposed it 

Although the FDP had voted 
at the weekend to continue to 
support the CDU-led coalition, 
in which it is the junior part- 
ner, it agreed to oppose any 
attempts by the government to 
extend security surveillance by 
bugging private homes. It also 
voted to scrap a law requiring 
registered churchgoers to pay- 
tax. Church membership has 
sharply fallen east Ger- 

mans since unification because 
the tax levy is deemed exces- 
sive. 


Health reforms hit drug sales 


By Daniel Green In London 

Healthcare reforms in France and Italy 
depressed pharmaceuticals sales in the 
first quarter of 1994, according to figures 
published at the weekend. 

France introduced guidelines at the start 
of the year to reduce over-prescribing hab- 
its; doctors were asked to prescribe only 
drugs appropriate to a given medical con- 
dition. Sales in France in the first quarter 
of 3994 were worth S&9bn (£19bn). com- 
pared with £L2bn in the first quarter of 
1993- The decline was 4 per cent, taking 
into account currency fluctuations, IMS 
International, the London-based market 
research company, reported. 

Italian reforms significantly affected 


sales, which fell 11 per cent in constant 
currency terms to $lAbn. Italy has intro- 
duced limited lists of drugs for which the 
state medical system would pay in the 
treatment of patients. 

By contrast, sales in Germany, Europe’s 
biggest market, recovered 6 per cent 
against a year earlier to $3.1bn. However, 
the improvement was partly due to the 
low level of last year's figures for the first 
quarter, when new healthcare reforms 
penalised doctors for over-prescribing. 

Sales in the UK, where reforms have 
been relatively modest, grew by 8 per cent 
fester than any other large country. Nev- 
ertheless, UK doctors remained relatively 
low prescribes, and sales of $L3bn were 
less per head of population than Spain. 


The US, where sweeping healthcare leg- 
islation is still being discussed, saw drugs 
sales rise 6 per cent to $LL2bn. Sales in 
Canada, which has a thriving generics 
(cheaper unbranded drugs) industry, rose 
1 per cent to S822m. 

Sales in Japan, where the government 
has pushed through drug price cuts, fell 6 
per cent to $4.6hn. 

By therapeutic area, cardiovascular 
drugs, including many treatments for 
heart conditions, remain the biggest single 
area, with sales 5 per emit higher than in 
the first quarter of 1993. 

But the next biggest category, digestive 
tract drags including the world's biggest 
seller, Glaxo's Zantac, was one of the fast- 
est growing; sales rose 7 per cent 


Madrid unwilling to help if it means distorting competition 


Spain to 
discuss 
Seat aid 
with VW 

By David White in Madrid 

The Spanish government feces 
tough new talks this week with 
the management of Volkswa- 
gen over the scope of state aid 
for the German group’s loss- 
making Seat subsidiary. 

The Industry Ministry said it 
was prepared to provide invest- 
ment harking but not to make 
a special case of Seat by sub- 
sidising restructuring costs in 
a way that would distort com- 
petition in the car market. 

VW is seeking aid of 
DM820m ($49lm) from Spanish 
central and regional authori- 
ties to cover compensation for 
early retirement by 4,600 Seat 



Gonzalez (left) and Kohl: meeting today in Schwerin 


workers, reducing the work- 
force to about 9,500. 

The issue is expected to sur- 
face in a two-day meeting 
starting today in Schwerin 
between Chancellor Helmut 


Spanish prime minist er. 

Promises of assistance for 
Seat provoked sharp reactions 
last week from other multina- 
tional motor groups which 
manufacture in Spain, includ- 


Kohl and Mr Felipe Gonzalez, ing Ford and General Motors. 


“You cannot help one with- 
out helping all," said Mr 
Araaud de David-Beauregard, 
manag in g director of Citroen 

Hispania, part of the French 
PSA group. Mr Juan Antonio 
Moral, chairman of the Renault 
subsidiary FASA-Renault, said 
aid for job reductions at Seat 
was “not acceptable". 

However. Mr Juan Llorens, 
Seat chairman, said the com- 
pany was not comparable to 
others since it had its own 
models and technical centre. 

The ministry said it was pre- 
pared to support new invest- 
ments at Seat based on the 
same criteria as other motor 
companies. The cutting of 9.000 
jobs at Seat anno unced last 
year would already result in a 
cost to the Spanish taxpayer of 
Pta30bn ($218m), it said. 

This was in addition to an 
estimated Pta400bn spent on 
restructuring the formerly 
state-controlled company in 
readiness for sale to VW in a 
phased operation that began in 
1986. 


Germany-Sweden defence link-up 


By Michael Undemann in Bonn 

Germany and Sweden will 
today agree to work together 
on future defence projects, a 
step expected to clear the way 
for a tank deal worth at least 
DML2bn ($71 8m). 

The agreement comes just as 
Sweden is nearing the end of 
talks to buy 120 Leopard II 
tanks and Germany is under- 
stood to have made the deal 
more attractive with offers to 


include Swedish companies in 
future defence projects. 

Mr Volker Rfihe. the German 
defence minister, and his 
Swedish counterpart, Mr 
Anders BjOrck, will sign an 
agreement outlining future 
co-operation in the develop- 
ment of unspecified defence-re- 
lated projects. 

While about 75 per cent of 
Germany's aims building pro- 
grammes- are already under- 
taken in cooperation with sev- 


eral Nato allies, the closer 
links with Sweden are the first 
such initiative with a non-Nato 
member. 

As part of a programme to 
re-equip its mechanised bri- 
gades the Swedish army will 
buy 120 Leopard fls from 
Krauss Maffei, the Munich- 
based company, in a deal 
worth about DMLZbn. Another 
80 tanks are likely to be bought 
later, an official said. . 

To complete the overhaul the 


Swedes are considering leasing 
another 160 used Leopard Ds 
which Germany needs to take 
out of service. An official said 
the deal was likely to be com- 
pleted this year but could give 
no further details. 

The Swedes preferred the 
Leopard n to the US-made Ml 
Abrams and the French 
Leclerc and will become the 
third army to use it as its main 
battle tank, after Germany and 
the Netherlands. 


Spain 
writes off 
N-power 
stations 

By Tom Bums in Madrid 

Spain bag finally written off 
five partly-built nuclear power 
stations, whose construction 
was frozen 10 years ago, at a 
cost of Pta730bn (S5.3bn). 
under a new law aimed at 
reorganising the domestic 
electricity sector. 

The legislative initiative, 
which was approved by the 
government at the weekend 
and will now be debated by 
parliament, adjusts Spain's 
electricity industry to meet 
Brussels’ competitiveness 
guidelines. In line with similar 
norms in other EU states, it 
breaks up the powerful domes- 
tic utilities, which both gener- 
ate and market electricity, 
into separate production and 
distribution units. 

One of the controversial 
aspects of the new law con- 
cerns the phasing out of the 
nuclear power sector, which 
currently represents some 35 
per cent of all domestically 
produced energy and which 
had attracted large invest- 
ments on the part of all the 
m ain domestic utilities 25 
years ago. 

The nuclear build-up, mod- 
elled on that in France, was 
stopped in 1984 when the 
Socialist government meeting 
a groundswell of opposition to 
snch energy, ordered a mora- 
torium on all new reactors. 
The shortfall engendered by 
the freeze will to a great 
extent be made up by natural 
gas and in particular by a new 
pipeline linking Spain to the 
Algerian gas fields via 
Morocco, scheduled to be oper- 
ational in 1996. 

The Pta730bn debt bill accu- 
mulated by the utilities which 
own the unfinished nuclear 
power stations is to be paid off 
by a charge that will be Incor- 
porated into the domestic tar- 
iff. 

The government claimed 
that the charge, representing 
£L54 per cent of the total elec- 
tricity charge paid by consum- 
ers, would not involve any 
extra cost, as it has already 
been levied over the past 10 
years that the moratorium has 
been in force. 


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FINANCIAL TIMES MONDAY JUNE 6 1994 


THE PINEAU-VALENC1ENNE AFFAIR 


Schneider chiefs arrest spotlights business ties 

^ ^ ... . from a 


■Hi' 


PJI 


M r Didier Pineau-Vaiendenne's 
detention in a Brussels prison 
developed into an affair 
of enormous media and business interest 
in France and Belgium. But it has not 
so far caused a major political row 
between the two gove rnm e n ts. 

Certainly, the Schneider chairman must 
have taken some satisfaction from having 
almost the entire French political and 
business establishment weigh in an his 
side. 

On hearing of his arrest 10 days ago, 
Prime Minister Edouard Ball adur rang 
his Belgian counterpart, Mr Jean-Luc 
Dehaene, while Mr Alain Juppe, France's 
foreign minis ter, telephoned his opposite 
number, Mr Willy Claes. 

They got the same message in private 
that the Belgian press has been 
broadcasting in public: that Belgian 
justice is independent of government 
Since that has not always been the case 
in France, it was perhaps a salutary 
reminder. 

Having assured themselves that 
Mr Pineau-Valencienne is not being 
ill-treated - he is getting meals bum the 
French embassy and wearing his own 
suits, rather than prison-wear - the 


David Buchan looks at Franco-Belgian two-way investment 


French authorities are now helping 
Belgian justice to run its coarse. 

Mr Jean -Claude Van Espen, the Belgian 
prosecuting magistrate investigating 
alleged Schneider irregularities in 
Belgium, got no answer to his first request 
on May 16 for judicial help from France. 

But last week Mr Pierre Mfefaaigoerie, 
France’s justice minister, belatedly 
pledged full cooperation to estahllsh 
the truth. Last Wednesday a French judge 
and policemen helped their Belgian 
counterparts start to question Schneider 
executives and look for documents at 
the group's Paris headquarters as well 
as at Mr Pineau- V alendenne's suburban 
home. 

If the Schneider affair has gradually 
elicited more cooperation from France, 
in Belgium it has reawakened a certain 
animosity towards its large neighbour. 

This is particularly prevalent in the 
field oF business. Extending beyond 
traditio nal Belgian w™pinint« about 
French hi gh-hanffarinwa; . there is 


Irritation, particularly in the Flemish 
community, about the activities of stick 
“money men" from France. 

In Paris last March Mr Luc Van den 

haail of Hw Fl emish regional 

government, invited French companies 
with interests in Belgium to “stop . 
thinking about purely financial 
operations” and to start creating real 
jobs. His reprimand was exaggerated, 
because some French companies, such 
as FpritniU, have set up Tnamifan imi fig 
plants in Belgium. But of 800 
French-controlled subsidiaries in Belgium, 
employing 157,000 people, most resulted 
from takeovers in ttw fi mm rial sphere. 

By far the biggest was the 1988 takeover 
of Soraftte Gdndrale de Belgique bythe 
Suez financial group, which now controls 
61 per cent of the giant Belgian holding 
company. 

Some of the French financial 
investment — such as the controlling stake 
by EMC, a French holding group, in the 
Tessendarlo rf lpmiral company — is in 


industry. There is a link between the 
two countries’ biggest companies. 
Elf-Aquitaine, the French oil group, owns 
5 per cent oT Petrofina, Belgium's leafing 
camMEny in this rector, but the main 
ties atogtti banking and insurance. 

- fJaS French insurance groups Union 
de^JAsteranoes de Paris and Assurances 
Gdnerales de France.contrbl Royale Beige 
and AssubeL The investment flow is by 

HO m pa Tin all OO P Trtty- Rpl ginn rfu m p m rtPB 

have some 350 subsidiaries in France, 
employing 37,000 people. They range from 
Solvay, the major Belgian chemical 
company, to the flourishing **»Ytfip 
businesses of west Flanders that have 
expanded into northern France. 

hi tending to reinforce their presence 
in Belgium through financial takeovers 
erf existing Belgian enterprises, rather 
t ha n retting up greenfield operations 
there, French companies have tended 
to forget about that often-awkward 
customer - the minority shareholder. 

"Ibis may be because Belgian 


le gislation to prot e ct rights of minority 
shareholders is fairly recent, though very 
sfmfiar to what has existed for longer 
in France,’' says Mr Jean-Nicolas Caprasse 
of Deminor, a Brussels legal firm 
Specialising in work for minority 
shareholders. 

The new Belgian law gives people 
owning 1 per cent of a company's shares, 
or BFrSOm (£980,000) of the company's 


for an investigation into the co m pany. 

Deminor acted for minority shareholders 
in Wagons-Uts, the Belgian travel group, 
who felt they were unfairly treated when 
Accor, the French hotel group, took it 
over in 1991. 

Bel gium started to put legislation to 
protect minority shareholders into place 
only in 1389, after the Sod6fa GAn&rale 
de Belgique saga, and completed the job 
in 1991. 

For its part, the French badness 
community has closed r anks in rallying 
to Mr Pineau- Valendenne’s defence. 


“Imagine that a policeman from a 
French village committed a certain offence 
and Mr [Charles] Pasqua [the interior 
minister] was arrested for five days while 
the was studied," said Mr Jean-Ren6 
Fourtou, ^hgfrp ian of Rhdne Poulenc, 

the and pharmaceuticals group, 

expressing a common reaction. _ 

The B e lgfa" affair has underlined 
French companies’ particular sensitivities 
about allegations of malpractice, following 
revelations of a series of examples of 
corruption in the last two or three years, 
j pHnrTmg those of companies involved 
in illicit political fina ncin g. 

Mr Thierry Jean-Pierre, a crusading 
French magistrate who is running in 
the European Parliament elections, has 
just published a 40-page booklet alleging 
widespread corruption in French political 
and business life. . . 

Mr Jean-Pierre has stopped short or 
giving specific details into his allegations 
of corruption in areas ranging, from party 
financing and export commissions to 
football and motor racing. 

But there fa a growing nervousness 
in France that he, or someone else, may 
soon provide them. 

See leader page 




Pineau-Valendenne: a businessman’s nightmare 


By John Ridding fa Paris and 
Emma Tucker hi Brussels 


M r Didier Pineau- 
Valendenne fa living 
a businessman's 
nightmare. Since he travelled, 
voluntarily, to Brussels on May 
26 to make a statement con- 
cerning an investigation into 
two Belgian subsidiaries of his 
electrical engineering group, 

the Schneider chairman han 

been locked up in the city’s 
ageing Forest prison, under 
investigation for alleged fraud 
and embezzlement. 

It fa a cautionary tale of the 
risks for managers of multina- 
tional groups," says a French 
industrialist "Many business- 
men are wondering to what 
extent they are responsible for 
every part of their company's 
operations. Many are watching 
this case very carefully.” 

The nature of the problems 
encountered by Schneider in 
Belgium extends well beyond 
the question of senior manage- 
ment's liability for operations 
in different countries. 

A long and contorted affair 
links Schneider's headquarters 
In the smart 16 th ammdisse- 
ment of Paris and a prison 
known locally as the “black 
hole of Brussels." A landmark 
came in November 1992 when 
Schneider launched an offer to 
buy out minority shareholders 
in Cofibel and Cofimines, two 
Belgian financial subsidiaries. 

Minority shareholders pro- 
tested against the terms of the 
offer, which was launched at 
BFr2J>25 per share for Cofibel 
and BFr 1,265 for Cofimines. 
They claimed that the bid 
undervalued their investments 
and that Schneider manipu- 
lated sales of shares to benefit 
its own balance sheet 
Mr Andr6 de Barsy, one or 
the rebel investors, said last 
week he had collected files of 
information incriminating 
Schneider’s management in 
the conduct of the offer. 

In support of their claim, the 
disgruntled minority share- 


MR. PINEAU- VflJ-ENCIFNNE. GOESTV BRUSSELS 



holders filed a suit in Brussels 
to secure a higher bid price. 
After protracted and bitter 
negotiations, Schneider raised 
its offer to BFr3,400 per share 
for Cofibel and BFrl,475 per 
share for Cofimines. The 
Improved terms cleared the 
way for an accord with minor- 
ity shareholders at the begin- 
ning of this year. 

The original complaint, how- 
ever, had set Belgium’s legal 
wheels into motion. Mr Jean- 
Claude Van Espen, a well 
known prosecuting magistrate, 
with a history of handling 
financial fraud cases, had 
launched an investigation in 
October 1993. The probe contin- 
ued after the resolution of the 
dispute with minority share- 
holders and fa the reason why 
Mr Pineau-Valendenne stayed 
behind bars at the weekend. 

Following the agreement 
with minority shareholders, Mr 
Pineau-Valencienne was confi- 
dent the case could be brought 
quickly to a close. "He had 
appointments in his diary for 
Friday," said one colleague, 
referring to the day after the 
Schneider chairman's visit to 


Brussels last month. 

Instead, he was held without 
charge, undo* investigation for 
fraud, benefiting from fraud, 
embezzlement and falsification 
of accounts. Hie was detained 
for the five days of preventive 
detention allowed under Bel- 
gian law. Last Wednesday, a 
Brussels’ court confirmed the 
nature of the investigation and 
ordered the Schneider chair- 
man to remain In prison for a 
period of up to one month. 

Since Wednesday's hearing, 
the thrust of the inquiry info 
Schneider and Mr Pineau- 
Valencienne has become 
clearer. After the ruling to 
extend the Schneider chair- 
man's detention, the prosecu- 
tion issued a statement alleg- 
ing "illicit manoeuvres” 
through which the company 
received more than BFrSbn at 
the expense of its Belgian sub- 
sidiaries between 1988 and 
1992. 

According to the prosecu- 
tors, Schneider had concealed 
offshore companies and assets 
worth about BFr4J3bn from 
regulators and shareholders in 
Cofimines and Cofibel. Divi- 


dends totalling BFrl.8bn from 
the offshore companies regis- 
tered in Panama and Bermuda 
were not distributed -to all 
shareholders in the subsid- 
iaries, the prosecutors believe. 

The investigation is also 
focusing on fhe dealing s of PB 
Finance, a Belgian shell com- 
pany in which Cofibel held a 
minority stake of 25 per cent 
before selling out earlier this 
year. The company was con- 
trolled by Mr Valentino Foti, 
an Italian businessmen, who 
represented Fimo, a Swiss Kal- 
ian company. Mr Foti, arrested 
as part of the same investiga- 
tion, served as a director on 
the board of Schneider's Bel- 
gian subsidiaries during the 
period before the offer to 
minority shareholders. 

Schneider denies the accusa- 
tions of the Belgian prosecu- 
tors and says it "deplores” the 
actions fakwr against Its chair- 
man. It claims it never harmed 
interests of minority share- 
holders and that Mr Pineau- 
Valendenne, although nomi- 
nally dmimuiii of Cofibel and 
Cofimines, was not actively 
involved in their Tnfm p gemftn t;. 


This task foil instead to Mr 
Jean Verdoot, who was manag- 
ing director of the subsidiaries 
imtn his death last year. 

Schneider says its ties to the 
group of offshore companies at 
the centre of the investigation 
are an histo rical accident, dat- 
ing back to the group’s origins 
hi the business empire of the 
Belgian Empain family. 
Schneider claims the offshore 
companies, as with many Bel- 
gian groups, were established 
in the 1960s to protect mining 
interests in the Belgian Congo 
(now Zaire) from nationalisa- 
tion after independence. 

Schneider denies benefiting 
from funds gemmated by the 
off shore companies, except in 
the form of dividends to Cafi- 
bel and Cofimines. 

The company has also firmly 
denied allegations in the Bel- 
gian press that PB Finance was 
involved in money-laundering 
activities. "There fa nothing in 
the structure of PB Finance 
which would allow any laun- 
dering of any kind,” said Mr 
Pineau-Valencienne In an 
interview with Les Echos, the 
French business daily, last 


October. "I would add that 
money has rather been burned 
than laundered because the 
company has lost a lot of 
money,'’ he said. Cofibel sold 
its shares in PB Finance earlier 
this year and the company is 
currently being managed by 
court-appointed lawyers. 

Despite denials by S chneider 
of any irregularities, the 
events to date leave several 
questions unanswered. Why 
did Mr Pineau-Valencienne 
travel to Brussels apparently 
unaware of the legal risks 
involved? Were decisions taken 
which, as the prosecutors 
allege, acted against the inter- 
ests of Belgian minority share- 
holders? If this was the case, to 
what extent could Mr Pt ne a n- 
Valencienne have been 
involved? On the first count, 
Schneider says its chairman 
was taken by surprise .and foil 
victim to an over-zealous Bel- 
gian legal system. “We have 
encountered a very particular 
judge," said a company official 
after the chairman’s arrest. 
"Mr Pineau-Valencienne went 
to Brussels to mak e a state- 
ment which ha believed would 


INTERNATIONAL PRESS REVIEW 


A feast for Europe’s media 


De Barsy: a high-profile 
minority shareholder 


SCHNEIDER 


By Alice Rawsthom 
and Emma Tucker 


There are very few prisoners 
whose incarceration would 
inspire a former French prime 
minister to write a front page 
newspaper article protesting 

a gains t their plight. 

Yet, Mrs Edith Cresson, the 
former Socialist premier, was 
moved to do just that in last 
week's Journal du Dimanche 
following the imprisonment of 
Mr Didier Pineau-Valencienne. 

The protest from Mrs Cres- 
son, who once worked for 
Schneider, was followed inside 
the paper by a declaration of 
support for the Schneider 
chairman signed by 36 of 
France's most eminent indus- 
trialists. The protest set the 
tone for French coverage of 
L 'a ffair e Pineau-Valencienne . 

“Stupeficatfon and emotion” 
was the headline of an article 
in Monday's edition of La Tri- 
bune, the financial daily. Le 
Monde recalled Belgium’s past 
criticism of F rench “imperial- 
ism'' in the corporate arena. 

Even Liberation, the liberal- 
left daily, expressed astonish- 
ment: “Company chairmen 
have been imprisoned before, 
but this time , a linchpin of the 
establishment has been hit.” 

Le Figaro, the centre-right 
daily, struck a cautionary tone 
on political consequences of Mr 
Pineau-Valencienne's arrest: 
"A stumbling block in the calm 
waters of Franco-Belgian rela- 
tions". Later in the week, the 
media turned to long-term con- 
sequences on public percep- 
tions of the business world. 


usEftre, 
fMtieKtiire [ 


By Emma Tucker In Brussels 


Cgaiite ! 

/ 


0 




K 




The Franco-Belgian rumpus as seen by Flemish daily De Standaard: Alain Juppd, French foreign 
minister, and Prime Minister Edouard Balladur on the line to Jean-Lnc Dehaene, Belgian premier 


The news on Monday that 
Mr Pierre BergA Yves Saint- 
Laurent chairman, had been 
indicted for insider trading 
cast another cloud over the 
corporate scene, as did con- 
tinuing speculation over Mr 
Bernard Tapie, the left-wing 
entrepreneur, under pressure 
from Credit Lyonnais to repay 
part of Ids debts. 

Liberation ended the week 
with an essay entitled “Good- 
bye to business?" in which Mr 
Michel Wieviorka, a leading 
sociologist, said idolisation of 
business in the 1980s had been 
replaced with disillusion over 
the “failure of industry to 
reduce unemployment or to 
regenerate the economy.” 

The Belgian press has been, 
as L’Echo, the Francophone 
financial daily put it, "indig- 
nant that the French are indig- 


nant”. Many newspapers said 
that If France had forgotten 
the principle of judicial inde- 
pendence, Belgium had not 

"That this affair leads (In 
France) to unkind commen- 
taries on the way Belgian 
judges conduct business arises 
from confusion which borders 
on bad faith and lends support 
to those circles that denounce, 
more often incorrectly than 
not, French imperialism',” 
said La Libre Belgique. 

Id Libre noted that Mr Mel- 
chior Walhelet, Belgian justice 
minister, was obliged to 
remind him that in Belgium, 
rule of law prevails. 

De Standaard took a similar 
line, writing glowingly about 
the prosecuting magistrate, Mr 
Jean-Claude Van Espen, as “a 
judge like no other”. The idea 
that the arrest of Pineau- 


Valenaenne was a lapse at the 
aid of Van Espen’s long career 
fa just "wishftil thinking” by 
people who believe that "a 
judge should defer humbly 
before a certain class of peo- 
ple”, said the Flemish daffy. 

La Lanteme, a populist tab- 
loid, rephrased the same 
thoughts. “France in shock: 
how could a "little judge 
dare._” it suggested. 

De Standaard even contem- 
plated a conspiracy theory. 
While it was inevitable busi- 
ness and politics of Belgium 
and France should be inti- 
mately involved with each 
other, it said, political reaction 
In France prompted by the 
detention lends weight to the 
theory that the French have a 
dark political and economic 
strategy of investments and 
takeovers in Belgium. 


Afr Andre de Barsy displays none of the low-key 
characteristics of the typical bourgeois Belgian 
investor. 

Unlike tha Belgian shareholder who carefully 
avoids both the country's tax system and the 
limelight, Mr de Barsy is known for his forth- 
right questioning at atmuai general meetings. 

At his sombre offices in central Brussels, Mr 
de Barsy, a financial analyst who runs his own 
investment company, expounds on the ques- 
tions he has put to the management erf Cofi- 
mines since 1991, when he first became a share- 
holder in the Schneider subsidiary. 

“For some years I was singled out because, 
when I went to meetings, it wasn’t just to tear 
what I could read in a report, ft was to ask 
questions about the normal course of business” 
he says. Other individual minority shareholders 
took note. A total of 180 of them turned to Mr de 
Barsy for advice when they first suspected that 
Schneider was giving them a less than fair deal 
in its takeover bid in 1 ate 1992. The group of 
minority shareholders took their case to the 
Belgian legal authorities. The threat of legal 
action pro m p t ed Schneider to raise the share 
price offer. 

While most of the individuals took the money 
and settled back in anonymity, Mr de Barsy 
refused to accept the raised offer -and has con- 
tinued to ask questions about unexplained 
aspects Of the S *^neid«^ -Cn fi mines Knk. 

From behind his solid wooden desk, piled high 
with papers and sporting a bakelite telephone, 
as well as two more modern handsets, Mr de 
Barsy has meticulously followed the Schneider 
case. He focuses on what he calls toe "compli- 
cated architecture” of Cofimines’ elaborate off- 
shore operations, which he aTfagas has had the 
effect of hiding part of Cofimines pro fi ts from 
shareholders. 

"I knew in 1992. of the existence of some of 
these offshore companies and asked why It was 
necessary to have this sort of investment 
vehicle. But I didn’t suspect that other offshore 
companies existed as wdL" 

In 1992, he says, Mr Jean Verdoot, the compa- 
nies’ former managing director, answered some 
of his questions in apparent good faith. “But he 



Andrd de Barsy: ‘When I went to the 
[shareholders’] meetings, it wasn't just to fau r 
what I could read in a report, it was to ask 
questions about the course of business’ 


evidently knew many things he didn’t speak 
about” 

One of toe points queried by Mr de Barsy 
refers to guarantees on share transactions 
involving both Schneider and Cofimines, cen- 
tred on the purchase of a stake in the Luxem- 
bourg steel company Arbed. 

"At Cofimines animal general meeting In May 
1992 1 received an assurance that thess (guaran- 
tees] were clear, and I was satisfied with the 
Investment.” Now, however, he thinks that 
questions on these dealings need stiff to be 
followed np. 

Mr de Barsy questions Mr Pineau-Valen- 
rienne’s closeness to the operations of Cfflfi- 
m fries, of which he was the chairman, and 
alleges that the Schneider chief was rarely in 
Brussels. "I think a is Important that a manager 
fa conscious of his need to report to the people, 
and not to stand apart like the Boi de Solefl.” 


Hostile 


strategy 


pays 

off for ,, . 

Schneider Hill! 


By John RkkSng 


resolve the whole affair." 

The answer to the second 
and third points is more com- 
plex, and will partly depend on 
a study of documents and cor- 
respondence taken by prosecu- 
tors after a search of Schnei- 
der’s Paris headquarters by 
French and Belgian police last 
week. The documents have 
been studied over the weekend 
and will be used to decide 
whether Mr Pineau-Valen- 
cienne's appeal to be released 
will be upheld. An appeal fa 
due to be heard early this 
week, and a derision should be 
made within II days. 

Ironically, it was Mr Pineau- 
Valencienne’s attempt to bring 
more coherence into the dispa- 
rate group of companies he 
inherited in 1981 that lies 
behind his current plight 

His decision to buy out the 
minority Investors, he says, 
was an attempt to rationalise 
the “unimaginable imbroglio” 
of Schneider's Belgian 
operations. 

As he sits to his cell to For- 
est prison, he fa confronted by 
an imbroglio which appears 
denser stiff. 


In 13 years as head of 
Schneider, Mr Didier Pineau- 
Valendenne has transformed a 
disparate range of business 
interests, ranging from steel 
and teleconununicatons equip- 
ment to sportswear, into one 
of Europe's largest electrical 
engineer ing companies. 

The transformation has 
involved an aggressive strat- 
egy of acquisitions and dispos- 
als. Landmar ks include liqui- 
dation of the group’s 
Creusot-Loire steehnaktog arm 
in 1984, after a protracted test 
of strength with the Socialist 
government of the time. The 
government’s refusal to rescue 
the steel company prompted 
its collapse, one of France's 
largest corporate failures. 

In 1986, Mr Pineau-Valen- 
cienne took over Tfltmtonl- 
qne, the electrical equipment 
group, after a bitter battle 
with employee shareholders. 


fori K i 


Oii’.f- •• 

fc'v. • • 


The company has 
emerged as one 
of Europe’s 
largest electrical 
engineering 
groups 


Five years later, toe target 
was Square D of the US, which 
again succumbed only after a 
fierce fi ght The final cost of 
the deal, $2.23 bn (£i.48bn), 
made it the biggest hostile 
takeover by a French company 
to the US. Mr Ptoean-Valen- 
rienne's victory won him the 
accolade of manager of the 
year from toe Nouvel Econo- 
mists magazine. 

The Schneider chairman's 
aggressive restructuring strat- 
egy can be seen from the com- 
pany’s statistics. Last year it 
recorded sales of FFr56bn 
(£6J55bn) and employed about 
90,000 people. In 1981, sales of 
FFr-JObn were achieved from a 
workforce of 125,000. The bot- 
tom tine has also been improv- 
ing, with net profits np by 33 
per cent last year to FFT40SUL 

The bulk of the group's bold- 
ness comes from electricity 
distribution, industrial con- 
trols and electrical contract- 
ing. In addition to Square D 

and Tti&n&canique, the princi- 
pal subsidiaries are Merlin 
Gain and Spie Batignoles. The 
Schneider chairman has also 
pursued a strategy of partner- 
ships, resulting most recently 
m a joint venture with AEG of 
Germany in robotics. 

Ironically, Mr Pineau-Valen- 
denne’s role in transforming 
toe company may prove a 
weakness. "He is responsible 
for a lot of what toe g r o up has 
achieved hi im p r o vin g produc- 
tivity and re-focasing its 
operatio ns,” says one electron- 
ics industry analyst in Paris. 
"As a result, his incarceration 
is worrying for investors.” 

Such worries have been 
reflected to the movement of 
toe company’s share price. It 
fan by 5J5 per cent on the day 
°f M r Pineau-Valencienne's 
arrest and by a further 5L5 per 
cent when the Brussels magis- 
trat es co nfirmed that be would 
be detained in prison. 

Industry observers say Mr 
rmean-Valenclenne's deten- 
tion does not pose a threat to 
the group as a whole since the 
subsidiaries Involved to the 
fraud case are relatively small 
- Cofibel and Cofimines repre- 
sent less than 5 per cent of 
Schne ider’s total assets. But in 
terms of image and practical 
manag ement of the group, 
implications are more serious. 


i 


r 



FXNANOAL TBVCES MONDAY JUNE 6 1994 


NEWS: INTERNATIONAL 


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Party facing N orth wards 

George Graham finds Virginia Republicans divided 


O oe year ago; Virginia 
Republicans were - 
divided sharply over 
the religious right-winger 
whom their parly had nomi- 
nated: for the state's Eentenant- 
govemorship. He lost 
This weekend, the party 
selected to run in November, 
for election to the US Senate, a 
candidate who divides opinions 
even more sharply: Mr Oliver 
North, former colonel of 
Marines, who was one of the 
organisers of the Iran-Contra 
plot to trade arms for the US 
hostages held in Lebanon. 

The: near-15,000; delegates 
who picked Mr North, at a fes- 
tive party convention in. the 
Virginian state capital of Rich- 
mond mi Saturday, were deter- 
mined to avoid the internal 
strife of last year- and to pre- 
serve party unity. 

Once it was clear that Mr 
North bad won more than 55 
per cent of the delegates' votes, 
Mr James Miller, budget direc- ' 
tor in the peagan administra- 
tion who had also battled for 
the nomination, promised bis 
full support in the wrmpaj gp to 
unseat Senator Chuck Robb, 
the Democratic incumbent 
whose sex life has severely 


tarnished his prospects of re- 
election. 

Virginia Republicans are 
unusual in picking their Sen- 
ate nominee at a party conven- 
tion. The state's Democrats 
wflThold a primary, open to a 
wider electorate than the party 
faithful who attend conven- 
tions, next week. 

The often fierce struggle for 
the Republican nomination has 
been portrayed as a fight 
between the moderate and the 
right-winger, but Mr Miller's 
political stance was as Car to 
the right as Mr North’s. 
Indeed, he even outflanked Mr 
North on the issue of abortion 
by refusing to accept any 
exceptions, even in cases of 
incest or rape. 

Although the few party mod- 
erates who attended the con- 
vention in Richmond mostly 
backed Mr Miller, most dele- 
gates committed to him were 
barely distinguishable from 
their counterparts in the North 
camp. 

“It’s neck-and-neck on con- 
servative issues. I amid sup- 
port either one," said Mr Harry 
Lee, a delegate who had picked 
Mr MDler mainly because opin- 
ion polls Show Ms rhawr-gfi Of 


defeating Mr Robb to be much 
better than Mr North's. 

Many Miller delegates, such 
as Mr William James from 
rural Brunswick county, on 
Virginia's border with North 
Carolina, had once backed Mr 
North. Mr James switched in 
April, but only in the last week 
was he able to persuade his 
wife, also a delegate, to change 
her mind, 

Besides the blessing of for- 
me: President Ronald Reagan 
and most senior figures from 
the Reagan administration, Mr 
MiMer also won the late sup- 
port of many of Virginia’s 
congressmen and Republican 
party heavyweights, 

But political endorsements 
swayed few at the convention. 

It doesn't matter which con- 
gressman is speaking on whose 
behalf, it matters what the per- 
son who kneels next to you in 
church thinks," Mr Kerry 
Burch, a North supporter. 

Senator John Warner, the 
Republican moderate who 
holds the state’s other seat in 
the Senate, has called Mr 
North unfit for office and has 
thrown his weight Mr 

Marshall Coleman, a Republi- 
can and a former state 


attorney-general who is trying 
to get on the November ballot 
as an independent He may 
even run as an independent 
when he feces re-election for 
his present job in 1996. 

Mr Warner preferred to 
attend D-Day commemorations 
in Europe this weekend rather 
than brave a party convention 
at which his name was often 
jeered. 

T think he's leaning too far 
to the left He’s talking about 
running as an independent ^nri 
1 can see why, because 2 don’t 
think this party would support 
Mm.” said Mrs Janice Cifers, a 
North supporter. 

Yet, even in this conserva- 
tive and religious assembly, 
however, Mr North was able to 
win only 55 per cent of the 
votes. 

There remain doubts over 
his ability to win votes from a 
broader electorate which 
remembers that he was con- 
victed of lying to Congress 
over Iran-Contra. His convic- 
tions were subsequently over- 
turned, hpraire» he had previ- 
ously testified to Congress 
under immunity from prosecu- 
tion, but he hue admi tted lying. 

In fact, the Virginia Republi- 



He’s our boy: Governor George Allen of Virginia (right) congratulates Oliver North 


cans have picked one of the 
very few candidates against 
whom Mr Robb’s chances of 
winning re-election must be 
rated as good. 

Mr North's fervent support- 
ers are aware of the difficulties 


he will face in the November 
election, and have joined with 
gusto in the game of tactical 
voting that is expected then: 
supporters of the Democratic 
former governor of Virginia, 
Mr Douglas Wilder, set up 


stands outside the convention 
and estimated that 5.000 to 
6.000 Republican delegates, 
eager to split Mr Robb's sup- 
port, signed petitions to put Mr 
Wilder on the ballot paper as 
another independent. 


NEWS IN BRIEF 




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Britain has 1 agreed to let .Washington use the Turks and Caicos 
Islands, a British archipelago in the Caribbean, for processing 
Haitians seeking asylum in the US, writes David Owen in 
London. 

This was .agreed over the weekend at a meeting of Mr John 
Major, UKL prime minister, and US Pr esident B01 Clinton. The 
proposed processing centre could be in use by month. 

The agreement on. Haitian asylum-seekers came less than a 
week after. Mi 1 P J Patterson, Jamaican prime minister, had said 
his country .was to let its territorial waters be used for the 
questiomngrrai board US-chartered ships, of Haitian refugees 
who had.betax intercepted at sea by US farces. ' 

The prime minister and the president used their in formal 
meeting, in Britain during the D-Day commemoration, to discuss 
a wide range of . Issues, including North Korea, Bosnia, Rwanda 
and Northmn Ireland. On Bosnia, the two nun . welcomed the 
establishment of a diplomatic process to bring together the US, 
the European Union and Russia, and the two man discussed plans 
for a conference iir Geneva on the reconstruction of Sarajevo. 

Oil refinery in Aden 
bombed by northerners 

Northern Yemeni warplanes yesterday bombed Aden's oil refi- 
nery, setting a storage tank an fire. Rival forces exchanged rocket 
and tank fire at battiefrtrats around the city before the expected 
arrival in Yemen of a United Nations envoy. Reuter reports from 
Aden. 

"As part of a tfang nrnm.g^ escal atio n in the war, and in a flagrant 
violation of mediation by the international community, Aden's 
refinery was bombed by ... northern warplanes, setting fire in one 
of the storage tanks,” said a southern statement It added that 
southern anti-aircraft fire shot down one of the raiding aircraft 

The refinray, in the little Aden suburb about 12 miles from the 
centre of Aden, has been a constant target of northern aircraft. 
Refinery officials put production at 70,000 bands per day, down 
from about U0.OOO bpd-at the start of the war. 

Southern officials had warned that, if the refinery or the nearby 
power plant ..were hit the south would retaliate by attack vital 
northern installations. - 


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Inflation figures undermine 
Turkish austerity efforts 

Turkey’s hopes of achieving its austerity targets have been dealt 
a blow with publication of the latest inflation figures, which 
could undenMne; government efforts to win union restraint in the 
current public sector wage negotiations, writes John Murray 
Brown in Istanbul. 

Annual consumer {nice inflation last month rose to 117 per 
cent, compared with 107 per cent in April, after a 24 per cent 
increase in April had followed the announcement of on^off price 
rises in state-controlled commodities such as petrol and sugar. 

The government's austerity programme, announced on April 5. 
aims to halve the budget deficit to the equivalent of $L8tm 
fclisbn) in 1994, on tire basis of a 15 per cent real cut in wages 
across' the economy and nnnnaiispH inflation in the second half of 
this year at about 30 per cent 

The latest figures, announced at the weekend by the state 
institute of -statistics, suggest that, four months into the crisis, 
some companies are only now adjusting prices to compensate far 
slower sates and squeezed margins. 

The latest increases, higher than the official forecast of 7 per 
cent, will make it more difficult far the government to hold the 
line oh wages, and thus could Imperil the fiscal reduction targets 
on which Turkey is negotiating for a stand-by facility with the 
International: Monetary Fund. . - . 

Iraqis sentenced to death 
in Kuwait over Bosh plot 

A Kuwatti court: on Saturday sentenced five Iraqis and one 
Kuwaiti to death for plotting to kill former US president George 
Bush when lie visited the emirate in 1993, Reuter reports from 
Kuwait • - 

Another five Iraqis ami two Kuwaitis were sentenc e d to prison 
terms ranging fitan six months to 12 years for offences including 
possession of explosives, liquor smuggling and illegal entry. One 
Kuwaiti was’ acquitted. 

The death sentences are subject to review by another court and 
by the ruler of Kuwait, the emir- 
During' the last, session, in April of the trial, which opened 
nearly a year ago, defence lawyers said the testimony of the sole 
prosecution Witness, state security Colonel Abdul Samad al- 
Shatti, was based on assumptions, 

nam vote for assembly 
to driw up constitution 

' Ethiopians began voting early yesterday in a na ti onal poll for an 
% . assembly which is to draw up a democratic constitution, agencies 
report from Addis- Ababa. 

- ' The election is Ethiopia’s first national democratic poll for 
decades, with about 15m registered votere from a population of 
-- more than 50m choosing a 547-member assembly. About 60 per 
»•. «ot of tire canfidates say they are independent and not allied to 
aqy political party. 

Some opposition parties, which draw their main support from 
the Amhara ethnic group fa the capital, are boycotting the polL 
They argue that a draft constitution. likely to be approved by the 
new elected body could lead to the disintegration of toe country 
■ by granting the right of secession to its many ethnic groups. 


Czechs alerted by investment deadline 

Vincent Boland assesses the latest twist in an eastern European privatisation 


L ittle disturbs the aver- 
age Czech investor, 
except the occasional 

itowffinp 

This weekend, aspiring 
shareholders in another 
tranche of the co untry’ s eco- 
nomic infrastructure were 

mftlrtng lagj.mirmte touches to 
their voucher booklets as the 
second and cru cial round of 
the second wave of privatisa- 
tion drew to a dose. 

Applications for shares in 
846 of the Czech republic’s top 
companies have to be at toe 
privatisation ministry first 
thing this mo rning Ministry 
officials have cleared the <Wto» 
for a deluge of paper from an 
estimated 6m investors. 

Prague launched Eastern 
Europe’s most ambitious mass 
privatisation p rog ram me with 
the first wave of sell-offs in 
1991. transferring 943 enter- 
prises to the public, it is now 
mid-way through the second, 
and probably final wave of 
mans privatisation. 

To rapidly transfer state 
property to the public, the 
Czechs have developed a com- 
plex system in which each 


investor starts off with 1000 
points. These points are then 
converted into shares thro ugh 
a series of closed national auc- 
tions at bids which are 
matched with the shares avail- 
able. If a particular share is 
over-subscribed no shares are 

SOld and the char e is moved 

into a second round of bidding 
at a higher price. 

The second wave of privati- 
sation began in March with an 
initial round of bidding which 
resulted in the allocation of 
just over IS per cent of toe 
Kcl55hn ($5S4bn) of assets for 
sale. 

Bids for the second round 
dosed tins morning and inves- 
tors are busy predicting how 
much of the state property will 
be sdd. 

Analysts in Prague expect a 
large number of toe’ available 
shares to be sold off in this 
round. "This is the single larg- 
est round in terms of shares 
distributed, 1 * said Mr Alexan- 
der Angell of stockbrokers 
Wood and Company. “My gues- 
stimate is that between 40 and 
50 per emit of the shares will 
be allocated.” 


Managers of Prague’s invest- 
ment funds, to which 65 per 
cent of private investors have 
entrusted their vouchers, are 
tight-lipped about which sec- 
tors and companies in this 
round are most in demand. 

Pierce competition among 
the 349 funds for points, and 
the inevitable excess of quan- 
tity over quality on offer, is 
likely to lead to heavy bidding 
for certain sectors, reflecting a 
growing trend among fund 
managers to concentrate their 
investment strategies on cer- 
tain sectors. 

P rivately, the frmd man- 
agers say that the brew- 
ing, pharmaceutical, 
chemical, telecommunications 
and oil distribution sectors are 
those most likely to attract the 
most bids. 

In the first wave, many less- 
experienced funds bid for 
shares in almo st all the compa- 
nies on offer. The result was a 
dispersed portfolio which has 
failed to match the returns 
being offered to investors by 
those funds which concen- 
trated their investments in a 


narrower range of companies. 

The most successful funds - 
including Creditanstalt Invest- 
ment Fund, ZB Trust (run by 
Zivnostenska Banka) and Har- 
vard (established by controver- 
sial Mr Viktor Kozeny) - have 
invested in less than 100 com- 
panies in key sectors of the 
economy. 

This round of the privatisa- 
tion is attracting strong inter- 
est by foreign investors, 
according to Mr Nigel Wil- 
liams, rhairman of Creditan- 
stalt’s fimds. 

Foreigners cannot partici- 
pate directly but some, such as 
emerging market funds, are 
offering to buy stakes in some 
Czech companies from the 
investment funds at a pre- 
mium. Mr Williams said the 
premium can be as much as 20 
per cent of the value of the 
stake. “It happened to an 
extent with industrial inves- 
tors in the first wave. Now we 
are seeing financial investors 
coming in," he said. 

The premium offered by 
such investors to the Czech 
investment funds goes to the 
shareholders in those fluids. 


increasing the attraction of 
investing in the fluids them- 
selves rather than directly in 
the companies. 

Creditanstalt’s privatisation 
fund was fully listed on the 
Prague stock exchange last 
week, only the second such 
fund to be quoted so far. 

When the second wave is 
completed, probably by Octo- 
ber of this year, some 1,600 
companies will be listed on the 

wphang p, making it the big- 
gest stockmarket in eastern 
Europe. Then, all investors 
should have taken possession 
of the shares, substantially 
increasing the liquidity of the 

mar ket. 

Problems of illiquidity have 
caused share prices to fall 
heavily in recent months. 
Since February 1. the market 
has dropped by more than 40 
per cent in thin trading as the 
big investment funds concen- 
trated on the share flotations. 

Analysts expect the deadline 
today deadline to shift the 
focus back to the market, 
though no great surge in prices 
is expected until more compa- 
nies are fully listed. 


Expand 

jobs 

‘through 

training’ 

By Peter Norman 


The US and other western 
industrial nations could 
achieve higher levels of 
employment by training more 
people to develop problem- 
solving skills, Mr Robert 
Reich, US secretary of labour, 
said yesterday. 

At a seminar on job- 
creation, organised in London 
by the British newspaper The 
Guardian. Mr Reich said there 
was a “third way" between the 
US experience of the past 20 
years, of creating many jobs 
but with low wages, and the 
European approach of creating 
few, highly-skilled jobs and 
suffering high unemployment. 

Faster job growth, Mr Retcb 
said, would be In areas where 
intellectual capital is required. 
Job seekers in industrial conn- 
tries bad to cope with the 
world in which the mass pro- 
duction of hfgh-volnme, stan- 
dardised products was no lon- 
ger the engine of economic 
growth. Instead, growth lay in 
fulfilling niche requirements 
and constant adaptation. 

The US administration has 
acted, Mr Reich said, to create 
national vocational standards, 
created links between school 
and apprenticeships, intro- 
duced an earned income tax 
credit to help the poor in 
work, and started a scheme to 
channel the unemployed into 
new jobs and skills. 

Mr Reich will explain more 
about the US programme for 
dealing with unemployment at 
a meeting of finance, employ- 
ment and trade ministers in 
Paris tomorrow. That is due to 
adopt a new report on job- 
creation prepared by the 
Organisation for Economic 
Co-operation and Develop- 
ment 

Mr Reich’s remarks yester- 
day showed bow far the Clin- 
ton administration has shifted 
the debate on unemployment 
and pay from the free market 
doctrines of the Reagan and 
Bush years. Using words that 
would surprise many in the 
UK, he said flexibility in 
labour markets should not 
mean giving employers the 
power to fire workers or 
reduce wages at will. 

He also spoke in favour of 
the minimum wage as a way 
to combat poverty, suggesting 
that the present US minimum 
wage of $4J25 (£2.81) per hour 
could be raised by 50 cents to 
81 without endangering 
employment. 


Serb commanders 
remain confident 
of Bosnia victory 


By Laura SSber at DoboJ, 
Bosnia 

Firmly convinced that peace 
talks on Bosnia will remain 
deadlocked. Serb commanders 
maintain that the final settle- 
ment will be readied on the 
battlefield. 

From big hill-top command 
post in northern. Bosnia. Lt- 
Colonel Miko Skoric insists 
that Serb forces will honour an 
agreement reached by their 
leaders. “But the war will end 
only when the Moslems are 
defeated." He echoes the off- 
repeated threats of his military 
chiefs -that Serb forces will 
seize all of Bosnia if the Mos- 
lems sustain their offensive. 

There is scant evidence of 
this offensive, much heralded 
by the Serbian modia. Instead 
of a major mflitary push, the 
occasional crash of artillery 
rounds inflicting civilian casu- 
alties in Serb-held towns, 
appears to signal the growing 
confidence of the Bosnian 
army. 

Eager to portray the Serbs as 
victims, guides point to a gap- 
ing bole where a tank round 
ripped through the wall of toe 
medical centre at Doboj, north- 
ern Bosnia. In a departure 
from the usual military bra- 
vado, Lt-Col Milovan Miluti- 
novic, the Serb army spokes- 
man. even claims huge losses 
in a recent battle in the area. 

Despite these reports, Serb 
soldiers on the northern front 
appear relaxed and self- 
assured. In fact, say diplomats, 
there are signs that Serb forces 
are preparing to launch an 
attack in northern Bosnia, a 
region which both sides see as 
crucial to toe war’s outcome. 

The Serb corridor, linking 
Belgrade to Serb-heM land in 
Bosnia and Croatia, weaves 
through the northern Posa- 
vina, the Sava River valley. 

Lt-Col Skoric say toe Serbs 
will never give up this land. As 
though following an order, 
local commanders no longer 
use toe tens “corridor". 

They say that toe Posavina 


The United Nations yesterday 
abandoned efforts to start new 
ceasefire talks among the 
leaders of Bosnia's warring 
communities, after a four-day 
government boycott, writes 
Laura Sflbor in Belgrade. 

The Moslem-led Bosnian 
government had refused to 
return to the negotiating table 
in Geneva, in protest against 
the Serb failure to comply 
with toe 3km UN exclusion 
zone around Gorazde, the 
south-eastern Moslem enclave. 
UN officials yesterday said the 
bulk of the Serb militia had 
withdrawn from the zone set 
up by the UN in ApriL 

Also. President Alija Izet- 
begovfc of Bosnia called far a 
100km exclusion zone with its 
centre in the heart of the coun- 
try. He told US senators visit- 
ing Sarajevo that he would 
propose the idea to the peace 
talks in Geneva, in order to 
create a “free Bosnia". 


historically was Serbian, ignor- 
ing the fact that, before the 
war, Moslems and Croats com- 
prised the bulk of the popula- 
tion. 

Republika Srpska, the 
self-styled Serb state which 
covers more than 70 per cent of 
Bosnia, depends on the corri- 
dor for survival- 

People show little remorse 
for their farmer neighbours in 
the towns of Doboj and Brcko, 
who were mostly Moslem 
before the outbreak of war in 
April 1992. Instead, they com- 
plain that the West has sided 
with their Moslem enemies. 

With each day Of what they 
call Moslem delays in reaching 
a political settlement, Serb 
commanders say the Bosnian 
army risks losing everything. 
“When Serb forces re-take ter- 
ritory, we don't just take a few 
metres but several kilometres," 
says Lt-Col Skoric, laughing. 
“Like toe Moslems, we see Bos- 
ma-H er c e gervina as our father- 
land. We also believe that 
much more land should belong 
to us” 



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NEWS: INTERNATIONAL 


Beijing may 
toughen line 
on N Korea 


Seoul on hook of unattractive options 

There are risks in both war and sanctions, writes John Burton 


By Tony Walker In BeQktg 

C hina has given no official 
indication that it might be 
about to reconsider its refusal 
to countenance sanctions 
against North Korea over 
Pyongyang's resistance to 
International Atomic Energy 
Agency inspections of nuclear 
fariTIHps 

But there is also no doubt 
that Beijing is viewing develop- 
ments with Increasing alarm, 
and may have decided to begin 
sending more pointed si gnals 
to Pyongyang that it cannot 
continue to defy international 
pressures. 

In Hong Kong at the week- 
end. the Beijing-funded news- 
paper Ta Rung Pao provided 
the first hint that China might, 
if all else fails. Call into line 
with sanctions that would 
include an oil and food 
embargo. China would also 
cease all border trade, the 
article said. 

China's oil exports to North 
Korea are critical to the contin- 
ued functioning of its econ- 
omy, and perhaps more impor- 
tantly its war machine. 
Chinese foodstuffs are also 
vital to a country suffering 
from shortages of basic items. 

But for the moment, it 
seems more likely that China 
will continue to insist that dip- 
lomatic efforts be exhausted 
before the international com- 
munity resorts to sanctions. 

South Korea has few links 
with the North, so the Impact 
of its sanctions would be lim- 
ited without the participation 
of other nations. 

South Korean officials have 
indicated that Seoul wanted a 
resolution that would put an 
economic embargo into effect 
only if North Korea foiled to 
offer a credible way to open its 
nuclear programme by a dead- 
line. “This formula might 
make it easier for China to 
take part in the resolution.” 
the official said. 

A mncliHnnal embar go seems 

compatible with a statement 


by US President Bill Clinton 
that Pyongyang could still 
head off sanctions. 

hi Beijing last week a foreign 
ministry spokesman said that 
while China was very con- 
cerned about the Issue, “we do 
□ot favour the resort to means 
that might sharpen the con- 
frontation.". 

However, as the crisis deep- 
ens, it is becoming more diffi- 
cult for Beijing to maintain 
that dialogue will yield posi- 
tive benefits. In March, China 
headed off an earlier US 
attempt to promote a sanctions 
process in the United Nations 
Security Council, arguing that 
more time was needed to draw 
Pyongyang into discussion cm 
the nuclear issue. 

Two months have passed 
without tangible progress. 
Indeed the IAEA conclusion 
that it may now be too Late to 
verify what has happened to 
weapons grade plutonium from 
spent fuel rods in North 
Korea’s nuclear reactors sug- 
gests that diplomacy has 
foiled. 

Chinese officials were this 
weekend talking about “fresh 
complications" over North 
Korea, but this is a long way 
from inrfi^Hng a sea-change in 
policy may be under way. 

Beijing has no interest in 
seeing a further destabilised 
Korean peninsula and one in 
which nuclear weapons have 
become part of the equation on 
both sides of the demilitarised 
zone. But equally, It remains 
deeply opposed to meddling by 
outside powers in the region's 
affairs. 

One of C hina' s abiding fears 
is that an economic blockade 
against an impoverished North 
Korea might precipitate a refu- 
gee stampede along the two 
countries' common frontier. 

If Beijing fell into line with 
limited sanctions It would 
almost certainly produce a 
deep chill, if not a diplomatic 
estrangement with Pyongyang. 
China would risk such a devel- 
opment only as a last resort 


T he deepening crisis over 
North Korea’s nuclear 
programme is provoking 
much soul-searching in South 
Korea. 

The possibility that United 
Nations economic sanctions 
could trigger a military 
response from North Korea is 
raising doubts about whether 
the South should risk going to 
war to stop the North from 
possessing a nuclear weapon. 

A conflict could cost several 
million civ ilian lives a™* the 
destruction of Seoul, the South 
Korean capital, which lies only 
35 miles from the demilitarised 
zone separating the two 
Koreas. 

The no-war scenario is also 
ala rming . An international 
trade embargo could cause the 
tottering North Korean econ- 
omy to collapse and with it the 
government of President Kim 
Q-sung - a prospect 'that 
scares Seoul almost as much as 
a militar y conflic t 
Such a premature reunifica- 
tion of Korea would force 
South Korea to spend as much 
as $200bn (£1333bn) on recon- 
struction costs to absorb the 
North, while diverting 
resources from the South’s 
push to create an advanced 
industrial base that would 
compete effectively against the 
West and Japan. 

The complexity of the situa- 
tion Is in sharp contrast to the 
clear-cut cold war view of 


North Korea during the 
1961-1987 period of military 
rule in South Korea. The gov- 
ernment and public then 
widely regarded North Korea 
as a dangerous foe that must 
be brought quickly to its 
knees. 

That attitude has not com- 
pletely disappeared under the 
democratic government of 


the position of Sooth Korean 
officials w ho favour a hard hnt» 
toward Pyongyang: 

But the belief that North 
Korea, still harbours hostile 
intentions toward the South 
has been met with Increased 
scepticism among some South 
Koreans, particularly those 
born after the Korean War 
ended in 1958. 


build a nuclear weapon, but 
Pyongyang needs to create the 
impression that it is pursuing 

such a programme to bolster 
its negotiating position, with 
the US. 

The action by North Korea to 
bar international inspections of 
the spent fuel rods Is part of its 
strategy to maintain uncer- 
tainty over the extent of the 


Patriot missile. Anti-American 
feeling Is widespread among 
students because of past US 
support for the country’s mili- 
tary rulers. 

Distrust toward Japan 
even greater as it develops 
nudear reprocessing capability 
and the potential means tc 
build a atomic bomb. Opposi 
Hnn pftiiHriatm are d emandi ng 


is 


South Korea wants the United Nations to give 
North Korea a deadline by which it must open 
its nuclear sites to international inspection or. 
be slapped with economic sanctions, Seoul offi- 
cials said yesterday, Reuter reports from Seoul. 
“What the international community wants is 
North Korean nuclear transparency and not 
punishment for the sake of p unishment ,* a gov- 
ernment official said. 


Too Chongha, South Korea’s UN ambassador, 
said: “It is the South Korean government's 
clear position that there’s no other option but 
to seek sanctions against North Korea through 
the United Nations." 

He told the Seoul dally Dong-A Hbo that the 
five permanent members of the UN Security 
Council would soon begin intensive consulta- 
tions on a US-drafted resolution on sanctions. 


President Kim Young-sam. The 
military and Intelligence ser- 
vice contend that North Korea 
is intent on developing a 
nuclear weapon, possibly to 
support a forced reunification 
on Pyongyang's terms. 

They warn that North Korea 
has taiypij about reunifying 
the “fatherland” in 1996, the 
symbolic 50th anniversary of 
Korea’s division after the pen- 
insula’s lilwrafann from Apa- 
np sft milrmial rule. 

North Korea's apparent 
efforts to destroy evidence of 
its suspected nuclear weapons 
programme by removing spent 
fuel rods from its reactor and 
biding them from international 
inspectors has strengthened 


The South’s growing prosper- 
ity and democratic progress 
have increased national 
self-confidence. It has sup- 
ported the perception that the 
South has already won its cold 
war a gainst the struggling and 
isolated North and has little to 
fear from it 

Government officials who 
favour a conciliatory approach 
toward North Korea argue that 

Pyo ng yan g is using its m ylsar 

programme as a bargaining 
chip to win security guaran- 
tees from the US, including 
diplomatic recognition and eco- 
nomic aid- 

These officials believe that 
the North may not even have 
the technical capability to 


programme until Pyongyang 
wins the concessions it seeks, 
according to this theory. 

Outside government, there 
are widening generational dif- 
ferences on tiie North Korean 
issue. University students 
believe that the US and Japan, 
rather th»r> North Korea, rep- 
resent the biggest potential 
threats to South Korea, accord- 
ing to a recent survey. 

Radical students view the 
nu c lear dispute in a pan-Kor- 
ean nati onalis t perspective, 
claiming that the crisis haa 
been provoked by the US to 
reverse Washington's dwind- 
ling influence on the Korean 
peninsula and to force Seoul to 
buy US weapons, such as the 


that South Korea should 
acquire nuclear processing 
facilities in response. 

There is growing public sen- 
timent that a North Korean 
pnriaar bomb programme may 
not be such a bad thing as 
South Korea could inherit it 
after rt wmifi nation and use it to 
defend Korea against Japan. 

The best-selling book In 
South Korea recently has been 
a thriller describing a secret 
joint North-South programme 
to build a nuclear weapon, 
which is then used to stop a 
Japanese attack on Korea in 
the late-1990s. “Many people 
find the book thought-provok- 
ing and wonder why South 
Korea shouldn 't have a nuclear 
weapon,” sa i d (me Korean jour- 
nalist. 

The popularity of the novel 
suggests that (me unexpected 
result of the North Korea 

ww|Mr dispute could be grow- 
ing public acceptance for a 
more assertive and indepen- 
dent South Korean foreign pol- 
icy, indudiiig the possession of 
its own nuclear arsenal. 


Japan’s SDP opposes Korean sanctions 


By WBiam Dawkins In Tokyo 

Japanese government preparations for 
possible sanctions against North Korea 
have provoked strong resistance from 
the Social Democratic party, the second 
largest opposition group. 

Opposition to action against North 
Korea, voiced over the weekend by Mr 
Watartr Kubo. the SDFs secretory gen- 
eral, suggests that a United Nations call 
for sanctions might produce a slow 
response from Japan, given the unsta- 
ble state of the minori ty coalition gov- 
ernment. 

“The Socialists. . . are against this 
idea," he said. 

Mr Ichiro Ozawa, the government’s 
backroom strategist, has repeatedly 
warned that Japan will lose interna- 


tional credibility if it to make a 
contribution, commensurate with its 
economic clout, to solving international 
crises. 

The SDP, whose left wing supports 
the Py o ngy a ng regime, was responding 
to Japanese press reports that the gov- 
ernment offered a 10-point sanctions 
package to curb cash transfers and stop 
nfflrial visits. 

The package resulted from a meeting 
between US and South Korean' officials 
in Washington on Saturday, according 
to the reports. 

Government officials in Tokyo 
refused to comment on details but con- 
firmed that a draft plan had been dis- 
cussed, following the International 
Atomic Energy Agency’s decision to 
refer North Korea to the UN Security 


Council for continuing to frustrate its 
attempts to inspect nudear reactors. 

Japanese government policy, as 
explained by Mr Koji Kakizawa, the for- 
eign minister, is for a twoatoge strat- 
egy: a UN resolution warning North 
Korea, followed by a derision on sanc- 
tions. 

According to Japanese newspapers, 
the draft includes a complete ban on 
bilateral trade - farlnding - any through 
third countries - on fli ghts , frnanrial 
transfers and travel between Japan and 
North Korea by offi cials of each side. 
Stricter immigration controls are also 
said to be proposed. 

Japan’s stance will be an important 
influenrp on the weight of any threat to 
take sanctions - or the effectiveness of 
actual measures - because it is North 


Korea’s second largest trade partner 
after r!htr>« officials believe Beijing is 
likely to veto any UN sanctions, leaving 
the US to act outside the aegis of the 
UN. with Japan and South Korea. 

But some Japanese commentators as 
well as politirians said the proposed 
ganrtifwm would be diffimit to imple- 
ment, illegal and ineffective. 

Japanese exports to North Korea 
were 5219.7m (£146.4m) last year, while 
imports were 5252.3m, according to the 
Japan External Trade Organisation. On 
top of this. North Koreans living in 
Japan carry an estimated 5600m annu- 
ally back to their home country. For 
this reason, the pariinqp» also includes 
curbs an rash that North Korean iwiTtri- 
grants may carry with them on home 
visits. 


Prosecutor’s claims that assassin probably acted alone criticised 

Colosio theories fail to satisfy Mexican opposition 


By Damian Fraser In Mexico CRy 

Mexico's main opposition parties 
have criticised the special prosecu- 
tor’s claim that the assassin of Luis 
Donaldo Colosio, the slain presiden- 
tial candidate ot the ruling party, 
probably acted alone and was not 
part of a conspiracy. 

Mr Miguel Montes, the govern- 
ment's special prosecutor, last week 
backed away from his original con- 
tention that several people aided the 


assassin, saying there was no new 
evidence to bolster the conspiracy 
theory. 

Without calling for the release of 
three men arrested for helping the 
gunman, he said: “The hypothesis Is 
strengthened that the murder was 
committed by one man alone: Mario 
Aburto Martinez". 

Mr Diego Fernandez de Cevallos, 
the presidential candidate of the cen- 
tre-right opposition, said: “They 
should get to the bottom of this. 


What Montes has said so for does 
not satisfy me or my party." 

The leftist opposition said that 
there were severe doubts about the 
impartiality of the special prosecutor 
and “we are now seeing the conse- 
quences of this". 

The three men accused of assisting 
the assassin bad been hired by Mr 
Colosio '8 own party to control 
crowds at the campaign rally where 
he was slain. 

Their arrest contributed to politi- 


cal instability and nervousness In 
financial markets in the weeks fol- 
lowing Mr Colosio's death, with polls 
showing that about one-third of 
respondents believed the ruling 
party was behind the killing. 

The evidence against the accused 
appears to have been largely based 
on photographs and video footage 
which, in the prosecutor’s original 
view, showed them helping Mr 
Aburto, who has confessed to the 
assassination. 


However, Spanish police called in 
to help the investigation later con- 
cluded that the photographic evi- 
dence was inconclusive. 

Earlier last week the five members 
of the independent commission 
appointed by President Carfos Sali- 
nas to verity the fadings of the spe- 
cial prosecutor resigned, saying they 
were not given sufficient legal 
authority to carry out their task. 

A government official said the 
widow o i Mr Colosio would select a 


new commission. 

• Mr Cuauhtemoc CArdenas, the 
presidential candidate of the left- 
leaning opposition Democratic Revo- 
lutionary Party, has received a death 
threat, according to the . state news- 
paper El Nadonal yesterday. 

The threat came in a letter, which 
said: “We are disposed to eradicate 
social ulcers. Cuauhtemoc is one of 
those. Remember what happened to 
Colosio and say goodbye to Cuauht- 
emoc because this week be will die." 



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Row over 
Jakarta 
foreign 
investment 


By Manuofa Saragooa 
In Jakarta 

Indonesian ministers, 
journalists and publishers have 
expressed stiff opposition to 
the relaxation of rules on for- 
eign investment Emits. 

Presenting their case against 
the new policy which was 
introduced last week, they 
complained the move would 
endanger TnHmw<nan values by 
allowing foreigners to influ- 
ence public opinion. “If (this is 
allowed) we can no longer use 
the media to fight for the coun- 
try," Mr Harmoko, minister of 
information, was quoted say- 
ing in the national press. “We 
will he under the control of 
foreigners." 

Mr Harmoko said a law 
stipulating that only Indone- 
sian citizens may own publica- 
tions may be enough, to thwart 
any attempts to open the 
media to foreigners. 

The debate gave credence to 
criticism that government 
departments and ministries do 
not consult each other when 
formulating policies. Mr Har- 
moko’s statements come only 
two days after the g over nm ent 
announced it was slashing lim- 
its on foreign investment and 
foreign equity ownership In an 
effort to compete with neigh- 
bouring Asian «diAmif*y offer- 
tog more attractive investment 
policies. 

Foreign investment in Indon- 
esia dropped to 5S.4bn in 1993 
from $10.3 bn a year earlier. 

The deregulation package 
also opens up nudear power, 
ports, telecommunications, 
railways and dvfl aviation to 

partial foreign ownership. 



An Indonesian woman and her 13-nHHrtb-old child sit amid the 
wreckage of their home in Pancur over the weekend 


Indonesia 
hit by 12 
tidal 
waves 

Indonesians mourned their 
dead yesterday after up to 12 
tidal waves an guiiiad Pancur, 
880km east of Jakarta, after an 
earthquake just after midnight 
on Friday. 

Pancur and its surrounding 
areas stand an a spur near the 
resort island of Bali. More than 
400 earthquake aftershocks 
triggered fears of a fresh trag- 
edy In the remote southeast 
corner at East Java. 

No official death toll has 
been issued but police estimate 
tiie toll at more than 200. 

It was Indonesia’s worst Hrfal 
wave disaster since over 2,000 
people were killed on Flores 
island, east of Bali, after a big 
earthquake and tidal waves in 

1982. 

Wreckage from nearly 500 
wooden homes was strewn 
among palm trees In the fish- 
ing town of Pancur. Children, 
played among the debris while 
people sought to salvage pos- 
sessions from their homes . 


Russia’s 
arms sales 
drive 
triumphs 

By Kieran Cook® In Kuala 
Lumpur and BruC® Clark 
in London 

An agreement to be signed In 
Malaysia tomorrow for the 
purchase of 18 MIG-29 fighter 
aircraft is a success for Bus. 
sia’s drive to break into the 
most lucrative sectors of the 
international arms market 
Malaysia will be the first 
country in the strongly anti- 
communist region to bay 
MiGs, but it cannot be accused 
of leaving Itself dependent on 
Russian air power. It Is also 
buying eight US-made F-18 
fighters and 28 British Hawk 
fighters as part of a pro- 
gramme to upgrade the air- 
force. 

The country is using its new- 
found economic prosperity to 
modernise all its defence 
forces. Under the the current 
six-year (1991-95) defence plan, 
its is spending about $3bn 
(£ 2 bn) on weaponry, an 
increase of more than 200 per 
cent over the previous five 
years. 

That makes it exactly the 
irinrf of customer that Russia’s 
newly revamped arms export 
agency is trying to woo. 

On the face of things, arm 
exports from the former Soviet 
Union plummeted following 
the collapse of communism, in 
part because so many or the 
country's traditional clients, 
such as Libya and Iraq, were 
subject to international sanc- 
tions. 

However the statistics woe 
somewhat misleading. Most 
Soviet arms deliveries wen 
dictated by political rather 
than commercial consider- 
ations, and they were often 
tiumIp on such soft terms as to 
be of little economic benefit to 
Moscow. 

Only now is the Russian 
government mounting a prop- 
erly co-ordinated effort to sell 
weaponry to countries that 
can afford to pay. 

Russia’s initial approaches 
to Malaysia were amateurishly 
presented - “an offer scribbled 
on a piece of paper", as one 
military expert put it -and 
governments In south-east 
Ana were bewildered by the 
numbered of Russians who 
riatmud to have the authority 
to sell MiGs. 

Ironically, one of the 
Moscow's most high-profile 
salesmen in Malaysia has been 
Alexander Rutskoi, the rene- 
gade vice-president who was at 
tiie centre of last October’s 
attempted putsch. 

Since the October violence, 
President Boris Yeltsin has 
moved to consolidate his own 
authority over tiie arms export 
business. He blessed the foun- 
dation lh March, amid a daz- 
zling display of corporate hos- 
pitality, of a new state agehey 
called Ros-Vooruzhenie. 

As well as south-east Asia, 
other target markets include 
the wealthy Gulf states and 
Latin America. Russia sent a 
top-level delegation to ananas 
exhibition in Chile in Munch. 

The es tim ated value ct the 
Malaysian deal is about 
5650m, with 25 per cent to be 
paid in palm oil. There have 
been tough negotiations over 
servicing and maintenance, 
with Malaysia pressing - 
reportedly with some suc- 
cess- for production of some 
spare parts on its own soft. 

This is likely to raise eye- 
brows among western defence 
officials, who allege that the 
servicing of weaponry is often 
used as a cover for Russian 
military intelligence. 

However the Malaysian gov- 
ernment is insisting a' mixture 
serves its purposes best. It 
says its MiG fighters wCR be 
used for defence tasks, while 
the F-iSs will be deployed as 
strike aircraft. 

The combination will not be 
an umnixed blessing for the 
Malaysian air force, since it 
involves combining two 
systems for internal organisa- 
tion and training. It could also 
complicate the efforts ot Asso- 
ciation Of South-east Asian 
Nations (Asem) countries to 
i ntegr ate and make comple- 
mentary their armed forces. 

However the country's 
refusal to commit itself to tiie 
weapon systems of any one 
major country haw increased 
its financial bargaining power. 


Taiwan to probe pollution claims 


By Laura Tyson in Taiwan 

Taiwan's Environment 
Ministry has launched an 
Investigation Into allegations 
that France’s Thomson Con- 
sumer Electronics and US- 
based RCA dumped organic 
wastes near factory sites, pol- 
luting soil and groundwater 
over 20 years. 

Chinese New party legislator 
Jaw Shau-Kong, former head of 
the Environmental Protection 
Administration, bad accused 


Thomson, which bought the 
two factories south of Taipei in 
late 1987, of covering up tiie 
extent of the damage. The EPA 
promised legal action against 
the companies involved if the 
water supply had been contam- 
inated and proof of a cover-up 
was found. 

Public protests over pollu- 
tion have mounted in recent 
years in heavily -Industrialised 
Taiwan, but usually they have 
been aimed at local companies. 
There is concern that foreign 


companies may find them- 
selves caught in the crossfire 
of domestic politics. The case 
also raises the spectre of liabil- 
ity for actions taken by previ- 
ous owners. 

RCA built the factories in 
1970, and they became the 
property of General Electric of 
the US in 1386 when GE took 
over RCA. according to Wil- 
liam Betke, Taiwan general 
manager of General Electric 
Technical Services. 

A spokesman for Thomson 


Cons umer Electronics said 
from Paris: “To the best of our 
knowledge, Thomson did not 
violate any environmental 
laws or regulations during the 
time the company owned the 
properties." 

Thomson sold the sites in 
1991 and 1392 to local conglom- 
erates, which apparently plan 
to use them for commercial 
and residential purposes. 

The EPA said the investiga- 
tion results would be made 
public next week. 



FINANCIAL TIMES MONDAY JUNE 6 1994 


NEWS: UK 


Britain backs Major steps up Euro offensive 
off veto over B,Da,wo " c " 

▼ Vt-V Vr ▼ Mr John Major yesterday 

.launched a last-ditch attempt 

1 ,1 Jf ^ • 'B to stave off disaster for the 

PH ■ rw /k l*! AIT Conservatives in Thursday's 

■ J Xs ^ III II . W European elections by stepping 

*** J up his attack on the dangers of 


By Phfllp Stephens, 

Political Ecfitor 

The British government is 
refusing to threaten its 
national veto against the can- 
didacy of Mr Jean-Luc Dehaene 
for the European Commission 
presidency amid acknowledge- 
ment In Whitehall it may even- 
tually fail to block the appoint- 
ment of the Belgian prime 
minister. 

But risk of a political back- 
lash on the Conservative back- 
benches could force Mr John 
Major to ensure that a decision 
on the succession to Mr Jac- 
ques Defers is postponed 
beyond this month's European 
Union summit in Corfu. 

Ministers insist the competi- 
tion for the post is still wide 
open despite the endorsement 
of Mr Dehaene by both Ger- 
many and France. They also 
point out that the Belgian 
prime minister, an avowed sup- 
porter of a federal Europe, has 
not formally announced he is 
r unning for the Job. 

But Mr Major yesterday pub- 
licly acknowledged the risks of 
seeking to use Britain's 
national veto to block Mr 
Dehaene. Speaking on BBC 
television he recalled that the 
then Mrs Margaret Thatcher 
had vetoed the candidacy of Mr 
Claude Cheysson, the former 
French foreign mini ster, in 
1984. The result had been the 
appointment of Mr Delors. 

Former Conservative Trade 
minister Sir Leon Brittan - Mr 


John Major's preferred candi- 
date - and Mr Ruud Lubbers, 
the Dutch prime minister, have 
both indicated their determina- 
tion to stay in the race. British 
minis ters believe the Irish gov- 
ernment will not give its 
required support for Mr Peter 
Sutherland, the outgoing bead 
of the General Agreement on 
Tariffs and Trade. 

British ministers believe Mr 
Dehaene's reputation as an 
advocate of a centralised Euro- 
pean superstate has been 
greatly exaggerated in the Brit- 
ish media and among Euros- 
ceptics on the Tory back- 
benches. The Belgian prime 
minister is seen in Whitehall 
as "political fixer” rather than 
a “European visionary" in the 
mould of Mr Delors. 

But Mr Major knows that to 
accept the candidacy of Mr 
Dehaene immediately after an 
expected heavy Tory defeat in 
this week's European elections 
could provoke a serious rebel- 
lion on the Conservative back- 
benches. 

Alter his retreat earlier this 
year on the issue of majority 
voting in the Council of Minis- 
ter. some right-wing Tory MPs 
see the Commission presidency 
as a litmus test of Mr Major's 
credibility in Europe. 

So while studiously avoiding 
any threat of a veto, the prime 
minister will hope that dead- 
lock at the Corfu summit could 
halt the Dehaene bandwagon 
and rekindle the chances of Sir 
Leon's eventual appointment. 


By David Owen 

Mr John Major yesterday 
.launched a last-ditch attempt 
to stave off disaster for the 
Conservatives in Thursday's 
European elections by stepping 
up his attack on the dangers of 
greater European integration. 

The prime minis ter used a 
wide-ranging television inter- 
view to emphasise that bis 
“instincts” were not in favour 
of a single European currency 
and to predict that the Euro- 
pean Union would “break” if it 
did not develop more flexibly. 

But, as the main parties 
reduced the intensity of their 
campaigning to accommodate 
yesterday's commemoration of 
the fiftieth anniversary of the 
D-Day landings. Mr Major 
declined to predict the elec- 
tion's result. 

A recent opinion poll put the 
Conservatives in third place 
more than 30 percentage points 
behind Labour, suggesting the 
party could be reduced to a 
handful of seats. 

Such a result, coming within 
a month of the Tories' local 
election humiliation, would 
revive doubts about Mr Major's 
leadership and lead to renewed 
speculation that a challenge to 
the prime minister could be 
mounted this autumn. 

The Conservatives currently 
hold 32 seats in the European 
parliament, compared with 45 
for Labour. A haul of fewer 
than a dozen seats this time 
around would be regarded as a 
serious setback for Mr Major. 

Interviewed on BBC Televi- 
sion, the prime minister said 
his opposition to a single Euro- 
pean currency had “always 
been more in practice than in 
principle", while adding that 
his practical objections were 
“very reaL” 



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Prime minister John Major and Conservative party chairman Sir Norman Fowler face an anxious 
week in the run-up to Thursday’s elections to the European parliament pww* Tony Ana*** 


“My instincts are not in 
favour of it," he said, “I can 
conceive of circumstances a 
long time in the distance 
where it might possibly be in 
our economic interests . . But 
I don’t believe myself that 
those circumstances will apply 
if ever for a very long 
time . . not this side of the 
turn of the century.” 

The prime minister said that 
to argue for the flexibility of a 
"multi-speed” Europe, as he 
did at a rally at Ellesmere Port 
last week, was not to argue 
against the European Union. 

Europe had “slowly, unob- 


trusively'' been moving in that 
direction for some time, he 
said. The EU had to develop in 
a more flexible way. 1 believe 
if it doesn’t then it will break,” 
he said. 

He said he did not see any 
areas where there was a case 
for extending majority voting. 

Pressed on his own future, 
Mr Major said that the govern- 
ment had a five-year pro- 
gramme and that he expected 
to carry it through. It would be 
“perfectly proper” for someone 
to use the party's leadership 
procedure to mount a chal- 
lenge in the autumn. If that 


Britain in brief 


System ‘could 
link lottery 
and benefits’ 

Britain's national lottery 
computer system could be 
used to pay oat pensions and 
social security benefits, says 
G-Tech, a member of the 
Camelot con so rtium which 
will operate the UK lottery. 

The company already uses 
a system based, on the 
technology It has developed 
for running state lotteries to 


in parts of the US. 

The end of the traditional 
pension and benefit books was 
signalled last month when 
Mr Peter lilley, social security 
secretary, told 


happened, “I will take on 
whomsoever the contestant 
may be and I would hope and 
expect to beat that contestant." 

He said he would “pick my 
own time" for the cabinet 
reshuffle, .expected during the 
summer. 

For the liberal Democrats, 
Sir David Steel foreign affairs 
spokesman, attacked the gov- 
ernment for being “shackled” 
by the Euro-sceptics on their 
own backbenches. 

Labour concentrated on 
pressing home its assault on 
tax where it hopes the primary 
focus of the camp ai g n win rest 


to introduce computer 
terminals in every post office 
to replace the 57m order books 
usedtopay £80bnof benefits 
every year. 

Mr Craig Watson, 

vice-president far public 
affairs at G-Tech, confirmed 
a report in the British 
magazine Electronics Times 
that benefits payments could 
be integrated into the network 
of terminals it wiD install to 
record entries fed 1 the weekly 
draw. 

Post offices wonkl have two 
swipe-card terminals; one for 
the lottery and one for benefit 
paym en ts. 

G-Tech already pays benefits 
to 700,000 people in New York 
city, and has won a contract 
to set up an electronic benefit 


Probe into market-making at Stock Exchange 


By John Gapper, Banking Editor 

Britain's director-general of fair 
trading. Sir Bpran Carsberg, has 
launched a new inquiry into the prac- 
tice of market-making on the London 
Stock Exchange, under which stock- 
broking firms buy and sell shares in 
publicly-quoted companies. 

The Office of Fair Trading has writ- 
ten to market-makers, brokers and 
institutional Investors to ask for com- 


ments on the effects of market-mak- 
ing, a system which is not used by 
other large international exchanges. 

The last inquiry into market-mak- 
ing, which relies on large brokers pro- 
viding liquidity by guaranteeing to 
sell or buy shares at set prices, was 
undertaken in 1988 and cleared the 
system of anti-competitive effects. 

Supporters of market-making argue 
that it has helped London to establish 
a pre-eminent position among Euro- 


pean exchanges because it guarantees 
investors the ability to sell and buy 
large block of shares. 

The OFT said yesterday the inquiry 
was a standard re-examination of an 
area which had been investigated 
before, and had not been prompted by 
a particular concern that market-mak- 
ing had become less competitive. 

The inquiry is likely to focus on the 
use of capital by firms that trade 
shares, and whether the system 


allows market-makers to make exces- 
sive profits by fixing large margins 
between their bid and offer prices. 

Other exchanges tend to use order- 
driven systems, where offers to buy 
and sell blocks of shares at particular 
prices are posted on computer 
systems, and are matched centrally. 

Pressure from the former director- 
general of fair trading. Sir Gordon 
Borne, over the separation of brokers 
and jobbers, and minimum commis- 


sions, eventually led to the Blg Bang 
deregulation of the City in 1986. 

However, a subsequent inquiry into 
the privileges and obligations of mar- 
ket makers in 1988 found that the 
rules of market making on the Lon- 
don stock exchange were “not signifi- 
cantly anticompetitive”. 

The OFT is asking for preliminary 
responses this month and may then 
hold detailed discussions with firms 
involved in market-making. 


Consumer credit 
figures fall 

UK consumers took out 8 per 
cent less credit in April than 
in March, according to figures 
released by the Finance and 
Leasing Association today. 

The figures are not 

seasonally adjusted, however, 
and may reflect the restricted 
number of trading days in • 
April because of the Easter 
holidays. 

Compared with April 1993 


consumer credit showed a 31 
per cent increase at £L34bn, 
according to the FLA. 

Business finance showed 
a fall In the rate of growth, 
with April's leasing total 17 

percent lower than a year ago. 

Hire purchase was up 25 per 
cent year-on-year. 

Few disclose 
currency details 

Only a quarter of British 
companies with foreign 
currency exposure provide 
any meaningful disclosure, 
according to Company 
Reporting, the monthly 
Edinburgh-based monitor of 
company accounts. 

In a sample of 520 
companies* la test gnnT| M 
reports, 76 percent showed 
some evidence of foreign 
currency exposure but only 
27 per emit of these provided 


The analysis comes as there 
is increasing attention on the 
potential BabiUtleg which aw 
incurred by businesses by 
foreign currency hedging and 
other d erivatives or financial 
instruments, such as swaps 
and options. 


Defence anions 
attack review 

Unions rep resen t ing workers 
in the defence sector are 
challenging the government's 
claim that support services 
can be trimmed without 
affecting defence capacity, and 
accusing ministers of delaying 
the announcement of sweeping 
changes in. an attempt to 
reduce the political cost 
And they are using the 

Th^wyw ^ tijiig tiwi namp ai g n 

to Cocos attention on. the 
prospect of tens of thousands 


Mr John Clark, heed of the 
Ministry of Defence section 
at the NUCPS civil service 

ira inn wriri the unions w anted 

a “proper strategic review" 
of military spending. 

Mr Malcolm Eifkind, the 

defence secretary; has 

promised a statement soon 
on the results of the Defence 
Costs Studies, an effort to trim 
£750m from the ministry's 
budget without c om p rom ising 
military capability. 

But Ministry a£ Defence 
trade unions expect 15,000 
Civilian and 10,000 militar y 
posts to be shed as an 
immediate result of foe DCS. 


nan 


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FINANCIAL TIMES MONDAY JUNE 6 J 1994 


MANAGEMENT 



And my spouse came along too 


International companies increasingly find that employees are married to people who have their own job, career, 
and income which they don’t want to leave behind. Bobby Meyer considers the implications 


I t may not be the biggest constraint on 
their global expansion, yet a growing 
challenge for the personnel depart- 
ments of international companies is 
how to accommodate the so-called “trailing 
spouse". 

One of the most common reasons for an 
employee’s refusal of an overseas posting is 
the disruption caused to his or her partner. 
Not only is the spouse’s career jeopardised, 
the dual income disappears, too. 

Failure to tec kfe these issu e s has signifi- 
cant implications tor companies. There is 
the obvious headache of finding someone 
else to go in their place when executives 
turn down an international assignment - as 
one in three in Britain does, according to 
the consultancy Organisation Resources 
Counsellors. But there is also a financial 
impact The Confederation of British Indus- 
try estimates that restricted mobility is 
costing UK companies as much as s snore in 
lost business opportunities a year. 

By 2000 an estimated 75 per cent of relo- 
cating executives will be involved in dual- 
career partnerships, and yet few companies 
give the issue the attention it deserves. 
ORC found that while almost three-quarters 
of a sample of American and Earopean com- 
panies admitted to a dual-career relocation 
problem, few had plans to tackle it 
Many companies stQl use policies devel- 
oped in the 1970s and 1980s, with the result 
that little or no account is taken of the 
spouse’s career. The spouse is seen as the 
back-up. expected to organise the move, 
entertain and be prepared to uproot the 
family again, often at short notice. 

Companies too often assume that the only 
remedy is to compensate for lost income, 
but there are other ways of dealing with the 
issue. Employers, for example, have easy 
access to training expertise and recruitment 
information, as well as their overseas net- 
works. They can help spouses obtain work 
permits; ORC found that 42 per cent of 
European companies are already doing this, 
compared with 15 per cent of US companies. 

The companies can provide career coun- 
selling, which can be valuable preparation 
for a new life abroad. Too often the spouse 
is left to fight for help; that takes a strong 
personality, particularly when speaking out 
may jeopardise the partner’s prospects. 


The more enlightened companies advise 
against a blanket approach. Realising that 
each case must be assessed on a highly 
individual basis, and that the conditions in 
the host country also need specific consider- 
ation, the international chemjc al company 
Monsanto in Brussels has developed what it 
calls a “cafeteria approach”. Kristlen 
Debougnoux, responsible for Expat Policies, 
explains: “The intention is to elimina te as 
many barriers as p osoflifa to an iwtenw. 
tional assignment for dual-career families." 

Monsanto offers some compensation for 
loss of income to the trailing spouse (linked 
to the employee’s salary level). It also tries 
to help spouses develop skills in their own 
field or a new endeavour. Perhaps most 
important of all, the spouse gets help re-en- 
tering the home job market when the 
assignment is over. Monsanto also helps 
indirectly as one of the corporate sponsors 
of Focus in Brussels, a networking and 
career resource centre operated by volun- 
teer expatriate spouses. 

The oil company Shell, with 5,600 expatri- 
ate staff in 100 different countries - Is cur- 
rently analysing the outcome of a large 
survey commissioned from the independent 
organisation International Survey 
Research. A long, detailed questionnaire 
was sent to expatriates and their spouses In 
35 countries, as well as to couples who bad 
been or might be expatriates. The 70 per 
cent return rate was “exceptional", says 
Mike Qoughley, special projects managpr 
for human resources at Shell. 

Overall, Shell expatriates seem to be a 
happy bunch, with 88 per cent expressing 
satisfaction. The company’s handling of 
expatriation , however, dr e w some critidam, 
with only 60 per cent saying they were 
satisfied. At this point there were some 
revealing onmmgnte from spouses. 

The dual-career problem separation 
from school-age children were two of six 
main issues Highlighted For Cloughley, a 
tog worry Is that these two factors have 
emerged as the main reasons for restricted 

mo b ilit y among staff aged under 30 — the 
ones specifically recruited for their willing- 
ness to "go anywhere, anytime”. 

Not everyone, though, thinks that the 
answer is to bow to UK expatriate needs. 
On future mobility trends, Alan Chester, 


operations director of Employment Condi- 
tions Abroad, suggests that “mobility may 
have to came from parts of the world where 
people are still prepared to be mobile'’. 

Meanwhile, the spouses themselves have 
not been idle. In cities such as Brussels, 
The Hague, Geneva and Paris, women have 
set up counselling and advisory services of 
their own. I too, hag a non-profit 

resource centre far to tcraatkm al residents. 
Focus Information Services, run by a volun- 
tary staff of expatriate wives. 

Focus runs a monthly job group and a 
series of seminars on interviewing tech- 
niques, CVs, cultural adjustment and other 
Issues. M TiItfr^ttinrial^ mhh 35 AT&T 
General Electric of the US provide sponsor- 
ship. 

Working Partners, co-ordinated from 
Belize by GUI Mackflfigin, uses the United 
Nations network as a worldwide link for 
expatriate spouses. “The talents arid pfihr is 
of thousands of trained professional people 
are going to waste, often in countries where 
the very they po s s ess are In desper- 
ately short supply.” she says. 

There is a strong emphasis on project and 
job creation and the training of local people, 
rather than taking jobs away from them. 
Working Partners began in 1990 as Spouses 
for Development and was adopted as a pro- 
gramme of the Worid Federation of United 
Nations Associations in November 1992. 
Pilot Working Partners programmes are 
already In operation in the UK, Switzerland, 
US and Belize and by 1995 it is hoped that 
expansion will cover a further 23 locations. 


bi London: 

Working Partners 

c/o United Nations Association (UK) 
3 Whitehall Court 
London SW1A 2EL 


Focus Information Services 
Tel: 071 937 0050; Fax: 071 937 9482 


In Brussels: 

Focus Career Services 

Tel: 322 646 6530; Fax 322 646 9602 


In the Netherlands: 

Cope Internatio nal 

Teh 31 TO 392 4003; Fax: 31 70 360 3575 


Tips for a moving experience 


I f yon lose your job tomorrow, at least 
there is a network to help yon pick up 
the pieces. Break off your career to fol- 
low your husband or wife to an overseas 
posting, though, and thing s are very differ- 
ent. Not only do yon lose your job, income, 
colleagues, perks and pension; you lose an 
important framework to your life and part 
of your identity. 

living in Moscow for four years, from 
1987, taught me a lot about myself and my 
inner resources. At the time I saw my 
attempts to find work in toms of filling 
the gaps in my cv. Now, 1 realise that I was 
training myself for life back in the UK to 


which my husband and I both returned in 
the middle of a recession without a job. 

Moscow was a hostile city at the time: no 
map, no telephone directories, no public 
libraries, so information on offer and "no 
entry” signs everywhere. 

A previous posting in Madrid had 
already taught me some important guide- 
lines: set yourself goals before you go. Net- 
work all the time, even back home on 
leave. Tell everyone what you are doing 
and what your plans are. I never cease to 
be amazed at people’s generos ity with con- 
tacts. Keep working on your image. Always 
dress in a business-like fashion and yon 


win be taken seriously. Have visiting cards 
printed on day one and call yourself what 
you are planning to be. It helps to put yon 
in the right frame of mind. 

Channel y our anger, frustration and feel- 
ings of powerlessness into positive actions. 
Start on a project of your awn as soon as 
yon can. - .anything, as .kntg as it really 
interests yon. I researched Soviet publish- 
ing houses and because I marketed myself 
hard on leave in the UK, Publishing News 
soon asked me to be its Moscow correspon- 
dent I built np work as a publishmgageut, 
freelanced as a journalist and enjoyed 
doing photography to bade up my articles. 


Is your boss Britain’s meanest? 


T here is a new generation of 
British bosses out there. 
They are egalitarian, intelli- 
gent and highly principled. They 
ore hardworking and meritocratic. 
They live by their corporate mission 
statement and strive to offer their 
customers the very best value. 

So says City journalist William 
Kay who has just interviewed two 
dozen of the new guard for his hook 
The Bosses. After hearing ad infini- 
tum about their Oat management 
structures and modern manage- 
ment methods, he has jumped to 
the conclusion that the flashy old 
captains of industry are gone, and a 
more homogenous group of deserv- 
ing high-flyers has replaced them. 

I don't buy it. The average boss 
may be brighter than before - after 
all, business has got harder, so also- 
rans tend not to make it But are 
our corporate leaders really more 
fair minded? More egalitarian? 
Human nature being what it is, 
surely there are as many boors in 
the boardroom as ever before? 

For every executive with the 


admirable qualities that Kay has 
found in his research. I bet there 
are just as many successful bosses 
who are bullies, tyrants or impossi- 
ble to work for. I could list a few off 
the top of my head but that would 
get me into trouble. Therefore, I am 
passing the buck and inviting read- 
ers to nominate their own candi- 
dates for Britain's meanest boss. 

The rules are as follows: 

• The bosses must be chairmen or 
chief executives of Britain’s biggest 
350 companies. 

• Relevant criteria include: intimi- 
dating or unreasonably demanding - 
behaviour; tantrums, abusive lan- 
guage, failure to listen, impatience, 
ruthlessness, bullying, intransi- 
gence. intolerance, unpredictability, 
arrogance, vindictiveness. 

• Readers may nominate up to 
three bosses each, listing them in 
order of meanness. It is not neces- 
sary to have worked for any of 
them directly, bat anecdotal evi- 
dence should have been collected. 

• AD nominations should state in 
a few words why each candidate 


LUCY 

K E L LA WAY 


than ever before. People at the 
Economist must watch nothing 
other than sitcoms or they would 
have noticed the popular new genre 
of business documentaries on sub- 
jects such as venture capital which 
are watched by millions. If they still 
need convincing, they should Invest 
in Kay’s glowing book. 


deserves to be considered for the 
Financial Times Mean Boss Award. 

• Nominations sent in anony- 
mously will be accepted. Signed 
nominations will be treated with 
the utmost discretion. 

• My decision will be final 

• Nominations «hfmM be sent by 
post to: Lucy Kdlaway, Financial 
Times. Number One Southwark 
Bridge, London SW1 9HL, or by fax 
to 071 S73 3196. 


If anyone from the Economist Is 
reading this, they may he fe eling 

vindicated. That periodical has just 


published a leader wympiarnfag that 
Ihe British view “trade” with suspi- 
cion and uven all entrepreneurs to 
that shady character Arthur Daley 
in the TV comedy Minder. 

Let me set the record straight: I 
do not hold British businessmen 
and women in low esteem. On the 
contrary, some of my best friends, 
etc etc. 

My point is that some of the peo- 
ple who have got to the top in busi- 
ness - as in politics, and any other 
area you can mention - are power- 
crazed and difficult to work for. Ihe 
magazine ’s view is at least a genera- 
tion out of date. Businessmen are 
better known and better respected 


Our nanny has just regaled me with 
the story of a friend who has got a 
job looking after one docile baby for 
£140 a week net plus a two-bed- 
roamed flat and a car. 

R was not the unfavourable com- 
parison with, her own terms and 
conditions that took me aback. It 
was that the balance of power 
between us had shifted: throughout 
the recession it was she who was 
lucky to have an acceptable job. 
Now it is I who am lucky to have a 
(more than) acceptable nanny . 

When I advertised in The Lady a 
year and a half ago I had 70 desper- 
ate replies. A friend who last week 



* „ f *‘~- 


desert island 
manager 


John 

Hegarty 


Should John Hegarty be stuck . 
on a desert island there would be 
a lot of upset entrants in the 
Evening Standard's 
fantasy advertising league. Such 
is his reputation within the 
industry that the creative 
director of advertising agency 
Bartle, Bogle, Hegarty figures as 
star striker in the vast majority 
of top t e»ni selections. 


ff you could take one person 
with you who would ft be? 
Michelangelo would be good 
because he was one of the great 
art directors. But then the 
church was one of the first great 
advertising clients. He ami I 
could have good, conversations 
about how we visualise things. 


Which additional item would 

yon need for the beachside 
office, apart from a fax and 
telephone? 

A lay-out pad so that 1 could put 
ideas down. If ideas stay in your 
head they forever perambulate 
around. The frustration of not 
being able to put them oh paper 
would drive me mad. 


Which extra sanity preserver 
would you opt for? 

. I would probably learn about the 
flora and ’fauna. I detest 
gardening . My father was a 
gardener and 1 think you always 
rebel against what your parents 
did. So although I loathe it, I 
rrahaa T am missing out. 


What would yon dislike about 
being oit tife island? - 
Perennial sunshine. The fact 
that it rainsa lot in Britain 
makes us tw^fc more. I would 

hate rrawfamt s tirwhine al thoug h 
It is nice to have on occasions. 


-Andfike? 

An uncomplicated life. The 
abffityto concentrate; and not be 
diverted, to.be able fo focus your 


Some food and drink that you 
Would ei*joy? 

• If rd asked AHchelangelo, I . 

. would probably go for pasta 
because it would suit inm, 
although with my -Irish heritage 
‘ Iwoold.atso'liketogofor the 
potato. They are raderretied and 
■ seen as a commodity. But then, 
sitting: there with Michelangeto 
we would have some . pasta and I 
; would have ahice bottle of 
1 rfrfafttt ■ 


A film far after dinner? 

..The Godfather, andlwmild hope, 
/.to cheat and take the triIogy.lt 


photography, music and the 
themes# explores* . 5 


placed a similar ad received only 
four. The story at London's nanny- 
lug: agencies shows this to be no 
freak. They say they are finding 
jobs for 30 per cent more tuwhiipk 
every week than they were six 
months ago. 

This is the most fan g f fr ]fl sign I’ve 
seen that the economy is picking 
up, and that confidence is wen and 
truly back - among London’s pro- 
fessional classes at least 

During the recession, freelance 
women fired their nannies as soon 
as they feared their work might be 
drying up, only to reemploy th em 
once they started feeling more opti- 
mistic. Similarly, women who do 
not work get rid of the nanny the 
minute their husband's job looks 
precarious, but once he seems more 
secure, they are on the phone to the 
nanny agency in no tfmp 

Anyone who is not impressed by 
this powerful new economic indica- 
tor should try to book a table at 
Quaglino’s. A few months ago you 
could have walked in off the street 
Now two weeks' notice Is required. 


Gold Wddc&is aXTabout two 
phitastgi^era'aigra^ 


which I have always fomid very ' 

. profound: "What tim heart 
'known, today, the bead wfiLkoow ' 
.tontonrcri?. , ‘ 


- .bottle front the island, what 
'wad&ftbe?.. 


"Remember that good is the 


oneconditfon; 

Thm iwooldcmlybetherefora .■ 
, timited-time. Knowing we ha w g 


productive. Fve always thought ’. 
a great description of bell would-. 


would be no reason to do 


Christine Buckley 



‘So you’re flying KLM 
on the London to 
Amsterdam stretch.” 


“Exactly,” 



c 


Antoam 

TruisnUi 



The Financial Times reaches 75% of the Professional Investment Community in Europe, more 
than any other European publication, and 36% of the Professional Investment Community in 
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10 


mn^MTAf . TIMES MONDAY JUNE6_1994_ 


CONTRACTS & TENDERS 


MEDIA FUTURES 


PRE-QUALIFICATION TENDER 
EXERCISE FOR A FUTURISTIC 
THEME PARK IN SINGAPORE 

AIM 

The Singapore Science Centre, as part of its long-term expansion plans, 
is inviting investors to design, develop and operate an educational hi-tech theme 
park in Singapore. Located on 3.75 hectares of prime recreational land beside 
the Singapore Science Centre's premises, the project offers exciting opportunities 

for investors worldwide. 

CONCEPT 

The concept of "Edutainment”- that of having fun and learning about science 
and technology at the same time, will be the hallmark of this science theme park. 
The Centre has available for investors a preliminary concept plan for the 
theme park setting out a possible thematic design which investors may study 
as a suggested guide. Iron rides, dark rides, simulators, animatronic shows, 
special theatres, live entertainment, etc. would be employed to give the visitors a 

total sensory experience. 

INCENTIVES 

This project offers excellent opportunities for private and corporate investors 
seeking investment opportunities in the leisure industry. Singapore, being the 
tourist hub of the Southeast Asian region, attracts more chan 6 million visitors 
annually. Singapore also boasts of a strong economy, high creditworthiness and 
extensive air-links to over 50 countries. With attractive tax incentives designed to 
benefit both foreign and regional investors, total cumulative investments in 
Singapore at the end of 1991 amounted to SS54.6 billion. Based on the educational 
element of this theme park, attractive rates for the 30 year land lease 
as well as tax incentives are expected. 

Additionally, the Science Centre already possesses a firm infrastructure and 
provides a strong base of a million visitors every year to its current facilities 
namely the Science Centre and the Omni-theatre. Through complementary 
architecture, land planning and themed environments, the Science Centre, 
the Omni-theatre and the Theme park would be linked to form an integrated, 
unified, futuristic Science Complex. With its realisation, this futuristic 
Science Complex would be the first of its kind in the region. 

PROJECT DOCUMENTATION 

Investors are invited to submit their designs and proposals to set up this theme 
park. An investor's package containing the conditions of the tender exercise, the 
preliminary concept plan and a visual presentation on video cassette (VHS(PALJ) 
may be obtained from the Centre at a cost of USS150. Please fax or write by 
31 July 1994 to the following address : 


mm 


Investors' proposals for 
the theme park should 
be sent in by 
30 September 1994 



Singapore Science Centre 
Science Centre Road 
Singapore 2260 
Republic of Singapore 
Telephone (65) 560-3316 
Facsimile (65)5654533 



SINGAPORE 
SCIENCE CENTRE 


JIL 


Cyprus Petroleum Refinery Ltd 

DEBOTTLENECKING 

PROJECT 

PREQUALIFICATION 

Cyprus Petroleum Refinery Limited (CPRL) are 
proposing to debottleneck their Crude Distillation and 
Hydrotreater Units as well as build a 24.000 cubic 
meter floating roof tank at their 18.000 barrel per day 
refinery at Lamaca. 

Consideration for inclusion in the selected list of 
tenderers will only be given to contractors with 
previous experience in the design, procurement and 
construction of refinery or petrochemical projects. They 
will be required to demonstrate their ability and 
experience in Process Design Engineering. The 
successful contractor will be required to guarantee both 
the expected increase in capacity as well as the forecast 
performance. 

Contractors wishing to be considered for inclusion in 
the selected list of tenderers can obtain the 
prequalification questionnaire as well as a description 
of the envisaged modifications incorporating the 
relevant PI diagrams, for an amount of Cyprus Pounds 
1,000.00. Only contractors who have responded to this 
notice by 17th June 1994 will be considered further. 
Such contractors will be issued with prequalifications 
questionnaire after this date. 

Interested contractors are requested to apply to the 
General Manager, Cyprus Petroleum Refinery Ltd., 
P.O. Box 275, Lamaca - Cyprus, enclosing foe amount 
of Cyprus Pounds 1,000.00. 



TKE EUROPEAN COUflSSION 
intends to launch a new 

call for tender 

far the tranalalfoii of technical rogutaHans and 

rds communicated under Directive 03fl8£^EEC. 

The publication of this cafl (or tender in the Official Journal of the 
European Comm unities Is planned for mid-June 1994. Expenditure 
on the services to be provided b expected to amount to a 
maximum of approximately ECU 22 mfflnn over a three-year period. 


The work win involve: 

□ highly technical texts; 

□ very strict dearffines; 

□ targe and variable volume 
(750 ppAnonth, with peaks of 
app- 1200 pp/mcmth); 

□ translation from all the official 
languages of the European 
Union (i.o. Danish, Dutch. 
English, French, German, 
Greek, Itafian, Portuguese, 
Spanish) into all the others; 

□ management of the entire 
procedure from the receipt of 


the technical regulations and 
standards to the deRvery of the 
translations. 


Further information on 
the nature of the work and the 
award procedure can be 
obtained from 
MissS. VANHAL, 

Ftond-PoW Schuman 3, 
B-1040 Brussels. 

TeL 32-2-296.61 .48. 

Fax: 32-2-296.08.51 . 


PUBLIC NOTICES 


LEGAL 

NOTICES 


PERSONAL 


Ttc Ink Mattel oat bcbm mo Blanton: 
27 Hay ]W3 

Br LDSORCTIME INNS PLC 
To: CROSVENO* INNS PLC 
THE QUO SCHOOL HOUSE 
LONDON ROAD 
SHENLE Y 

HHBrroMWMUtt 

WDTTO 

WlibMt Or goodwill of ih* btttlBew in riw 
gf*i I for wbdi the Trade Mnt b wg btead . 
Trade Mw k. Nor tfSllJd Mart SLUG AND 
LETTUCE. Goods Specification: Hotel, 
ictowjm . pUdtc bo — c, «fl MCMcd la Cba 
ta none bring prov ided wUb t mdira of 
'ti mils* of Slraifurd-UpoB-Avui) ud 
New cauls -Under* Lyme and Wlollkld. 
Bcriotdic. 


PUBLIC 

SPEAKING 

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Tel: (0727)861133 


SCOTTISH EQUITABLE POLICYHOLDERS 
TRUST LIMITED 

Notice is hereby given that the first Annual Genera] Meeting of Qualifying 
Policybofaten of Scottish Equitable Policyholders Trust Limited will be held at 28 
Si Andrew Square. Edinburgh on Thmsday 16 Jane 1994 si 2 vi pm for the 
following pu r p o ses : - 
L. To consider the C ompany' s Report. ■ 

2. To approve (he aggregate ordinary remuneration so be made available la the 
Dhcoot of tbe Company. 

3. To reappoint the Pbectoa of the Co m pany retiring by rotation al ibe Meeting, 
namely: - 

(a) The Rt Hon Lord Yotmger of Prcatw i c k KCVO TD DL 
<b) Barry E Scaley CBE BA 
(c) Charles F Sleigh CA 

Any Qualifying Policyholder who ia entitled to attend and vole is entitled to 
appoint another person (who need not be a Qualifying Policyholder} as his proxy 
eo attend and vote instead of him. A proxy is entitled to vote bot is not entitled to 
speak except to demand or join in demanding a poE. Ptoxy farms, which can be 
obtained from the Company Secretary (at the following address), must be 
deposited at 28 St Andrew Square, Edinburgh before 230 pm on Tuesday 14 June. 
Every Qualifying Policy bolder whose policy, as al the oommenasnieiit or the 
Meeting, has been al least one year in force is entitled to attend and vote at tbe 


‘Qualifying Po li cy holders 1 for the p u rp oaca of this Meeting mmpr;— my person 
who was a member of Scottish Equitable life Ass uran ce Society (the Society) and 
whose policy, having been transferred from ttm Society to Scottish Eqailtbie pie, is 
stiD in fonx at tbe mmmnjeanem of the Meeting. 

Any queries in respect of the qoah'ficrati oo of polkyttoidea to attend and vote at 
the Meeting should be addressed to the Company Secretary (at the address 
specified betow). 

By Order of the Board 
P H Grace 
Managing Director 

28 St Andrew Square, Edinburgh EH2 IYF 


: APPOINTMEWSADvi^HOTiG^ 


appeacs in the 




. . V V 

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Gnxt&Jmm 00.07*8333773 V- ••• 


Doing cyber business 

Every two minutes a new user hooks into the Internet, a system 
that could revolutionise global trade. Louise Kehoe reports 


S olo travellers on the 
Internet Informa- 
tion highway” are 
being overtaken by 
the digital equivalent 
ai 16-wheel juggernaut trucks, 
as businesses begin to trans- 
port large quantities of data 
through cyberspace. The sys- 
tem is being transformed into a 
global electronic marketplace 
that could change the way 
world trade is conducted. 

The Inter net, a global system 
of computer networks, now 
links an estimated 99m com- 
puters and over 2 Sm users in 
137 countries. New users are 
hooking up at the rate of about 
one every two minuter 
Originally a US government- 
funded programme in the late 
1960s, to electronically link 
researchers at OS universities 
and government laboratories, 
the Internet was in theory 
closed to commercial ac tiv i t y 
until about two years ago. 

Now companies are rushing 
to take advantage of the sys- 
tem as a low-cost route for 
international electronic mail. 
Computer companies have led 
the way. Digital Equipment, 
one of the heaviest users, has 
over 31,000 computers linked to 
Internet and exchanges an 
average of 1.7m e-mail mes- 
sages per month with people 
outside the company. 

To date, however, very little 
commerce is actually being 
transacted in cyberspace. Most 
companies have been reluctant 
to trust sensitive business 
data, purchase orders or credit 
frifnrmatinn to the unregulated 
network. But that could be 
about to change. A group of 
Silicon Valley companies and 
organisations has joined forces 
in an attempt to pioneer the 
use of the Internet as a new 
medium for trade among high 
technology companies by creat- 
ing an electronic marketp lace 
called CommerceNet. 

If successful, this "could 
revolutionise both regional and 
foreign trade”, says Marty 
Tenenbaum, chief executive of 
Enterprise Integration Tech- 
nologies (EIT), a research firm 
leading the development of 
[ CommerceNet; together with 
Stanford University's Center 
for Information Technology 
and the Western Research and 
Educational Network (West 
Ren), a non-profit group that 

How to 
join the 
system 

How do businesses get cm the 
Internet? Tbe answer to this 
FAQ (frequently asked 
question, in “netspeak”) 
depends to a great extent on 
the size of an organisation, 
the number of people who will 
be using the Internet and how 
much use they plan to m«hi> 
of it 

The basic requirements are 
simply a personal computer, 
with a modem, and an account 
with one of the numerous 
companies that offer Internet 
access. Two that offer their 
services internationally are 
ANS (313 663 7610) and 
Sprintlink (703 904 2230), 
both of the US. 

To take advantage of (he 
latest software, such as 
Mosaic, which makes access 
to Internet resources 
relatively simple, a 
high-powered PC such as those 
based on Intel’s 486DX or 
Pentium chips is 

T wummraiiliiil Tha mndran 

should be designed to send 
and receive date at 14.4 
kilobauds. Slower modems, 
although cheaper, will keep 
yoa waiting interminably if 
you attempt to access any 
document containing graphics. 

Also, to use Mosaic yon 
most have a direct link to the 
Internet, known as a PPP or 
Sttp account. This enables 
your computer to exchange 
date in “packets” directly with 
other computers on the 
Internet Prices vary, but in 
the US they are typically about 
S20 per month plus |2 per 
hour connect time. 

Busi n es se s with several 
users tapping into the Internet 
may choose to install a 
dedicated, high-speed 
telephone tine, which makes 
access more efficient Routing 
equipment is needed to link 
local area networks to the 
Internet Security systems 
may also be desirable. 

There are numerous books 
about the Internet Most 
however, are aimed primarily 
at individiial users. An 
exception is Mary Cronin's 
Dome Business on the Internet; 
Sou? the Electronic Highway 
is trtmsftimdng American 
Companies , published hr Van 
Nostrand Reinhold at S29JB5. 
Written for business 
•man ag ers, rather than 
computer experts, it offers 
a readable introduction to the 
Internet’s business potential. 


operates the Northern Calif- 
ornia portion of the Internet 

The CommerceNet consor- 
tium is funded by a 36m US 
govecoment grant, through the 
Department of Commerce* 
Technology Reinvestment Pro- 
gram which is being expanded 
by the dmtnn administration 
as part of its technology devel- 
opment policy. The group will 
obtain matching foods from 
the companies, state and local 
agencies that have agreed to 
sponsor the service. 

CommerceNet is tackling foe 
problems that have discour- 
aged ram t paTifag f mm the 
Internet for buying and telling 
goods and services, notably foe 
complexity of navigating the 
Internet and lax security. 

The first problem can be 
overcome with a new “point 
and click” interface program 
called Mosaic, developed by the 
National Center for Supercom- 
pnting Applications (NCSA) at 
the University of Illinois at 
Urbana-Champaign. Distrib- 


uted free via the Internet, 
Mosaic is rapidly gaining popu- 
larity as an easy-to-use method 
to gain access to information 
resources on the Internet. 

Mosaic will enable compa- 
nies to place "virtual store 
fronts" an foe Internet Buyers 
nan tap into these store fronts, 
browse through catalogues of 
products - which may include 
pictures, diagrams and even 
video clips - call up order 
forms and transmit their 
orders directly to foe seller. 

However, security remains a 
serious concern for business 
users. The public network is 
particularly vulnerable to com- 
puter “crackers", as demon- 
strated by a recent rash of 
password interceptions involv- 
ing tens of thousands of Inter- 
net users. 

To address this problem. EIT 
is working with RSA Data 
Security, the leading US 
encryption technology com- 
pany. to develop a “secure" 
version of Mosaic. 




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Dual security gates 


Digital Equipment, the US 
computer group, last month 
announced an Internet security 
service based cm tbe 
technology and expertise that 
it has developed to protect its 
own networks. 

The decision to establish 
links between a company’s 
computers and the Internet 
involves balancing risks and 
benefits, says Jim Hogan, vice 
president of global 

cnmmimiraHo n rand 


information processing 
services at Digital. For many 
companies, protecting the 
integrity of internal 
computer systems is 
paramount, but the advantages 
of Internet access are also 
compelling. 

Digital's system incorporates 
two “gateways" that in efltect 
build “firewalls" around 
internal networks, protecting 
than from unwanted 
intruders. 


CommerceNet will provide 
participants with authentica- 
tion. authorisation and data 
encryption programs so that 
buyers and sellers can S afely 
exchange sensitive information 
such, as credit card numbers 
and bid amounts, sign legally 
enforceable contracts, main- 
tain. audit trails, and get paid 
through cooperating banks. 

Until such software is avail- 
able, CommerceNet partici- 
pants will proceed cautiously. 
Most say they will provide 
on-line product catalogues and 
literature and enable orders to 
be placed via the Internet For 
now, however, they will stop 
short of completing financial 
transactions. Nevertheless, 
CommerceNet is an important 
testbed for "commerce In 
cyberspace”, say participants. 

“We expect to gain valuable 
Insights and experience con- 
cerning electronic commerce, 
and to offer a broad range of 
business information and ser- 
vices via CommerceNet,” says 
Peter Meekin, of Dun £ Brad- 
street 

Hewlett-Packard and other 
manufacturing companies that 
are already using private net- 
works for exchanging order 
information with their custom- 
os and suppliers see Commer- 
ceNet as a potentially cheapo 
alternative that could be used 
to expand their electronic sell- 
ing activities. 

“It will be another mode of 
electronic commerce, another 
tool in our tool kit.” says 
Sandy Whitson. EDI business 
manager at HP. The company 
will move cautiously, she says, 
but is keen to explore the 
potential of public network 
electronic sales which could 
reach a broader range of cus- 
tomers than existing systems. 
While CommerceNet is cur- 
rently focused on “business-to- 
business” transactions within 
a tightly-knit group of about 
two dozen companies, its 
founders have ambitious 
goals. 

“I believe that in two to 
three years you will see as 
many as 100,000 companies 
using foe Internet as a princi- 
pal sales and service channel ," 
says Tenenbaum. Commerce- 
Net itself will be handling busi- 
ness transactions for as many 
as 3j000 companies by the turn 
of the century, he predicts. 

Mind your 

Internet 

manners 

Businesses venturing into 
cyberspace are well advised 
to observe the “netiquette" 
established by the community 
erf researchers and computer 
enthusiasts who still dominate 
most of the “newsgroups", or 
special interest discussion 
groups, on tbe Internet 
Rule number one is that any 
attempt at unsolicited business 
promotion is unacceptable, 
except in areas of the Internet 
spec ifically designated for 
commercial activity. Violators 
of this rule are regarded as 
the on-line equivalent of 
vandals who daub buildings 
with graffiti, and they are 
Ukely to provoke angry 
responses, known as “flame 
mail". 

In extreme cases, this nan 
effectively force violators off 
the Internet. A US l og*! firm , 
for example, has been 
ostracised by the Intenet 
community for posting an 
thousands of newsgroups 
messa g es that advertised its 
services to immigrants seeking 
US visas. 

Outraged Net users 
bombarded the law firm with 
over 35,000 messages, most of 
them complaints, crashing foe 
computer of the local Internet 
access service through which 
the law firm accessed the 
Internet. 

This incident, together with 
nsmg concern about the 
distribution of sex ually explicit 
messages on the Internet, has 
created broad debate about 
freedom of speech in the world 
of electronic comm uni cations. 
Until more specific guidelines 
are developed, businesses 
looking for customers on the 
Internet should tread carefully. 


New billboard on the highway 

/oAlrlarmivNq a TTQ l **»*•«*»__ i_ ji » 


Mecklermedia, a US technology 
publishing group, last week 
launched “MecklerWeb", an 
electronic communications 
and marketing system aim ed 
at businesses that want to 
have a “corporate presence" 
on foe Internet 

For $25,000 per year, 
MecklerWeb will provide 
companies with, a billboard 
on foe electronic highway; a 
place to present their product 
information, corporate 
messages and news. 

This fo unHkeiy to cause 
offence in the anti-advertising 
culture of the Internet, 


however, because foe group 
will not distribute promotional 
materials. Instead It will 
provide a commercial 
catalogue that users may 
choose to browse at will 
“Cyberspace is not a 
market," says Christopher 
Locke, president of 
M eckler Web. “You don’t have 
to target audiences, they self 
select The real opportunity 
here is not traditional 
advertising hut rather a new 


market presence!" MecklerWeb 

will be organised into broad 


topical areas of interest such 
as taw, medicine, sports and 
technology. Within each, 
fbkgroups and specialties will 
oe arranged in an hierarchical 
struc ture. As well as tbe 
corporate information, 
JtecJderWeb intends to create 
juscussion groups that could 
lure potential customers. The 
group is inviting professional 
?f»jdations to serve as “hosts” 
to foe various subject areas, 
operating discussions and 
“Raoiaing multimedia content 
«ich groups will receive a 
s bare of the fees paid by 
companies that participate. 



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FINANCE ! 


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Shareoption 
taxoptfons 

■VVfa^x'nK executives make a kfllfag 
artsdg tt.tmfc of their share option 
schemes, their amtfes can be wiped 
awayat the thought of the tax they 
(ffil incur on cashing intheir 
windfall. Gatos are liable to capital 


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t - wrt ^ gahErtax.4 fr . per c ent for a 

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What can be done to bring down 
: - V; tte takburden? 

- j: Ashore option gives the holder 
V' the right today to acquire tomorrow 
'*■ -• shares^in his company, at today's 

price; fa a conventional Inland 
J Revenue-approved executive 
*■■■' ' scheme* this can be any time during 
■■ the period of seven years following 

"'.v'.' die third anniversary of the day 
ba wasgtven the right 
The main tea-planning tool is 
•"f..; the annual CGT exemption of £5300 
-..s' - not enough. to shelter substantial 
k.' gains. For these, David Cohen, 

:-. v ; partner in the City law firm of 
vii .. . Paisner & Co, suggests spreading 

Hutyi,!. ‘'■ I disposals over more than one tax 
■' ';. r . year and favolving a spouse. 

He gives the following example: 
"Suppose that 'Judith, has an option 
'■2. 4 to tay ldjOOO shares for 150p each 
and she exercises it in June 1994 
■■ when the price has risen to 400p.- , 

“ • Full CGT on Judith’s gain of £25.000 
. (10,000 x 250p) would amount to 
. . JLT £10,000, pushing bach hernet profit 
to Just £15,000. 

. ; V.'.;'- "On the assumption that Judith 
has no other taxable gains,- she 
V '■ can sell tax-free approximately 2^00 
! shares in this tax year and.. ‘ V . 

. “ ' ( afimwitug ri'n r;hfliig » in tlw ghan o - 

V- , -p '■ price) a further 2^00 in the tax year 
e*lch bt^fos on 6 April 1985 " .! 
However^ he warns executives 

• against exerclsmg in each tax year 
only the. number of shares which 

i.T they plan to.'sein in that year, in 
f- - preference to exercising the whole 
. . ; option (thatis, buying the sharrai) 

*' ^ * ■: and then fletUng iww a 
‘ 1 ^ number of years. "To do so would 
' : be a painful blunder, if an executive 
“ “^option is exeridsed twice within ' 

-7 a three-year period; the profit on . 

’ ' : - the second t^tion will be faQy taxed 
' as income, thereby sc u p pe r in g any 
■ ^ . chance of using the CGT 
exemptioiLT 

• Instead, it ts possible for-those 
■ : _ who are marriai to ex^olt their 
■ • - spouse's CGT-saving potential. A 
^ft of shares will generally be 
- treated as a disposal by tim donor 
. _ at market value but this .rule does 
-not apply to transfers between 
.‘spouses. 

So Judith’s husband, Alan, can 

• receive and sell 2^00 shares In this 
. v-J tax year mid to 1996/^ without .. 

~inciurtoganyCGT./ 

. . “As a result of a combtoaticar 
. 1. of ^atMcfehhgtParhial t faduw p iA, 

’ 9200 Shares will htore bean cashed 
in tax-free. Even If the remaining . 
ft A * 1 r 800 shares are taxed; the taxable 

Pfl fi II vi VC gain will have-been reduced from 

* £25^)00 to £2,000 thereby boosting 

V i iirnflt the net profit from £15,000 to £24^00 

£f 1 1 C I I Itl - a 61 per emit rise." 

Holders <tf savtogs-related options 
m * | fl ft PH have even more flexibility. TJp 
■amM* l,ltl, to£3.000w«fiiofriiaresacqtih«d ' 
on the exercise of such options can 
’ be transfarteSsmmiaUy Into a 

* single company personal equity 
• plan." says Cohenu The transfer 
x w£D.be taxJiee provided it takes 

pace witihn 90 days ofexerdseand 
from then an 'the single-company 
7 Pep will give cmoplete protection 
against Incoma tax bn dividends 
“• and CGT on sale. " Unfortunately, 

- this privilege does not aimly to 

- holders of execotive options. 



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By SchAejrattdeDanedikha 


HEALTH 


Outside help for 
troubled workers 

A statistical portrait of employees 
today does not amount to a cheery 
picture. 

Consider that one in three 
marriages breaks down. One to 
seven people will have a degree 
of mental illness during their 
working life. One In ten employees 
suffers from an alcohol problem. 

These difficulties are not left 
behind when an employee comes 
to work. “Frequently stress fa 
domestic ttfe has knock-on e f fec ts 
at work," says Dr Michael Turner, 
chief medical officer at Texaco, 
the oil company. 

To help workers deal with 
personal and professional anxieties, 
more than 80 per cent of companies 
to the UK offer some form of stress 
counselling. About 4 per cent now 
use specialised external counselling 
services, known as Employment 


EAFs function as outstep shops 
for employees to phone for legal, 
-financial or psychological help. 
Each employee is given a telephone 
number where EAP staff are 
permanently on-calL Most services 
also offer fiace-to-face co unselling 
which can be arranged within 48 
hours of a phone calL 

The company pays for a specified 
range of services on a per capita 
basis and all employees and their 
families can use the SAP for free. 
Services cost about £18 to £45 

awmwTIy pw Atfip lnyw; 

. AD services are confidential. The 
employer may receive statistical 
feedback about employee up-take 
and types of services requested, 
bat individuals' who use the EAP 
are never identified.. 

Such anonymity helps employees 
who fear black marks on their 
personnel records if they discuss 
anxieties .with their managers. “IF 
people are going to receive 
counselling they do not want to 
have it from within the company," 
says Cheryl Mann, training and 
development consultant at Sun 
Alliance, the insurance company, 
where almost 20 per cent of staff 
use the services of Independent 
Counselling & Advisory Services, 
the company’s contracted EAP. 

EAPs are also able to draw upon 
a pool of counsellors, rather than 
depending on one or two company 
medical officers. ’The difficulty 
with having services in-house is 
that the nature of enquiries are 
very varied - financial, legal, 
domestic,” says Turner. “To find 
one person trim is an expert in all 
these areas is impossible. The point 
of EAPs is that they have many 
.experts.” 

ICAS, which has 45 EAP 
contracts, has 400 contracts with 
counselors around tiie country. 
Personal Performance Consultants, 
another EAP which serves 96 
companies, has 55 counselling staff 
and calls upon an additional 150 
freeJance therapists. 

Currently 10 to 20 per cent of 
employees to companies with EAP 
contracts phone for help at least 
once. Alistair Anderson, managing 
director of PPC, believes the 
number of employees seeking 
counselling help, as well as the 
number of companies contracting 
with EAPs, will increase sharply 
in the next deca d e. 

“There are a whole range of 
pressures in the workplace and 
tiie level of awareness of 
counseDfagand its value is 
Increasing,” he says. “Suddenly 
external counselling services are 
seen as the answer.” But external 


SPORT: LAURA THOMPSON 



Horses for 
courses 


e 


big 


h* 



ast Wednesday, on Derby 
Day at Epsom racecourse, 
I became a social revolu- 
i denary. I was walking 
[ back to the grandstand 
from the paddock when I discovered 
that my way through was com- 
pletebKbarxed.: Phalanxes of police- 
men had formed a square around an 
empty, open -car and were holding 
. up tbose .who wished to pa6s. There 
was a clear path back to the grand- 
stand but .this- was through the 
Member Enclosure. Here, too, the 
way was hatred. 

After a few minutes of enforced 
uamobtUty - flmM a throng of non- 
members, 1 confronted a security 
man,. “You -have got to let us 
through that emdosure,” I said. No, 
be craHfft do that We were not 
membere. : “We have just as much 
right to b® hew as they have. You 
cannot stop, us moving about the 
course just because somebody is 
feavtog.^--: 

"Tte Queai is leaving," he said, 
to a shocked and pompous tone: 
"listen,® I said, “there are about a 
huudred of ua and three of you. 
How 'are- you going to stop us?" 
Auh beaming to the crowd behind 
me. 1 waited: through the members' 
eoridsurej past the morning dress, 
the ttttteQBxy and badges 


T probably made a ridiculous fig- 


ure, getting fiery-eyed about my 
racegoer’s rights; but I frit like Wat 
Tyler, marching my band of peas- 
ants upon the nobffity- And yet not 
one of toe people that I was fighting 
for followed me into toe enclosure. 
They had, I think, been told too 
many times that they had no busi- 
ness being there. 

Most race meetings promote a 
glow of egalitarianism as all present 
submit themselves to the sport 

itselft they annihilate class differ- 

euces- But the big occasion race 
' meetings, those that attract the 
stars of royalty and their attendant 
satellites, just as surely propagate 

tb <nn. 

At the Derby, at Boyd Ascot, I 
find that instead of thinking about 
' horses, 1 am obsessively revolving 
around my mipd the question of the 
English social structure. There are 
few better ways of spending an 
afternoon than to fee atmosphere of 
worldly bonhomie which pervades, 
say, Newmarket or Goodwood; but 
the glamour meetings, which 
should be even more fan, are 
almost ruined by the feet that class, 
not racing, is toe central issue. 

Last week's Derby Hoy crowd was 
playing up to its various class ste- 
reotypes for all they were worth. 
Urn non-members that I bad tried 
to lead in revolution were swearing 
and shouting, wrenching the rings 


WORKING LIFE/SPORT 



services are not always perfect for 
flngnpawfwa "The potential downside 
of outside EAFS is that they do 
not know about the organisation.” 
says Prof Cary Cooper. Professor 
erf Organisational Psychology at 
the University of Manchester 
Institute of Science and Technology. 
"So they are treating the individual 
but they cannot see if there Is 
something grossly wrong in the 
or ganisati on that is causing 
illness.” 

Cooper, who is studying the 
effectiveness of EAFs in the UK 
for the Health and Safety Executive, 
believes psychologists with both 
diniml a nri occupational slrilTa 
win be trained to the future and 
be hired by EAPs. 

Improving the value of EAPs 
will no doubt be fueled by 
bottom-line considerations such 
as reductions to levels of sickness 
absence, which costs the UK around 
£27bn a year, and increases in 
employee performance. 

“Now ltoe managers are 
beginning to see connections 
between EAP and performance, 
rather than just seeing it as a part 
of the company's duty of care,” 
says Michael Reddy, chief executive 
of ICAS. 

By Motoko Rich 


Mind games 

Today is June 6, and here is your 
homily for the day. “Expand your 
perspective by ex panding your 
mfad v isualize in rich de tail. 
Involve as many emotions and 
feelings as possible.” 

There are plenty more where 
that one came from, 364 to be exact, 
(me for every day of the year in 
a handy pocket-sized volume that 
promises to help executives through 
life’s difficult mnrpffn ts 

Self help books for managers 
are two a penny, but Daily 
Reflections for Highly Effective 
People is a little unusual. Most have 
the virtue of offering clear guidance 
- do x, y, z, they say, and you’ll 
be successful By contrast, this book 
is so obscure that the reader may 
find it hard to decipher the “daily 
reflections”, let alone find a way 
of incorporating them into the 
working day. 

"Anything less than Win/Win 
in an interdependent reality is a 
poor second best that win have 
impact in the long-term 
relationship”, the book preaches 
for September a What on earth 
does that mean? 


It would be tempting conclude 
that you can publish any old 
rubbish these days so long as you 
claim on the dust jacket that it 
will make managers more 
auccessfuL However, 3m people 
can’t be wrong. At least that 
n umber , from the US to China to 
Germany, own a copy of author 
Dr Stephen R Covey’s most famous 
work, 7 Habits of Highly Effective 
People. This said all you needed 
to do was to acquire seven habits 
- including "begin with the end 
in mind " and “be proactive” - and 
the world would be your oyster. 

The latest work is aimed at the 
further millions out there for whom 
Hip earlier one was too long and 
heavy. It promises to provide the 
same “holistic sens e of personal 
effectiveness and purpose” in a 
more succinct format And those 
of us who doubt its worth, we must 
need toe book most. Dr Covey 
would no doubt tell us that we are 
sadly lacking that win/win habit 

Daily Reflections for Highly Effective 
People, By Stephen R Coney- Simon 
& Schuster. 369pp. £199. 

By Lucy KeDaway 


EATING OUT 


The ins and outs 
of al fresco 
dining in London 

During the last week of May you 
could not get a table outside In 
any London restaurant The 
weather was so cold that the few 
permanent outdoor tables were 
not laid out 

During the first week of June 
you could not get a table outside 
to any London restaurant but for 
a very different reason. Suddenly 
the sun shone, the temperature 
rocketed to 20 degrees C and 
everybody wanted to eat 
outside. 

These two consecutive weeks 
neatly encapsulate the dilemma 

facing any British restaurateur 

who wants to offer open-air dining, 
and any customer who wants to 
take advantage of those restaurants 
with relatively quiet pavements 
and secluded gardens. The British 
public, may be becoming more 
European in its eating habits but 
the British weather remains firmly 
British - unpredictable even in 
the short term. 

This unpredictability also makes 
it difficult for the restaurateur to 
know what to offer. When May and 
June are fine nothing can better 
a truly British meal of fresh 
asparagus, cold poached salmon 
and the first of toe summer’s 
strawberries with Devon clotted 
cream. The riii ewm a is how many 
to cater for. 

If the sun shines then everyone 
wants this combination. If it does 
not, then nobody orders it and a 
lot of unwanted food goes to waste. 
When, as I did as a restaurateur, 
you prepare 30 meals such as this 
for a restaurant that can seat 100. 
you are sure to please the first 30 
customers who will have ordered 
this by 13.15 - but you will 
disappoint many of the other 70. 

When the sun does shine there 
is a mad panic among cafe owners, 
restaurateurs and publicans to 
move every available chair and 
table with four stable legs out of 
doors and on to a relatively level 
piece of pavement It is, while it 
lasts, great fan but sadly illegal. 
When restaurants apply for a liquor 
licence the magistrates grant them 
on the basis of a defined licenced 
area within which drinks must 
be served. This naturally, takes 
account of the normal British 
ritmate not th ose hot days and 
balmy nights tha t sadly do not 
prevail for too long. 

What follows is a list of just some 
of the l/mdrwi restaurants, across 
a broad range of cuisines, which 
have tables outside or open to the 
air. It comes with a health 
warning - take a jacket or a 
cardigan!: 

Al Bustan, Wl, (235 8277), Alfred, 
WL (240 2566), Al Hamra, Wl. (493 
1954), The Brackenbury, W6, (061 
748 0107), Brasserie Rocque, ECS, 
(638 7919), The Belvedere in Holland 
Park . W8, (602 1238), Cafe Lazeez, 
SW7, (581 9993), Dan’S, SW3. (352 
2718), Daphne’s, SW3, (589 4257). 
Frederick’s. Nl. (359 2888), The 
Eagle. ECl, (837 1353). The 
Lansdowne, NWl, (483 0409), 
Montpeliano. SW7, (589 0032), Blue 
Print Cafe. (378 7031), Butlers Wharf 
Chop House (403 3403) and Le Pont 
de la Tout (403 8403) all SE1. 
Odette’s. NWl. (586 5486). The Ritz, 
Wl, (493 8181), Ransome’s Dock, 
SWU, (223 1611). The River Cafe. 

W6. (385 3344). The Rock Garden, 
WC2, (836 4052), Sofra, Wl. (493 3320) 
and Tutton's, WC2 (836 4141) 

By Nicholas Lander 


STYLE 


Shirt tale 

You have to be a bit careful with 
short-sleeved shirts at work during 
the summer wearing a collar, a 
tie and sleeves that end just above 
the elbow can make you look 
dangerously like the man who 
comes round to service the 
photocopier. Indeed, to some, a 
formal short-sleeved shirt that you 
wear with a business suit is a 
contradiction in terms. On the other 
hand, a short-sleeved business shirt, 
with its implications of 
transatlantic style, can make you 
look a real go-getter, if a go-getter 
image is what you’re after. The 
thing is, to chose a shirt with care- 

At one end of the scale, there 
is Littlewoods: they wfil let you 
have a shirt for only £8.50. or £6.99 
if you buy two or more - to white, 
colours and stripes. An Oxford 
weave with a button collar, comes 
cost £9.99 In white or blue and Is 
quite tastefaL The biggest problem 
is that all are made of polycotton 
mixture and are completely 
indestructible. You can never wear 
them out and throw them away, 
even if you decide you hate them. 

At the other end of the price 
scale, Paul Smith of Covent Garden, 
will do you something unique and 
stylish for upwards of £80. His soft, 
hand-stitched cotton and linen 
mixture shirts come with long or 



short sleeves, and with a variety 
of collars, buttons, flaps and 
mysterious Paul Smith details. A 
white, short-sleeved Paul Smith 
shirt worn under a jacket will be 
about as commonplace as a talking 
oyster, but every bit as desirable 
to rich exhibitionists. 

Then there is toe middle ground. 
Simpson’s of Piccadilly does its 
own-label white cotton shirt with 
front pocket and stiff collar for £35. 
Marks and Spencer, on toe other 
hand, hag a vast range of 
short-sleevers including, a plain 
easy-care cotton, or Oxford weave 
with a button collar (both at £19); 
a cotton-linen mix with button 
collar at £22£0 and a soft design 
in Italian doth, also at £22.50. 

Then again, there is always 
HDditch & Key, to Jermyn Street. 
At £55. their short-sleeved shirts 
are more than twice the price of 
the M and S variety, and with less 
choice of style. They are, however, 
extremely satisfying shirts, and 
not toe most expensive from this 
part of town. Their striped 
short-sleevers (blue, red and green) 
are ready-to-wear, but they will 
tailor you a plain white one from 
a longer-sleeved shirt at no extra 
cost All have robust collars, 
placket fronts, fine stitching and 
use the best cotton poplin. In the 
end. toe choice between M&S and 
H&K is between honest practicality 
and restrained luxury. Duck the 
decision: buy two of each. 

By Charles Jennings 



The Derby: a race capable of producing moments like the smooth explosion of acceleration from eventual winner Erbaab as be moved into a different dimension from toe horses ahead of him 


out of lager cans with formidable 
force and stripping off their shirts. 
One of them, a dangerously drunk 
girl in an unbuttoned suit, stumbled 
across the invisible electric fence 
which separated the grandstand 
from the members' enclosure. 
“Rosie!” screamed her beleaguered 
beau, "you cant go to there, you 
silly cow! You’ll get barged upT 
Meanwhile, the members were 
staring at Rosie as if toe were a 
seaside donkey feat had infiltrated 
the parade of Darby entrants to the 
paddock. There eyes were cold, fall 


of conscious superiority. They were 
in, we were not, and they were lov- 
ing it Every time I fell among their 
rigorous tailcoats and the elliptical 
resonance erf their squeak and bray, 
I felt diminished, down at heel, com- 
mon as muck. Every time I emerged 
from their territory Into the miasma 
of the grandstand. I felt like an aris- 
tocrat. Both feelings were com- 
pletely absurd, yet temporarily both 
were real. 

In everyday circumstances - at 
an everyday race meeting - neither 
set of people would conduct them- 


selves in such exaggerated fashion. 
But there is something about the 
segregation at these big events 
which has an almost fatalistic effect 
upon people, turning them into par- 
odies of their class as If there was 
no other way that they could 
behave. You think we’re hoi poDoi? 
Right, mate, we'll give you hoi pol- 
loL Upper class? Yes, my man, cer- 
tainly we are upper class. 

It is impossible to expect any- 
thing else, given the tWffarpn«> fa. 
the way that members and non- 
members are treated. I have 


attended Royal Ascot both in and 
out of the enclosure, and I have 
seen the metamorphosis of the 
course officials from camp comman- 
dants to cap doffers. I accept that 
members have paid more money, 
and that for this they are entitled to 
a little more luxury, but not to be 
treated as superior beings. 

It used to be that all England 
would go to occasions like the 
Derby for the joy of experiencing 
the race Itself. Now it seems that 
attendance is a more self-referential 
business, to which people reinforce 


meaningless ideas about themselves 
and play their part in a crude pag- 
eant How silly this is; and how 
much it detracts from the event 
which should be more important 
than the people that attend it Espe- 
cially an event which can produce a 
moment like the smooth explosion 
of acceleration from Erhaab as, his 
coat black and oily in the sun, he 
moved into a different dim e n si on 
from the horses ahead of him: the 
moment when the obsession with 
top hats and baseball caps fled the 
mind of every person present 



Canadian switch 


Mpy 71 A Www . 

AgW // hAMnatfandl 

\<W /I Iwwiiow 

/ // JBwrtched fta 

*—* London- ■ 
Toronto da0y service tram. 
Ctetwfcfcto fhuHuMri 
wrttms Bernard Sbnonht 
Toronto. 

C anadia n, in wMcfa 
American Airitom recently 
teoght a 33 per cent 
stake, wanted tba 
H u aUuuw atollwytyto 
cater for travellers wllb 
connecting ffigUi to end 
from eastern Europe, 

Africa and Asia. Its fHgfite - 
to Vancouver mid Calgary 
wW continue to operate 
from Qatwiefc for now. 


US-South Africa hnk 

A new aWrte, USAfrfca Airways, 
last week fnaugLratedaBnk 
between North America end 
southern. Africa, writesBemartf 
S&rian. ; 

i- The aWne vriff Wliefiy offer 
! twfcfcweeWy flights between- ' 
Washington DCs OtiCes Afrport' 
"did wfth a . 

reftjBSng stop in the Cape ' 

. Varde tstands. tt alms to expand 
Jafer to other US dties, as waS ' 
as courtries such as Namibia, 

. Zimbabwe and Konya. • ■ 
Tbeorty other tfiroctafr 
sovfee between Nor® America 
and Saotti Africa at prasentla 
operated toy South African 
Airways, with flights from New . 
Yak and Miami. Many travelers 
stiff 8y via Europe. 


Taiwarfseartfsquake 

Visitors to nembte parts of 
Tdmn tto iMdtitwuld 
contact its airthua dam if 
tfwym conccroed about 
any reprrcuidoni oftha 

st rong eorftquaini, . 

measnrtag &O on ttier 
n k Jitor sc sl c, wWcfa sfaoofc 
flu Wwd ymtonhy, wntoa ' 

Unt&ood. 

The a wttMp i to kWwId ' 
least kmm peimoRi Iqfumcf 
two, and triggered a ' 
la nd sB da Inrihe- northeast of 
the 6dnd and * Are to 
TaipeL : 

. The cah&wd near 

the coast towtSttm south 
of the north wtsni- county 
of Baa> ataw» m in B d h ni s to * 
Tafaet and other dflae. ' 



psifaEt.msv 

.conflnuetorafi 


MrtfcoBv 


visitors may find teweiijg : ‘ ' . 
«ottnd the country even more 

difficult than usaa >\ - T 
Stokes can suspend hcroial .. 

business throughout the country 

aid make &aveffing ha 2 ^dkja& ; : 
People Ignoring strikes can *. 
become targets for violence and 
cam or buses may be damaged" . 
cr destroyed. ■ : ■ 

There has been a marked * 
increase in nighMitoe arined . # 

' bardHry on mam road&faeiwem-' 
toga towns In recent iweeta ami - 
Iravelts ncd: racxxwmfe ti a fter 
dak.' "* 


Travel H .Albania ^ 

PuhBo onSar fa Mbmto has 7 

huiww s tf hottto. rw i t p i . ■ 

OjMtee adw toes tta ft hr host 
tolnmea guide outdde of 
Tirana, the capital. . 

’ 1 1— Iff 1 1 lain nm Itlpfi inirf 


NefMdltto AaodB 


Petrol etattonscan be fa» 


,a» nMm t to have Ml ... 
Jenjrcans oaf kmp |otahegrs> 
^tpimpetisrchahal. . 


More attantfan to safisy has .. 
been oriferad by CWrtese;duS - ■ 
evtatiorr officials after 'dozens of 
..neaMOKtecrtsttavebeen 1 
reported so far tirc year. • '■ <: “ 

■ The China News Service said 
yesterday that '‘several tensP of 
near-acddertshai occurred, . 
irvdoding arcraft golngoff the 

runway .or laridne at an angle. . 

abcraft wtegar brushing and 
engines “stopping jn mkisair; . 

China’s afrflneshave been 
trying to knprovtt their reputefion 
after a succession of crashes, fo*. 
t9^and.1993W»ed nearly 400 
peopto Tire government ■ 
regiiatory body f therCtvi ‘ * . 
Aviation Adr nfnfeimt ionof CWna, 
announced plans late last year 


* t TIMES MONDAY JUNE 6 1994 


.LMy weather In the leading business centres.^ 
Mon TU® W «* .? Ur 2* 


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Jenny Luesby examines the prospects for Air Miles now that BA owns the scheme 

T here is an office in X-7 yOO ’ll 1 €X rl C f\ T ■ Q T scheme, which incurs all of tht 

Crawley, Susses, that A. III • 1 I 1 (1 I I ^ V cost, but gets none of the reve 

deals in dream tickets. J nue ter the airline.” 

Every day it books The use of Air Miles as ar 


T here is an office in 
Crawley, Susses, that 
deals in dream tickets. 
Every day tt books 
2,000 of them, free, to destina- 
tions all over the world. 

The Air Miles company last 
year had a turnover estimated 
at £60m. Yet last month. Mr 
Keith Mills and Mr T.iam Cow- 
drey, the creators of Air Miles, 
sold their 49 per cent stake in 
Air Miles Travel Promotions to 
British Airways, which now 
owns the whole scheme. 

The a dminis tration of the 
scheme is complex. Companies 
pay the Air Miles company for 
vouchers; it pays British Air- 
ways for flights; British Air- 
ways earns revenue on. its 
unfilled seats; companies offer- 
ing Air Miles increase their 


market share; and customers - 
who save up points through 
the vouchers - get free flights. 

The appeal for BA may be tn 
the fact that only 8 per cent of 
the British population has 
begun to collect Air Miles. The 
rise has been rapid - for a 
product dreamt up seven years 
ago on a train from London to 
Liverpool - but the potential is 
huge. 

In Canada, unlike in the UK, 
an Air Miles scheme launched 
two years ago does not Include 
a frequent-flyer scheme, where 
regular travellers are awarded 
bonus flights. But Air Miles 
are now being collected by 37 


per cent of Canadians. 

BA aims to invest heavily in 
attracting loyalty among gen- 
eral consumers, with Air Miles 
issued against an increasing 
range of products. The scheme 
is exclusive to companies 
within a product area - with, 
for example, only one petrol 
retailer or one credit card offer- 
ing Air Miles. But the variety 
of products in the arfigmn is 
still narrow. 

Air Miles will not renew con- 
tracts With nrmipnnieg if it has 
received complaints about 
their quality of service. 

There have been fears that 
growth in Air Miles would be 


constrained by the number of 
empty airline seats. This is not 
the case, says BA. The 2.751m 
Air Miles held by customers In 
the UK would fill just 10 per 
cent of Its empty seats, it says. 

Meanwhile, Messrs Mills and 
Cowdrey have retained their 
intellectual copyright, and con- 
trol over the international 
operation. In September, they 
plan to launch Air Miles in 
another European country, 
thought to be the Netherlands. 

“The astonishing thing about 
Air Miles is that so one has 
copied it,” says Mr Mails. “It 
has so much more going for it 
than a standard frequent-flyer 


scheme, which incurs all of the 
cost, but gets none of the reve- 
nue for the airline." 

The use of Air Miles as an 
incentive for employees is an 
Incidental sideline, says Mr 
Mills . Air Miles issued by 
employers count as a taxable 
perk, whereas there are no 
plans to tax ordinary Air Mn**g, 
which are classed with other 
consumer incentives such as 
lOp off, or a free glass. 

In the meantime, he says, he 
still gets a tingle when he sees 
people at aiport check-in count- 
ers with Air Miles baggage 
tags. “First-time users never 
cease to be astonished and 
delighted that it works. There 
are no catches, it is easy, they 
get zeal tickets and they pay 
no money,” he says. 


Airports: where the price is highest 



Tokyo ‘dearest airport’ 


Airport chamea Index 
Rank Airport 

1 Tokyo 

2 Wow York JFK 

S Wow Jewrey Newark 

4 Frankfurt 

5 BwSn 

31 London Hoattvow 

34 London Gatwtak 

ScutcIVncnMc^m 


Special drawing 
rights' 


’ Umtofcurtwwyusad 
by Intamnlocial Monatarr 


By Paul Betts 

Tokyo's Narita airport has 
become the world’s most 
expensive, while London’s 
Heathrow and Gatwick remain 
amnng the cheapest 

Heathrow, the world’s big- 
gest international passenger 
airport, continued to slip in the 
annual index of charges at the 
world’s top 40 airports, pub- 
lished by the UK Travers Mor- 
gan consultancy group. It fell 
to 31st position from 24th last 
year and 18th in 1990, when the 
first review was done. 

Airports are ranked accord- 
ing to landing , parking , passen- 
ger and terminal navigation 
charges. The 1994 review takes 


into account changes in the 
world airline fleet: an increas- 
ing number of noisy airliners 
such as DC-lOs and 737-2G0S 
have been replaced by quieter 
jets. This trend will intensify 
during the next 10 years as air- 
lines seek to avoid paying sur- 
charges for noise. 

Noise charges at Berlin's 
Tagel airport had placed it at 
the top of the index last year. 
It has now slipped to fifth. 

London’s Gatwick airport 
dropped to 34 from 30 last year. 
The competitive charges at the 
two London airports, operated 
by the privatised BAA group, 
reflect the UK Civil Aviation 
Authority’s pricing formula for 
them. Dublin dropped four 


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BUSINESS TRAVEL 
CLASSIFIED 

appears every Monday in the Financial Times 
Do not miss the market-place for Business Flights, 
Business Travel Agents and any other services I 

that will ease your journey. 

Although eraynanonaWc precntfiao tusbeen lakeicrw responsibility em be for ; 

«nd/or Jorentmodanon ogered toough thqt cofcanns. Rgftdea atu acMara to j 

mnerewy measures brim cremng Into my umci anangemenis. 


places from 15 to 19, reflecting 
in part a discount on charges 
for flights fnt.n the UK. 

Charges at Heathrow's matn 
European rival airports are 
higher. F rankf ort has become 
Europe’s most expensive air- 
port and ties fourth In the 
index, Amsterdam is ninth and 
Paris Charles de GauQe 11 th. 

“Overall, we are seeing a 
trend of airports introducing 
new charges, with the excep- 
tion of BAA, rather than 
increasing existing charges, ” 
said Mr Peter Mackenzie- Wil- 
liams, Travers Mbsgan princi- 
pal aviation consultant. 
^Review of. Airport Charges 
1994, £335 from 2 KSUck Street. 
Sag’s Cross. London Nl 9JJ 


Avoidance 
tactics 
in Manila 

I t does not take long for vis- 
itors to Manila to realise 
they have arrived in one of 
Asia’s most violent societies. 

Uniformed men brandishing 
pump-action shotguns stand 
guard outside high-street 
banks. Bars and restaurants 
remind patrons not to carry 
gmiK inside, a sign on the door 
of one bistro in tire Philippine 
capital's mam business district 
says politely: “Kindly endorse 
your deadly weapons to the 
house detective." 

The reputation of the Philip- 
pines for violence is well- 
founded. But as in Washington 
or Bangkok, the victims of 
shootings or WriTiappmg a are 
usually local residents, rather 
than visitors. 

Nevertheless, foreigners 
should be cautious when arriv- 
ing at the Nlnoy Aquino Inter- 
national Airport Visitors have 
faced demands for money from 
corrupt customs officials or 
been robbed by rogue taxi-driv- 
ers. The safest bet is to take a 
car provided by your hotel 
(they Leave from the “hotel 
counter” outside the terminal) 
or an Avis limousine. 

Other hazards include 
sophisticated conmen (and 
women) who invite you to 
drink a cup of enffea or Coca- 
Cola, into which they pour a 
soporific drug; victims of this 
method of robbery, also used in 
Singapore and Bangkok, wake 
up hours later without their 
wallets, if they wake up at ati. 
Yet everyday life in the traf- 






DuB l Rin 

Manila: a violent society, though the streets tend to be peaceful 


Ac-clogged streets of the town- 
ships that make up Metro-Ma- 
nila is generally peaceful. Mak- 
ati, the business district, is 
particularly dean and safe. 

A p enchant for guns is only 
one aspect of a society that has 
absorbed much from the US 
and Spain, its two colonial 
powers. The “Jeepney”, the 
ubiquitous, workshop-assem- 
bled vehicle, is loosely based 
on the front end of the US war- 
time Jeep. Festooned with bau- 
bles, bright lights and Catholic 


slogans, it is used for both pri- 
vate and public transport 
A refreshing change from 
some other parts of Asia is the 
variety of newspapers. You can 
usually find something enter- 
taining to read in a traffic jam, 
while wondering whether you 
dare roll down the window and 
give money to the street chil- 
dren tapping on the roof of 
your taxi. 

Victor Mallet 



ARCHITECTURE 


On show at the RA: the tip 
of a fascinating iceberg 

Colin Amery reviews work at The Summer Exhibition 

A rchitecture is at the 
centre of things at 
the Royal Academy 
Summer Exhibition 


A rchitecture is at the 
centre of things at 
the Royal Academy 
Summer Exhibition 
this year. Not only do the stri- 
king exhibits pytei^j intn the 
Central Hall so that they are 
the first things a visitor sees, 
but they also occupy a key 
room that is on everyone's 
route through the exhibition. 

This strong presence of 
architecture cannot be uncon- 
nected with the fact that the 
new president of the Royal 
Academy is Sir Philip Dawson 
- from the well known archi- 
tectural firm of Arup Associ- 
ates. He has dearly brought a 
discerning influence to the 
selection of exhibits and made 
them representative, not just 
of the work of the architect 
academicians, but of the state 
of architecture in Britain 
today. 

There are 18 architect acade- 
micians, including one honor- 
ary foreign one - Jom Utzon - 
the architect of the Sydney 
Opera House. All the leading 
architects of the curr ent gener- 
ation are members: Sir Nor- 
man Foster, Sir Richard Sog- 
ers, Richard MacCormac and 
Mirhflgl Hopkins, «r»ri Edward 
CuDinan. The older generation 
is also there: Sir Philip Powell 
Sir Denys Lasdun, Sir Leslie 
Martin and Colin St John Wil- 
son. 

The annual, opportunity to 
gyhflri* the work of these lead- 
ers, mixed in with a cross sec- 
tion of the work of current 
practice, does give a dear pic- 
ture of the profession at work. 
It is an opportunity for the 
public to see architecture at 
work - and as Luge numbers 
do flock to the Sommer Exhibi- 
tion it is an opportunity the 
profession should seize ener- 
getically. This year the stan- 
dard is high but, as is the 
every year, the visitor Is not 
helped by the pedestrian dis- 
play awl the lack of informa- 
tion about the exhibits. It is 
not as easy to exhibit a work of 
architecture as it Is to show a 
painting or a sculpture. You 
are not looking at the real 
thing, only a representation at 
a small scale in model or draw- 
ing form of a full-scale build- 
tog. This needs Interpretation 
and architects (or is it the 


A 





Hanging in the BA: The 


Academy?) resolutely refuse to 
do this. The result is that what 
you are shown at the RA is 
just the tip of a fascinating but 
nearly Incomprehensible ice- 
berg- 

The first architectural 
exhibit to cpfeh the eye is what 
looks like a peepshow on the 
left hand wall erf the Central 
Hafi. Look into the Olummated 
box and you will see the 
maquettes of the work of the 
artists who worked with the 
architect Richard MacCormac 
on the new residential bunding 
for St. John's College, Oxford. 
You are looking at miniature 
versions of an engraved glass 
wall and a sculpted Iron 
screen. It is intriguing but 
makes little sense without 
some representation of exactly 
how they were used in the 
buildings. A beautiful model of 
elegant steel staircases by Eva 
Jiricna does, however, stand 
alone, because it is immedi- 
ately comprehensible and can 
be enjoyed in exactly the way 
you would enjoy a glimpse 
inside a futuristic dolls bouse. 

Models convey information 
quickly and effectively - the 


fed Movement by Ben Johnson, 

model of a proposal for new 
Thames Bridge by the Spanish 
architect Santiago CaLatrava - 
is of such clarity and elegance 
that you wish it could be slung 
across Thames at Bankside 
tomorrow. Another brilliant 
model of a scheme that looks 
very promising indeed, is the 
eyeshaped building far Ruskin 
Library at the University of 
Lancaster. Even to model form 
it does have a sense about it of 
the stones of Italy - a fragment 
of Venice reinterpreted for the 
campus. 

A less comprehensible 
model but one that does work 
as a tortured work of art is the 
representation by Daniel Lihes- 
ktod of his extension to the 
Berlin Museum with its contro- 
versial Jewish Museum, The 
model has an uncanny resem- 
blance, presumably intentional 
of a shattered Nazi swastika. 

Sir Norman Foster hag also 
designed what he calls, a "Cen- 
tre de la memoirs" - a tribute 
to victims of the Nazis in the 
town of Oradour-snr-Glane to 
France. It is sublimely simple 
and less tormented than the 
Liheskitiri worts for Berlin. A 


circular pool reflects the sky 
and is surrounded by a curved 
wall carved with the tragic vic- 
tims’ names. Anyone doubting 
the ability of Sir Norman, to 
achieve an architectural tri- 
umph in the most minimal 
way, only has to leave the 
Summer exhibition and take 
the glass lift to the Sackler 
Galleries to the Academy Itself. 
Perhaps less profound but 
equally elegant is the little 
school In France, the Lycde 
Albert Camus at Frigus that is 
shown in photographs. 

British architects working 
abroad would be a good subject 
for the next Royal Academy 
architectural erhUiiHrm. ft is a 
tribute to British talent and 
living proof that architecture is 
an international art that so 
man y good architects from, the 
UK now work worldwide. 
Offices for the Max Planck 
Institute in Munich by John 
Partridge, a stadium in Johan- 
nesburg by Arup Associates, a 
competition design for the the 
new Royal Library to Copen- 
hagen by Paul Koraiek (did it 
win? We are not told), and a 
monorail station at Wuppertal 
in Germany are only some of 
the examples shown in this 
year's show. Of course they 
can all be reached from Britain 
via the Channel Tunnel. A 
Painting by Br endan NeUand 
and a model by the architects 
G rims haw and Partners of 
their Waterloo Terminal show 
the high quality and architec- 
tural excitement we can expect 
when the trains start their sub- 
aqueous journeys. 

This year's Royal Academy 
Summer Exhibition to a dem- 
onstration of the hig h quality 
of work that is being achieved 
by British architects. I hope 
that the architect President 
wan his ambitious plans for an 
Archite cture Centre to what is 
currently the Museum of Man- 
kind will start closer to home 
and make the small changes to 
the architectural display at the 

Summer Exhibition that will 
make it immediately more 
accessible. The projects need 
dear displays and careful cap- 
tions, architectural models do 
not work when hung as pic- 
tures, and photographs of 
build ings do help. Over to you 
Sir Philip- 
















FINANCIAL TIMES MONDAY JUNE 6 1994 


PEOPLE 



Prodi 
pets bn his bike 

* \ Robert Graham reviews the achievements 
5 ; of the departing chairman of IRI 

V»s _ .. . . ■ ■ ■ 

enlist him as a figure around 
which to boOd a new 





.omano . Prodi is 
demob happy, having 
plucked up the cour- 
age to announce Ms 

resignation from the chair man. 
ship of IRI, Italy's huge debt- 
ridden- state holding company. 

It was always questionable 
whether he would serve under 
the new Berlusconi govern- 
ment, In such a hot seat he 
would have guided the biggest 
chunk of the planned privatisa- 
ttons. But be took Ms time in 


The moment he chose came 
last week when the IRI board 
-1 approved the 1993 balance 
4*1 sheet -with record losses of 


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i LliUSObn «8.4bn). Today he 
ghegtofl a brief holiday to cele- 
-Mb- 25th wedding anni- 
^ •warsary .hut will return fia an 
jfctoterimVrola until the share! 
holders’ meeting on June 28. 7 
. “Therewas no confrontation 
With. Berlusconi,” insists' the 
SfrggaiMflrt economics professor 
Bole «na. The two Inf or- 
_i discussed his tenure at 
last -autumn when Berios-: 
... atUI xah Mb Finlnvest 
lempira and =■ had hot 
an interest in politics. 

, — .theft/. Prodi -told the 

mate pramierhe wasnotcon- 
a fanfeistay. 

^Todhlidfijob propertynow 
wcwldraqulre staytog-om for 
some ftvevyears.? -Prodi .wants 
to do other: things like return 
to his natiws^Bdlogna, ride his 
and look after his eco- 
thlnk - tank, Nomisma. 
He also, whnts to concentrate 
an 01m of his “dreams” - the 
w: t. creation of an institute . to 
export Italy’s successful devel- 
- opment rf mArifanmigpri com- 
panies to developing countries. 

Some colleagues say he is 

... hwting hie thtm hgfirvre ontoring 

. politics, hut he Is coy about 
1 .. admitting this. Several times 
. 7 during file past two years of 
.. [ transitions^ politics, Prodi, ' 
/who is close jto the former 
. Christian Democrats, has been 
f mentioned as a possible pre- 
mier. Since- the election, sev- 
eral of his Colleagues in that 
party have .tried in. vain to 


centre 

party to oppose Forza Italia. 

He is smart enough to realise 
that Berlusconi and his right- 
wing coalition government 
cannot be challenged in the 
short term. Asked how long 
Berlusconi's honeymoon will 
last, he chuckles: “His popular- 
ity depends on whether or not 
Italy wins the Football World 
Cup.".. 

IRI for him is already In the 
past tense: “Mine was an emer- 
gency administration, brought 
in a year ago at the request of 
the Ciampi government . . .1 
was given a completely free- 
hand, and had Clampi's full 
; support It is the right moment 
to change." 

Unsaid - but obvious is the 
fact that Prodi would have- to 
work with a government 
whose mindset he does not 
know and whose various com- 
. pooents maty be, pulling in dif- 
ferent directions. - - 

HO would have risked being 
caught between those who 
want to privatise and wind up 
tiie state holding as quickly as 
possible and others, like the 
neb-fesdst MSI/National Alli- 
ance, who are nostalgic about 
retrinihg'a strong state pres- 
ence in the economy - IRI was 
-after' all founded in the 1930s 
. by their hero Mussolini 

-Prodi was previously chair- 
man of IRI from 1982 to 1909. 
But .his rote this past year has 
been, very different from what 
it was then. He found himself 
frustrating^ fettered at every 
turn; hy . politicians who farvari- 
ably placed political criteria 
above business sense. 

"It's been a very creative 
year " he says with a hint of 
self-congratalation. He feels he 
has laid down the the essential 
strategic hues for fill's future 
- “progressive break-up 
through privatisation”. 

. Prodi is not without his crit- 
ics, but few would deny his 
skill in tackling the dismem- 
berment of what was until 
recently considered an 
untouchable institution. In 


Italy it is one thing to talk 
about slimming down the pub- 
lic sector - quite another to 
translate this into action and 
tackle the vested interests. 

This time last year the turn- 
over of companies under the 
IRI umbrella was equivalent to 
5 per cent of Italy's GDP. By 
the end of this year, especially 
with the privatisation of Stet, 
its telecommunications arm, 
the proportion will have been 
halved. Privatisation revenues 
over the past 12 months have 
been IAQOGbn. 

“It is easy now to forget the 
tremendous scepticism only a 
year ago surrounding oar 
plans for privatisation. Many 
said privatisation wouldn’t 
work; They said people won't 
come forward and buy shares: 
others, said the operations 
wont be transparent. No one 
believed we would sell off oar 
entire stake in the banks." 



D 


espite such scepticism, 
be claims a new share- 
owning culture has 
hewn created. “Milan has been 
turned into a modem stock 
exchange," he says, . refishing 
the Idea of days when recent 
turnover has exceeded that of 
any other European bourse. 

“You had to begin privatisa- 
tion of banking and finance. 
No other European countries 
allowed over 85 per cent of the 
banking and financial system 
to be held directly and indi- 
rectly by the state. You have to 
begin here if you want a more 
pluralistic system.” 

The b anking privatisations 
he conducted - Credito I tali 
ano and Banca Commercial e 
Italians (BCD - are a sore 
topic. He cannot i^mcaa l a cer- 
tain bitterness about the way 
be failed to persuade the previ- 
ous industry treasury min- 
isters to agree to introduce leg- 
islation which would have 
produced genuine public com- 
panies that protected the role 
of small shareholders. 

This left the way open for 
Mediobanca, the powerful and 
secretive Milan merchant 


bank, to establish a dominant 
position in the privatised Cre- 
dito and Bd using its tradi- 
tional foreign and Italian 
allies. The battle had been well 
signalled in advance. Prodi had 
already rejected a closed offer 
from Enrico Cuccia, the octoge- 
narian honorary efrairmap . to 
take over at least one. 

“At least through privatisa- 
tion, we got more money than 
Mediobanca offered us,” he 
says in consolation. And adds 
defensively: “The present situ- 
ation with Mediobanca exercis- 
ing such control can only be an 
intermediate one." He believes 
other merchant banks can be 
formed by recruiting interna- 
tionally to rival Mediobanca's 
near-monopoly position. 

The disposal of SME, the 
foodstuffs group, which he 
inherited, has also been messy. 
Part of the group, the canned 
foods side, was sold to a 
heavily under-capitalised con- 
sortium which has since been 
obliged to call in a white 
knight in the form of contro- 
versial financier Sergio Crag 
noth. Haul Gardini's the for- 
mer right-hand man. 

“We got a good offer and the 
initial tranche of the payment 
was backed by bank guaran- 
tees. How could we refuse?" 
Prodi says of the original con- 
sortium which has now effec- 
tively been disbanded. 

On the disposal of industrial 
assets, he has managed to 


accelerate the reorganisation 
of Eva, the loss-making state 
steel group, and hopes during 
the current month to be able to 
settle the disposal of the spe- 
cial steels arm. Here Krupp has 
emerged as a front runner In a 
consortium with the local 
group, Riva. 

“T have nothing against for- 
eign groups faking advantage 
of privatisation - although I 
think here as elsewhere in 
Europe, governments are anx- 
ious to safeguard against for- 
eign ownership of utilities... 
Nevertheless, here one has to 
be careful of a backlash 
against foreign ownership. In 
particular there are problems 
at a local/regional level in 
Italy; and the trade unions 
remain suspect of foreign own- 
ership.” 

He feels the most Important 
signal the Berlusconi govern- 
ment can give is to respect the 
existing timetable for privatisa- 
tions - notably for Stet and, 
outside HU'S empire. IN A. the 
state insurance group. At the 
same, time he says this means 
introducing early legislation to 
allow the Rome Airports 
Authority and the company 
running the Autostrada toll 
roads to be fully privatised. 

But an equally important sig- 
nal will be the person selected 
.to replace him. He observes 
dryly: “I don’t think Berlusconi 
has marie up his mind about 
my successor." 



C/2 

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in i nr \ t\y.s 


'Hopeless 
romantic’ for 
Seagram 

Edgar Bronfman Jr epitomises 
both the benefits and the 
drawbacks of being bom into 
a rich and powerful business 
family, writes Bernard Simon. 
Without his Lineage, it is 
doubtful whether Bronfman 
could have rocketed from 
being a New York high-school 
drop-out set on a career in 
Him. making and SOQg- Writing, 
to chief executive of one of 
the world's biggest beverage 
companies at the age of 39. 

Bronfman replaced his 
father, Edgar Sr, as ceo of The 
Seagram Company last week. 
But having reached the top, 
be now faces the tough task 
of proving that he deserves 
to be there. 

Outsiders can be forgiven 
for wondering whether show 
business remains Bronfman’s 
first love. Several of his closest 
friends are from the 
entertainment world, as was 
his first wife. “Beneath a 
veneer of reserve, Edgar 
Bronfman Jr is a hopeless 
romantic,” observed a recent 
profile in New Yorker 
magazine. 

The depth of Bronfman’s 
attachment to Hollywood has 
become relevant since he 
spearheaded Seagram's 
purchase over the past 16 
months of a 149 per cent stake 
in Time Warner, the 
en tertainment and 
communications conglomer ate. 
He asserted last week that “the 
reason for Seagram's interest 
in Time Warner had nothing 
whatsoever to do with my 
personal ambitions beyond 
my role as a steward for 
Seagram's shareholders" . 
Seagram insists that it has no 
plans to raise its Time Warner 
stake beyond 15 per cent 
"There is nothing wrong, in 
my view, with anyone being 
interested in what is clearly 
the fastest-growing, most 
global industry in North 


America,” Bronfman said. 

Seagram has been a 
Br onfman fiunily business 
since 1928. Edgar Bronfman 
Sr, who turns 65 later fids 
month, remains chairman and 
his brother Charles 
co-chairmen. Edgar Jr's elder 
brother Sam heads Seagram's 
US wine division. But the new 
ceo is also expected to lean 
heavily on a number of 
non-family members in 
Seagram's upper ranks. The 
most influential is Stephen 
Banner, a New York lawyer 
hired three years ago as 
Seagram’s senior executive 
vice-president 

Ellwood marks 
Visa’s card 

Another leading figure from 
the UK retail hanking industry 
has emerged at the top of an 
international payment 
organisation, writes Richard 
Waters. Earlier this year, Gene 
Lockhardt took over as chief 
executive of MasterCard. An 
American, Lockhardt was 
behind the launch of Midland 
Bank's First Direct, which 
pioneered telephone banking 
in the UK. 

Now Peter Ellwood (below), 
former boss of Barclaycard. 
has been selected as part-time 
chairman of Visa, the big 
brother of the payment 
organisations. 

The choice of Ellwood - 
presently chief executive of 
the TSB Group - hints at 
where the future of Visa may 
lie. In 1989, exactly half of 
all payments made through 
the system were in the US; 
last year, that had slipped to 
42 percent 

Over the same period, the 
European share climbed three 
points, to 34 per cent Though 
growth in plastic payments 
in Europe has sagged with 
its economies, it still presents 
a better medium-term growth 
prospect for the payment 
organisations. 

Ed Jensen, Visa’s chid' 




13 


executive, seemed to 
acknowledge as much, paying 
tribute to Ell wood’s “vast 
European experience”. A 
little-noticed announcement 

the same day confirmed it; 
Visa, it said, was setting np 
its first European product 
development office, to tailor 
its products for the European 
market 

Ell wood’s selection, after 
seven years under Henry 
Benacerraf, president of the 
Banco Union of Venezuela, 
completes a sweep of Visa’s 
top echelon. Jensen himself 
took over from ten-year 
veteran Charles Russell earlier 
this year, while Carl 
Pascarella was only recently 
selected to head the US 
operation, where Visa has 
been losing ground to 
MasterCard. 

Moore inherits 

stirred pot 

Pity Eugene Freedman, writes 
Richard Waters. The chairman 
of Coopers & Lybrand in the 
US since 1991, he has had a 
lot to contend with: a weak 
economy in which many 
companies cut spending on 
accountancy and consulting 
services, sagging profitability 
and the need (never popular 
in a partnership) to slash 
partner numbers. An abrasive 
style didn't help, making him 
many enemies inside the firm. 

Life should be easier for 
Nicholas Moore, the man just 
elected by Coopers' partners 
to take over when Freedman 
retires in October. A 
52-year-old Californian, Moore 
has an altogether more 
diplomatic manner. Refusing 
to be bounced into 
commenting on Freedman's 
style, he will say only: "He 
stirred the pot, and we will 
be forever grateful to him for 
making some difficult 
decisions.” 

With the US economy now 
growing strongly again, 
Coopers' revenues are up 
around 8 per cent in the 
current financial year (which 
ends in September), double 
the rate of growth of a year 
before, says Moore “Business 
is looking better than it has 
for a number of years, 
especially in the consulting 
line." 

For Moore, the first and most 
important job will be to rebuild 
morale. The downsizing has 
had some impact on the 
psychology of partners,” he 
says. “My number one 
objective is to rally partners 
and move them forward.” 


Victor!* 





-DAY 


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AGOTHEY 
WERE THERE.V 
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cases where state assistance is inapplicable, 
inadequate or unable to meet the 
immediate need. 

Your donation, covenant or legacy will 
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Please help them in their hour of need. 


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ms aKOAL TIMES MONDAY 


FINANCE TIMES SURVEY 


CANADA 


Monday June 6 1994 


M ost nations only 
dream of emulating 

Canada’s recent 
achievements. How many, 
after aQ, can boast that they 
have signed free trade agree- 
ments with their biggest trad- 
ing partner and with one of the 
world’s most vibrant emerging 
economies; that they have 
pushed inflation down virtu- 
ally to zero; changed govern- 
ments after a free and peaceful 
election; and, to cap it all, pro- 
duced North America's cham- 
pion baseball team two years 
in a row? 

Canada haa done all tbese 
things, and is starting to reap 
the rewards. Before the US 
Federal Reserve began tighten- 
ing monetary policy in Febru- 
ary, Canadian interest rates 
had slid to their lowest level in 
30 years. Equally significant, 
the gap between Canadian and 
US interest rates was at its 
narrowest in decades. With 
exports leading the way, the 
economy is on track, at least 
for the time being, for a steady, 
non .inflationary recovery. 

At the same time. Canadian 
workers’ productivity has 
improved dramatically. Compa- 
nies have sharpened their com- 
petitive edge, broadening their 
horizons in the US, Mexico, 
Latin America and south-east 
Asia. 

Canada also deserves credit 
for at last starting to tackle 
some of the structural handi- 
caps which for years have kept 
the economy from reaching its 
full potential 

One is the generous unem- 
ployment insurance and wel- 
fare system which has kept 
Canadian cities remarkably 
free of beggars and slums, but 
has raised public sector deficits 
and trapped thousands of 
able-bodied people at the bot- 
tom of the social ladder. The 
new Liberal government, 
which came to office in last 
October’s general election, -has 
launched a vigorous overhaul 
of the once-sacred social secu- 
rity programmes. 

The government plans to 
unveil reforms within a year 
which are likely to link bene- 
fits more closely to training 
and work. In a remark which 
would have been unthinkable 
even as recently as last year’s 
election campaign. Mr Jean 


A weary wait for 
Quebec’s verdict 


The economy is on the mend, but the political scene 
is becoming more stormy, writes Bernard Simon 


Chrftien, the prime minister, 
observed in mid-April that "it's 
better to have (people) at 50 
per cent productivity than to 
be sitting at home drinking 
beer”. 

Meanwhile, the 10 provinces 
are inching towards an agree- 
ment to rti<mwTitip the perva- 
sive non-tariff barriers which 
have kept British Columbia 
wine out of Ontario liquor 
stores, and New Brunswick 
workers from Quebec construc- 
tion sites. A growing number 

nf influential Canadians nwlla* 

that their education system is 
badly in need of repair - 
though progress so for in fix- 
ing it has been slow. 

Regrettably, these signs of 
renewal do not tell the fall 

story of Canada to. spring 1994. 

A gloomier dimension, is evi- 
dent in the stunning results of 
last October’s general election. 

The Liberals won a comfort- 
able majority, returning to 
office for the first time since 
1964. But Canada’s two other 
national parties, tiie Progres- 
sive Conservatives (which had 
won the two previous elec- 
tions) and the left-of-centre 
New Democrats, were virtually 

annihilated Despite gaining 16 
per cent of the popular vote, 
the Tories won just two seats. 

The opposition benches are 
now filled by two regional par- 
ties which did not exist seven 
years ago, and whose policies 
are the Antithesi s of the quail- - . 
ties of compromise and toler- 
ance for which Canadians are 
justly famous. 

The Bloc Quebecois, whose 
avowed priority is to turn Que- 
bec from a province of Canada 
intn an independent country, 
holds the incongruous titlp of 
Her Majesty’s Loyal Opposi- 
tion. 

The Reform party, all but 


Jean ChrMon, the prime mMstan 
tries to avoid confrontation 


one of whose MPa come from 
the four provinces west of 
Ontario, wants to scrap 
national bilingualism and 
opposes any special deal with 
Quebec which might prevent 
the francophone province from 
breaking away. Reform's eco- 
nomic policies are well to the 
right even of the defeated Con- 
servatives. 

The two new opposition par- 
ties have undeniably brought 
some fresh air to Canadian 


IN THIS SURVEY 


Economic paHdea ; Key fads; Nafta; 
provfheM trade barrios Page 8 
, Foteign paticy. prime minister pro- 
filed; nuclear Industry Pagan 
Quebec; muUktatfanafs; so del Secu- 
rity ■' Page IV 


politics. The BQ has so for 
been the more effecti ve of the 
two. Although its MPs spend 
most of their time as Quebec’s 
cheerleaders in Ottawa, some, 
have also been thoughtful 
clitics of national policies, 
especially of the proposed 


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cuts in serial programmes. 

Reform’s penny-pinching 
MPs seldom allow a Question 
Period to pass without politely 
reminding the liberals of tin 
long shadow cast across Cana- 
da’s economic prospects by the 
towering budget deficit. The 
foderal ifpflrft naaffhwH a tgoorfl 
C$45.7bn, or 5.4 per cent of 
gross domestic product, in the 
year to March 31 1991 

Aside from the occasional 
KTcmrreth. the governing Liber- 
als and the two opposition par- 
ties have yet to lock horns on 
their profoundly different 
visions of Canada. Mr Chre- 
tien, for his part has so far 
sought to avoid confrontation 
on the Quebec issue, in favour 
of setting the new govern- 
ment’s economic, social and 
foreign affairs a gcnHa 

The political scene is becom- 
ing more stormy, however, as a 
provincial election draws 
nearer In Quebec. The vote, 
which win most likely be held 
in September, will determine 
whether fiwnaifa mnst endure 
yet another period of hand- 
wringing and navel-gazing 
over the future of Quebec. 

A victory by the separatist 
Parti Quebecois. the BQ’s pro- 
vincial cousins, would pave the 
way for an unwitting period 
lasting at least a year, and 
probably much longer. 

The PQ, which currently 
teaflu in opinion polls .in .Que- 
bec, plans to start the break- 
away process immediately 
after the election. It has prom- 
ised to hold an independence 
referendum within 12 months- 

The separatists have spread 
a soothing message, reassuring 
Quebeckers that independence 
would pHmmnto the inefficien- 
cies of a 10-province federal 
system while maintaining the 
benefits of the North. American 




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Toronto: the CN Tower and Sky Dorns 


free trade agreement and dose 
economic ties with Canada. 

Prop onents Of TMUn pal ii}ilty [ 

led by Mr Daniel -Johnson, 
Quebec’s new liberal premier 
(with the federal Liberals in 
the wings), .are using a differ- 


ent tactic from earlier constit- 
utional wrangles. During the 
1980s, federal Tories and 
Quebec Liberals pandered to 
Quebec nationalism by 
promising greater autonomy 
for the province within the 


Canadian federation. 

But Mr Johnson has taken a 
more aggressively federalist 
approach. He has told Que- 
beckers that the best way to 
create jobs and to safeguard 
their fixture Is through a 


strong, united Canada. 

Business leaders generally 
endorse that view, but are ner- 
vous about speaking out. 
Those that have raised their 
voices in recent years — includ- 
ing Royal Bank of Canada, the 
country’s biggest financial 
institution, and most recently, 
Johnson & Johnson, the US 
healthcare products group - 
have found themselves accused 

of blackmail 

The conventional wisdom in 
Montreal is that, while many 
Quebeckers are keen for a 
change of government after 
miw yeara of Liberal, tula, they 
win not be willing to take the 
Hindi bigger gamble of break- 
ing away from Canada. 

But the longer the squabble 
over Quebec’s future contin- 
ues, the greater the chances 
that tbe separatists will even- 
tually prevail. With defenders 
of a strong, central govern- 
ment thin on the ground in 
recent years, the transfer of 
one power after another from 
Ottawa has seemed almost 
inevitable. 

Outside Quebec, the willing- 
ness of Canadians to keep 
fi ghting for a nnltea country 
cannot be taken for g ran t e d. 

Many English-speaking 
C ana d ians have become weary 
with the bickering, now span- 
ning almost two decades, over 
Quebec's place in Canada. The 
view Is now widespread, espe- 
cially in the Reform party’s 
western stronghold, that while 
Quebec is welcome to stay, it 
should be wished good rid- 
dance if it derides to go its own 
way. 

Mr Mike Harcourt, British 
Col umb ia’s premier, told the 
Globe and Mail newspaper In 
mid-May that “Quebec and BC 
are natural allies in a renewed 
Canada and would be the best 
of friends. But if they decided 
to separate, we wouldn't be the 
best of friends, we'd be the 
worst of enemies.’’ 

A victory by Mr Johnson’s 
Liberals in the forthcoming 
election would seriously 
weaken the PQ, and probably 
cripple the Bloc Quebecois. If 
the PQ wins, however, the 1994 
poll may mark the ironic point 
in history where, just as Can- 
ada was starting to revitalise 
itself, it started to fall 
apart. 


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with First Class dimensions. 


receive calls, of course you 


upholstering, and leg room 10 


can bar them. There's a fax* as 




EXECUTIVE first 


inches more generous than 


welt for you to use or ignore 


table choice of meals 


previous executive class... more A 


You can just lie back and 


travelling Executive First 


‘desk' space if you've got work to do. 


watch your selection from current 


guarantee you an 


if it's bedtime by your body clock. ^ films or special programmes, on 


aisle- or window seat. There’s a tap 


including anytime dining for the 


business person whose regular three 


A I R CANADA 

A BREATH OF FRESH AIR 


V T* 


The 


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VV li. 


iC y . 4 • FINANCIAL TIMES MONDAY JUNE 6 1 994 


IS 





CANADA II 


federal g ovcmmaiii net debt 

’toBjjanMntagaofGBP.;’*.,.’.-’ — I 

“-8WS 


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mm mm mmmm immmmm 

1. ■ «-'■/.■ -ft*** tetfwU3ud0a dciajmito4M«# >.ij^«r tim' '• ” ! . 

. Bernard Simon considers the government’s economic policies 

I The Liberals’ good fortune 




The Chretien government has 
tried to steer a middle course 
in its ec onom ic policies, balan- 
cing ' financial markets' 
demand for fiscal and mone- 
tary discipline with fee liber- 
als’ campaign pledge to create 
Jobs. ' 

The result is that while the 
new government has not made 
any serious mistakes during its 
first half-year in office, it can- 
not yet boast of any dramatic 
aohito y ftTnentS . 

However, the liberals have 
bad the good fortune to take 
office at the best possible time. 
They have escaped blame for 
the pain of high Interest rates 

and the initial shock of the 

1989 US- Cana da free trade 
agreement, which helped drive 
the ranaidian economy tntn a 
deep recession from 1990 to 
1992. 

Now the benefits of these 
policies have started to become - 
apparent. 

Interest rates fell to their 
lowest levels in three decades 
before the US Federal Reserve 
started tightening monetary 
policy last February. The 
banks' prime lending rate had 
tumbled to 5£ per cent from a 
peak of 14.75 per cent in mid- 


1990, and the gap between US 
and Canadian interest rates 
was at its narrowest since the 
late 1970s. 

Inflation is virtually non-ex- 
istent Thanks partly to a cut 
ih -cigarette taxes earlier- this 
year, the consumer price index 
crept up by only 0J2 per cent in 
the year to April. ' 

1 . Recession and free trade 
have also sharpened the 
competitive edge of many 
Canadian companies- Workers 
now consider themselves lucky 
to get a 2-3 per cent pay 
increase: and productivity has 
improved markedly in recent 
years. But the price has been 
stubbornly high unem- 
ployment, which stood at 11 
per cent in ApriL 

The upturn has so for cen- 
tred on the export sector which 
has been helped by strong 
demand from the US and the 
slide in the Canadian dollar 
(from a peak of 89 US cents in 
late 1991 to 73 US cents in late 
Mart. 

These gains are gradually fil- 
tering through to the rest of 
the economy. With luck, they 
will be reinforced by a further 
rise in -prices for such key 
exports as pulp and paper, met- 


Economic forecasts 



| . - (percentage change unless otherwise indicated) 


* 

Annual averages 

4tfvto-4th quarters 


1993 

1994 

1895 

1993 

1994 

1995 

Real GOP 

ZA 

a s 

4 J3 

3.0 

3-9 

4a 

Unemployment rate {%) 

11-2 

109 

102 

11.1 

107 

100 

Consumer prfca Index 

1-8 

0.9 

1.8 

1.8 

09 

1^ 


Bbuok (total Baric aeonci 

toes dwitwit. aprtno 1894 j 


als, wheat and natural gas. 
ScotiaMcLeod. the securities 
firm, forecasts that real GDP 
growth will accelerate to 3.4 
per cent this year and 4 per 
cent in 1995, from 2£ per cent 
in 1993. 

However, the outlook varies 
markedly across the country. 
British Columbia, which has 
already benefited from record 
lumber prices, is expected to be 
pushed farther ahead by a 
recovery in other forest prod- 
uct and metal markets, and by 
a continuing inflnr of immi- 
grants from south-east Asia 
and other Canadian provinces. 

At the other end of the coun- 
try (and the growth spectrum), 
Newfoundland's economy has 
been devastated by the virtual 
disappearance of North Atlan- 


y impact of the North American free trade agreement 

A small step on the right path 




J 


Any Canadian businessman 
will agree . ■ that while 
ratification of the North 
American free trade 
agreement (Nafta) late last 
year was important, it was 
secondary' to the D84Snilda' 
free trade agreement (FTA) 
sealed in 1989 during Mr Brian 
Mnlroney’s period as prime 
minister. In its five-year life, 
the FTA has had a 
far-reaching impact on the 
structure of Canadian business 
and au. Canada’s e tnniwp T riiii 
links wltlrits biggest trading 
partner, the US. 

However, free trade 
advocates who had hoped that 
the new US-Canada-Mexico 
trade- bloc would address some 
:of the FTA*s flaws have been' 
disappointed. • ■ • / 

Over the longer ran, Nafta 
wtU open Mexican markets to 
Canadian exports, .but its most 
importaot fniMtioii win be to 
cement trading , practices 
between the US, and Canada 
already defl pe d >y the FTA. 
Mexico last,year .accounted for 
less than 1 -per. ebqt of 
Canada’s tetal exports, while 
the US nljsdrbed 80 .peg.cehi 
Together, trade flows across , 
the -U$-Canadian border 
totalled neariyj406ba to 1993. 


free and open international 
trade is crucial to Canada, 
which is in the midst of a 
export-led recovery after a 
long and trying recession. A 
country of only 27m people 
with' an economy a tenth the 
she of its southern neighbour, 
ft cannot afford costly trade 


However, for all its promise, 
Nafta has not offered a means 
to resolve subsidy and 
dumping dispates that have 
arisen between the US and 
Canada under the FTA. Thus, 
tiie two governments are close 
to an embarrassing trade war 
over Canadian wheat exports, 
just months after the Nafta 
accord was readied. 

- Mr Roy MacLaren, the 
minister for international 
trade, told North American 
business leaders recently that 
Canada’s government was 
committed to negotiating dear 
and agreed definitions . of 
subsidies and' dumping with 
its Nafta partners. Had these 
existed, .be said, it would have 
averted the wheat c ont r o ve rsy 
and other US-Canada trade 
disputes. “They constitute a 
crucial missing element 
necessary to secure market 
access within North America 


for our companies," be 
declared. 

Regardless of the disputes, 
the sheer size of trade between 
the two countries has shaped 
Canadian business, part- 
icularly since the FTA was put 
in place. Total value of 
merchandise trade between 
the US and flawflria baa jumped 
42 per cent since 1989, and the 
integration of Ninth American 
operations for big inter- 
national companies such as 
Ford and General Motors has 
been remarkable. 

Mr Gerry Protti, president of 
the Canadian Association of 
Petroleum Producers, says 
that Nafta “was not a huge 
win” for his industry. 
“Liberalisation of energy trade 
between the US and Canada 
was already occurring at a 
very rapid rate," he adds. 
“Nafta insures that develop- 
ment wiU continue to expand." 

If the FTA provides a due, 
Canada’s energy business will 
boom as trade becomes freer. 
Canada’s exports of natural 
gas to file US, . for example, 
have increased 25 per emit in 
five years. Its oil export 
revenues exceed JlObn and 
comprise more than 40 per 
cent of total Canadian 


production. 

Under Nafta, Mexico’s state 
oil company, Pemex, will keep 
its monopoly over most of the 
country’s oil production. 
However, Mexico will allow 
foreign investment in petro- 
chemicals, pipelines, refine- 
ries, electricity generation, 
and other “downstream" 
energy activities. This, Mr 
Protti says, will open up many 
opportunities for Canadian 
energy companies, which also 
stand to benefit from 
increased exports to the US as 
US production companies 
pursue natural gas exports to 
Mexico. 

And, he is confident, as 
Mexico becomes accustomed to 
life under Nafta, “upstream” 
oil and gas exploration and 
extraction wiB gradually open 
to Mexico’s Nafta partners. 

Canadian telecom- 
munications and trans- 
portation companies are 
already feeling renewed 
benefits in Mexico, with 
companies such as Northern 
Telecom entering agreements 
to provide telephone 
equipment to the newly 
opened market. 

Laurie Morse 




■ Laurie Morse looks at moves to dismantle internal trade barriers 

Some progress in the provinces 


* 


? ^ » 


■. a . - 
&T- 


0? !-• 


\ Canada's federaLgovenunent 
has sealed historic intema- 
a tlonal trade agreements fids 
year, but is still without a solu- 
tion to the pervasive inter-pro- 
vincial non-tariff tirade barriers 
that stifle growth and the free 
flow of goods, services and cap 
ital within its own borders. 

Intense negotiations between 
provincial ministers, the terri- 
tories, and the federal govern- 
ment may finally produce a 
solution to these internal trade 
blo ckades this s ummer . 

A certified accountant in 
New Brunswick, tor example, 
is not allowed to practise in 
neighbouring Prince Edward 
Island because professional lic- 
ensing requirements differ. 
Manitoba procurement agen- 
cies, in -charge of the prov- 
ince’s liquor stores, will not 
purchase regional beers 
brewed elsewhere in Canada. A 
forest products company in 
. Ontario must buy electric 
power from Ontario Hydro, 
even though electricity pro- 
duced by neighbouring Mani- 
toba Hydro may be one-third 
the cost - 
The lack of uniform trucking 
codes between provinces often 
forces Canadian freight compa- 
nies to make coast-to-coast 
deliveries via the US. Until 
recently, a cable manufecturer 
wishing to sell wire to a pro- 
vincial. utility had to have a 
factory in that province. 

These are Just a few exam- 
ples of how protectionist atti- 


tudes in Canada’s 10 provinces 
disrupt the five flow of inter- 
nal trade. The problems these 
barriers cause, long a festering 
issue at the federal level, have 
bead exacerbated recently by 
new international trade agree- 
ments like Nafta. 

“With the Free Trade Agree- 
ment (with the US) it is some- 
times easier for people to trade 
north-south than east-west," 
says Mr Robot Knox, execu- 
tive-director of Canada’s. Inter- 
nal Trade Sec- — — 

retariat in 
Ottawa.. 

"Canada’s 
problem is that 
we’re a rela- 
tively small 
domestic mar- 
ket. We want 
to thrive in a 
global econ- 
oxny, but government practices 
have kept many businesses 
from growing a strong domes- 
tic base. We’ve got to a point 
where we can’t afford it -any 
more,” says Mr Knox. 

Canada exported about 
$2G0bn in goods and services 
last year, and its internal 
trade, while more difficult to 
measure, is nearly the same 
size, economists say. 

A study by the Canadian 
Manufacturers' Association in 
1991 found that provincial con- 
straints in just two areas - 
government procurements and 
agricultural marketing prac- 
tices - cost Canadian taxpay- 


Negotiators say that 
ministers from nine 
of file 10 provinces 
have endorsed 
a draft agreement 


ers some $7bn a year. However, 
Mr Jason Meyers, economist 
for the CMA, says that if one 
could quantify the dynamic 
effects of lost trade, the figure 
would be much higher. 

As Canadian companies 
struggle to be internationally 
competitive, there is a growing 
realisation in government and 
business circles that the bene- 
fits of liberalised domestic 
trade could be higher than 
those offered by protectionism. 
But the pro- 
cess of achiev- 
ing a common 
market is more 
difficult than 
issuing a fed- 
eral edict from 
Ottawa. Inter- 
nal trade talks, 
initiated in 
1987 when Can- 
ada’s federal government 
appointed a Committee of Min- 
isters for Internal Trade, have 
proved as difficult as those 
undertaken to cement interna- 
tional trade compacts. 

When the provinces and the 
federal government last seri- 
ously tried to solve internal 
trade issues at constitutional 
talks two years ago, the effort 
fell flat Interest groups were 
so effective that the pact bad 
it passed, would merely have 
presaved the status quo. 

Since then, a persistent 
recession and objections to lib- 
eralised trade by the NDP gov- 
ernments of Ontario and Brit- 


ish Columbia - two of Cana- 
da’s largest commercial prov- 
inces - have further stalled 
talks. However, the CMTT per- 
sisted and last year set a dead- 
line of this Tnnnfh for conclud- 
ing a comprehensive 
agreement an internal trade, to 
be Implemented in June 1995. 

With the deadline looming, 
the ministers agreed two 
Tnnnthg ago to refine a draft of 
a new internal trade agree- 
ment that addresses non-tariff 
trade harriers in ll industry 
sectors and contains a mecha- 
nism to arbitrate on internal 
trade disputes. 

Althoug h the talks are not 
public, negotiators say that 
ministers from nine of the 10 
provinces have endorsed a 
draft agreement. 

Whatever the final form, 
analysts agree that the CMFTs 
efforts win produce progress in 
certain areas, if not a compre- 
hensive free trade zone. An 
agreemait that would open up 
provincial procurement - a 
huge area that encompasses 
everyt hing from liquor to road, 
school and hospital construc- 
tion - is under consideration, 
but may be difficult to ratify. 

However, analysts say that 
at the very least Canada will 
get an agreement that provides 
for uniform standards and reg- 
ulations for professional ser- 
vices. trucking and other 
industries, bringing the coun- 
try a step closer to an open 

TTiHTkgt. 


KEY FACTS 


Area 

Population .. 
Currency 


Average ex cha nge rate, 1993 


9,220,970 sq km 

._27.8 mtfflon (1993 estimate) 

Canadian Dollar (CS) 

US$1=C$1-29 


Exchange rate May 25 1994 US31=C$1B8 

ECONOMY 


1993 Latest* 


Total GDP (US$fan).. 

Real GDP growth (%>. 
GDP per capita $. 


Components of GDP (%) 
Private consumption..™ 

Total investment 

Government consumption.. 
Exports 


Imparts., 


550.9 

2.4 

19.816 


n-s. 

3.1 

rLa. 


Consumer prices (% change pa) 

Ind. production (% change pe) 

Unemployment {% of tab force).... 

Reserves minus gold (US$bn)..„ 

10 year govt bond yield (% pa, avg). 

FT-A index {% change over year) 

Current account balance (US$hn)..„. 

Exports (US$bn) 

Imports (US$bn). 


Main tradtog partners (1992, % by value) 

us.- 

Japan 

UK. 

G er ma ny 



*1894 figures (BU es Uuw te e tor 1984 except unemployment and reserves 
(March), bond yield (May 25 1994) and the FT-A Index (% change from 
1/1/94 to 25/S&4) Sources: IMF, Data at ma m , Economist Int o Sg o ncm Unit 


tic cod stocks. Some 20,000 jobs 
have been lost in the east coast 
fishery, putting one in five 
Newfoundlanders out of work. 

Despite the forces working in 
the ir f a v ou r, the T.ihgraia have 
not had an entirely smooth 
ride, hi particular, financial 
markets have- been unsettled 
by uncertainty over Quebec's 
future and the new govern- 
ment's priorities. 

The Liberals initially ■u*n t a 
number of gj gn«ig that their 
economic policies would be 
kinder and gentler than the 
Tories, with job creation as 
important a short-term goal as 
low inflation oar defi cit reduc- 
tion. 

The message was reinforced 
by the replacement of Mr John 
Crow as governor of the Bank 


of Canada by his deputy, Mr 
Gordon Thiesaen. Mr Crow 
carved out a reputation as one 
of the industrial world’s most 
ardent inflation fighters dnring 
his seven years in office. 

One of Mr Thiessen’s first 
acts was to spell out slightly 
more flexible inflatio n targets 
than those set by his predeces- 
sor. The present aim is to hold 
inflation in a 1-8 per cent a 
year range until at least 1998. 

The new finance minister 
and central bank governor 
threw finanrfai markets off 
balance again with a hesitant 
response to the US Federal 
Reserve’s tigh tening 1 of mone- 
tary policy last February. Not 
only did the Canadian dollar 
slide by three US cents 
between February and April, 
but interest rates ended up ris- 
ing for more steeply than in 
the US. The banks’ prime lend- 
ing rate jumped back to 6.75 
per cent by the end of April. 

The consensus, however, is 
that interest rates are likely to 
stay flat or rfenHw* a little in 
coming months, and that the 
economic recovery will remain 
on track. 

On fiscal policy, the liberals 
pledged during the election 
campaign to bring the federal 
deficit down to 8 per emit of 


GDP within three years, from a 
projected 5.4 per cent in the 
fiscal year to March 31 1995. 

The previous Conservative 
government badly underesti- 
mated the impact of the reces- 
sion on gover nment revenues, 
w ithin two months of taking 
office, Mr Paul Martin , the 
flnanca minis ter, revised the 

1993- 94 budget estimate 
upwards from the Tories’ rosy 
projection of C$32.7bn to a 
record Cf45bn. 

Mr Martin’s first budget, 
tabled last February, aims to 
cut the deficit to C$39. 7bn in 

1994- 95 and C$32.7bn the fol- 
lowing year. He announced the 
closure of a string of politically 
sensitive military factatiatiwig 
and renewed a freeze an civil 
servants' wages. 

The biggest contribution to 
deficit redaction could come 
from a planned overhaul of the 
ance-sacrosanct social security 
net These programmes, some 
of which are administered by 
the provinces with financial 
support from Ottawa, are by 
for the biggest single spending 
item in the federal budget The 
liberals ahn to spell out their 
reform proposals in next year’s 
budget 

Financial markets have yet 
to be convinced, however, of 







The Royal Bank is the country’s biggest financial institution Tory Mm 


the new government’s stead- 
fastness. Analysts are encour- 
aged that Mr Martin's eco- 
nomic assumptions are more 
realistic than threw of his Con- 
servative predecessors. 

But they worpr that much of 
the drop in this year’s deficit 
will be t hanks to measures 
announced by the previous 
government or accounting 
changes, rather than brave 
new Liberal spending cuts. 

The minister is sticking to 
his guns. “There is no doubt 
that we are not going to be 
able to solve our deficit prob- 


lems by growth alone," Mr 
Martin said in late April. “And 
what that means is a complete 
restructuring of government. It 
is going to mean major, major 
cuts which will affect every 
segment of our society." 

Despite the recent increase 
in borrowing costs, he remains 
confident of meeting his deficit 
targets. Mr Martin has also 
pledged that his 1996 budget 
will spell out a game plan to 
eliminate the deficit entirely. 
International investors how- 
ever, are likely to judge him by 
actions rather than words. 








FINANCIAL TIMES MONDAY JUNE 6 1994 


CANADA III 


FOREIGN POLICY 


■"r~ .v 




Trying to do more with less 


Foreign policy, traditionally an 
area of little public interest in 
Canada, is quietly returning to 
the national agenda. For the 
first time since the 1370s, Ott- 
awa is embarking on a major 
review of its international rela- 
tions. 

The challenge is to deter- 
mine priorities abroad and 
ensure the means to meet 
them at home. The end of the 
cold war, the rise of Asia, and 
the advent of North American 
free trade have dramatically 
changed the assumptions 
which have governed Canada’s 
defence and foreign policy 
since 1945. 

Uncertain of which direction 
to take, the Liberal govern- 
ment has begun seeking 
advice. Since last October’s 
election, the House of Com- 
mons has held debates on the 
North American Free Trade 
Agreement, US cruise missile 
tests over Canada, and the 
future of Canadian peacekeep- 
ing omissions. Two parliamen- 
tary committees are studying 
defence and foreign issues. A 
public forum, organised by the 
government, has convened 
leading experts In Ottawa. 

In the old bipolar world, Can- 
ada's international activism 
gave rise to many labels: for 
instance, helpful fixer, honest 
broker and middle power. They 
generally reflected the activist 
but conciliatory role which 
Canada has sought to play In 
the post-war era. 

As a warrior, Canada fought 
early and often In both world 
wars, Korea and the Cult As a 
peacekeeper, It has partici- 
pated in every mission under- 
taken by the United Nations. 


As a trader, earning one quar- 
ter of its income from com- 
merce. Canada has supported 
global free trade. 

As a donor. Canada has ran 
one of the world's most gener- 
ous aid programmes. As a dip- 
lomat, Canada helped create 
the architecture of the new 
world order, joining all the 
major international organisa- 


Cpnflria remains rmwm1ft<y| to 
th» liberal internat i onal of 
Lester Pearson, the former 

prime minister 
Still, money is a constraint. 
With the federal government 
running an wnymai budget def- 
icit of $40bn, many foreign pol- 
icy experts question whether 
Canada can still afford to do all 
that it has in the past 


‘f : ;r,-. 





Downtown Calgary, the ca pita l city of Aborts 


Hons mrinriing the Group of 
Seven, the Commonwealth, La 
Francophonle (the organisation 
of French-speaking countries) 
and the Organisation of Ameri- 
can States. 

Whatever the government’s 
review concludes, Canada is 
unlikely to embrace a new iso- 
lationism or protectionism. 
While the traditional consen- 
sus on federalism and social 
welfare is fraying at home, 


For a decade or more, for 
example, Canada has been 
reducing military spending by 
cutting the size of the armed 
forces. Yet it still maintains 
too many bases and carries oat 
too many functions. 

Meanwhile, the demand for 
peacekeepers has soared. Can- 
ada has always agreed to 
serve; it once comprised 10 per 
cent of the world’s peace- 
keepers. But the former Con- 


servative government with- 
drew Canadian troops from 
Cyprus after 28 years and 
asked other countries to share 
more of the burden. - 

Canada is still the world’s 
seventh largest aid donor. But 
aid as a percentage of gross 
domestic product has now 
fallen to around 0.45 per emit, 

and the fjmadian Inter national 
Development Agency has been 
called wa s te fu l and inefficient 

The government is under 
pressure in all areas to find 
new ways to do more with less. 

In defence, for example, 
some suggest turning the mili- 
tary into a peacekeeping army. 
T he argument is Canada 
no longer needs a traditional 
force equipped for high-inten- 
sity warfare and should pre- 
pare its forces for more limited 
needs, such as civil order and 
surveillance. 

“Our defence policy Is ... 
rational no longer,” says a 
recent report by a group of 
prominent Canadians. “Unless 
tiie policy is changed quite rad- 
ically, the result will be that 
Canada wOl have a miniature 
model of a general purpose 
force - one with just a little bit 
of everything but not enough 
of anything to be effective.” 

One proposal is to abandon 
high-intensity combat. This 
would mean dashing Canada's 
fighter aircraft fleet by two- 
thirds, closing bases and drop- 
ping armoured formations, 
heavy artillery and ground-to- 
air support 

To modernise Its aid pro- 
gramme, critics propose that 
the government redirect aid to 
only the poorest countries, 
abandoning those which no 


longer need it Ottawa has also 
been urged to step supporting 
costly megaprojects, and con- 
centrate more on developing 
human resources through 
microbusiness loans and edu- 
cation. 

In reviewing foreign policy, 
the government will have to 
consider a host of other ques- 
tions: whether to remain in 
Nato, even after withdrawing 
forces from Europe; whether bo 
take a softer tine on human 
rights in the third world and 
concentrate more on trade and 
investment; whether to r emain 
a mem b er of so many interna- 
tional organisations; whether 
to try as Csmada did in 
the 19703, to diversify trade 
beyond the US, which accounts 
for more than 70 per cent of 
Canada’s exports. 

For all the discussion, 
though, Canada’s objectives in 
the 1990s remain similar to 
those of the 1950s. If opinion 
polls are correct, Canadians 
want to do more in the world, 
not less. 

But that does not mean the 
government will embark on 
bold initiatives. Foreign policy 
is not a priority for Mr Jean 
ChTOtien or his government, 
and the expectation is that it 
will be cautious in cutting 
defence spending and reallocat- 
ing aid. 

What is more, if the seces- 
sionist Parti Quebecois is 
elected in the province of Que- 
bec later this year, the federal 
government will have its 
hands full with the national 
unity issue, leaving little time 
for the rest of the world. 



J( 


& 


Andrew Cohen Rating boats, yachts and otharsmafl craft at Victoria haibour, Vancouver Island 


v. ■ ■’ . 


I n the months leading up to 
last October’s general elec- 
tion, some senior members 
of the Liberal party quietly 
began to plot the downfall of 
their leader, Mr Jean Chretien. 

Mr Chretien had been a big 
disappointment in the three 
years since he won the party 
leadership. He had failed to 
capitalise on the unpopularity 
of Mr Brian Mulroney's 
Conservative government 
The opposition leader’s 
heavily-accented English and 
less-than-perfect French 
helped fuel the impression 
that he was out of his depth. 
His fe 11 ow-Qn checkers bad not 
forgotten or forgiven his role 
as justice minister In outflank- 


ing the francophone province’s 
separatist government during 
constitutional talks in the 
early 1980s. 

However, the dissatisfaction 
has evaporated since the Lib- 
erals’ election victory. The 
would-be plotters are now 
senior cabinet ministers. Most 
Canadians - including non- 
Liberals - have come to regard 
their new prime minister with 
respect, and even with quiet 
affection. 

Mr Chretien's down-to-earth 
manner and his common sense 
approach to government are a 
sharp contrast to Mr 
Mulroney's regal style. They 
have proved an effective 
antidote to the revulsion felt 


Bernard Simon profiles Jean Chretien, the federal premier 


Leader who shunned a Cadillac 


by many Canadians against 
their politicians and the 
political process. 

Mr Patrick Gossage, a 
Toronto public relations con- 
sultant who has close links 
with the Liberals, describes Mr 
Chretien as “somebody who is 
by nature not the slightest bit 
puffed-up, arrogant or self-sat- 
isfied”. Referring to his home 
town in rural Quebec, Mr 
Chretien calls himself “the lit- 


tle guy from Shawurigan”. He 
has eschewed the official, 
armour-plated Cadillac limou- 
sine used by Mr Mulroney for 
a taxi-like Chevrolet Caprice. 

Mr Chretien is sometimes 
compared to former US Presi- 
dent Harry Truman. But like 
Mr Truman, the Canadian 
leader's folksy style masks a 
finely-honed political compass. 

Aged 60, Mr Chretien Is one 
of Canada's most experienced 


politicians. He celebrated his 
30th anniversary as an MP last 
year, and his cabinet experi- 
ence stretches bade to 1967. 

Hie held almost every senior 
portfolio In the 1970s and 
early 1980s when Mr Pierre 
Trudeau was prime minister. 
At times of despair in the lib- 
eral camp over the past few 
years, Mr Chretien's support- 
ers would take solace that, for 
all his drawbacks, their leader 


had never been tarred by a 
mqjor mistake or by scandaL 

Since the start of last year’s 
election campaign, Mr Chre- 
tien has steered clear of the 
debate on Quebec sovereignty 
by insisting that the liberals’ 
top priority is to create jobs, 
not squabble about the consti- 
tution. 

But as another poll in Que- 
bec draws nearer, he will find 
it increasingly difficult to 


remain above the fray. 

like Mr Trudeau, his men- 
tor, Mr Chretien has never 
radp any secret of his disdain 
for Quebec separatists. But in 
contrast to Mr Trudeau’s 
coldly logical arguments in 
favour of a united Panada, Mr 
Chretien wears his patriotism 
on his sleeve. • 

“Whatever happens, I am 
personally convinced that it is 
possible to be a proud Que- 
becker and a proud Canadian 
at the same time,” be wrote in 
Ms recent autobiography. Tar 
from bring exclusive, they are 
complementary, for withont 
Canada Quebec cannot sur- 
vive.” 

Mr Chretien recalls his 93- 


year old father saying after 
the separatists’ defeat in the 
1980 sovereignty referendum: 

“I can die now, the liberals 
are back in power and Quebec 
will remain in Canada.” 

Such views have not been 
popular, however, in Quebec 
where Mr Chretien is por- 
trayed in the media and by 
influential intellectuals as a 
bumbling Uncle Tom. 

According to a recent opin- 
ion poll in the Globe and Mafl 
newspaper, almost two-thirds 
of Quebeckers think the prime 
minister should remain neu- 
tral in the.looming battle over } 
the province’s place In Can- 
ada. However, it would be out 
of character if he did so. 


C ompilers of the federal 
government telephone 
directory have had to 
change an unusually large 
number of entries since the 
last edition was published in 
April 1993. 

The new Liberal cabinet, 
which took office after last 
October’s general election, is 
the most obvious change in the 
corridors of power in Ottawa. 
But it is no meous the only 
one. 

The Bank of Canada has a 


All change in the corridors of power 


New faces in Ottawa 


new governor. For the first 
time, a woman holds the job of 
Clerk of the Privy Council, the 
most senior position In the 
federal civil service. Names 
of several government depart- 
ments have been changed. 


More than two-thirds of the 295 
members of parliament 
returned in last October’s gen- 
eral election are newcomers. 

Furthermore, the way that 
business is dnnp in Ottawa has 
undergone some chan g e s since 


Boidm-IXiMouM-Howard-Gervais 


TORONTO VANCOUVER CAUiARY MONTREAL LONDON ENGLANO 


Borden DuMouUn Howard Gervais is both a national associa- 
tion of Canadian laic firms, and an international p ar t ne rs hip 
imtsulv <Mnadu. 


77x‘ national association in Canada is comprised of Borden & 
Idlhe in Toronto, Russell 6 DuMouUn in Vancouver, Howard 
\hickie in Calgary and MacKenzie Gervais in Montreal. The 
four Hicmlvr firms are all established leaders in their own juris- 
dictions. 


Borden DuMouUn Howard Gervais in Canada offers the cont- 
inued experience of over 500 lawyers, having specialized exper- 
tise in all areas of practice. 


The association has developed over the years an active interna- 
tional practice. and acts fora broad range of international 
clients. 


The London office of the International partnership of Borden 
DuMouUn Howard Gervais was established in 1993 to provide 
*«» enhanced level of service to European and Canadian clients. 


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the Liberals came to office. 
“The previous 10 years were 
government by the friends of 
(former prime minister Brian) 
Mulroney," one lobbyist says. 

He adds that the Liberals 
have so far been “very open 
and very forthcoming. They’re 
not willing to talk about T 
scratch your back, and you 
scratch mine’.” 

The Liberals have launched 
top-to-bottom policy reviews of 
such contentious and wide- 
ranging areas as defence, 
social security and transport 
Some lobbyists report that poli- 
ticians and civil servants are 
calling on them as the new 
government feels its way. 

Mr Jean Chretien, the prime 
minister, has discouraged cabi- 
net members from assembling 
the large political staffs which 
became a fixture of ministerial 
offices during Mr Mulroney's 
tenure. 

While deci- 

sions were 

channelled BERNAF 

through a rnrm- 

of ministerial iGsntr 

committees up-and 

and a pyramid names 

of advisers dur- 
ing the Mulro- 
ney years, the centre of power 
in Ottawa is now a small group 
of senior cabinet members. 

Besides Mr Chretien, the 
group Includes Mr Paul Martin, 
finance minister; Mr Lloyd 
Axworthy, human resources 
minister and Mr Roy 
MacLaren, trade minister. Any 
important decision involving 
Quebec is likely to have the 
stamp of approval of Mr Andre 
Ouellet, the wily foreign affair s 
minister. 

Though Ms Sheila Copps was 
renowned as one of the liber- 
als’ most forceful debaters on 
the opposition benches, she 
has yet to make a mark as dep- 
uty prime minister. She also 
holds the environment portfo- 
lio. 

One consequence of the 
leaner political decision- 
making process is that senior 
civil servants have regained 
some of the clout they lost 
during the Mulroney years. 
The most influential depart- 
ment heads include Mr David 
Dodge (finance), Mr JeanJac- 
ques Noreau (human resources 
development), Mr Harry Swain 
(industry), Mr Allen. Kilpatrick 
(international trade) and Mr 
Reid Mbrden (foreign affairs). 


BERNARD SIMON 

identifies the 
up-and-coming 
names to note 


“The number of people you 
have to talk to is still relatively 
smafl.'' says Mr Tom D’Aquino, 
president of the Business 
Council an National Issues, a 
big business lobby group. 

Nonetheless, life has 
changed for the army of lobby- 
ists which sprang up in Ottawa 
during the 1960s. Liberal minis- 
ters and MPs have put out 
word that they prefer to deal 
directly with companies and 
individuals seeking favours, 
rather than with professional 
arm-twisters. 

Many lobbyists’ work now 
centres more on research and 
advice than directly pleading 
clients' cases. But same of the 
firms which were most suc- 
cessful at opening doors in the 
Mulroney years remain widely 
respected. They include Hes- 
sian Neville & Associates, and 
Parker Norquay, whose head, 
Mr Rob Parker, has the unenvi- 
able job of representing the 
interests of Canada's tobacco 
c ompanies 

At the Bank of Canada, Mr 
John Crow was replaced last 
February as governor by the 
less prickly Mr Gordon Thies- 
sen. Mr TMessen was formerly 

senior deputy 

governor, act- 
I SIMON mg in effect as 

„ the bank’s 

» “I® chief operating 

xjming officer. 

O note Perhaps the 

biggest change 
w^^^ma—a Is in the House 
of Commons, where two of 
Canada’s three national par- 
ties, the Progressive Conserva- 
tives and the left-of-centre New i 
Democrats, were all bat sxml- 1 
hilated in the election. The 
opposition benches are now 
filled by two regional parties - 
the Bloc Quebecois, whose 54 
MPs are all French-speaking 
and an from Quebec, and the 
Reform party, all but one of 
whose 52 members represent 
constituencies west of Ontario. 

The BQ has so fer proved to 
be a more effective and cohe- 
sive opposition than the 
Reform party. Although their 
concerns are centred on Que- 
bec, BQ members have carved 
out a left-of-centre position on 
some national issues, such as 
social security reform. But the 
Liberals have so fer had the 
Geld largely to themselves. 

With all these changes, any- 
one planning to do business in 
Ottawa would be well advised, 
as a first step, to pick up a 
copy of the government phone 
book. The Government Tele- 
communications Agency has 
just produced a new edition 
that incorporates the comings 
and goings of the past six 
months. 


THE NUCLEAR INDUSTRY 


Drought may be over 


net 


Two events last April 
underlined the volatile mood 
in Canada's nuclear industry. 

Mr Zou Jiahua, China's vice- 
premier. visited the suburban 
Toronto offices of Atomic 
Energy of Canada Ltd (AECL), 
reinforcing hopes that Beijing 
will use its Candu heavy water 
reactor to meet part of its East- 
growing power needs. 

The high-profile Chinese 
visit symbolised AECL’s opti- 
mism about the Candu pro- 
gramme's future. A 700-mega- 
watt Candu unit installed at 
Wolsong, South Korea, in 1983 
has won acclaim for two years 
in a row as the world’s best- 
performing nuclear reactor. 

AECL has won orders for 
three more units at Wolsong 
since 1990, and expects to be a 
front-runner for reactors in 
Romania, Turkey and Indon- 
esia, as well as China, over the 
next few years. 

Two weeks before, however, 
came the latest of many 
upheavals within AECL's 
ranks. Its chief executive quit 
after less than a year at the 
job. Over the past four years, 
the government-owned com- 
pany has had three ehirf exec- 
utive officers and four chair- 
men, while 10 of its 12 
government-appointed direc- 
tors have been replaced. 

AECL has been through sev- 
eral painful restructurings 
over the past decade as the 
prospects for nuclear energy 
have waned, and government 
ftmding has contracted. 

In particular, AECL has bat- 
tled to bring a sharper, more 
commercial focus to its 
research arm, whose payroll is 
about three times bigger than 
the Candu division. 

Uncertainty about the future 
of nuclear power has taken a 
toll on the Candu programme. 
This division's payroll has 
shrunk from 3,600 to 1,000 
employees over the past 
decade. Much of its effort (hir- 
ing the 1980s was directed at 
service work on existing 
Candu and other reactors. 

AECL announced another 
round of cuts late last month, 
including a 15 per cent reduc- 
tion In its total payroll over 
the next two years. Nonethe- 
less, Mr Don Lawson, who 
heads the Candu operations, is 
optimistic that the new orders 
from Korea herald the end of 
the long drought for the 
nuclear Industry. 


Construction of a Candu 
reactor at Cernavoda in 
Romania is again in full swing 
after being interrupted because 
of the 1989 revolution. AECL 
and its Italian engineering 
partner. Ansaldo. now have 
complete charge of the site. 
“The quality of work has been 
as good as anywhere else,” Mr 
Lawson says. “What we’ve 
done is to put a fence around 
the site, with western work 
practices within the fence.” 

Drawing on staff from sev- 
eral Canadian utilities, AECL 
will run the plant for the first 
18 months. About 150 Roma- 
nian operators are being 
trained at a Candu power sta- 
tion in New Brunswick. 

AECL's marketing efforts are 
at present focused on Turkey, 
where the government is 
expected to call for bids later 
this year for one - possibly 
two - units at Akkuyu, on the 
south coast. 

TEK. the Turkish utility, 
signed a letter of intent for a 
Candu reactor in 1983. But fin- 
ancing problems related to the 
unusual ownership and operat- 
ing structure of the project , 
scuppered that deal The trans- , 
action is likely to be more 
straightforward this time i 
around. 

Mr Lawson says that AECL 
has already arranged C$L_5bn 
in financing for the Can»diar> 
content of its renewed bid for 
the Turkish contract. Its part- 
ner, the Dutch arm of John 
Brown, the UK engineering 
and construction group, has 
brought in support from the 
UK, Netherlands and Spain. 

Asia will be the biggest 
source of business over the 
next few decades, predicts Mr 
Lawson. AECL is banking on 
its success in Korea to win 
orders from Indonesia, Thai- 
land, the Philippines and 

China 

But the company is also 
crossing its fingers for a 
revival in nuclear power’s for- 
tunes closer to home. 

One prospect is Saskatch- 
ewan, the prairie province 
which is the world's biggest 
uranium producer but has so 
far steered clear of nuclear 
power generation. 

AECL hopes that Racirafr h- 
ewan will order a smaller ver- 
sion of the TOO MW Candu 6 
reactor. A relatively simple 450 
MW model, with a construction 
tune of less than three years, is 


at present on the drawing 
boards. 

Elsewhere in North America, 
several first generation nuclear 
reactors are nearing the end of 
their planned 40-year life. 

Environmental groups are 
certain to fight any move to 
replace them with new nuclear 
units. 

However, the power station 
sites have already been 
approved for nuclear use, and 
the infrastructure is in place. 
Mr Lawson predicts that orders 
from North American utilities 
will restart within 15 years. 


0» 


Bernard Simon 


JTranaAtta 

Corporation 



Chris Hampson 


TransAlta 

Corporation is pleased to 
announce the election of 
Me Chris Hampson to its 
Board of Directors. Mr. 
Hampson is Executive 
Director of Imperial 
Chemical Industries 
PLC 

TransAlta 
Corporation — based in 
Calgary, Alberta - has 
two Operating 

companies, TransAlta 
Utilities Corporation and 
TransAlta Energy 
Corporation. TransAlta 
Utilities supplies 
electricity directly and 
indirectly to about 1.7 
million Albertans. 
TransAlta Energy 
develops, owns and 
operates non-regnlaled 
electrical and thermal 
energy plants. 


i 


■r 




17 



\ 


FINANCIAL TIMES MONDAY JUNE 6 1994 


m- 


C ARVADA IV 




s 


uebec’s coming election 
: will briny Canada's 
. only French-speaking . 
province face-to-face 
with a .choice . between the 
mainstream and some fann.Qf : 
breakaway from-tbe rest of the 
country. . 

jfflr-Daniet Jo hnaom, the •©■ 
jsSatftfd premier, who was 
aaMiMctiteBda* of &£.fedaral- 
. liberals Jast Decent 

! bSf;afl«r the ailing Jfr Robert 

fthflfeSfe rpal gTipd, fg Kattttwp 

tc^pewrtmde nervoos voters 
(bi^ffrjara ..revive, a sluggish 
edwiMf ^with tighter manage- ' 
(w®era£ioir srttb- Ott- . 
K dtfe-iaBff resilrgenf private sec- 
■ t^iraestofeart. ■■ -*■ 

™ .ilflk j&xii Quebecois oppo- 

r' 1876 'to JS84 and a.hard- 

nationalist, Says political 

| separatioh is the only way. out 
• of - ihe ; confederation strait- 
jjacket Were be to_ win the deo- 
tfimj.JMr Parizean prandseii an 
(independence referendum. 

| would follow- within a year. . 

1 /He knew*, however, that the 
■“.* ■ Quebec electorate' is older and . 

1 -more cautious than! in. the 
, j 1970s -and 1 ; 1980s, and that’first- 
VpasfctoB-post In 1994 does not 
mean tba subsequent referen- 
idtun Is won. Both sides have 
| sought -the hlessiiiy of interna- 
tional investors and palitt- 
itians. Mr JohhscuiL has- won 
(approval so long as he keeps a 
r . . I tight rein on budget fl pgnrKnp 
i^ atMr Parizeauhas met the same 
^^KBOeptttdsni aa in 1977, just after .- 
fee PQ first took 1 power The 
I typical . US view fethat Quebec 


Robert Gibbens looks ahead to an important provincial election in Quebec 

Johnson leads fight to stop breakaway 


can get what it wants from 
Canada end cannot afford to go 
it alone. ■. 

Mr Jean Chretien. the federal 
prime minister, in the tradition 
of. Ids mentor, Mr Pfone Tru- 
deau,, is implacably against 
separation or. sovereignty. 

The election will probably 
come in September. Quebec, 
with 7m people, is Canada's 
second biggest province after 
Ontario and 99 per cent 
French-speaking outside 
Greater Montreal. Montreal's 
Francophone population . is 
about 70 per cent of a total 3m; 
the balance is Anglophone and 
“AEophone", in other words, 
those whose mother tongues 
. are neither 'English nor 
Ranch. 

Both Mr Johnson and Mr 
Parizeau lack seasoned sup- 
porting talent and inherit a 
heavy, baggage of past mis- 
takes. Voterotemember the PQ 
government's disintegration 
after failing to cany the 1980 
referendum on sovereignty. 
But they blame the Liberals for 
12 per cent unemployment and 
the decline of Montreal - key 
to the province’s economy. 

The PQ’s 1979 legislation to 
protect French, make It the 
l ang nag e of work and restrict 

itnTrrigranfg ' ^nrwsw to En gtteV 



The city of Quebec its electorate i 


schools, retains soM Franco- 
phone support The Liberals 
can make only tnkpm conces- 
sions. 

Since 1990, the economy has 
been hit by the North Ameri- 
can recession and depressed 
world commodity prices, accel- 
erated Canada-US free trade, 
defence cuts and the soaring 
costs of health and other pub- 


- bo more cautious now than in the 1970 b and 1880s 


lie services. Old industries 
have withered. A new econ- 
omy, based heavily on 
research, aerospace, communi- 
cations. software, electronics 
and pharmaceuticals, is taking 
shape slowly. 

A wave of investment in 
hydro power and primary alu- 
minium plants has tapered off 
Many new industrial projects 


are delayed by political uncer- 
tainty. 

The PQ won five by-elections 
in a row before the Liberals 
turned the tide in March. The 
polls have consistently shown 
the PQ ahgfld, thoug h Mr John- 
son leads Mr Parizeau in per- 
sonal popularity. 

But Quebec's most popular 
politician is the rhaHgmfl tl c Mr 


Tfeoya*** 


Luden Bouchard, leader of the 
Bloc Quebecois, which pro- 
motes the separatist cause at 
the federal level. The BQ took 
54 of Quebec’s 75 seats in the 
October 1993 federal election 
and Mr Bouchard became 
Opposition leader in Ottawa. 

Many PQ supporters would 
prefer Mr Bouchard as their 
leader, saying be could best 


lead them to victory in the 
coming election. His “sover- 
eignty” and “independence” 
options sound more palatable 
to anxious voters than Mr Pari- 
zeau’s hardline “separation" 
and his curt dismissal of Can- 
ada and all its sins. 

The Quebec Liberals have 
studied the 1993 rout of the fed- 
eral Conservatives and a come* 
from-behind victory by Mr 
Ralph Klein's Conservatives in 
Alberta. They have consulted 
the Conservatives in Britain. 
But no Quebec party has won a 
third successive majority man- 
date since 1952. 

Another handicap is that 35 
of the 92 liberals elected to the 
national assembly in the last 
election in 1989 are not run- 
ning * gyiTn - Shifting some 
big names. The Liberals at 
present hold 79 of the 125 seats 
in the national assembly, com- 
pared with tire PQ's 33. 

The Liberals see the risks 
quite clearly. Though the econ- 
omy is slowly turning, spurred 
by the US up sur ge, real growth 
may not reach the predicted 3 
per cent or enough to meet job- 
creation promises. Moreover, 
public sector cutbacks, over- 
seen by Mr Johnson as Trea- 
sury Board head, are not yet 
complete. 


“If we could translate Mr 
Johnson's personal popularity 
into voter intentions, we'd be 
talking about how many seats 
we’re going to win," says Mr 
John Parisella, Liberal cam- 
paign chairman. He claims the 
Liberals have some big names 
ready to run in several “safe" 
Montreal ridings. 

Mr Parizeau s strategy is 
clear. If the PQ forms the next 
government, he says, the 
national assembly will pass a 
resolution starting the process 
of separation and the division 
of Canada's assets and liabili- 
ties. A referendum will follow. 

“People who vote PQ will 
have thought it through and I 
want no ambiguity." Mr Pari- 
zeau says. He promises the ref- 
erendum question will be sim- 
ple and clear tide time. But the 
“new” Quebec would aim to 
retain the Canadian dollar as 
its currency and accept Bank 
of Canada policies. 

The PQ remains the only 
alternative and attempts to set 
up a third party have failed 
miserably. 

Mr Johnson says Quebec 
must remain an important part 
of the federal system to pros- 
per in the era of global trade. It 
must actively spur private sec- 
tor investment and cultivate 
the new economy. “We must 
remain outward-looking and 
benefit from world trade,” he 
says. 

About one-third of the elec- 
torate is undecided. It is still 
not clear whether Mr Johnson 
can overcome history and win 
the Liberals a third term. 


*•- 

tff 

to . 

tod 

ft- 

ta 

*r- ; 

g- 

» 

#-■ 

in-' 

te 

tt 


■“orriga ' investment in 
•‘dQi H Canada has begun to 
'~'r- 1 •' riving up again, bolstered 
--.’by exchange- rote a d va nt ages, 
f- new trade agreements that 
-• ■. /will open more international 
markets to products made in 

* ... Canada and a heelthy recovery 

in the US economy. — 

jrrtir nut i.-’.hrr Nearly 45 per cent of 
the wpu ^Canada’s manufacturing 
Mm-ivimi, . output WHS exported to the US 
ca» t*;i- Vlast year,., making the 
^•v- economic health of Canada's 
: : r . 1 huge southern neighbour an 
inescapable-- consideration 
.when it comes to investment 
i | Canada is currently running a 
:fl , ?l2bn international trade 
■ surplus, and feta the midst of 
an expertOfed economic 


.'to* 1M4-K i; 

■ Will rrjr.i; 

SLq»-h 

pOpbijr i, 

where V.-. 

travc-ti m: 
Influent 

■ fettBlbl::*! t in 

, A Wi4! 

ton v* :: 


::;i- i. 


recovery.- 

Companies wishing to 
broaden their. presence in 
North ■ Aider ic a - ■ are 
increasingly tanking - to 


wf l|fcf-Nli.rp I!:;, 

ik flitMt.'. • . *«mwwwiu*ijt suruiug. w 

JJ 1 ’ . . “ ’ Canada for /spectaUsefl 

torCS* ‘ ~ v manufacturing operations, 

s capitalfeing mi'the benefits of 

• ' Ha . 


a - cheap currency, a 
highly-educated workforce, 
good labour relations and 
proximity to the largest 
consumer market in fee world. 

These ' factors for many 
companies offset the negative 
influences of high taxes and 
the risks 'associated with the 
threat of a political split 
between Canada and 
francophone Quebec. 

A survey of current business 
conditions published in )Warrii 
by the US Commerce Depart- 
ment described Canada as one 
of the biggest beneficiaries of 
a $5.Sbn, or 8 per cent, 
worldwide . increase in 
investment planned by US 
companies in their «fniiafam 
abroad in 1994. Canada will 
receive a full tt~8bn of the 
increase, second only to 
investments -planned for 
affiliates of US companies 
located ht Asia and the Pacific. 

US companies plan ' to spend 
98.71m in impro v in g or adding 


Laurie Morse on the impact of multinationals on trade 

US investment rises sharply 


to their Canadian operations 
this year, the highest since 
1990, and a 16 per cent 
increase over 1993. The jump 
in US investment follows a 
difficult s tructuring period 
in Canada, which saw a 
number of multinational 
companies rationalise 
operations and streamline 
marketing and manufacturing 
strategies. 

"What's happened here over 
the last 15 years is that there 
has been a greater degree of 
specialisation,” says Mr Jason 
Myers, chief economist for the 
Canadian Manufacturers' 
Association. “Ten years ago, a 

itml H njiH nwfll wnii pany would 
have lw a wnfa elu r ml 10 Or 12 


products in Canada and 
Imported several others. Now, 
the same company will 
produce one or two products 
in Canada, but will do it an a 
large scale for worldwide 
distribution.” This consol- 
idation, he says, has forced the 
small Canadian suppliers to 
rationalise as welL 

The new interest in 
multinational investment in 
Canada, then, is more to 
expand and modernise 
existing operations than to 
open new facilities. 

Merger and acquisition of 
Canadian companies by 
foreigners has remained 
relatively stable over the past 
two years, representing about 


gSbn, with US, UK and Hong 
Kong interests making the 
largest deals in 1993, 
according to global investment 
statistics complied by KPMG 
Feat Marwick. 


Three' industries are seeing 
the bulk of the new capital 
infusion - oil and gas,' vehicles 
and transportation equipment, 
and mining. In vehicles, a 
recent surge in North 
American car demand has 
caused Ford to invest about 
$3bn at its Canadian plants in 
the past two years, and 
Chrysler another $2bn. 
according to Mr Slawek 
Skorupinski. director-general 


of the automotive section at 
Canada's Department of 
Industry. Eighty per cart of 
cars produced in Canada are 
exported. 

Ford and Chrysler are 
aiWTiig r third shifts to their 
Canadian plants to meet 
surging demand. AH the big 
three car manufacturers have 
modernised their factories In 
Canada and are lannriiing 
products, according to Mr 
Skornpinski. Ford, for 
example, has retooled its old 
Tempo Topaz plant- in 
Oakville, Ontario to be the 
sole producer of its new family 
mini-van, which is expected to 
compete with Chrysler's 
popular Voyager model. 


US-owned carmakers will 
together increase their 
in ve st ment by 53 per cent, or 
51.71m, in Canada in 1994, a 
boost *h»t looks particularly 
strong considering it follows a 
42 per cent increase in 1993. 

However, not all vehicle 
manufacturers are sharing 
equally in the rise In rienwnH 
for new cars. Hyundai recently 
shot a Quebec plant that had 
been producing its Elantra 
model, leaving 700 people 
without jobs. Hyundai’s 
problem, Mr Skorupinskf says, 
is that it was not successful in 
generating demand in the 
North American market 

Canada’s western provinces 
have been thriving on 
expansion in the energy 
industry. In 1992, Canada’s 
federal g o ver n ment revised its 
regulations regarding foreign 
Investment for oil and gas 
exploration and development, 
putting foreigners on an equal 
footing with Canadian 


companies and opening up the 
industry to outside capital. 

With exploration success 
rates in Canada averaging 
about 50 per cent, compared 
with about 25 per cent in the 
US. multinational oil 
companies have expanded 
their operations here. Eastern 
provinces are not entirely left 
out of this movement Several 
US oil companies will plough 
about 32.5bn into their 
Canadian operations this year 
to develop crude oil reserves 
off the coast of Newfoundland. 

Natural gas investments are 
also on the rise. Existing 
North American natural gas 
pipelines are currently 
operating at high load factors, 
making several expansion 
projects necessary. With 
Mexico's entry into the North 
American energy grid, 
Canadian companies will 
produce and export related 
equipment as the US develops 
the Mexican market 


lOStm 



Reform of the social security programme is on the way 

net catches too many 


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Canada is a rich country - but 
the social safety net which suc- 
cessive governments have 
devised over five decades has 
become unaffordable. 

• - Nearly C540bn a year is 

spent by the federal govern- 
ment alone On social pro- 
grammes ranging from unem- 
ployment insurance :.and 
• welfare benefits ;to student 
loans a nd training for the disa- 
bled. The country's 15 prov- 
.. inces and two territories spend 
billions more. 

Canadians have become tired 
of paying high taxes. They also 
■' fear the foreign borrowing that 

has mads the spending possi- 
ble in recent yharkwfflheooms 
n ,... o r Impossible as lenders succumb 
1 1 "" to concern about high debt lev- 
dS. 

.h What is worse, there is 

TVsfiJ#* almost universal agreement 
Corp&fi that many- hf the country’s 
r very expensive social pro- 
grammes -do’ not work.' 

Ms Judith Maxwell, associate 
director ofthe School of Policy 
Studies at Queen's University 
in Kingston, Ontario, says both 
the vurcun&oymiemt insurance 
and welfere<8odaI assistance) 
prt«ramHie»'Wtte designed for 
the 1950s and 19608 ' when than 
was foil employment 
“The original design of 
un^^n^.insorance was 
that- it was to. help people who 
were on temporary lay-off and 
expecting to return to the same 
job,” she Bays. 

“The Intent of sodal assto 
- fence was that it" was for peo- 
pie who were unemployable. 

. Now half of "the “people on 
, social ; assistance are fuHy 
employable." ■. . .. . . 

Ms Maxwell is one of the 
experts on- a social services 
task force jet ig> by Lloyd 
Asworthy, ibh^federal human 
resources minister. The task 
force is abmrt to come up with 
‘ reform proposals. ^from which a 
Parliamentary -^maralttee is 
-• expected to produce cecom- 
mendatitmsin the 
"It's especially difficult is 
*' . CSaada," Mar MakweU says of 
the search for reforms to the 
social safety net The powers 
and responsibilities of the fed- 
; oral and provincial govern- 
• ments are drorly set <mt in the 
Canadian tiobstitution, and 
jealously gtawded’ by politl- 
tians^aach leveL 
Fbc example, tha provinces 
are respomfofe for education 
... ' and social security, but unem- 
PtoFment insuranca comes 




Looters to downtown Toronto; more single mates are 
and tho overaR cost hoe become unaffordable 


coSec&ng benefit 

HwaDeryttAP 


Over titoyaars, however, the 
federal government has used 


its taxing powers to entice the 
provinces into various social 
programmes such as universal 
health care and welfare. 

“It’s very difficult for one 
level of government to insti- 
tute reforms without having 
big spill-over effects on 
another level of government,” 
says Ms Maxwell. *Tf the fed- 
eral government makes 
changes (to unemployment 
insurance), then it pushes peo- 
ple onto the welfare system, 
which is provincial jurisdic- 
tion, Ms Maxwell says. 

Conversely, provincial gov- 
ernments will sometimes tailor 
job-creation programmes to 
make people eligible for unem- 
ployment insurance, which is a 
federal responsibility. 

Social assistance has even 
become a political football 
between provinces. Recently. 
British Columbia claimed it 
was experiencing an influx of 
welfare claimants after the 
neighbouring province of 
Alberta cart its level of benefits. 

Mr John Richards, an econo- 
mist in the business faculty at 
Simon Fraser university in 


Burnaby, British Columbia, 
says that Canada has among 
the most generous unemploy- 
ment benefits of countries in 
the Organisation for Economic 
Co-operation and Development 

But the Canadian insurance 
scheme “certainly has a num- 
ber of perverse incentives”. 

Mr Richards makes a distinc- 
tion between “passive" mea- 
sures that band money over to 
the unemployed, and pro- 
grammes such as training and 
mobility grants designed to 
make people work. 

“Canada spends relatively 
more on the passive than on 
the active," he says. Other 
countries such as Sweden and 
Germany that spend heavily 
on social programmes place 
more emphasis on the active. 

Ms Maxwell says spending 
on job creation and training 
will have to be increased. “We 
have to find more efficient 
ways to do what we do bat we 

a ten have to fill wang glaring 

holes in toe social safety net.” 
she adds. “We don’t have any 
kind of adequate system for 
child care or parental leave.” 


As social safety reforms are 
rolled out over the next year or 
two, training and other pro- 
grammes may be introduced, 
but toe problems will not be 
solved without attacking the 
unemployment insurance and 
welfare programmes. 

Unemployment benefits cost 
about C$l9bn a year. The fic- 
tion that the system is self- 
insnring is becoming harder to 
sustain as Canada experiences 
a jobless recovery with unem- 
ployment stubbornly stuck at 
about 11 per cent The fund is 
now more than CSSbn in the 
red. The likely solution is that 
it wDl became more difficult to 
claim benefits. 

The current implicit subsidy 
to seasonal industries is also 
likely to be reduced or elimi- 
nated. At the moment, an 
employee in a sector such as 
fisheries can work as little as 
10 weeks a year and claim for 
toe other 42. 

Social assistance, which was 
originally supposed to help the 
most desperate and unemploy- 
able, is costing the federal and 
provincial governments about 
CS21bn a year. 

Mr Derek Brackley, an econ- 
omist with the British Colum- 
bia a~nrt Yukon branch of the 
Canadian Ministry of Human 
Resources Development, says 
that the biggest change to 
social assistance in recent 
years has been in the profile of 
people collecting benefits. 

“TTie number of single males 
has gone up astronomically 
over the past few years," he 
says. However, most of these 
get off welfare fairly quickly, 
while families tend to collect 
benefits for a long time. 

Mr Brackley says the heads 
of single-parent families find 
they are better off on social 
assistance. Minimum-wage jobs 
do not pay enough to cover 
such work-related costs as day- 
care, extra clothing and trans- 
portation. 

Experts expect toe system 
will be redesigned to make it 
more financially attractive to 
retain to toe workforce. 

“I think there’s a consensus 
that we need a different incen- 
tive system,” Ms Maxwell says. 
But she warns that govern- 
ments will have to take care to 
cushion toe blow for toe casu- 
alties of toe adjustments. 

“If yon start tearing down an 
existing sodal structure, you 
create losers. You can't simply 
write off the people who are 
rniahiA to adapt” she warns. 

Stephen Wisenthal 



tL - **,- 

. 






The Whole World Is Only Half The Story . 


f Hongkong Bank of Canada is part uf a 
financial organization that has over 3000 
offices in 66 countries. And with over 100 
branches across Canada, that mahes us a member of one 
of the Luuest financial institutions in the world. 

A comforting thought, but its on iy half the story. 

If you’re a manufacturer of coat hangers in Toronto 
Onferioi does it really matter that your hank has a 
branch in Kuala Lumpur? 

We lihe to think that it doc?. 

As a global hank with a Canadian presence, our wider 
perspective comes with a weight of expertise that 
can he profitably applied on your behalf. Expertise 


in Trade finance, Commercial Savings & Loans, 
Credit, Payroll and Cash Management 

Expertise in erery level of Canadian business. 

And who knows, if one day your company sets it? 
sights on overseas expansion, rt’s nice to know that 
Hongkong Bonk of Canada has a direct connection 
to virtually anywhere on Earth. 

After all, people need something to hang their coats 
on in Kuala Lumpur too. 

Hongkong Bank of Canada 


COMMERCIAL. SERVICES 








THE WEEK AHEAP 



DIVIDEND & INTEREST PAYMENTS 


■ TODAY 

Atlas Conv. Equip. 15p 
BentaJIs 1.4 p 
Davis Sefvice 525p 
ENSBtCH $0.05 
IBM Credit Yen-linked FRN's 
*95 $186.42 

Japan Air. m% Gtd. Bds. ‘96 
Fr75Q 

Mariey 2.1 p 
Rttencrieff 4p 

Prudential Currency FcJ. Ptg. 

A Prf. 3.4p 
Do. Ptg. B Prf. £3.4 
Rockwell Inti. $0.25 
St Ives 1.9p 
Scotish TV10-2539p 
Sumitomo Bank Cap. Mkts. 
Gtd. Fftg/6at Nts. 2002 
$21549.31 

Thomson Clive Invs. 3.8p 
Tokyo Bee. Power 1196 
Nts. *01 £110 
WaceZ^p 

■ TOMORROW 

AstecO^p 
Brooks Service Ip 
Creditanstalt-Bank. Creuset 
SAFr0.44 

Hongkong Land (Bermuda} 
$0.0685 

Da (HK Reg.) $0.529163 
Do. (Jersey Reg.) $0.0685 
Northern Rock Bldg. Soa Sub. 
FRN’s *02 £1617.43 


UK COMPANIES 


■ TODAY 

COMPANY MEETINGS: 

Alexandra Worfcwnar, Institute of 
Hracton, riB. Mi Md. aw, WOO 
CheMtaM, Roysl Festbri Hai. South 
Be* Contra &£.. 11.D0 
re Smulur Cota YuL, SaUtoe Oowt 
20, Gutts Terrace. Edinbragh, 1Z3Q 
Perry Chp^ Cambridge House, Bluaooats 
Awertun, Hertfo r d. 12.00 


Norway FRN's ‘02 $12&39 
Rand Mines R0J23 

■ WEDNESDAY JUNE 8 
Abbey National GtcL FRN’s 
■99 $9.62 

Cardiff Auto. Receivables 
Securitisation UK No.2 Class 
A FRN’s 1897 £140.52 
Da Mezza ni ne FRN’s 1997 
£166.99 

Dairy Farm Intt (Bermuda) 
$0,041 

Do. (HK Reg.) HKS0.316733 
Da (Jersey Reg.) $0,041 
Karea-Europe $ 0.01 
Da IDR $5 

Nat West Bank Var. Rate 
Cap. Nts. ‘09 £140,21 
Nationwide Bldg. Soa FRN's 
*95 £131.7 

New Zealand FRN's *96 
$174.87 

Nippon Chemi-con Gtd. FRN's 
*96 $195.64 

Reed IntL 5% (31696 net) Prf. 
1.75p 

Do. 796 (4.996 net) Prf. 2.45p 
Standard Chart Und. Prim. 
Cap. FRN's (Sets. 3) $184^3 

■ THURSDAY JUNE 9 
Abhauaer-Busch $0-36 
Antofagasta 15p 
Beckman (A) 1.2p 
Boosey & Hawkes 1 9p 


FMk 

MBadCdoUa 


AngBan Group 
AngOan Water 


City Centre Restaurants 1-33p 
European Inv. Bank 9V696 Ln. 
•09 £237.5 

JarcEne Strategic (Bermuda 
Reg.) $0,085 

Da (HK Reg.) HKS0.6566 
Do. (Jersey Reg.) $0,085 
Mandarin Oriental IntL 
(Bermuda Reg.) $0.0359 
Do. (HK Reg.) HKS0J27731 
Do. (Jersey RegJ $0.0359 
Treasury 1096 Ln. W £5 
Do. Rtg. Rate *99 £0.9559 

■ FRIDAY JUNE 10 
African Lakes CL5p 
Allied Signal $0.1675 ■ 
APV3.4p 

Aqaurius Plus FRN’s 2000 
$265.42 

Brit Empire Secs. & Gen. TsL 
0.25p 

Treasury 896 2003 £4 
Chevron $0,925 
Cotes Myer A$0.11 
Dun & Bradstreet $0.65 
Exxon $0.72 

Finsbury Growth TsL Q-9p 
Gen. Motors $0.2 
Grace (WR) $0.35 
Great Southern 8.2p 
Hapoalim IntL Gtd. FRN’s 2001 
$189.58 

Houston Inds. $0.75 

HSBC 16.5p 

Do. HK$10 HK$1 .8843 


6nrtmore Stared EquBy 

Hambros 

Kloof Sold Mining 


Qartmoro Vatu# tnv. 


Leigh Interests 
Nururoa 


RPC 

St. Jamas Ptaca Capital 
Stmmtey 

TR Property hw. Tiuat 
Vodafone 


i & Metropolitan 


t SreaWar C«Hnda« 




On Tuesday, June 14 the Financial Times will publish a special supplement on 
the outcome of the European parliament elections. 

This authoritative guide will include a comprehensive round-up of the voting and 
analyse how the results could affect the political outlook of the European Union. 

There will also be a revealing look at the successful candidates - the men and 
women who will wield the power in the new parliamentary line-up. 


Times. Europe^ Business Newspaper. 


COMPANY MEEnNQSt 
Brenner. Glazier* Hsft Montagus Ctoua, 
London Bridge, SlE, 12.00 
B Ora Mkilng & Expht, 41. ChMf 
Ptaca. S.W_ 11-30 

Exploration Co, 41. Ctmval Ptaca. S.W„ 
11.16 

ftoct Qrp^ The Brawny, ChfcnraB Street. 
£.0.11.00 

Jacks (Wm], Stsutingd a te Cartage Col, 
London Road, Smnhigdaie, Borin., 12JW 
Owan ft RoMnaon, Broadwak Housa, 

5. Appold Street, E.0. 10-00 

Stylo, Ha nogate Hone! Appmtay Bridge. 

Bradford. 11JJ0 

S A U. Plough & Hwraw Hottf. Hsgley 

Road, Bkmingham, 11.30 

Tarmac, Quean r*j«ha»ti g Confomco 

Contra, Broad Sanctuary, aw„ 12.00 

IMM Energy, G, Thraodneetlo Street, 

&O.11J00 

BOARD MEETINGS: 


Turkey Itut 

■ WEDNESDAY JUNE 8 
COMPANY MEETINGS: 

Amae, Hofidoy Inn Crown Plaza Mkfand 
Hotel, Pfltor SlreoC Manchester, 12-00 
Btoctdeys, Parti Houee Hotel, SNfrud, 
ShropsWra. 1200 

Elya (WknUedo^. 22-28, VAmbtodon 
Hffl Road. Wimbledon, S.W.. 0-00 
Hmsiock Bmpu, Masses*. HBcnd 
hdtts&M Park. Dalgety Bey. Rfe, 12-00 
HeBeai Bar. May FUr Holtf. Stratton 
Street, W„ 11 JO 
HopMitsona (ftp, Ramadn Hotel, 
Btaddrlaa Street Manchester. 11 JO 
London ft Assoc. Inv. Tnt, 30-34, New 
Bridge Slraot EC, 12.00 
London ft M u nc h u a tar Op, Armourara 
Haft 81. Coleman Street EG. 12.15 
BOARD MSTVIGS: 

Rnta 

Alph am er i c 

Anglo Untied 

Cwffyrw 

Capo 

CaM 

Doetaraal Gold MMng 
OoomfonMn Qold Mntag 
Ortefontaki cans. 

Drummond 

Bactroo o rap one rrt n 


Northam Poode 
Racal Etacfrwticu 

ft ■ i ifi h lliAn fYe r >■ In 

SOOUWl UJfWPrUStUW 

Tumpyk* 

Waddtngton (J} 


Chemring 

Daly MaH ft General Trust 
Ekfcidaa. Pop* 

French (Thomas) 

Qraenooro 

G ree n w ich Reaoucea 

■ THUftSOAY JIHE9 
COMPANY MEETINGS: 

Antofagasta lldga, Chartered 
Accountanta Hal. Moorgata Place, EG. 
11J0 

Austin Read, 15-21. SeckvOe Street 
W„ 12.00 

CMy Centra Restaurants. George 
Inter-Continental Haiti. 19-21. Georgs 
Street Edinburgh, 11.00 
BS, Brewwa Hal. AMumtanbury Square. 
BC., 11 JO 

etrew ndow Chandwa Haft 4. Dowgata 

Hn.EXt.12J0 

HTV, Tetovston Centra, Cubethoiiso 
Craas, GartfJt. 12J0 
Hewden Short Gtaegow Royal Conceit 
Haft Buchanan Street Gtaegow, 12J0 
Mowlam (Johoft BufcSng Employer# 
Con f ederation. CavontWt Cotdaranoa 
Centre, 18-20, Ducheee Mows, W„ 12.00 
SaatcM ft SaidcM, Queen Btaabelh 

■ Outdaranca Contra, Bead Sanctuary, 
S.W„ 11J0 

TBrury Douglas, Bartrer-Sugoom HNI, 
Monkwel Square EO, 11 JO 
BOARD MEETINGS: 

Rrata 

Bristol Scotta 
ChU4> Securfty 
Held 

Johnson MatOwy 
Lyons Irish 


IBM $0.25 
Ipaco 2.3p 

J artline Matheson (Bemtuda 

Reg.) $0,152 

Do. (Jersey Reg.) $0-152 
Jerome (SJ 0-^P 
Laing (J.) 6p 

Do. A NV 6p 
Laird 6^p 

Lloyds Chemists 2.7p 
MoW S0.S5 
OGC Inti. 3.^> 

Quicks 3p 

SABRE IntL Sers. N Var. Rata 
Seed, Nts. 1996 Y83011 . 
Do. Sers. G Var. Rate Seed. 
Nts. *96 Y68122 
Sumitomo Bank Cap. Mds. 
GtcL Fltg/Fxd. Rate Nts. 2003 
$19843.05 

Sumitomo Heavy FRN’s *98 
Y768Q2 

Sun Co. $0.45 . . 

Texaco $0.8 

Trafford Park Ests. 7%96 1st 
Mtg. Deb. 90/95 £3.25 
Do. 996 1st Mtg. Deb. 91/96 
£3.97 

UtcL Tech. $0.45 
Warner-Lambert $0.61 

■ SATURDAY JUNE 11 
Hafstund Nycomed AS A 
NKr4.4 

■ SUNDAY JUNE 12 
Eaton Fin. NV 1214% Uns. Ln. 
2014 £6.25 


Mortal Sbeftort 

Northumbrian VVMer 

Oshome & Utflo 

Oxfottl instnaAontB 

Powerg en 

Proteue 

Scqa 

000 

knurins: 

Chryseita 

Dewhur o t 

QWR 

Lorwho 

Premier Lend 

Wldney 

Woug hby Cone. 

■ FRDMY JUNE 10 
COMPANY MEETINGS: 

Greenacre Gtph Copper Inn, 
Psngtxtume. Berio., 1DJ0 
Martat bit, SwaHow Hold. South 
Normanton, DertJya-. 12.16 
Morgan Cntdble. Hold W e rcontbwnl a L 
1. Hamteon Ptaca. Hyde Park Comer, 
W.. 12.30 

Shoroo Grp, Cross Green Way, Leeds, 

12.00 

Syfcea-Pkfcavant IGnhouse Lane, 
lytham Bt Ames. 12-00 
BOARD MEETINGS: 

Finals: 

BidtfnCAF) 

CwrfMe 
Cohen (A) 

Baor 
Park Food 
Hire 
Sonde 
Wetah Water 
baarirm: 

Qold n a M a Coal 

Company mootings m annual general _ 
imBdgiinbB otherwise stated 

Please note: Reports and aocouits are 
not normally avntobta until apprord ma toly 
■be weeks altar the bowd meeting to 
approve the prdkdnmy raeutts. 


r 

II, 

t, L 
111 : ' ■ 
0-.^" - 

O' 

pang 4 - 

linking 

and : 


CONFERENCES & EXHIBITIONS 


JUNE 9-10 

BUSINESS PROCESS RE- 
ENGINEERING SEMINARS & 
WORKSHOPS 

C ont inuing a s umneta l series nf wnri n ant 
far cxccabvct ind wdck roaiy eduiyd 
with designing and implementing BPR 
initridves. Edabfished btae cUp diem CsL 
Presaned by n leading US praniti o ncr . our 
guide b tnvsttaied with case stndia and 
workshop*. Coarse book available. 
Repeated September 19-20. Contact: 
Richard Pattis, Vertical Systems Intercede 
Ltd Tel: +44-455-250268 (24 boars] 
Fhx: +44-455-890821 

LONDON 

JUNE 10 

IBCmOUOGYlRANSFBI- 
BLOCKBtaiPnON REGULATION 

PuH day debate cm ECS c on trove r s ia l draft 
Block Exemption Rtgahlha to replace 
[base an patent and know -bow licensing. 
Prapml for eadnsiviiy and permissible 
uapctt fcx port tuns ate big issues. Speakers 
indude Dr SGonuso(DGtV) plus busmess 
leaders, patent attorneys and lawyers. 
Contact: Rente Sirftnmr. LES 
Tel: 071 493 0184 Fas: 071 629 9705 
LONDON 


JUNE 12-17 

ALPHATAMA- 

TME PRACTICAL ESSENTIALS 
OF NATURAL GAS 

Fivfrday semlaer designed both far those 
who arc ne w c om e r s to the gas business, 
and specialises who are unfamiliar with 
certain c an —cial/tadmologfenl aspects 
and need to broaden tbeir knowledge. 
Programme coven whole spectrum of ga» 
bonne** from exploration through ro end- 
users. 

Contact Anita Gardiner. The AJptutaaia 
Group, Loodoo - 

Tet +44f7])bLT«W7 Rue f44(71) 6IJ OtW 
CMCKLADE, ENGLAND 

JUNE 14 

MAMTANNG HARMONY WtlTfli 
THEFAMLY 

A Workshop for Fiamiy Busteessas 

Refations h ips within family businesses ate 
oompBcaed by emotinod ties. This evening 
workshop highlights die adwaWages nf mmg 
mediation to encourage effective 
e ainumu catirm. gjvts g u idmue on i q uj r 'rog 
Cut firan emotni and demmuuaKs how to 
move from adversity to c o nsensus. 

Contact: Fria Ttnffali. Stoy Centre for 

FamRy Botinem 

TeL071486588S 

LONDON 

JUNE 14 

MANAGEMENT BUY-OUTS 

Management buy-outs arc established and 
well recognised transactions. The - 
comprehensive programme of this 
conference. In association with Gresham 
Trust, will provide an in-deptb 
of MBOs. The »— |4— ^ win 
be on practical odvkx whh ate studies 
from directors who have led successful 
mmagmeat buy-outs. 

DircckH Conlerenccs 07 1 7300022 
LONDON 


JUNE 15 & 16 

FT TRANSPORT IN EUROPE 

The meeting "dH Ideas ou the "-yiir^rnf 
of Conmmniiy proposals (or the Trans- 
Europcan Networks and the prospects for 
public-private pnraterehipf to finance 
EnropeS* haapon infrastruemre. 

Empirks: Fmamaai Tima 

TcL 081 673 9000 Far 081 673 U35 

LONDON 


JUNE 16 

PROSPECTS FOR LOCAL 
MARKETS AFTER THE 
RECESSION 

Aims to highlight strategic n a fl uen c ea 
affecting local markets and economies, 
helping to develop new ideas and more 
effective local marketing strategies far the 
fanre. Com £50 * VAT. 

Contact JacquJ Gotti 
TeU 071 353 9961 

LONDON 


JUNE 16-17 

GREECE M A CHANGMG EUROPE 
Old Theatre, Loodoo Scfaoal of Ecomhihs 
P olitical and "er roo ro fa relations with EU. 
International academic speakers, political 
ieadcas (Tbeo. Fangakw. Greek Minister far 
Europe). Fro: £23/13 stndcats; to "Creek 
Conference"; The European Institute, 
London School of Ec on o mi cs, Houghton 
St. Aldwycfa. London WC2A 2AE 
LONDON 


JUNE 17 

THE LONDON SCHOOL OF 
ECONOMICS 
is offering a one dsy emnse entitled Some 
Lessons From Japan designed to 
f a m iliarise British manufacturers with 
methods of subcontracting used in Japan. 
The Course is based on a recently 
completed research programme carried 
out in Japan by Dr Gietzmann of the LSE. 
Contact: LSE Shut Courses Office 
Teh 071 955 7227 

LONDON 


JUNE 17 
BPR FORUM 

A one day, participative session; BPR, an 
explanation, it's origin A principles: Urn 
riiatlmy facing business fat the 90s; BPR 
case sindies from a range of industry 
sectors; Managing Change and where to 
start; Membership of the BPR Study Group 
Cose £150 + VAT. 

Contact: Hanson Associate r 
Teh 0285 885201 Fate 0793 752592 

EDINBURGH 


JUNE 20-21 

THE BUSINESS OF LICENSING 
Annual Conference of the Licensing 
Executives Society Britain and Ireland. 
Keynote speaker lan Harvey (BTG) on 
t mriVr c iM l property rights in a changing 
world. Other speakers front UK, Ireland, 
USA giving internal! Oral perspectives. 
Wta d bhopi od mKhnit , heakfacBn. 

compucen, trade marks, tasigB tight* Oft 
Contact Rcnatc SebrasK 
TeitOn 493 0184 Fax: 071 629 9705 

DUBLIN 


JUNE 21 

ENVIRONMENTAL AUDITING 
An Important one day course ran by the 
British Uhtwy designed to clarify wh* an 
environmental audit Is, why yon sboahl do 
one and what benefits yon will gnin. 
Venue: Science Reference and 
Information Service. Cost: £145 + VAT. 
COnacc DavM DuButoan 
TeL- 07 1 323 7470 

LONDON 


JUNE 21 

■MYTHS AND REALITIES' 

NEW BUSINESS OPFO8X0NXHES 
IN INDIA 

The f orem o s t Conference os India post 
1994 Indi a n budget, b rin gi n g toget he r a 
high profile delegation of leading 
Govern men t. Legal and Business experts 
from India and Britain. Auspices of the 
Dm. 

Carton Qxpamtian 
TCL-081 5777713 Fax: 081 813*136 
LONDON 


JUNE 24 

CHINA: OPEN FOR TRADE 
AND MVESTMBrr 


L a ncaste r Unlvmtity Mir a gstnent School 
ere Session on cross-cultural business 
etiquette. Panel discussion with experts 
from Chinese Embassy, Foreign office. 
China- Britain Trade Group. 

Contact Sue Ecdes 

TeL 0524 594013 Fax 0524 381454 

LANCASTER 


JUNE 21 -23 

IGAP94- Information Capture & 
RrocaraiiB Exhtttion & Conference 

Featuring a wide range of supplier* to the 
bdeEo »<knii»iTfeB imfirtftjr xhc cadfisaxis 
brings in expert sp«a!ccn to discuss 
mtonudc Uamifie alion soloiioiis for cod 
users in major market sectors such as 

fk^iUii|^ hgp w n^ nff mfi i iiM i i ii |^ 

rad mom. A halfday wndadhpp oa the basks 
of a n t nm atic i d eu ril aii t ion b available to 
bsc new to the fadnsuy. 

TeL +44 244 378888 Pax: +44 244 370011 

BIRMINGHAM 


JUNE 22 & 23 

IMPLEMENTING PRACTICAL 
PERFORMANCE MEASURES 
ACROSS YOUR BUSINESS 
PROCESSES 

This conference fa designed to take the 
delegate through a structures learning 
programm e cmafering of 13 practical case 
studies ilh at ra ri ng how to u u ufcmcnr and 




Tet 444(0)71 £774383 Fnc+«<U)7lfi3l32W 

LONDON 


JUNE 22-28 

RB&IGMEBWG TO CREATE 
WORLD CLASS PBTORMANCE 

Executive briefings ou World Class 
Management issues, a. g usiucss Process 
Re-Engineering and Workflow 
Automation, b. Re-Engineering the 
Manufacturing Process - towards World 

Conner Vicki Welham, World Gass 

I J i ihi hI 

Teh 07Q5 288133 

VARIOUS 


JUNE 23 

COMPETITIVE FINANCIAL 
RATIO AN ALYSIS 
Forum Hotel, Kensington. 

Evaluating company pe rf o rm ance from 


Qxraet: Evmna Mortis, QMANhtaeieoaBes 
Tsk 071 917 9244 Fax: 071 5S0 6991 

LONDON 


JUNE 23 

TOTAL INNOVATION 
MANAGSIENT: IDEAS INTO 
ACTION FOR IMPROVED 
PERFORMANCE Sc PROFTIAMLITY 
Innovation maBcra. Directors know tab-. 
The question b how to engineer your 
orgaaimion far the app rop riate levels of 
innovation. This conference, chaired by 
Robert Heller is organised by The 
Strategic Namuag Society , 

Contact: Jo Mainee. The Stra tegic 
Maturing Society Teh 071 636 7737 
LONDON 


JUNE 27 

SOV8BGN RBK- ACRHXT 
ANALYaS WORKSHOP 
Thomson BankWalch, the international 
credit rating and analysis agency, is 
running n workshop to teach the 
techniques and strategies for 
mulenir a n t rai g country risk. Country risk 
analysis techniques are applied to both 

Qw «« B fan Rothery 

Tel: 071 353 1768 or 071 815 0406 

Pax: 071 815 0408 

LONDON 

JUNE 27 - 28 
THEBU9NESSGFFUM) 
MANAGEMENT COMPETITIVE 
5IRATEGES FOR TtE 1990ft 
The seminar wfll dfecnattbe issues affecting 
the dniekgnarat aud oompetanoieH of da: 
money m a na g e uuh tawtoess. B will take a 
fiesh look us market pe n e ns ti a e strategics, 
the management of people, finances, 
inlonnttkm wi—i 

EUROMONEY 

TcL 44 71 779 8683 Fax: 44 71 779 8603 

LONDON 

JUNE 28 

RBjOCADON POLICY & PRACTICE 
UNDER THE NEW TAX REGIME 

A CBI/ Ernst & Young seminar on 
domestic end totenational relocation to 
explain: the new tax rales and e mp lo y e: s' 
reporting obligations; how organisations 
are reviewing relocation policies and 
practices; and the results of a major 
Survey oa company practice. 

Oomacn S*mfn Aldxed GBI Gon&rances 
1V± 071 3797400 Fate 071 497 3646 

LONDON 

JUNE 28 

THOMSON BANKWAnCH 
Bank CrectAnaiyais Workshop 
Tadring the timdanaentab of Bnfc Ctedh 
Analysis, locating on qaslilative and 
qn in tiiativu boots. Begms with tfitenssfad 
of the sign ifi canoe of banking system 
nrnemres, faBowed by a review of uafytfea] 
tndraiques, Snsnrial s wMBm a n ts analysis, 
peer comparisons rad trend asafygris. 

Canmee lan Rmhoy 

TcL 071 353 17&W71 8150406 

Ite OTl 815 0408 

LONDON 

JUNE 28/29 

INTRODUCTION TO RISK 
MANAGEMENT 

Training course covering treasury 
derivative markets. Currency Options, 
SAFEs. FRAs, Futures, Interest rats swaps 
and related products. For Corporate 
Treasures, bank dealers and marketing 
executives, financial controllers, systems 
and support ptasonncL £480 + VA.T. 
I#wood David Insematianal Ltd. 

Tet 0959 565820 Fkxt 0959565821 

LONDON 


JUNE 29 

CRE5T-lHEDEVHJ0nBfT 

FRAMEWORK 

For bnriness and qnems analyas led by the 
Bank of England CREST Project Team 
wh ich e xamines technical aspects or the 
CREST system development. This bill-day 
conference feraaes workshops on N g wwfca 
sad Security Rcgjatari an . h Bauction. Input 
and Access to Information- Price: £75 
+VAT. Conlacc Sally-Ann Bezant - 
Seaniixs Instate (Services) Lid. 

TcL 071 6263052 Rue 071 626 3062 

LONDON 

JUNE 29 

INTERNATIONAL WHEAT 
COUNCIL, WORLD GRAM 
CONFERENCE 1994 

Speakers from 1 1 * i jv r grain and 

exporting countries will explore policy 
adjustments in the post-lira gnay Round 
tra d in g environment. Prominent tmdras wiB 
being the nnUnig and 


Contact: imernaikmal Wheat Cbundl 
Tti: 071-513 1 122 FWc 071-712 0071 

LONDON 

JUNE 30 JULY 1 
RAISMG EQUnYAfC EQUTY- 
LJMCED MIERNAHONALLY 
The seminar wiO fbemi on the issues faded 
by corporates when issuing capital 
Internationally: balance shed structure, 
instruments choice, risks and rewards __ 
Workshops win look S: using de ri v ati v es , 
maximising the conversion chances. 


JULY 4 & 14 

STRATEGIC PROCUREMENT M 
THE 1990b: Concepts & Cases 
Umo Mated work sh ops designed ro explore 
leading edge thinking about Strategic 
Procurement Each event win cnmNnr the 
work of senior practidonere and leading 
academics to mix fandameatal concepts 
with practice. They are intended to act as 
departing peine for new )s mJ i rs ing forum. 
Contact: The Contracts ft Procurement 
Rese ar ch Unit. University of Bi uuiugha m 
Tet 021 414 3221 Fax: 021 414 3217 

BATH/BIRMINGHAM 

JULY 5 86 

GLOBALISATION THROUGH 
CROSS CULTURAL TEAMWORK 

The conference, icing pooka! case studies, 
will take the delegate through a streamed 
laming jxognnroo focmed on bow to derelop 
and bnpkmeman kcagoted ifproach to global 
hrawworfcando ^wfati ontiilmelopmenL 
r~/nttn r Sarah Pe a c e 
Tel: +44 (0)71 637 4383 
Fh* +44(0)71 631 3214 
LONDON 


rfuui g ln g (he syndicate structure. 
EUROMONEY 

Teh 44 71 7798683 Free 44 71 779 8603 

LONDON 

JLJLY4 

USGOVEHMMBNT 
PROCUREMENT CONFERENCE 
Policies, Procedures, Legal issues and 
pjvqaiflqdpn Opportunities 
A Ugh level sentar whh US speakem fam 
tire Washington-based British American 
Basin ess Council; the American Bar 
Association, the tail secretary (commercial) 
of the British Embassy and qmafecta bom 
Coopers ft Lybrand and rim University of 
the Westof Eogfcnd. 

Contact: Richard Deanery, RDA 


Tel: +44275 856700 Fax: +44 275 858569 

BRISTOL 

JULY 4 

NAMGATMGTHE ^FORMATION 
SUPBRHGHWAYMadaQQmegBnoe 
& your markeSng ss^egy 
This oonilerence will examine the policy 
Implications, the battle fas control and the 
significance for marketing and 
advertising. An: yoo ready tn interact with 
ibe consumer? Contact: Nick Jones, 
Marketing Week Conferences 
Teh 071434 3711 Fix: 071 2878706 

LONDON 


JULY 4*8 

THE JJT/KAIZEN WORKSHOP 
As featured on FT Management Pago on 
4th January: Five dayri inten sive ha nds-on 
experience for senior Manag ua in worid- 
bcatlng productivity Improvement 
tecfatriqnes, in a real factory. Free video 
and oopj of FT slide also available. 
Cbnnct Sarah Bisby. Kraai hskBetfBncp: 
Tel: 071 71 3 0407 Fa» 071 7130403 

SOUTH WALES 


JULY 5/6 
INTRODUCTION FOREIGN 
EXCHANGE AND MONEY 
MARKETS 
Highly parti d pa rive training coarse 
covering traditional PX and money 
markets featuring WTNDEAL a realistic 
PC based dealing simulation. For 
Corporate treasurers, bank dealers, 
marketing executives, financial 
controllers, systems and rapport 
personnel. £480 + VAT 
Lywood David International LlcL 
TeL' 0959565820 Fax: 0959 565821 
LONDON 


JULY 5 & 6 

NCC94 ■aWPOWEFHNG THE 
ORGANISATION' - 
The Business of IT 
This conference will focus on practical 
advice on how new and evolving IT 
rofanoos arc String used to develop eSntive, 
real- world, busmess stiategi ca. NOC94 is 
specifically tailored for senior IT 
paafn wimulr and aoriar corporate executives 
requkmg uptbieson dmqgps umlvinB IT. 
Catenet Carol Wright Nil Campatmg Cenne 
Teh 06 1-228-6333 or Rue 061-236-8049 
' LONDON 


JULY 6 

SECOND CITY OF LONDON 
DERIVATIVES CONFERENCE 
Bankers, regulators and users discuss 
supervision, capital adequacy, new product 

development and problems in the markets. 

Sponsored by CSFL TWcri Bonk Europe, 

Af rfcw Aiufa-rWM, I Vitift i M i it I n m lan t 

Risk Systems. David MulKus Keynotes. 

Details from; Gtyfurum Ltd 

Tot 0225 466744 Fws 0225 442903 

LONDON 


JULY 8 

RUSSIA &F0HMB1SCMETUM0N 
Commerce & Imomattortal Aflajrs 

Opportunities 

fa^crtant strategk briefing wbora forcuom 
werid qxcialte on them esmgkig nakne 
and republics assess tbeir current status, 
likely developments Md future 
Rare fom t sprite wht, 

unmaKbcdaaSbflity. 
CanaKttWestmdsFkhsUd 
Tet 0923 778311 Rac 0923 77683) 

LONDON 


JULY 6 & 7 
FT INTERNATIONAL 
EQUITY MARKETS 
The narariri Times and tho f yn tm for Cbe 
Smdy of Ftaandri hmoratian « atrangfog 
a hjgh level conference on the falern s tfonal 
Hquity Markets. The aim is to provide a 
high-level forum for stock exchanges, 
regulators, market practitioners and 
ntvesms to debate the evolution and flame 
sBuctnre of flat iakxnaiioml equity markets. 
Enquiries: Ha an cia l Thaos 
Tet 081 673 9000 Rnc 081 673 1335 

LONDON 

JULY 66 

CONFERENCE ON HUMAN & 
ORGANIZATIONAL ASPECTS 
OF MANUFACTURING 

Topics include: change; lean 

production; implementing concurrent 
engineering; design nf manufacturing 
systems; and many morn. Fee £399 
(includes VAT. lunches, codec breaks, 
conference dinner and proceedings). 
Oaofact: Paul Kidd, Phaa« 0625 619313; 
F«c 0625 619060 




JULY 20 & 21 
FT EUROPEAN 
IFI BOOHHUMCAHONS 
This conference will examine the 
fanpEotiions of the cmrriH trends snd the 
potential business opportunities in the 
industry doe to HbeaBniiOR. privatisation, 

<»niy^lrm andrfa.iHB«ihSKwte mlAw«tti 

Tet 081 673 9000' Ron 081 673 1335 

" ‘ LONDON 


NOVEMBER 24 

BRAEL^TRADE & MVESHIBfr 
W AN BHB1GMG MARKET 

Mgarcradetcnoe ■ mmcistian wte the faaefi 
i ; -*y, London. Higli fcxri speafcos fmm tae 
Israeli Government St Companies already 
cstabfished in IsneL Topics include The 
E*P?o*« Eenxxny. Bvataem Davefapmemta 
a High-Tech Enviroomem, Opportunities 
tfrnxgi Privafiroioa Fhsmcfaig, htfisstraatte; 
Sdenoe A Tedsmlagy. 

INTERFORUM Tet +44(0)71 3869322 
Fax: +44 (p) 71 381 8914 
LONDON 


JULY 7 & 8 

INTERNATIONAL CORPORATE 
INTELLECTUAL PROPERTY 
PRACTICE 

An I m poi tt ut oppor tu nity for huettectoal ' 
property professionals and their advisers 
to look at new davefopments and treads* 
re-examine practices, problems and 
predictions. The panel of speakers has 
been carefully chosen for tarir specialist 
knowledge end expertise. 

Contact: Steve Warner. E uro p ean Smdy 
Conferences 

Tel: 071 386 9322 Pax: 071 381 8914 

LONDON 

JULY 11 

PRIVATE SECTOR 
INVOLVEMENT IN PUBLIC 
SECTOR SERVICES -THE WAY 

AHEAD 

This event examines the future of 
competing for quality in the public sector 
in the UK and oversea* against the 
ba c kgroun d of cesufcs to date. Organised 
by QuadriUct. Price £295 + VAT. 
For brodmre tdepboue: 071 242 4141 

LONDON 

JULY 12 & 13 

FT MIU3UBXA * Vision and FteaHy 

Thra major businem forum wiB focus on (be 
fay fewes fidog one of the fastest growing 
industries, the regulatory and legal 
framework for Industry development, 
financing (he raBhi mcd ia future, assessing 
teal business anofleatiopa and pn«afai 
the role of stuttgic aUanoes in respecting 
m (he devefapa^nmltiniedta mmketfdact. 
Enqimiex Rbancial Times 
Td: 081 673 9000 focOSI 673 1335 
_ LONDON 

JULY 13 

LITLLI1VE UTBJTY REGULATION 
The Accounting Requirements 

au/ICAEW Semmar addocsses (he beaa on 
which finuodal Information should be 
collected and whether the Information » 
aufficienl for renlunrY dedskm n»Wm, 


EXHIBITION 


JUNE 21-23 

OBJECT WORLD UK 

OLYMPIA 2. LONDON 
Sponsored by The Object Management 
Group. IBM and Andcssen Cbnsnltiqg, tins 
event focuses on the cost and busmen 
benefits of Object Technology, achievable 
through faster software development, 
extensive re-nse and more effective 
maiiitnnmcc. A FREE Brttibitiaa mid «*•»*= 
at FREE Vendor Sentinsa are on offer. 

Tet (.081) 541 4865 Rue (081) 974 5188 

LONDON 


INTERNATIONAL 


JUNE 23 

CORPORATE SECURITY WRUSSA 

A" you doing cnongfa for the safety of ymr 

“tipfaytes, property and prances in Russia? 
Thai ore-day con li nrc iM e add uaa c a four key 
topics: Company policy towards security 
issues; Guidelines on personal security: 



ife 


m 


Omtact: G de LeouanSs. The Ecotmmbt 
fotdligc&re Unit GmbH 
Tbt +43- 1/712 41 6(0 Fax: +43-1/714 8769 
— VIENNA 


JUNE 28-27 

APOWB1RJL GLOBAL ALLIANCE 
: tetomercM Teleshopping *94 


tema+ng top direct response television 
ataiiivre uum North America and famp. 

bHdqjta tSseustam on legriamy 

DRTV trends, followed by six 


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Tst 071-630 9977 Fax:071-6309806 


^Ksaras metedB Sr reynu Cssba^ OfiBro 

of Fair Trading and Professor Mm Kay, 
London Economics . 

Gnsao: Leigh Sykes, CRI 

Teh 071 895 8823 Fax; 071 895 8825 

_ LONDON 


TO ADVERTISE IN THIS SECTION PLEASE CALL JANET KELLOCK ON 071-873 3503 


AMSTERDAM 

JUNE 28 & 29 ' — “ 

EUROSECUR/TY "94 

,lw ! Mtrio1 Espionage and 
Conference The 

meeting place for company 
^rvroooocereed with rTactwf^AII 
protection will be covered 

Tti (+322 512 46 36) Fax (*322 5 12 4 m) 
— Brussels 


















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and art 


Jackie WullscUager argues against 
one move for political correctness 


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TC' 


■Nous AccosonsT began the letter 
ait to critics covering the recant 
Xiblin Pinter Festival. The Dangh- 
ers of Eve, a feminist group which 
jives its address 'as the University 
if Southern California, atmnmwwi 
. : r " he forthcoming trial of three writ- 
--i ts: Harold Pinter, John Osborne 
'irid Ted Hughes. Their crimes? 
' Fatal damage” to three women - 
"'Vivien Merchant, Jill Bennett and 
lylvia Plath, all of whom died, two 
»y suicide and one of akohohsm, 
? ifter broken marriages with the 
niters. 

“Age has withered their talent” 
ays the letter of Pinter, Osborne 
nd Hughes, “but the nrtn lfmrily of 
heir spite, damage, self-seeking is 
a far unbroken." Although a f fina- 
list trial of Harold Pinter is as 
iffensive to' most people as the 
atomi c fntir* 1 a gainst Salman Bush- 
He, the Daughters erf Eve - who see 
, .. irt as an «»v*enriin« ofpefsoaahty - 
■ •• -eflecf a widjer 'shift towards the pol- 
tirisation. of an artist’s life. 

■ "Perfection of the Hfe, or of the 
.rorfcP’ Yeats : once nsted. When he 

- '••.note.' few readers rated .about the 
acts of the writer's existence, hi 

past 15 yean,- however, there 
been a surge of literary htag- 
and anexplosmcrf Interest, 
is changing the fimdamental 
'-jT4''t • '"ray we think about the relation 

"iT'eij* ^ v. jetween life and art .. 

.w.vAX “Biography Is Bstening to back- 
rtairs comment and reading peo- 
- . 'lie’s mail." rays Janet Malcolm, 

Cl;.! V whose controversial book The Silent 

Woman, about .the battle between 

- Hughes and the “cultist" biogra- 
’ Aere who see Sylvia Plath as a 

.. . feminist martyr, has just been pnb- . 



fished in the US. Last year, after 
Andrew Motion’s biography of 
Philip Ta ykrn , and the publication 
of Larkin’s own letters, revealed 
racist attitudes - “too many flack- 
ing niggers around"'— and. sexist 
tastes - a penchant for schoolgirl 
bondage - there were calls far his 
poems to be harm art 

To trace this movement is to see a 
cloud of censorship emerging from 
' our .most liberal and individualistic 
t raditio ns In an indjiridnaliBHo soci- 
ety, it is natural that the writer 
becomes the celebrity, almost a con- 
sumer icon, as well as in some 
sense our representative - an 
Everyman whose life tells us about 
our own. Henm die bestselling sta- 
tus of recent biographies such as 
Richard Ettmann’s Oscar WSde or 
Victoria Gtendinning’s Trollope. 
And in a culture which flatters 
itself on its lack of repression it is 
also inevitable that we assume the 
writer’s private life; like his work, 
is our public propert y. 

in- so far as this effe cts our aes- 
thetic responses, it is usually to 
mulch them - most literature is 
grounded in personal experience, 
and is a better read when we know 
what- that experience was. But 
recently other cultural trends have 
come into play ~ political Correct- 
ness, the tendency to conformism, 
to simplify and to he over-literal 
Together, these encourage a confla- 
tion of an artist’s life ami work, and 
the passing of an inappropriate 
moral judgment on both. 

There are the modern giants 
whose books we are constantly try- 
ing to explain, but who are above 
moral criticism, such as Joyce. IBs 


John Osborne and Jill Bennett when she died he said he regrett e d being "unable to look down on her open coffin and drop a large mess in her eye" 


. *wi vr - • 

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vv— ' • 





Ted Hughes: battle 


Sylvia Hath: suicide 


books are driven by personal experi- 
ence. When he wanted to write 
about infidelity, be covertly urged 
his wife Nora towards an affair , but 
she saw through him- “Jim wants 
me to go with other men so that be 
can write about it,” she ex plained 
baldly to the suitor he found, for 
her, "but I want only him.” Brenda 
Maddox’s Nora is a model of a biog- 
raphy which illuminates Joyce’s 
wuik through a fascinating account 
of two lives. 

But at the other end of the spec- 
tram are the more recent authors 
whose lives happen to embody cur- 
rent political myths. The hijacking 
of Sylvia Plath, who gassed herself 
in 1963 leaving bread and milk by 
her sleeping children, as an early 
feminist icon, has prevented serious 
evaluation of her work beyond 
those terms. Thus Ronald Hayman’s 
1991 study reads like a detective 
story ("had there been a suicide 
note? What had It said?... was it 
true that a doll had been 
found. ..with inns stuck into it?") in 
which Plath’s poems are used to 
solve questions about her life. 

Where Plath is the good girl, Lar- 
kin is the bad guy in the new Life 
stakes. But both are badly served 
because appreciation of their work 
risks being subsumed into token- 
ism. So when Larkin began to be 
seen - retr os pectively - as politi- 
cally incorrect, a flurry of critics 
who had previously been respectful 
suddenly called him a minor poet 
and there was a new hint of dis- 


missal from the literary establish- 
ment. This trend is not lirnttari to 
the literary world. Something simi- 
lar ba pppnud, to the popular reputa- 
tion of Woody Allen; many fans 
vowed never to see another movie 
after revelations that Allen had 
betrayed Mia Farrow for her 
adopted daughter. 

Here is ideological revisionism in 
strong new form. It is a fearful and 
irrational interpretation of the link 
between life and art. It masks an 
intolerance of those we don’t agree 
with, the suspicion of what is not 
the moral fashion of the day. Enjoy- 
ment of Larkin’s poetry or Allen’s 
films does not depend on the moral 
purity of their creators - 
“Women who assist in reahsing 
the fantasies of Pinter/Os- 
borne/Hughes in any medium are in 
complicity with them and their 
crime,” say the Daughters of Eve. 
But fantasies are not separatist sub- 
committees, and you can't legislate 
over artistic inspiration, which is 
an haphazard, subconscious amoral 
affair. Andrew Motion defends Lar- 
kin by saying that "art exists at a 
crucial distance from its creator”. 
Art is timeless awrf universal, and 
different things to different 
people in different ages, whereas an 
artist’s life is conditioned by his 
thrw> and by the morality of ihp 
moment when we interpret it 
S may be true that Osborne has 
exploited his public image as the 
angry young man. of his plays and 
that tTrfs has made his later writing 


immature, self-indulgent vacuous: 
a casualty of hi s and our cult of the 
artist But William Burroughs is an 
equally powerful case: a writer 
whose morality few, in any age, 
would share. He really did kill his 
wife - he shot her dead at a party - 
yet the tragedy then inspired one of 
his best works, the magical lyrics 
for the rock musical The Black 
Rider, about a marksman who 
shoots his lover. The piece opened 
in 1990, and, as the mo6t innovative 
of recent musicals, has been a popu- 
lar hit across Europe, while some of 
the poetry - “HI shoot the moan 
out of the sky for 700 " - seems 
likely to last beyond its commercial 
success. 


Artists rarely lead lives which we 
would call no rmal; how ironic, in 
our tolerant, post-Frendian society, 
to criticise their work because they 
fail an emotional Heal th test. Artists 
have always stood on the edge of 
society: losers like T-arkm or radi- 
cals lie Pinter or angst-ridden neu- 
rotics like Allen. The paradox is 
that, from this position as outsiders 
they distil, in art, experiences 
which we cam all share - they touch 
the loner, the radical, the neurotic 
in all of us. If we allow the strai- 
g ht jacket of conformity or political 
correctness to tighten, we risk los- 
ing the richness of such vision. It is 
an absurd and horrific form of cen- 
sorship. 



■*' r it'; 

Vivien Merchant: drink problems Harold Pinter radical 


Don Quixote 
is sadly 
well off tilt 

“Remote and ineffectual Don" wrote 
Hilaire Belloc - in different circum- 
stances. certainly, but under no less 
real provocation. The Royal Ballet 
has marked its return to Covent 
Garden after an American jaunt by 
offering us Don Quixote. Is it bra- 
vado, menopausal caprice, despera- 
tion, that dictated this choice? The 
staging is wrong on every count. 
Text, score, performances, design, 
are equally dreadful, equally guilty 
in deforming a jolly old ballet and 
showing the company at a total 
loss, facing drama and rianrg with 
the desperate air of people trying to 
cope with a plague of hornets. 

Nothing must save this insolently 
inadequate production from the 
breaker’s yard, although on Satur- 
day night Sylvie Guillem seized 
gladly upon it as a show-case for 
her best qualities. That, in the pro- 
cess, her performance - witty, exul- 
tantly brilliant, awinaari and amus- 
ing - made the rest of the cast look 
even more funereal, like a conven- 
tion of disaffected corpse-washers 
and plaguen.urses, is no surprise. 
She darted and flirted, cut every 
step with exactly the right sophisti- 
cation (how dowfty our local misses 
looked by contrast) and enjoyed 
herself hugely. So did we - when 
she was on stage. 

Mile Guillem understands how 
much too far to go in galvanising a 
ballet which must be lit by a kind of 
charming sauciness in step and 
playing. Russian ballerinas - Pliset- 
skaya, Maximova, Kurgapkina, 
Semenyaka - have taken this chore- 
ography and by their own pleasure 
in the piece have fired their col- 
leagues to join in the Am. Mile Guil- 
lem did her best on Saturday night, 
and her partner, Oliver Mats from 
Berlin, matched her in vivacity, but 
they could not strike sparks from 
the dank activities surrounding 
them. I do not think 1 have ever 
seen the Royal Ballet look less like 
a national ensemble: muffed danc- 
ing (the matadors in the first act on 
desperate form; the Queen of the 
Dryads and her girls trudging 
through their dances; mimsiness of 
style an epidemic); and comedy that 
was about as amusing as a baby’s 
coffin. 

Mate, returning as a guest partner 
for Mile Guillem, provided breezy 
virtuosity, and made Basilio 
unabashedly cheerful - there’s little 
else to do with the role - with a 
neat line in groping during his sup- 
posed death-scene (albeit this Kitri 
knew how to keep him under con- 
trol). The only other performance 
worth considering is that of the 
mysterious drunk, master of tremu- 
lous balance, who skirts the edges 
of the stage in Act 1 . He is ftmny. 
which no-one else in the ensemble 
remotely is, but entirely uncon- 
nected with Petipa’s Don Quixote. 
He is, unjustly, not identified in the 
programme. 

Don Quixote is in repertory at the 
Royal Opera House. Covent Garden. 





■ sr 

iZ - ■ ■ ■ - 


; • * ■ 



: ■ BERLIN 

CONCERTS 

Phfihemwnto Karfta.MatiUa, Barbara 
; Bonney and ayn Terfel are among 
the sotoJsta jotting Claudia Abbado 
^-^and the Berih phfflwmonlb 

.. Orchestra forfenl^a. performance 
of Schumann 'a Scenes from Faust, 
latest h'ttewtSteatra’s Faust - 
aeries. The orchestra's other 
concerts this week are on Fri, Sat 
. antiSun morning, when JW . 

. SokrffeveK cOn dUc ts a Czech 
pttgrartme (piano sototei Gerhard' 

, Oppta}, jvo Pogoraflch gives a piano 
& reeiM tonight, and Aids Kbch 
" conducts Hemtanb Sifter's oratorio 
^ 10 Laud! anThufS (2548 8132} 

. Schataapta**** Ghana Oknrtrova 
* ■akiga.fifewWte'tt tomorrow’s 
concerf-parfonnimoe of PucdnTs 
rifftoxtot; wah.J®RSyn^jhony 
. , prtf«si»*na Chorus conducted 
- by Cartel ffeareth. Jac van Steen 
« J *fucte.BerfoSymphorty 
Orchewa-ep mire; Fri end Sat 
> by SfoUfefc St reuse and 

Bento* 

“^nducta an open-air performance 


of Verdi's Requiem on Sat evening 
(254890) 

OPERA/DANCE 
Staatsoper inter den Linden 
Jonathan Mater's 1993 production 
of Capricclo Is revived on Thurs 
with Anna Tomowa-SIntow as the 
Countess (repeated June 24 and 
27). Repertory indudes Tosca, 
Salome, Der FrefechOtz aid a Bdjart 
bafiet evening (200 4762/2035 4494) 
Kom&che Oper A new production 
of La Cenerantola opens on Fri, 
staged by Christine MteHtz and 
conducted by Caspar FBchter, with 
Christiaie Oertel as Angelina 
[repeated June 12, 14). Repertory 
also includes Harry Kupfer’s 
productions of La nozze di Figaro, 
Gluck’s Orpheus and The Bartered 
Bride (229 2555) 

Deutsche Oper A contemporary 
dance programme featuring new 
works by three New York 
choreographers, Meg Stuart MoRssa 
Fenley and Karole Amdtage, opens 
on Sat (repeated June 15, 18, 29). 
Nadine Secunde sings Leonora 
tomorrow In FkfeUo and Helen Field 
is Madama Butterfly on Fri. 

Tonight’s foyer programme b a 
l^th birthday portrait of Siegfried 
Wagner (341 0240) 
OeutscNandhaHe Agnes Baltsa 
and Josd Carreras head the cast 
in Steven Pimtotfs arena production 
of Carmen from Jime 17 to 23 (3038 
4444) 

THEATRE 

A new production of The Father, 
Strindberg's play about seocuaOty 
and power, opens on Thurs at 
Maxim Gorki Theater, directed by 
Martin Meld® (208 27820. The 
popular Gershwin musical Crazy 
tor You has just opened at SchBer 
Theater, and runs dafly except Mon 


tlfl July 31 (2548 9241). Metropoi 
Theater has Jute Styne’s musical 
Funny Girl (2038 4117) and Theater 
des Westons has Cote Porter’s 
Anything Goes (882 2888) 


■ NEW YORK 

THEATRE 

• Broken Glass: set in New York 
in 1938, Arthur Milter's latest play 

is a short, discursive aid compelling 
study of petraiysis in the face of 
crisis (Booth, 222 West 45th St, 

239 8200) 

• Three Tafl Women: a moving, 
poetic play by Edward Afoee. 
dominated by the huge, heroic 
performance of Myra Carter. She, 
Jordan Baker and the drofl and 
delightful Marian SeJdes represent 
three generations of women trying 
to sort out their pasts (Promenade, 
Broadway at 788) St 239 B200) 

• Aft In the Timing: six spariding 
short plays by David hies add up 
to one enchanted evening (John 
Houseman, 450 West 42nd St 239 
620 0) 

• Angels in America: Tony 
Kushnerts two-part epic conjures 
a vision of America at the edge of 
tfisaster. Pat one is MBlenhim 
Approaches, part two Perestroika, 
played on separate evenings (Waiter 
Karr. 219 West 48th St 239 6200} 

• Four Dogs and a Bone: John 
Patrick Shantey*s satiric comedy 
about movie-making and power 
plays In Hollywood (LucSJa Lortal, 

121 Christopher St 924 8782) 

• Laughter an the 23rd Floor: 

Nefl Simon's 27th Broadway play, 
about a group of writers trying to 
come up with a new show, is one 
of his finest comic efforts. Directed 
by Jerry Zaks (Richard Rodgers. 


226 West 46th St 307 4100) 

• The Sisters Rosensweig: Wendy 
Wasserstein’s most successful play 
to date, a comedy with serious 
undertones about the reunion in 
London of three American Jewish 
sisters (Ethel Barrymore, 243 West 
47th St 239 6200) 

• An Inspector Cafls: J.B. 
Priestley’s 1947 mystery thriller in 
an award-wirming production from 
Britain's National Theatre, directed 
by Stephen Daldry (Royale, 242 
West 45th St 239 6200) 

• She Loves Me: the 1963 Bock, 
Hamfck and Masteroff musical is 

a delicate, unabashedly simple story 
wife all the humanity, integrity and 
charm that Broadway’s 
mega-musicals lack (Brooks 
Atkinson, 256 West 47th St 307 

4100) 

• Carouset Nicholas Hytnerte 
bold, beautiful National Theatre 
production from London launches 
Rodgers end Hammersteln 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 St 239 
6200) 

• Mart SahFs America: a one-man 
show about the poetical and social 
power structure in American life 
(Theatre Four, 424 West 55th St 
239 6200) 

CITY BALLET 

NYCB’s Spring season at New York 
State Thaafor runs dafly except Mon 
tiH June 26, with choreographies 
by Balanchine, Robbins, Martins 
and Tanner. This week’s 
performances include Peter Martins’ 


Barber VioRn Concerto, Balanchine’s 
Vienna Waltzes and an afl-Robbrns 
evening (870 5570) 


■ PARIS 

DANCE 

Palais Gamier Paris Opera Ballet 
presents the first of two 
programmes of 20th century classics 
daDy till Sat (also June 18 and 21). 

It consists of Harafd Lander’s 
Etudes (1952), Jerome Robbins’ 

In the Night (1970) and William 
Forsythe's In the Middle (1987). 

A second programme, comprising 
works by Antony Tudor, Paul Taylor 
and Kenneth MacMJIan, opens on 
June 17. The Nureyev production 
of La Bayadere moves to the Bastille 
for two weeks of performances 
starting on June 29 (4742 5371) 
Th ea tr e de la VfSe Jan Lauwers 
and Needcompany are in residence 
this week with a new choreography 
of Stravinsky’s Puldnefla. Next 
week: Lyon Opera Ballet (4274 2277) 
OPERA 

Op&a Bastille Tonight, Wed, Sat 
Tosca, staged by Wemer Schroeter 
and conducted by Spiros Argiris, 
with changing casts headed by 
Galina Kalinina, Giacomo Aragall 
and Jean-Phitippe Latent (runs tffl 
July 17). Tomorrow: Myung-Whun 
Chung conducts final performance 
of Andrfr Engel’s production of Lady 
Macbeth of Mtsensk, with cast 
headed by Mary-Jane Johnson and 
Jacque Trussel (4473 1300} 

Theatre Champs-Elysees Tonight 
Natalia Gutman plays Bach cello 
suites. Wed: Bdar Nebdsin piano 
recital. Thurs: chamber music recital 
by Mozart Academy of Prague (4952 
5050) 

Safle Pfeyei Tomorrow; Radu Lupu 


is soloist in a Mozart programme 
with Academy of St Martin in the 
Fields. Wed, Thurs: Michael Stem 
conducts Orchestra de Peris in 
works by Barber, Beethoven and 
Bartok, with piano soloist Maria 
Joao Fires. June 14: Vladimir 
Ashkenazy- June 21: Maurizio Poffini 
(4561 0630) 

JAZZ/CABARET 
Singer and keyboard artist Davell 
Crawford, the latest discovery of 
the New Orleans jazz and blues 
scene, is in residence this week 
at Lionel Hampton Jazz Club. Music 
from 10.30 pm to 2 am. June 13-25: 
T.S. Monk (Hotel Meridien Paris 
Etoile, 81 Boulevard Gouvion St 
Cyr, tel 4068 3042) 

THEATRE 

• The Prince of Homburg: KJeisfs 
drama about state power and 
individual freedom, duty and feeling, 
is directed by Alexander Lang at 
Mogador Comddfe Frangajse. Final 
week (4878 0404) 

• Huts Cios (tn Camera): Michel 
Raskin© directs one of Sartre's most 
celebrated plays, with its gradual 
revelation that the scene is hell, 
and its three characters who mist 
stay there ter eternity. Til July 3 

at Theatre de I’Athdnee (4742 6727) 

• Oieanna: David Mamefs 
celebrated two-hander about sexual 
harassment on the university 
campus. Charlotte Gaisnbourg and 
Maurice Benichou in tins production 
at Gait6- Montparnasse. Daily except 
Mon (4322 1618) 

• The Homecoming: Harold 
Pinter’s menacing drama directed 
by Bernard Murat DaBy except Mon 
at Atelier, place Charies-DuHin (4606 
4924) 


ARTS GUIDE 

Monday: Berlin, New York and 
Paris. 

Tuesday: Austria, Belgium, 
Netherlands. Switzerland, Chi- 
cago, Washington. 
Wednesday: France, Ger- 
many, Scandinavia. 

Thursday: Italy, Spain, Athens, 
London, Prague. 

Friday: Exhibitions Guide. 

European Cable and 
Satellite Business TV 

(Central European Time) 
MONDAY TO FRIDAY 

NBC/Super Channel: FT Busi- 
ness Today 1330; FT Bussiess 
Tonight 1730, 2230 

MONDAY 

NBC/Super Channel: FT 
Reports 1230. 

TUESDAY 

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

WEDNESDAY 

NBC/Super Channel: FT 
Reports 1230 

FRIDAY 

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; 




■ -■*• 


20 


/ 


FINANCIAL TIMES MONDAY JUNE 6 1994 


Samuel Brittan 


The ‘policy is dead’ 
theory arrives 



Not long ago, I 
heard a Labour 
economist peer 
outflanking the 
most extreme 
free market 
advocates by 
declaring that 
national eco- 
nomic policy was dead. His 
argument was that, in a world 
of completely free capital 
movements, governments and 
central banks were not able to 
mate independent decisions on 
the virtues of alternative mac- 
roeconomic policies. 

There are two ways of 
looking at such a world. One is 
to cry: “Woe. woe, woe. Gov- 
ernments are at the mercy of 
the financial mar kets and all 
possibility of rational policy is 
dead unless we have world 
govern m ent, and perhaps not 
even then." But there is an 
alternative, more optimistic, 
response. It is based on the 
view that attempts to promote 
output and employment by 
artificially low interest rates, 
budget deficits or other manip- 
ulations will not achieve their 
objectives but threaten infla- 
tion of the kind which was at 
its worst in the 1970s and 
which cannot be corrected 
without a painful recession. 
The financial mwrteta , on thin 
view, cut short the whole 
malignant process by making 
it impossible for national 
authorities to inflate in the 
first place. 

This can be illustrated by 
events in the last year and a 
bait As the chart shows, the 
whole UK yield curve fell in 
the course of 1993, not only 
because of cuts in official 
short-term interest rates but 
because of much-reduced 
expectations about inflati on is 
the longer term. Since then, 
however, greater pessimism - 
or realism - has returned. 
There have been rnmiiar devel- 
opments in other centres; and 
there is now a steep upwar- 
dyield curve, which is itself 
making for dearer money 

throughout the world. 

On any interpretation, the 
market has behaved in such a 
way as to make more infla tion- 
ary policies difficult to follow, 
whatever the urge to do sa 
The check works through sev- 


TTw> UK*WW 



eral channels. Obviously, a fall 
of many bEOions in the value of 
bonds itself reduces the pro- 
pensity to spend because 
wealth is reduced. This effect 
is reinforced if equity values 
foil together with bonds as 
they have. 

But the correction does not 
rely on these wealth effects 
alone (the 1987 Wall Street 
crash, for example, did not pre- 
vent inflationary overheating 
in several countries in subse- 
quent years), ft also works by 
inhibiting monetary policy. A 
monetary authority that tried 
to cut short-term interest rates 
now would be arguing with the 
market in a big way. A British 

rfiawrftnnr WOUld find it hard 
to cut base rates in the face of 
the present yield curve. 

Even if he succeeded for a 
while, it would not have any 
worthwhile stimulative effect 
For it would be apparent to 
any borrower - or pointed out 
to Hw — that: the UkeiUhood 
was that short-term loans 
would be renewed at higher 
and higher rates over the com- 
ing months and years. 

There are several questions 
about this apparently benefi- 
cent circle. One would Hka to - 
know whether it would be as 
efficient in the face of defla- 
tionary fears of the kind which, 
were rife only a year ago. 
Clearly, bond rates would fell,' 
but would they fall enough, 
and would financed markets 
tolerate a large fiscal stimulus 
if interest rates could not 
fall sufficiently to stop a 
slump? 


There are other questions, 
even in the more conventional 

rrmtor? nf mntainfng Inflation 

Just as the markets are can- 
straining central banks tim lat- 
ter are also affecting the mar- 
kets. An important influence 
on market behaviour is the 
belief that the Bundesbank and 
the Fed will in the aid tighten 
policy in the face of an infla- 
tionary threat; and markets 
are simply betting on when 
this will occur. At present, 
only the Fed and the Bundes- 
bank seem able to lead mar- 
kets in this way; and other cen- 
tral banks have discretion only 
about the pace at which they 
follow. 

There are also more techni- 
cal questions about how for 
any central bank can really 
determine even short-term 
interest rates. At present, the 
Bank of England’s rnfinonrg 
depends almost entirely an the 
overnight rates at which it 
lends to the money market 
Reforms are being studied 
which might shift the focus of 
official policy to one-month 
Interest rates. This would have 
the advantage of separating 
deliberate monetary action 
from day-today moves to help 
the banks and discount houses 
balance their books. 

Such reforms would help to 
clarify policy. But they would 
not resolve the question of the 
central banks' ability to argue 
with markets if they, thought 
that the latter were badly mis- 
guided. The present mood is 
not to force the question to the 
test 


I n the control room of the 
Hindustan Fertiliser plant 
at Haldia near Calcutta 
three men watch dials for 
eight hours a day. When they 
are finished, another shift of 
men in grey uniforms takes 
over, and then another, keep- 
ing watch 24 hours a day -just 
as they might in any other 

modern flbmnlnaln plant 

Except that at Haldia the 
plant produces nothing. R has 
produced nothing since 
attempts to commission the 
stateowned complex foiled in 
1986 because of fundamental 
design flaws. Needles on con- 
trol roam dials never move. 

Some 1,550 people report for 
work at Haldia. There is a can- 
teen, a personnel department, 
A m i an accounts department. 
There are promotions, job 
changes, pay rises, audits and 
in-house trade unions. Engi- 
neers, electricians, plumbers 
and painters maintain the 
equipment with a care that is 
almost stored. Signs are fresh- 
ly-painted, the roads sw ept and 
the grass verges cut. 

The absurdity of their posi- 
tion has driven some workers 
to mental Alness. Many work- 
ers have been idle so long they 
have become unemployable. 

The origins of Haldia’s fail- 
lire lie mainly with Mrs Indira 
Gandhi's ill-cuncelved pursuit 
of economic self-sufficiency in 
the 1970s: the complex was 
built by inexperienced Indian 
engineers with an inadequate 


budget and with insufficient 
export foreign supervision. 

But the fact that Haldia, 
which loses about RslSOm 
(£3 .2m) a year, has been 
allowed to survive until the 
mid-1990s is also a telling criti- 
cism of the present govern- 
ment's reluctance to deal with 
the legacy of the past With 
prime minister Mr P V Nara- 
simha Rap's economic liberalis- 
ation programme now in its 
third year, there is still little 
sign that he will drastically 
overhaul the country's bloated 
publicly-owned industries 
through rationalisation, priva- 
tisation or the rapid introduc- 
tion of competition into state- 
run monopolies. 

The main reason the govern- 
ment fears to act is that seri- 
ous reform would mean deep 
job cuts. India’s labour laws 
give workers an' almost 
impregnable defence against 
compulsory dismissal. The 
insolvency laws are so restric- 
tive that it takes an average of 
over 10 years to liquidate a 
company. A serious attempt to 
ta ckle the labour or insolvency 
laws would" be seen as an 
attack an jobs - so Mr Nara- 
wimba Ran is understandably 
reluc t ant to act, particularly 


Corporate Finance 


Fixed Income 
and Equity Capital Markets 


Asset Management 



Brokerage 


Stefan Wagstyi explains why India's government 
is only slowly shaking up state-owned industries 

Reluctant to give 
up its grip 


with the 1996 general election 
on the political horizon. 

Moreover, full-scale privati- 
sation would destroy the net- 
work of patronage which politi- 
cians have built throughout 
the public rector. While the 
government is selling shares in 
31 state companies, it is com- 
mitted to retaining 51 per cent 
anil manag erial controL Simi- 
larly, where private companies 
are being permitted to enter 
markets dominated by state 
monopolies, there is much foot- 
dragging and back-sliding. Mr 
Manmohan Singh, the reform- 
minded finance minister and 
his supporters in the govern- 
ment, know what needs to be 

Anna - but the pr ime minis ter 

will not let them act for fear of 
political turmotL 

To be fair, the prime minis- 
ter’s quiet approach has 
yielded some results. The gov- 
ernment bag iniTofliiRgfl volun- 
tary retirement schemes which 

are slowly reducing employ- 
ment Total employment in the 
237 cxmtxally-contrdned indus- 
trial enterprises (excluding 
state-owned banks and services 
such as telecommunications) 
has dropped from 223m in the 
late 1980s to under 2m. 

Government subsidies are 
also falling, though more 
slowly than planned. Mr Man- 
mohan Sing h in tended to elimi- 
nate public financial support 
for lore-makers from April 
1994. But when the 199495 bud- 
get was published it contained 
another cash injection: Rs&Sbn 
altogether. 

Privatisation may be half- 
hearted hut the entry of strong 
state-run companies into the 
stock market has encouraged 
investment, fnrindiny foreign 
portfolio investment. It was 
not a private company but the 
government’s Videsh Sanchar 
Nigam, India* international 
telemrnimmicatinns monopoly, 
which attempted the country’ s 
largest Euroissue - USglbn. 
The offer had to be postponed 
because of the turmoil in world 
stock markets earlier fids year 
- but the group is considering 
a second bid ter this year. 

Perhaps the government’s 
biggest success in public sector 
reform has been in shaking up 



Making connections: telecommunications is still state-dominated 


domestic air travel by permit- 
ting the entry of private opera- 
tors in late 1992. Their competi- 
tion has forced great 
improvements in timekeeping 
and quality from Indian Air- 
lines, the stateowned carrier. 

B ut when it comes to 
other industries, the 
interests of consum- 
ers seem to be of little 
account Indeed, for some gov- 
ernment ministers, the fact 
that the launch of private air 
lines has been accompanied by 
some teething troubles, includ- 
ing strikes, poaching of staff 
and arguments over routes, is 
taken as a reason for treading 
carefully in other markets. 

Private investment is being 
allowed in power generation 
but competition from private 
stations will have tittle effect 
on gristing state-run plants. 
Moreover, private companies 
are mostly being kept out of 
electricity distribution, where 
political patronage is perva- 
sive. Dispensing cheap power 
to privileged groups such as 
formers is a right few politi- 
cians will abandon lightly. 


Mr Rao argues that by dere- 
gulating the economy, includ- 
ing liberalising foreign trade 
and investment, he has created 
more tbnn enoug h opportuni- 
ties for private companies 
without the need for upheavals 
in the public sector. But poor- 
ly-performing public enter- 
prises Impose a heavy burden 
an the rest of the economy, not 
only by si phoning public funds 
but also by often providing 
high-cost, low-quality goods 
and services. As Mr Aditya 
Birla, head of a leading busi- 
ness grouping, says: “If the 
public sector is not competi- 
tive; then we cant be either." 

People suffer as well as com- 
panies. Legal job protection 
extends only to workers in the 
public sector and in large pri- 
vately-owned enterprises - 
about 30m people, or 150m with 
their families out of a total 
population of 890m. The eco- 
nomic cost of providing the 
safeguards falls on other 
Indians, many of them very 
poor and permanently jobless. 

State-owned units still domi- 
nate transport, telecommunica- 
tions, banking, oil, electric 


power and other basic services. 
They are also important pro- 
ducers of raw materials. Of the 
the central government’s 237 
active industrial enterprises, 

104 lost a total of Rs&5bn in f 
the year to March 1998. The 
profits of most cdf the rest were 

inadequate - the total return 
on capital was Just 2.4 per cent. 

Hand-outs for loss-making 
public enterprises contribute 
to government borrowing help- 
ing to raise the fiscal deficit 
last year to 7.3 per cent of 
GDP. Further support comes 
from state-controlled financial 
institutions in low-cost loans. 
Also, even though the govern- 
ment has cut import duties and 
relaxed internal price controls, 
the remaining protection is 
biased towards protecting pub- 
lic enterprises. 

Some state concerns perform 
well, despite the uncompetitive 
environment. Bharat Heavy 
Electrical, India's dominant 
maker of generating equip- 
ment, has won export orders, 
so has the Steel Authority of 
t n/Ha, the .steelmaker. Others 
could join than if they were 
free to compete, cut costs and 
nm themselves independently. 

But Delhi’s influence over 
saninr appointments is stifling 
- Air India, the international 
carrier, is one of about 10 big 
enterprises currently without a 
chairman because politicians 
and bureaucrats Canute agree 
on a candidate. 

Nevertheless, some enter- 
prises are beyond redemption: 
obsolete textile mills, steel- 
works and bicycle factories as 
well as fertiliser plants, includ- 
ing Haldia. The latter Is a unit 
of Hindustan Fertiliser Corpo- 
ration, which is one of 49 cen- 
trally-run public enterprises 
referred to the government's 
Board for Financial and Indus- 
trial Reconstruction, the 
agency established to expedite 
restructuring or liquidation. 

But only one public, centraQy- 
nm enterprise has ever been 
recommended for liquidation. 

The government hopes Out 
it will avoid big closures until 
the newly-liberalised economy 
grows fast enough to absorb 
the unemployed - perhaps in 
the late 1990s. Even then, min- 
isters will bite the bullet only 
under pressure. As Mr 
P B Krishnaswamy, secretary 
of the fertilisers ministry 
whose responsibilities include 
Haldia, says: “This kind of pic- 
nic should not he allowed to go 
on for ever. But things wont 
change in this country unl«« 
it’s the hard way, through 
sheer economic compulsion. 
Until then, politicians will 
keep making statements and 
keep alive the hopes of the 
dead." P 


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LETTERS TO THE EDITOR 

Number One Southwark Bridge, London SE1 9HL 

Pax 071 873 5938. Letters transmitted should be clearly typed and not band written. Please set fox for finest resolution 


VSO not an 
elite scheme 

From Mr Ken CaldwdL 
Sir, David Goodharf s article 
"Army of volunteers may be 
called up" (June 2) refers to 
VSO (Voluntary Service Over- 
seas) as an “elite scheme . . .for 

middle pj nfa ynrmg people". B 

that description was ever accu- 
rate, it has certainly been out 
of date for same years now. 
VSO started out as a scheme 
for young people, but these 
days only accepts skilled peo- 
ple aged above 20 - and up to 
the age of 70; the average age 
of a volunteer is now 34, and 
nearly 10 per cent of the people 
now overseas are above 50. 
Nor, I think, could it be 
described simply as “middle 
class", since those 1,750 volun- 
teers include bricklayers, car- 
penters, technical instructors, 
water engineers, and many 
others who do not necessarily 
fail Into that socioeconomic 
bracket Equally importantly, 
volunteers are not pvpprfgd to 
fund themselves; they receive 
an allowance equivalent to a 
local level wage. 

VSO Is in the business of 
supplying skills which have 
been requested by govern- 
ments arid community organi- 
sations in 57 countries, in the 
pursuit of a more equitable 
world. New volunteer schemes 
would offer complementary 
rather than supplementary, 
opportunities for people in 
Britain. 


Hualon textiles plant deal 
should be reviewed 


From Mr James McAdam. 

Sir, Recent coverage of the 
decision by the European Com- 
mission to approve the award 
of substantial public funding 
for the Hualon textiles plant in 
Northern Ireland has served to 
hi g hli g ht inconsis tencie s in ti w 
policies of the European and 
UK authorities. 

First, there is a difference of 
view as to whether there is 
over-capacity or not in this sec- 
tor of trade. Clearly Tun 
Smith, the UR economy minis- 
ter for Northern Ireland, feels 
that (hoe is unsatisfied, and 
indeed growing, demand for 
the product, whereas the Euro- 
pean textile industry believes 


the opposite, a position the 
Commission initially agreed. 

Second, the Commission is 
quoted as saying that the proj- 
ect is of a low-technology 
nature, whereas the UK gov- 
ernment is saying the opposite. 

Third, the project envisages 
the creation of 1,850 jobs 
whereas others contend that 
this level of employment is 
improbable, In this regard it is 
interesting that Trm Smith, in 
his detailed cahtribution to the 
debate in .the FT (“A respect- 
able and respected 
public corporation", June 3), 
makes no reference to the 
number of jobs that will be 
created. 


I should emphasise that the 
British Apparel & Textile Can- 
federation is strongly support- 
ive Of inward inves tment in tee 
textile industry in all parts of 
the UK. However, each case 
must be judged on its merits 
and surely, given tbe contra- 
dictions surrounding the Hua- 
lon investment, the whole case 
should now be reviewed by 
both the Commission and the 
Industrial Development Board 
before contracts are m gned. 

James McAdam, 
chairman, 

British Apparel & Textile 
Centre, 

7 Swallow Place, a 

London WIR 7AA ■ 


Too early ta talk of government victory 


Ken Caldwell, 
deputy director, 

VSO. 

317 Putney Bridge Road, 
London SW2S2PN 


From Mr Tino Hernandez. 

Sir, ff I were a government 
minister, I wouldn’t be cele- 
brating yet (“Government near 
victory on contracting-out". 
May 31). 

Tour correspondent, David 
Goodhart, normally the most 
reliable of authorities, fans to 
report the whole of the story 
on this occasion. 

While it is true that the 
European Commission Is con- 
sidering amending the 
Acquired Rights Directive, the 
law which protects workers' 
terms and conditions when 
their jobs are market tested, 
the revision, if accepted, will 
not hare the impact suggested. 

1 have a copy of the foil text 


of the latest revision of the 
directive. This does state that 
the transfer of only “part of a 
business" does not in itself 
trigger the regulations, as 
reported. However, the next 
sentence qualifies this by high - 
lightin g that the key test is 
always whether or not “an eco- 
nomic entity, which retains its 
identity" has in fact been 
transferred. 

This is exactly the same test 
that has been used over the 
past 18 months in each of the 
landmar k European Court of 
Justice cases, which have dem- 
onstrated that workers are pro- 
tected in virtually any market 
test or contracting-out exer- 
cise. 


Furthermore, while the UK 
government may wish to see 
the directive severely weak- 
ened, because of the way it has 
affected its own market testing 
programme, any revision at all 
of this particular piece of Euro- 
pean Union le gisiTwtHTrn requires 
the backing of each member 
state. This is very unlikely 
given the support far the prin- 
ciple of protecting employment 
rights which exists among the 
majority of our European part- 
ners. 

■Tina Hernandez, 
head of research, 

CmU and Public Services Asso- 
ciation. 

160 Falcon Road. 

London SW112LN 


World Bank support for Indian blindness control 


From Richard LShohuk. 

Sir, I refer to your May 14 
article on the World Bank 
credit to the Indian National 
Blindness Control Progr amme 
(“World Bank cash to help the 
blind") and to Professor R A 
Weale’s letter (May 20). The 
World Bank agreed to finance 
tills project at the request of 
the government of tihHb. Simi- 
lar requests from other coun- 
tries would be welcomed and 
considered on tear own mer- 
its. Cataract blindness consti- 
tutes a big public health prob- 
lem In India. A 
disproportionate number of 
blind people are the rural poor, 
particularly women, who have 
tittle access to healthcare. The 


social and economic returns of 
dealing with cataracts in India 
are very high. In addition, as 
the population of India ages, it 
will be even more Important 
for the country to have an 
effective and efficient cataract 
programme In place. 

Projects assisted by the 
World Bank are prepared and 
implemented by the borrowing 
countries. This project was pre- 
pared over two yeas with the 
involvement of local experts, 
numerous Indian and interna- 
tional voluntary organisations, 
the Ere Care- Institute of the 
United States National Insti- 
tutes of Health, World Health 
Organisation, and the Danish 
Development Agency (DAN- 


IDA). WHO does not Imple- 
ment projects of thfc type. 

Most of the training under 
the project will be in-service 
trai ning ., The aim will be to 

raise the quality and produc- 
tivity of service providers, as 
well as to help train, people in 
surgical techniques using 
intra-ocular Imngoa 

Alternative schemes were 
wwuteted. The project’s final 
design supports a variety of 
service delivery models, based 
on a number of criteria, includ- 
mg location of the people to be 
. sfee or the problem, 
avallabUity of facilities, and 
availability of trained person. 
r»L Based on the application of 
these criteria at the district 


programme 

level, services win be rendered 
in both mobile ramps and in 
fixed facilities. 

Project implttmgntatian will 
be carefoBy monitored at tee 
district, state, and national 
leveL World Bank staff will 
also review progress against 
project objectives through field 
visits two to three times per 
Tear. In addftfon , the project 
will be subjected to big tech- 
nical review* by competent 
Indian and International 
experts every two years. 
KLchard L Skn hvTk , 

Population and Human 
Resources Opns Division, 

India Department, 

The World Bank. 

Washington DC 30433, US 


i 



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v...^ Monday June 6 1994 



over Korea 


The crisis'.' ever North Korea's 
-suspected covert nuclear weapons 
programme is entertag a new ai^ 
dangerous phase. .This week the 
UN Security Council may move 
towards 'imposing wrmni^ir sanc- 
tions on Pyongyang for impeding 
International -Atomic Energy 
Agency inspections of its nuclear 
facilities. North Korea, which has 
always said tt would regard sane- 
tions as an aet of war. may witn 
draw from the nuclear Non-ProKf- . 
eratim Treaty in protest. ' 
As international crises go, this, 
must rank among the most frus--- 
trattng. On the one iy a u d , the 
issues if raises are of iimnense sig- 
nificance; on the other, the record 
does not suggest there is much the 
rest of the world, faced with a 
regime as erratic and mysterious 
as that in Pyongyang, can do 
peacefully to resolve it - 
If North Korea' Is allowed to 
develop an atomic bomb, the 
reverberations will be felt for 
years. In Asia. Japan would be 
tempted to review its constitu- 
tional aversion to nuclear weap- 
ons . prompting an inevitable 
resurgence of old regiinud insecu- 


rities. In the world at laige, the 
campaign to . prevent' the ftxrthier 
spread of such- weapons - now 
focused on the prospective 
renewal of the NFT : in 1995 - 
would suffer a blow from which it 
might not , recover. 

Carxo ts and sticks ’ 

Thus for . the past 18 months, 

Washington has been busily wav- 
ing carrots mod stlcks to persuade 
Pyongyang ' to open up its nuclear 
pjT^ramnm to Inspection. So Ear,, 
the carrots - principally offers of 
IntarrMtinn^l j BOOg nitlOP - have 
been to the fore, on the theory 
that the Nnrth Korean regime, 
feflring* for i£s survival, was using 
the possibility of an A-bomb to 
exhract ^ditical concessions from 
the west: *Hie . ewnts of the past 
week^'wtth the IAEA saying it 
oatdd na hm^r relialdy ascertain 
whe&er nuclear materials from 
North Smew's Yongbyan reactor 
had beeitdBBvrted to weapons pro- 
duetkm-- hato tipped the balance 
towards the' stick of eventual 
trade nffljctkms. 

-The wi^r probably has no alter- 
native now trot-td call North 
Korea’s bluff and proceed towards 
imposing some form of sanctions 
if it is to prevent further erosion 

The Schneider 


of tbe NPTs credibility. But if so, 
it should hasten slower, with the 
dearest of objectives and with the 
fifflest awareness of the pitfalls. 

First; the US needs to strain 
every smew to retain the co-opera- 
tiemof the regional players. South 
Korea and Japan both support 
sanctions with varying measures 
of and likely effective- 

ness. But to render an embargo 
■ even partly effective, China - a 
nominal ally and North Korea’s 
biggest source of imported fuel 
and grain - win also need to be 
pereukded'imt to veto a sanctions 
resolution. 

Quiet persuasion 

That argues for continuing to 
play the issue lcm&^ and for giving 
Beijing ample opportunity to dem- 
onstrate that Its preferred strategy 
of quiet persuasion can work. In 
particular, any measures should 
be preceded by an ultimatum giv- 
ing North Korea a deadline to 
open up to inspection the two sus- 
pected nuclear waste sites at 
Yangbyon that now constitute the 
sole verifiable clue to the nature 
of its nuclear programme. 

Second, the western powers 
should; not lose sight of the can- 
tinning need to offer Pyongyang 
diplomatic escape routes. In this 
respect, Russian President Boris 
Yeltsin's suggestion of a confer- 
ence involving the two Koreas, the 
US, Russia, China and Japan 
would be worth considering. Such 
an initiative’s chances of success 
would admittedly be slim. But 
only If all efforts to engage North 
Korea are shown to have been 
exhausted will it make sense actu- 
ally to nse the «*TtH4«n« ratch et 

Third, the west should recognise 
that North Korea’s isolation is 
already, intense, and that an 
unduly precipitate move to isolate 
it farther could provide a desper- 
ate regime with either an alibi for 
its own economic fallings or a con- 
venient distraction in conflict. 

The US dearly needs to main- 
tain its military umbrella over 
South Korea and to warn the 
North, tbat.if it initiates hostilities 
it will face faimflrtiate destruction. 
But war an the Korean peninsula, 
with or without nuclear weapons, 
is in no. one’s interests. Tbe west 
should beware of Inadvertently 
suggesting- to the paranoid regime 
in Pyongyang that it has no way 
out but through waging one. 



The. fata .' of Mr Didier 
Pineau-Valencienne, chairman of 
Gfoupe Schneider, - a leading 
French etectrical'engineering com- 
pany, must he troubling many 
other top executives in Europe, Mr 
Ptaean-Valenctettne has sprat the 
past 10 days in dBelgtan jail, after 
traycBiug to Brhssels to make an 
ostensibly routine statement con- 
cerning an official investigation 
into two of Schneider’s local sub- 
sidiaries. By aH aceaunts, he 
reran .likely: :tqr .fate a long and, 
drfficel' lepTbaitie. . 

The inddont- baa soma of the 
nightmare qualities of The Bonfire 


of -Vanities, the. 1980s novel about 
the ..downfall, of a wealthy New 
York investment, banker trapped 
by an.unforgiving legal system. It 
hhs outraged fte French budnass 
establi&hmrat nnd unleashed - : a 
wave of^defansfab: nationalism In 
T5ei^um. Bayohd that, it points to 
hitherto unsuspected risks in 
doing buaiaess across borders. If 
this^ ^can happen to the head of one 
of France's hugest companies, is 
anybody, soft?! ii.'. 

There are -obvious limits to 
generaUatag from a case in which 
formal charges have yet to be 
brought,.' and- about which many 
details remain murky. It does 
seem dear, however, that events 
would not have reached tins stage 
if- Belgium's -Bnandtal markets 
were more effectively policed. The 
case grew out of ctHirt actlaus by 
former minority shareholders in 
the two Schneider subsidiaries, 
alleging that the French group 
undervalued their stakes when it 
bought fheooHttt' in 1992. Proper 
regulation- would have made it 
more hkely ttat such aT?sgatjtons 
could have been dealt with at the 
time.; - 

Shareholders' rights . 

That Belgian minority share- 


more aggressively is partly 
a.. reaction, to the raw deal they 
have traditionally received. In ah 
effort to redress the balance, they 
wafe-rec^itly allowed greater 
recourse toaatkmal courts. How- 
ever, that decision has been critic- 
-feed- fog. raffing into Question the 
itfe.br the Commission Bancaire 


r^olapHyantlKrity. 

* *niougir some regulatory 
reforms ware introduced after, the 
^ttwbattle-fe-iS88'f0r control of. 
Mglua?s .aocj6t6 G&ttrale hid- 


ing company, they were timid. 
Authorities now recognise that 
more needs to be done, particu- 
larly to ensure proper disclosure 
and equal treatment of sharehold- 
ers in takeovers. Tbe Schneider 
case should encourage them 
swiftly to set their house in order. 

Tbe case also raises a second, 
broader, issue. Tbe Schneider 
investigation is examining 
Whether Other flrwnefo l and figflal 
irregularities occurred at the two 
subsidiaries, which Mr Pinaau- 
Yatencfezme chairs. However, no 
evidence has yet been produced 
that he personally ordered, or was 
aware d, any illegal activities. In 
its absence, is it right that he 
should be made to carry the can? 

Personal liability 

Some European legal systems 
already hold chief executives per- 
sonally liable for certain types of 
corporate violations, notably of 
health and safety laws. Such sanc- 
tions undoubtedly concentrate 
minds. But they seem unduly 
onerous. No sector manager can 
be fUlly-lnformed about every 
aspect of his business. StDl less so, 

- when, companies are increasingly 
.diversifying globally and decen- 
tralising authority from head 
office to often far-flung subsid- 
iaries. 

A more difficult question arises 
whore a company’s culture, or the 
'style of the chief executive, 
encourage those at lower levels to 
cut corners or even to break the 
law. In such cases, statutory pen- 
alties on Individual top managers 
might act as a deterrent But they 
could just as easily lead to more 
energetic efforts to conceal wrong- 
doing in erring companies, while 
unnecessarily inhib iting managers 
in law-abiding ones. 

In the longer run, the most 
effective cheeks are those which 
companies impose an themselves: 
rigorous Internal audit systems, 
codes of conduct and scrupulous 
monitoring by supervisory boards 
or independent non-executive 

directors. These are more hkdy to 

be encouraged by regulatory 
systems which require fairness 
and transparency In corporate 
dealings than by statutory sledge- 
hammers. Whatever the outcome 
of tire Sc hneide r case, it should 
give companies and governments 
across Europe a powerful incen- 
tive to examine how well they 
match up against these objectives. 


C oming this autumn 
from Fox Broadcasting, 
America’s upstart 
fourth television net- 
work: a new comedy 
series Hardball, which promises to 
take a “rowdy, locker room look* at 
a baseball team, led by a 
‘Tio-nonsense” manager, which will 
try anything- and everything to 
make it into the big league. 

Mr Rupert Murdoch, Fox’s own 

no-nonsense boss, is playing a real- 

life game of haniha» as he tries to 
push the company into the US 
broadcasting big league, alongside 
the established network trio of CBS, 
ABC and NBC. 

Last December he shook the tele- 
vision establishment when he won 
an auction to broadcast for the next 
four years American football gamas 
featuring one of the two leagues, 
the National Football Conference. 
Fox bid $1.6bn, more than 9400m 
higher than CBS, which has shown 
NFC games for almost 40 years. 

Two weeks ago Mr Murdoch fol- 
lowed that up with another shocker: 
12 television stations owned by 
media group New World Comm uni- 
cations are to shift affllfaHnn from 
tbe big three to Fox, broadcasting 
its national programming along 
with their own local content 
Once a gain , the n-iirfn victim is 

CBS - the number one network in 
the US audience ratin gs for the past 
three years - which is losing eight 
affiliates to Fox. 

A change of loyalties by 12 sta- 
tions may not sound particularly 
dramatic, given that the big three 
networks have nearly 650 affiliates 
between them. But a switch of this 
magnitude is extremely rmrmrai — 
Mr Murdoch claims it is unprece- 
dented - and it could have a 
far-reaching impact on the US 
b roadcasti ng industry. 

It is likely to set off a struggle for 
affiliate loyalty between CBS, NBC 
and ABC. It could also prompt CBS 
to review its strategy of remaining 
. a one-medium broadcaster at a Htwa 
when NBC and ABC have diversi- 
fied into cable. Some observers sug- 
gest Mr Laurence Tisch, CBS chair- 
man, might even consider merging 
the group with another entertain- 
ment company. 

But tbe most immediate effect of 
the New World deal is to give a big 
boost to Fax’s credibility. It marks a 
milestone in Mr Murdoch’s efforts 
to build it into the leading network 
in the US. “Partly as a result of this 
and partly what was' going on 
already you will see another six or 
eight VHF stations joining our 
hue-up between now and Christ- 
mas,” Mr Murdoch says. 

Fox hag Bmp a remarkably l opg 
way since 1987, when Mr Murdoch 
launched the network with two 
nights a week of programming and 
just over 100 affiliates, many of 
them small, independent stations 
broadcasting on UHF frequencies. 


Fox among the 
television giants 

Martin Dickson and Raymond Snoddy say Murdoch is 
taking on the big US broadcasters - and making gains 



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which are less powerful than the 
VHF signals used by the stations 
which dominate most big US cities. 

The latest deal was typical Mur- 
doch opportunism. New World 
approached Murdoch about making 
programmes together for daytime 
schedules and la unching them 
across half the US. “Then the con- 
versation led into this rather bigger 
deal and it was all done in three 
weeks," Mr Murdoch says. 

Fox, however, fa still far from 
achieving Mr Murdoch's ambitions. 
In the broadcasting season that 
Anriwi in April, the TnwrfcAt research 
agency Nielsen gave it a rating of 
72 in the prime evening telev isio n 
hours, far behind NBC with 11, ABC 
with 12.4 and CBS with 14. (Each 
rating paint represents 942,000 view- 
ing households.) " - 

Fox only began broadcasting 
seven nights a week last year. It has 
no national news service and it only 
broadcasts 15 hours of prime time 
prog ramming a week - made either 
in-house a r under contract - compa- 


red to the big three's 22 hours. 

Last year Wan Street began ques- 
tioning whether Fox might be run- 
ning out of steam. Its prime time 
ratings dipped for the second year 
running and two of the network’s 
most important creators - Mr Barry 
t hitw and Mr Jamie Kellner _ had 
quit the group. 

Mr Murdoch's recent coups have 
dispelled, much of the scepticism. 
Capturing the NFC contract gives 
Fox its first Mg scheduled sports 
programming. He win almost cer- 
tainly ]qca money on transmission 
of the games - as CBS did when it 
aired tham — but since winning the 
NFC contract Fox’s number of affili- 
ates has risen from 138 to 184. 
though 34 of the new stations are 
partial affiliates, interested mainly 
in feeds of the NFC 'gafnes. By com- 1 ' 
parison, ABC has 227 affiliates, NBC 
213 and CBS 206. The deal with New 
World win not add to the network's 
number of affiBatna , sinftp the sta- 
tions are in cities where Fox 
already has an outlet, which it win 


now discard. The Importance of the 
deal is that it will substantially 
increase Fox’s reach in the 12 mar- 
kets - which include important 
cities such as Detroit Dallas and 
Atlanta - because tbe New World 
stations are high powered VHF 
one s, wh ile those Fox is discarding 
are UHF ones. 

F ox reckons its prime time rat- 
ings win improve by 40 per cant to 
the cities involved, though observ- 
ers suggest a 20 per cent improve- 
ment CBS win probably try to steal 
the VHF affilia tes of NBC and ABC 
in dries where it has lost stations, 
rather than settling for Fox’s UHF 
cast-offs. That to turn could unset- 
tle the financial relationship 
between the networks and affiliates 
WhfGh has- long underpinned the US 
'feffivisiob industry. 

■ 1 1 The networks make much of their 
money from selling advertising 
space during the national program- 
ming they supply to their affiliates. 
The affiliates make their profits 
from selling local advertising, but 


they also get paid “compensation” 
by the networks for carrying 
national programming- 
To win new affiliates the net- 
works may now need to increase 
compensation, buy additional sta- 
tions outright or emulate Fox and 
take minority financial stakes in 
some. Mr Howard Stringer, who 
heads the CBS network, fa promis- 
ing to “open the network's wallet” 
to replace defectors. The Big Three 
may also have to make the timing 
of programmes more flexible to 
accommodate affiliates’ demands 
for local advertising slots. 

Y et in spite of such con- 
straints on its rivals. Fox 
still faces big challenges. 
The Federal Communica- 
tions Commission, the 
regulator, is looking into a com- 
plaint that Fox's ownership of six 
television stations - the basis of its 
network - violates federal laws pro- 
hibiting foreigners from owning 
more than 25 per cent of a broad- 
cast outlet. 

Mr Murdoch, who changed from 
Australian to US citizenship la the 
1980s to build bis television empire, 
holds 76 per cent of the voting 
power In the company that owns 
Fox’s stations, but News Corpora- 
tion. his publicly quoted Australian 
company, holds more than 90 per 
cent of tire equity. News Corp said 
on Friday the ownership structure 
has not changed since permission 
was first given to 1985. The minor- 
ity stake Fox is taking in New 
World seems certain to produce 
fresh complaints from rivals that 
Mr Murdoch is exploiting loopholes 
to tbe law. 

With the ratings slip of the past 
two years. Fox also has to prove 
that it can keep producing fresh 
programmes, introduce some 
national news content to its service 
and extend its appeal among older 
Americans. The New World deal 
may be the first step towards 
"relaunching our late night pro- 
gramming, maybe national news, 
certainly daytime programming," 
Mr Murdoch says. 

All four networks also face com- 
petition for viewers and affiliates 
from two networks being put 
together by Warner Brothers and 
Paramount Pictures, the Hollywood 
film and television studios. 

Whatever the outcome of this 
struggle, the money flowing into 
broadcasting Shows that some very 
canny entertainment industry 
investors disagree with the wide- 
spread idea that cable television is 
gradually killing off the networks. 
Mr Murdoch says: “All four [net- 
works]:' will survive and do very 
well. Well be the most economic 
way for mass marketers to reach 
the American public and that will 
remain so for a very long time ” He 
is putting a great deal erf money 
where his mouth is. 


A layman’s guide to US Fed policy 


I t is hard to find rational expla- 
nations for the height of bond 
yields in Europe where unem- 
ployment averages about 11 
per cent But the direction erf move- 
ment is determined fry events in the 
US, where tbe risk of inflation is 
greater because the business cycle 
is farther advanced. 

The key to understanding bond 
markets thus lies in grasping the 
modus operand! of the US Federal 
Reserve, which triggered the global 
rise to yields by starting to tighten 
monetary policy to early February, 
sooner than many investors expec- 
ted. The Fed has not folly explained 
the principles that govern its deci- 
sions. but it appears to have two 
main criteria for action: 

• Rule one. The Fed will raise 
short-term rates if economic growth 
appears likely to exceed an annual 
rate of 2%-3 per cent, the rate it 
deems sustainable in the longer- 
term. 

This rule was made clear in the 
minutes, released last month, of the 
March meeting of the Fed’s policy- 
making open market committee. 
The Fed said it was aiming for a 
“neutral" monetary policy. It 
defined this not in terms of a target 
real interest rate but rather as a 
monetary stance that would achieve 
"sustained non-inffationazy expan- 


sion consistent with tbe economy's 
potential”. What is this ? Well, tile 
labour force is growing at an 
annual rate of about L3 per cent 
and Mr Alan Greenspan, the Fed 
chairman, believes productivity is 
growing at about L5 per cent. 
Potential non-inflationary growth is 
thus 2%-3 per cent The Fed will 
raise rates to whatever level is 
required to prevent growth exceed- 
ing this rate. 

• Rule two. The Fed will raise 
short-term rates if inflation shows 
any sign of rising above the current 
level of just under 3 per cent 

Mr Greenspan spelled this out to 
Ids May 27 testimony to the Senate 
banking committee. “If we are suc- 
cessful in onr current endeavours, 
there will not be an increase in 
overall inflation, ?H)f i trends toward 
price stability will be extended.” In 
the written statement the word 
“not" fa underlined. Observers 
should ponder this commitment 
carefully because most seem to 
assume that US inflation will be 
permitted to drift higher, say to 
3Hr4 per cent Mr Greenspan is say- 
ing. in effect that this will happen 
only over his dead body. 

What do these rules tell ns about 
past and prospective Fed policy? 
The lifting of short-term rates from 
3 per cent to 4‘A per cent was an 



MICHAEL PROWSE 

on 

AMERICA 


application of rule one. The Fed was 
not responding to actual evidence of 
higher inflation but was rather try- 
ing to reduce growth, from an 
unsustainable annual rate of 4-5 per 
cent in the second half of last year. 
It also wanted to prick a speculative 
bubble in financial asset prices 
caused by its own failure to heed 
good advice - for example tbe plea 
to raise rates last September from 
monetarist economists led by Pro- 
fessor Allan Meltzer of Camegie- 
Mellon University. 

The perception that policies 
inspired by rule one are having the 
desired effect explains the revival of 
confidence in the US bond market - 
most evident in Friday’s rally 
despite news of a fall in the jobless 


rate to 6 per cent (“full employ- 
ment" to many economists' eyes). 
Tbe market took that number in its 
stride partly because labor depart- 
ment officials hinted it was proba- 
bly an aberration and partly 
because other recant data appear to 
point to a modest deceleration in 
economic growth. 

Housing starts and home sales 
are down from the peaks hit late 
last year. Growth of consumer 
spending seems to be dedining after 
several strong quarters, partly 
because mortgage refinancing is no 
longer providing much impetus. 
Factory orders and the Purchasing 
Managers Index - guides to the 
health of manufacturing industry - 
appear to be stabilising, albeit at 
robust levels. And the payroll ride 
of Friday's ambiguous employment 
report pointed to a somewhat 
slower pace of job creation. 

It would be dangerous, however, 
to conclude that the Fed has done 
enough to reduce US growth to a 
sustainable 2*A-3 per cent. Lulls 
occur to all business cycles. There 
is no evidence that interest rates 
are yet high enough, to deter busi- 
ness investment one of the engines 
of this recovery. Growth will proba- 
bly accelerate again later this year 
as consumers get a second wind and 
as economic recovery to the rest of 


the world stimulates US exports. 
When Mr Greenspan said be had 
substantially withdrawn the mone- 
tary accommodation prevailing last 
year, he did not mean to imply rates 
had reached an equilibrium level. 
As he hinted on May 27, the right 
inference was that “the degree and 
frequency of tightening" might be 
less in the fixture 

Even if growth does decline to a 
sustainable rate, rule two may come 
into play. The leading index of infla- 
tion compiled by researchers at 
Columbia University - one of the 
best available - surged in May, hav- 
ing risen continuously for eight 
months. Key components - such as 
industrial material prices - point 
unequivocally to an upturn in infla- 
tion this autumn. If the price data 
do indeed deteriorate, the Fed will 
tighten again regardless of growth 
trends. 

None of this necessarily spells 
doom for bond markets. Long yields 
of about 7.5 per cent in the US, and 
higher in most European markets, 
should provide a cushion against 
fixture shocks. Indeed, the most dis- 
turbing event for investors would 
not be a further increase in US 
short term rates, but a perception 
that the Fed was again behind 
events because it was failing to 
heed its own monetary logic. 


Observer 


The silver 
spoon mob 

■ Whilst the world’s media is 
focusing on the D-Day ceremonies 
another group of veterans slipped 
into London over the weekend. 

The big cheeses of the banking 
world are in town for a week of 
conferring and merry-making and 
keeping *hgm happy is almost as 
big a challenge, in terms of logistics 
and protocol, as organising the 
Normandy beach parties. 

Forget Royal Ascot, Wimbledon 
and Henley. The highlight of the 
summer season for a banka: is the 
International Monetary Conference 
where the bosses of the top banks 
hob-nob with central bankers 
behind closed doors whilst their 
spouses hit the tourist sights. 

Hosting an IMC meeting is the 
banking equivalent of winning the 
Olympics. Last year Stockholm 
did it, and it was Seattle's turn this 
year. But London jumped the queue 
because the IMC wanted to honour 
the tercentenary of the Bank of 
England with ite presence. 

London's bankers have responded 
magnificently. The Bank of England 
has laid on a concert (including 
a specially commissioned Geoffrey 
Burgoo number) and Nat West 
chairman Had Alexander has got 
the Qneen and her husband to 


throw a cocktail party at 
Buckingham Palace. Bankers are 
even being allowed to turn up in 
lounge suits. 

However, the British hosts are 
not allowing standards to slip too 
far. Not only are they tnristiwg on 
a proper seating plan for the rimnw 
at Whitehall’s Banqueting House 
but they're also presenting each 
delegate with a special gift from 
Garrard & Co, the Crown jewellers 
- a silver spoon. How very 
appropriate. 


Guilty as charged 

■ The British bookstore chain 
Dillons is promoting the latest work 
by the author of bestsellers The 
Firm and The Cfcent under the 
banner “Grisham’s Iaw". A clever 
evocation of Gresham’s Law, but 
if “bad money drives out good", 
what does that say about novels? 


Ex-diplomats 

■ Former US secretary of state 
Henry Kissinger has never taken 
kindly to criticism. Now that It 
fa coming via a dead man he is 
becoming quite apoplectic. 

The object of his ire, expressed 
in letters to the New York Times 
and Wall Street Journal last Friday, 
is HRHaldeman, whose 



posthumously published diaries 
of President Nixon's first term are 
as riveting a read as those of Alan 
Clark, despite the lack of sex. 

It is not so much Haldeman’s 
revelations about linking US 
withdrawal from Vietnam to the 
US electoral timetable which upset 
the rider statesman. It is the 
presumption that Ifixan dared to 
discuss vital policy with Haldeznan, 
his chief of staff, rather than 
Kissinger, the national security 
adviser. 

“Nixon was just blowing off 
steam rather than changing 
strategy for Haldeman was 


concerned with public relations, 
zurt substance, and any change in 
strategy would have been discussed 
with me,” says Kissinger. 

The problem is that there is a 
lot more in the Haldeman diaries 
about “K“ than Vietnam strategy, 
such as his bitter rivalry with Bill 
Rogers, then secretary of state, 
who is still alive. The letters 
columns threaten to be compelhng 
reading to the weeks ahead. 


Two legs good 

■ Oh no, India has discovered 
re-branding. Twrtian officials think 
their country has made so much 
economic progress as a result of 
the last three years' reforms, that 
they are chang in g the name of their 
annual meeting in Paris with their 
principal aid donors. 

ins tead of the Aid India 
Consortium the two-day meeting 
starting on June 30 will henceforth 
be known as the India Development 
Forum. Will they also be asking 
for less money? Don't bet on it 


Pick a job 

■ The UK government is planning 
to privatise - “contract out" is the 
official euphemism - the Careens 
Service, from April 1995. You may 
like that or not, but what does seem 


more than a trifle absurd is the 
choice of some of the department 
of employment's 43 “franchise 
areas" for which tods are invited. 

Number three on the list is the 
county of Cleveland, and number 
ten is the County of Humberside. 
But those thinking of bidding for 
the contracts to provide Careers 
Services to those places should 
think a gain; tha government has 
plans to abolish them, starting with 
Cleveland on April 1 1995. 


Gaza stripped 

■ A group of young Arabs is 
engaged in heated discussion in 
a West Bank cafe. As the chat takes 
a political turn, an older man taps 
one of the group on the shoulder, 
beckoning him aside. 

“You are an Israeli soldier in 
disguise,” says the village elder. 
“Unless yon admit it and make 
yourself scarce I shall expose you 
to the rest of the gathering." 

'Hie younger man is visibly 
distressed. “All right, I admit it,” 
he replies. “But please, how did 
you recognise me? I’ve always been 
assured my Arabic accent fa 
perfect" 

“Quite right," says the elder. “It 
is perfect But you are the only 
man in that group who has said 
nothing critical about Yassir 
Arafat" 


\ 





22 



| A FINANCIAL TIME 

( for change 


j Wfflt I 



FINANCIAL TIMES 

Monday June 6 1994 


brother, 




TYPEWRITERS • WORD PROCESSORS 
PRINTERS - COMPUTERS - PAX 


Germany, UK oppose borrowing for infrastructure projects 

Delors faces fight on EU bonds 


By Lionel Barber in Brussels 

Mr Jacques Delors, president of 
the European Commission, faces 
a test of strength with the UK 
and Germany today over his plan 
to launch “Union bonds” to 
finance trans-European net- 
works, the multi-billion dollar 
rail, road, and telecoms infra- 
structure projects. 

Amid strong scepticism in both 
Bonn and London, EU finance 
ministers will consider revised 
proposals for the European Com- 
mission to borrow on the capital 
markets to help fund the 
networks, which Mr Delors 
argues are vital for improving 


competitiveness and creating 
jobs. 

Ministers meeting in Luxem- 
bourg will also discuss how to 
improve labour mariret flexibility 

and tnpvio tmemp i py mant, now 
Ti oay tn g IBm 

A row would damage prospects 
for the European summit in 
Corfu on June 24, which is 
already threatened with a show- 
down over who succeeds Mr 
Delors asCommissiDn president . 

Some diplomats in Brussels are 
predicting a stormy session today 
between Mr Delors and the 
finimw» ministers. 

However, Mr Delors - who last 
rrtmifch riashad with Britain arcd 


Germany on a Bonn plan to 
improve competitiveness - is 
under pressure not to provoke a 
second confrontation with the 
finannp ministers. 

Aides to Mr Delors suggested 
that he wight, iianiite to shelve 
his ffnanrfng plan for the trans- 
European networks until the 
Essen summit in December. 

But he remains convinced that 
the private sector and the Euro- 
pean Investment Bank al a p p can- 
not ftnanra the irmffl-hffllnw dol- 
lar projects - hence the 
Commission’s plan last week for 
financing a Ecu5hn ($5.80bn) 
a lleg ed funding gap to 10 infra- 
structure projects. 


The Commission’s paper has 
reawakened some spectres we 
thought liad been already kfiiad 
off," a UK official sa i d , 

Another diplomat a d d ed : “We 
remain extr emely sceptical, as do 
the Germans others, 

about the ne ed for this." 

Ministers today will also dis- 
cuss whether the EU s h ou l d sin- 
gle out individual countries who 
are not sticking to its macro-eco- 
nomic guidelines, the framework 
to helping the EU achieve a sin- 
gle currency. 

The Commission believes 
-naming names" increases pres- 
sure for progress on tackling 

inflation and hnHgwt riaficH* 


Pomp and pathos mark a 
second D-Day invasion 


By David Buchan in Caen 

A dazzling commemoration of 
the allied invasion of France, frill 
of carefully organised pomp and 
small moments of pathos, got 
under way yesterday as the royal 
yacht Britannia carrying the 
Queen led a flotilla of ships 
across the Channel from Ports- 
mouth. 

In Normandy, 40 US veterans 
defied conventional wisdom on 
fiie limitations of old age and 
repeated their parachute jumps 
of 50 years ago. In a salute to 
fallen comrades, they jumped 
from a vintage DC-3 Dakota air- 
craft near the town of Sainte 
Mfcre Eglise, and landed safely, 
though one was hurt after his 
parachute twisted. Another 550 
serving US paratroopers fol- 
lowed. 

To the east 1.000 British, Pol- 
ish, Canadian a™i French paras 
dropped near file Pegasus bridge, 
the first piece of France to be 
freed on D-Day. 

The ceremonies, which come to 
a climax today oo file beaches 
where the allies landed, began 
yesterday morning with a reli- 
gious service on Soutbsea Com- 
mon outside Portsmouth. Lead- 
ers of the allied nations, bound 
for France on Britannia and a 
variety of warships, were given a 


tumultuous send-off by a flypast 
of Second World War aircraft. 

The Archbishop of C anterbur y, 
George Carey, who officiated at 
the service along with Roman 
Catholic and Jewish leaders, 
recalled some of the sensations 
experienced by the biggest inva- 
sion force ever assembled. He 
spoke of “the smell of self-heat- 
ing soup that did little for skk- 
seasfekness; the fear in the pit of 
the stomach as the beaches 
loomed ahead; the devastated 
orchards of Normandy and the 
stench of cattle; and the 
individual acts of bravery and 
brilliance". 

But “those we remember 
today”, said the Archbishop, 
“gave their Uvea not only to the 
liberation of occupied Europe, 
but also to the German nation - 
to free itself of the dark tyranny 
that was destroying its 8001 “. 

At a rain-swept ceremony on 
Saturday, the head of the Ger- 
man war graves committee, Mr 
Hans-Otto Weber held a service 
at the La Cambe cemetery where 
21,250 Germans are buried. Ger- 
man and French bishops yester- 
day held a joint service in Caen. 

French President Francois Mit- 
terrand said France was “happy 
and proud to welcome the veter- 
ans of file western allied troops 
who, 50 years ago, came to min- 


gle their blood with that of her 
sons”. 

The flotilla of small boats fol- 
lowing In Britannia’s wake mir- 
rored in miniature the vast inva- 
sion fleet mastered an D-Day. 

US President Bill Clinton, one 
of the youngest of the govern- 
ment leaders aboard the ship, 
said: “I never dreamt I would be 
here, doing sort of firing.” 

Mr John Major, the British 
prime minister, said: “I cannot 
remember anything as Mg or as 
spectacular as this. Pm very 
proud”. 

In mid-Channel, the allied 
leaders on the Britannia took the 
salute of some 40 allied ships. 
Wreaths ware laid at sea and a 
vintage Lancaster bomber 
dropped 850,000 popples, sym- 
bols of the war dead. 

One unusual ceremony was a 
joint manorial mass in the small 
town of Porters between veterans 
of the 90th US infantry division 
and the 8th German parachute 
division. 

This German unit gave the bat- 
tered 90th a trace in which to 
collect their wounded, prompti n g 
some Americans to find the Ger- 
mans after the war. They have 
already held several joint memo- 
rials together. 


The way we w&e, Page 2 


China plans ways to bridge sea channel 


Continued from Page 1 


ing. and the municipalities of 
Beijing and Tianjin. 

This followed a government 
decision in 1992 to declare the 
Bohai rim an independent eco- 
nomic zone under China’s strate- 
gic economic development plan. 

An important aim Is to match 
explosive economic growth in 
southern China. Development In 
the northeast, home to much of 
China's heavy industry, has been 
lagging behind programmes 
around the Pearl River and Yang- 
tze River deltas in the south. 

Some oT China's larged cities 
are located around Bohai Bay, 
including 11 cities with popula- 
tions of more than lm. 



Hungary’s 
socialists 
back former 
communist 
as premier 

By Nicholas Denton 
in Budapest 

Mr Gyula Horn, a long-time 
c ommunis t party functionary 
and now leader of Hungary's 
Socialist party, is poised to 
become the country's next prime 
minister. 

The reformed communists, 
newly assertive after gaining an 
absolute majority in last month’s 
par liamentar y elections, named 
Mr Horn at a special congress at 
the weekend. 

The party gave over whelming 
backing to the 61-year-old Mr 
Horn, a former foreign minister, 
and brushed off a challenge from 
Mr Laszlo Bekesl, the party’s eco- 
nomics spokesman. At the same 
time the socialists also offered to 
begin coalition talks this week 
with the Alliance of Free Demo- 
crats, the liberal party which 
came second in the vote. 

The socialists had held off fr om 
naming a nandidiriatn to the pre- 
miership because the liberals 
regard Mr Horn as a “divisive 
figure". The socialist leader was 
a volunteer in the “padded 
jacket" workers’ militia that 
helped put down Hungary’s 1956 
uprising against Soviet and com- 
munist rule. But the unexpected 
scale of the former communists’ 
election triumph - the party won 
209 of the 386 parliamentary seats 
— qhang wd the political bal- 
ance of power. 

Free Democrat leaders had 
vowed never to serve in a gov- 
ernment dominated by the social- 
ists and led by Mr Horn, and 
even last week were holding out 
to a compromise. 

The liberals nevertheless, 
agreed yesterday to begin talks 
on joining the next government 
after coming under strong pres- 
sure from intellectuals *md the 
business community to bolster 
socialist technocrats and dilute 
ftp influence of the traditionalist 
and trade union groups among 
the former communists. 


FT WEATHER GUIDE 


Europe today 

Rather warm, motet air win be drawn Into the 
UK and the Benelux between a depression 
near Scotland and a ridge of high pressure 
extending from the Azores towards France. 
Thera win be rain, especially over Ireland and 
Scotland. Nor m andy, the south coast of 
England, coastal areas of Belgium and the 
Netherlands will have fog patches. 
Meanwhile, central and southern France will 
have sunny spells. A strong mistral wind will 
blow across south-eastern France. 
Scandinavia, Denmark and Germany wfll 
have clear spells and isolated showers. An 
active frontal rone wlB cause periods of rain 
over eastern Europe. Italy and Spain wW be 
dry and sunny. 

Five-day forecast 

Spain. France and Germany win become 
warmer on Tuesday and Wednesday. 
Meanwhile, much cooler air approaching 
from the west wfll cause thunder storms over 
the continent during the mkfcfe of the week. 
Towards the end of the week, the UK, the 
Low countries and France win be rather cool 
and dry. Eastern Europe wfll continue to 
become warmer. 


TODAY'S TEMPERATURES 



Wind speed to KPH . 0 1 0 £ 


Situation el 1 i GMT. Tampmanavs nwtnum for day. Fomcastaby Mefao Consult of toe W Mhartaxfr 

Paris 
Perth 
Prague 



Maximum 

Batcalana 

hh 

28 

Gfaro 

SUI 

37 

Dubai 

sun 

40 

lushoug 

fair 

17 


Celsius 

Bajtag 

fair 

31 

Gape Town 

cloudy 

15 

Dubfin 

shower 

20 

Lyon 

ft* 

21 

Abu Dhabi 

sun 

42 

Belfast 

shower 

18 

Caracas 

doudy 

28 

DubrowiBc 

fak- 

24 

Madeira 

cloudy 

24 

Accra 

thund 

30 

Bdgrada 

shower 

13 

CtnHT 

shower 

19 

Edinburgh 

shower 

20 

Madrid 

SWI 

36 

Airfare 

fair 

29 

Btefat 

fair 

19 

Casablanca 

Mr 

29 

Faro 

sun 

32 

Malorca 

sun 

28 

Amsterdam 

Shower 

18 

Bonnuda 

rain 

26 

Chicago 

dwwar 

30 

Frankfurt 

cloudy 

21 

Mrfta 

sun 

27 

Athens 

sun 

28 

Bogota 

shower 

19 

Cologne 

fair 

20 

Geneva 

doudy 

19 

Manchester 

shower 

19 

Atlanta 

thund 

28 

Bombay 

cloudy 

33 

Dakar 

fair 

27 

Gibraltar 

SUI 

25 

Marta 

shower 

33 

B. Ainas 

fair 

19 

Brussels 

cloudy 

18 

Dallas 

fax- 

34 

Glasgow 

shower 

18 

Mettouma 

doudy 

15 

&ham 

shower 

21 

Budapest 

shower 

17 

Deftrt 

hazy 

44 

Hambtag 

fair 

18 

Mexico aty 

doudy 

22 

Bangkok 

shower 

34 

CJngen 

fair 

17 

Djakarta 

shower 

32 

HetsSnW 

Mr 

19 

Miami 

aim 

31 



Frankfurt. 

Your hub in the heart of Europe 

Lufthansa 

German Airlines 


Ctmrirti nisi 

wwiTOin 

Hongkong cloudy 28 Mian sui 28 Straaboug 

HgnoMu cloudy 31 Montreal thund 27 Sydney 

Istanbul sun 25 Moscow shower 24 Tangier 

Jersey tag 17 Munich cloudy 17 Tel Mv 

Karachi fair 36 Nairobi fair 23 Tokyo 

Kuwait sui 43 Naples sun 25 Toronto 

L Angelas cloudy Z1 Nassau s im 31 Vancouver 

Las Palmas fair 28 NewYorfc fat 27 Venice 

Lima Mr 20 Noe sim 23 Vienna 

Lisbon (sir 36 Ncoeia sun 31 Warsaw 

London shower 23 Oslo Mr 22 W a shington shower 


fair 21 
18 
fat 17 
rain 30 
shower 12 
cloudy 24 
sun 25 
cloudy 20 
fair 28 
cloudy 32 
far 20 
fair 20 

shower 21 
Ur 33 
sun 34 
cloudy 27 
Itund 27 
rain 15 
sun 24 
fat IS 


the t.f.x column 

Cash in hand 


The government may be inclined to 
blame the demands of Institutional 
investors for high dividends, but ris- 
ing pay-outs are now bring fuelled by 
: companies' improving haianra cherts 
1 and cash flow. The aggregate gearing 
: of the equity market is probably now 
below 30 per cent, having fallen from 
more than. 40 per cent at the trough, 
l ajpg that background it is hardly 
surprising that dividend growth has 
outstripped the most optimistic City 
forecasts this year, even though earn- 
ings are growing in hne with expecta- 
tions. 

But a flprpffwtp figures disguise the 
number of companies which have — or 
will soon have - net cash. Many are in 
sectors sneb as retailing or pharma- 
ceuticals which invested heavily in 
tiie 1980s. Utilities privatised on 
fa vo u rable terms, such as the regional 
electricity companies and power gen- 
erators, and established hoarders such 
as Associated British Foods are also 
on the list But companies as diverse 
as De La Rue, BET, Tomkins and 
Whitbread must also be included. On 
the fringes are industrial giants such 
as Imperial nhpwiiwii industries and 
RTZ which now boast very low levels 
of ge nrfo g by historic standards. 

While that prtwtg to big dividends to 

ramp from same ranwparriftR, imlnriing 
one-off payments, the overall position 
mniH ehang w quickly. Despite the gov- 
ernment’s concerns, investment inten- 
tions are not especially week for this 
point in the economic cycle. If physi- 
cal investment starts to rise and 
acquisitions return to the corporate 
scene, dividend growth across the 
market would soon revert to a more 
normal rate. 

Shell/Montedison 

The European Commission’s 
approval far their joint venture in 
plastics is probably more important to 
Montedison than to Royal Dutch/ShelL 
While the latter would dearly love to 
ra m p u t fis p osition in po l yp rop y l ene - 
one of the fastest-growing plastics - 
Montedison is counting on the oppor- 
tunity to inject $2bn debt into the new 
company. That would help relieve 
pressure following the financial 
restructuring cf its parent, Ferruzzi, 
last year. After three years of detailed 
planning, thnngh, failure to gain 
approval this week would be a blow to 
both prospective partners. 

It is hard to see the joint venture as 
inherently anti-competitive. While it 
would account to about 24 per cent of 
European, polypropylene capacity. 


UKytohlmHM 


Ralatom to FT-SE-A AH-Sharo<fividend yWd 



Sources Datastrann 


prices are set In the world market. 
Imports of either raw plastic or simple 
finished goods would be sucked in if 
European prices were pulled out of 
line. Neither is Shell/Montedison’s 
do minanc e in technology as threaten- 
ing as it might first appear. About 70 
per cent of world polypropylene capac- 
ity is based on technology licensed 
from Shell or Montedison, but alterna- 
tives are available. BASF, which 
bought ICTs polypropylene interests 
earlier this year, uses technology 
licensed from the UK company. 

Besides, the joint venture would 
encourage restructuring in an over- 
crowded market by reducing the num- 
ber of producers and allowing over- 
heads to be cut On that view it is In 
the wider interests of the European 
chemicals industry that an acceptable 
deal can be struck. 

European equities 

Continental European equity issues 
are about to reach flood proportions. 
As bankers and brokers seek to cram 
in deals before their summer holidays, 
five issues of $lbn or more and several 
of a lesser size are due to hit the 
market Given the recent poor perfor- 
mance of equities and the waning 
appetite amon g international inves- 
tors for new issues, some offerings 
could be in to a difficult run. A warn- 
ing sign came in last week’s (Llbn 
Endesa sale by Spain. Not only was 
the issue price at the low aid of expec- 
tations. The shares initially traded 
below the issue price. 

The unit big issue is the $&5bn «al« 
of shares in KPN by the Dutch govern- 
ment. Pricing is expected to be 
annrwmrari this morning . After that 

comes the $L3hn Pharmacia offering 
by Sweden and the $3bn INA sale by 
Italy. Also in the pipeline from Italy 


are Mediobanca's Slbn share Issue. 
Cariplo’s $L2bn issue and Maad&dorft 1 
S 500 m offering. It seems unlikely that 
any of these issues will be pulled. 
Once such large offerings get under 
way. they acquire a momentum of ! 
their own. Moreover, when govern- j 
ments are privatising compani e s, the 
loss of political face from ca&oeQtag-a 
flotation would be huge. 

Still. US and UK institutions -• 
which in the past have been the main- 
stays of international equity offerings 
- are no longer so keen. US investas 
are not as flush with cash as they 
were at the end of last year, whQe UK 
s har eholders have recently had to 
cope with an excess of domestic flota- 
tions. Investors may not boycott the 
European issues but they wfll expect 
generous prices. 

Utilities 

Investors traditionally view British 
utilities as bond surrogates. As gilt 
yields have shot up this year, so have 
utility yields- The rise in utility yields 
of 1.02 percentage points is sharper 
than the 054 points rise in the yield 
on the all-share index. Another way of 
looking at the same phenomenon is 
provided in the accompanying chart 
It shows a marked correspondence in 
movements in utility yields relative to 
the market and shifts in the gilt/eq- 
uity yield ratio. 

This habit of treating utilities as 
bond surrogates is odd. True, utilities' 
income streams are relatively predict- 
able. But there the correspondence 
with bonds ends. Gilt yields have risen 
this year because of higher real inter- 
est rates and increased inflationary 
expectations. The utilities, by con- 
trast, are effective hedges against 
increases in both real Interest rates 
and inflation. 

The real interest rate hedge stems 
from the way that utility regulators 
decide permitted profitability levels. 
Their starting point is to determine a 
utility’s oost of capital, which is calcu- 
lated by taking real interest rates and 
adding a company-specific risk pre- 
mium. So if real interest rates rise, the 
company's permitted profitability goes 
up too - albeit with a lag, as price 
caps are reviewed only every four or 
five years. 

The inflation hedge also stems from 
the regulatory system. Price caps are 
explicitly related to the retail price 

inriPT. Hi gher inflatio n means hi gher 

revenues and higher profits. One can- 
not say the same for an ordinary 
bond. 



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i 




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23 


• ■ i* 



EUROPE'S LEAOIKB 0E8T 
COLLECTION c-qhpanY 



FINANCIAL TIMES 


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MARKETS 


THIS WEEK 


RICHARD WATERS: 

GLOBAL INVESTQR ' ' 

A 20~25 per cent return for 
Investing in a stable utWty Hke a 
power station, or a toil road? A way 
Into' the emerging markets of Asia 
without pumping wore cash into 
wfcat have proved highly volatile : 
stock markets? These are the sort 
of carrots being dangled Increasingly frequently In 
front of pension fends and other tong-term 
Investors in the US and other developed nations. 
Page 26. 


MARTIN WOLF: . 

ECONOMIC .EYE 
Chaos theory appears to provide 
strong support for the “Austrian* 
vision of the market process as 
against the equilibrium view of 
neo-dasskal theorists. The theory 
- means, the future is unknowable. 
Economics can only explain, it wKI 
never give accurate predictions. Page 26 

BONDS: 

According to one depressed banker, Investors in 
the Canadian market have lost on the currency, tost 
on the spread arid been killed in the bond market" 
Why has this happened when so mary of the 
economic fundamentals look good? Page 26. 

EQUITIES: T 

There are signs -that soma market participants are 
wtflfngto take a rnore aptirnistic vtew on the 
prwpectaforUICshare prices. - • 

New York - List .Friday's employment report. 
rather than establishing a fresh direction for 
equities, seems to have exacerbated the confusion 
on Wall St Page 29. •' 

EMERGING MARKETS: • 

If Investors in Colombia’s stock mariosthad their 
way; Ahdrssrf^astrana would be the country’s next 
president Page 27 

CURRBIGtESt " 

TheTnWal concern for foreign exchanges this week 
wffl beiNhather the dollar can continue the ra/fy 
promptedlast Friday by toe release rtf the May US 
tabour.hwkst report Page 27 

*,■ ' • , ll* / ■_ I**' 

COMMWTCffiS: . ... 

The' worttf s /cocoa producers meet to London this 
vredc^Nto*gooa-prlces at then- highest levels for 6 


COMPANIES & MARKETS 


06 


©THE FINANCIAL TIMES LIMITED 1994 


Monday dune 6 1994 



Brossette _B7/ 

Sanitaire - Chaufioge • Canalisation * 



UK COMPANIES- .. 

-WRSmtth, the retailing and cfiatrfoufion graup, has 
Sgntid HSibiBgest US. airport deal,. expected to add 
S25rti to Its current annual turnover of $65m. 

The demerger andHotafion of VideoLogic, the 
electronics company, is expected to be announced 
' this week.. Page 26 

INTERNATIONAL COMPANIES: 

- Mercedes-Benz of Germany , has started production 
,*-jn Indonesia of its NIB 700 range of light-duty 
and buses. Page 27 ' 

; 


STATISTICS 


T-^Beyeleriano.wtee '. 

7 f £' Oo mpffliy ineettnqs IS 

I +rf rQMdandpeycwrta — i — 18 
tndcea^r-r—** 
. j ti FT Gifctoto' currencies 27 
Ui^Ifcwign exchanges 3S 


London recent issues 3S 

London sheiB service. 36-37 
Managed fund servtoe 31-34 

Money markets „ 35 

-New int hand issues — — 28 
World stock mkt indices — 30 


Astra satellite group plans £lbn float 


By Raymond Snoddy 

Socifete Buropfeenne des 
Satellites, the Luxembourg com- 
pany behind the Astra satellite 
television system, is planning a 
flotation which it is believed will 
valued ft at more than £Lb& 

■ The company, which already 
broadcasts SO television channels 
over Europe, would be floated on 
the London Stock Exchange and 
a number of other European 
exchanges, probably before the 
end of next year. 


A formal decision to float and 
the date will depend on the suc- 
cessful launch of the fourth Astra 
satellite, due in September, and 
the marketing of channels an the 
fifth and sixth satellite, which 
will be devoted to digital televi- 
sion services. Digital compres- 
sion technology will enable the 
two satellites to deliver more 
t~>inn 400 channels of television. 

Flotation has been brought a 
step nearer by last week’s agree- 
ment that Deutsche Bundespost 
Telekom, the soon to be priva- 


tised German telecoms group, 
will buy a 16.6 per cent stoke in 
SES for £180tn - much higher 
than previously expected. DBP 
agreed to buy 25 per cent of the 
two-thirds of SES held privately. 
The remaining third is held by 
Luxembourg state-owned finan- 
cial institutions. 

The German stake amounts to 
around 20 per cent of the finan- 
cial assets of SES (because the 
private investors put up about 80 
per cent of the finance). This sug- 
gests a current notional value of 


around £900m for the satellite 
group, which made profits of 
£55m last year. The DBP deal was 
accompanied by a SiQOm capital- 
isation to pay for the new satel- 
lites. 

Hie German deal and the new 
value it helps to establish for SES 
is important for Thames Televi- 
sion, an early investor in SES 
and now part of Pearson, the 
information and entertainment 
group that also owns the Finan- 
cial Times. 

hi 1986 Thames paid £7m for a 


10 per cent stake and has had 
most of that back in dividends. 
Thames wifi also get £l0m com- 
pensation for its stake in the 
enlarged SES falling to 6 per 
cent. Altogether, the value of 
Thames’s SES stake could now 
be around £75m. Pearson paid 
£99m for Thames, where the 
other assets include £40-£5Qm a 
year in revenues from indepen- 
dent production, Teddinglon stu- 
dios. a programme library and 
stakes in two satellite channels. 

DBT remains the largest share- 


holder to Eutelsat, the satellite 
“club” of Europe's telecoms 
groups, and the main rival to 
SES. 

DBTs stake is a tacit admis- 
sion of the success of- SES but 
aig^ an indication that the group 
wants to take advantage of SES 
plans to go digital next year. The 
DBT deal could also give SES a 
relationship with Bertelsmann, 
the international media group, 
and with the Kirch organisation 
which dominates German film 
rights. 


Brussels will this week decide on the $3bn Shell-Montedison venture 


Signs of an end to merger wave 


By Daniel Green 

O n Wednesday, a meeting 
of European commission- 
ers is scheduled to decide 
whether to allow a $3bn plastics 
joint, venture to he created by 
Royal Dutch/Shell and Montedi- 
son, the industrial arm of Italy’s 
troubled Ferozzi empire. To try 
to secure approval, the compa- 
nies are prepared to offer conces- 
sions that will limit the strength 
of the joint venture. But if the 
deal is blocked, it could signal an 
end to the round of chemicals 
industry restructuring that domi- 
nated the early 1990s. 

Called Montell, the joint ven- 
ture would plug gaps in each 
company’s strategy- Both are 
strong in polypropylene, a mate- 
rial with annual gtnhal qfi jpg <jf 
about $l0bn. MonteD would have 
a global market share of about 19 
per cent, four times its nearest 
competitor, and a European 
share of 24 per cent 
Montedison’s forerunner, Man- 
teca tini, pioneered the develop- 
ment of polypropylene in the 
1950s and toe company’s plastics 
subsidiary Himont remains a 
world leader with a technology 
licensed to companies in North 
America and Asia. - 
But Montedison is hampered 
by a debt mountain of U3,600bn 
($8.4bn) - even after a L5,177hn 
rights issue in January - and by 
toe high cost of buying in feed- 
stocks. Shell has financial 
strength and petrochemical feed- 
stocks. It is strong in markets 
such as northern Europe and 
Australasia, but weak in 
southern Europe and east Asia 
where Montedison is well placed. 

Manlell would also be a strong 
player in toe $29>n*-year market 
for polyethylene, best known for 
plastic bags and film. Himont has 
developed a technique for mak- 
ing linear low density polyethyl- 
ene, or LUPE, which has some 


The pressure eases 

Wast European petrochemicals prices indax 
14 0 


Polypropylene - 



advantages over older methods. 

The proposed Shell-Himont 
venture is just the latest in 
Europe’s industry-wide restruct- 
uring. The biggest moves in the 
past two years include Hoecbsfs 
merger of its PVC and plant pro- 
tection businesses with those of 
Wacker-Chemie and Schering, in 
Germany; Snia of Italy’s fibres 
deals with France’s Rhone Poul- 
enc and with Courtaulds of the 
UK; and ICI of the UK’s nylonfor- 
acrylics swap with Du Pant af 
the US. 

Such deals have been a 
response not only to recession 
but to toe rise of three groups of 
global competitors: 


• Eastern European manufac- 
turers are exporting cheap com- 
modity chemicals to western 
Europe, taking advantage of low 
labour costs, weak currencies 
and lax envir onmental controls. 

• The Middle East is now a 
source of petrochemicals and 
plastics with the advantage of 
abundant local feedstocks. 

• East Asia has emerged as a 
force in chemicals as exports 
from Europe and toe US have 
been displaced by local plants 
large enough to supply customers 
in Europe and North America. 

The strength of these competi- 
tors is reflected in the relatively 
slow growth of western European 


chemicals exports: between 1985 
and 1992 exports rose 13 per cent 
to Ecu 4&9bn ($42bn) but imports 
climbed 29 per cent to Ecu 24-3bn, 
according to the European Chem- 
ical Industry fymncii 

Rationalisation of the western 
European industry may or may 
not reverse this trend, but it has 
at least helped to rescue corpo- 
rate earnings. First-quarter pre- 
tax profits at Germany's BASF, a 
big polypropylene producer, rose 
48.6 per cent to DM349m ($21 0m). 
Strong performances were also 
revealed by Hoechst and Bayer, 

another Gor man company. There 

was optimism too from Akzo 
Nobel, created by the Dutch 
group Akzo’s takeover of Swe- 
den's Nobel Industries. 

Shell acknowledges that the 
industry’s emergence from reces- 
sion may slow the restructuring 
drive. Companies and priWiriarw 
are more amenable. to cost-cut- 
ting ventures when profits are 
under pressure: “It's easier to put 
together a deal when times are 
brutal than when they are not,” 
says one Shell executive. 

This week’s Commission deci- 
sion could confirm that time is 
indeed running out for industry 
mergers. A committee of national 
competition experts has recom- 
mended that the joint venture be 
vetoed. Shell says the main issue 
is control over polypropylene 
technology and. as a result, the 
past few days have seen last-min- 
ute concessions by both parties. 

‘"There is a point at which the 
price of concessions makes toe 
fundamental synergies not bene- 
ficial enongh." says Shell. But 
failure would be hard to swallow. 
“We have invested three years in 
coming to this point. We faced a 
lot of naysayers inside and out- 
side the organisation, arguing 
that it would be too complex to 
get done. But strategically it is a 
beautiful fit." 

Lex, Page 22 


selling of 
insurance gets 
continental break 


By Richard Lapper 

Zurich Insurance’s plans to 
launch a telephone-based direct 
sales subsidiary at first appear 
unexceptional. After all, the 
Investment is unlikely to dent 
the balance sheet of Switzer- 
land’s best capitalised insurance 
company. 

Yet the new business, which 
Zurich intends to rapidly 

to EU countries, indicates the 
arrival of direct selling in con- 
servative continental markets, 
where agents - usually selling 
exclusively for companies such 
as Allianz, Union des Assurances 
de Paris and Generali - hold 
sway. “Direct writing” bypasses 
middlemen iwrfpiui reaches 
customers through mam media 
advertising and telephone sales. 

This sales method is firmly 
established in the UK, where toe 
original telephone insurer. 
Direct lane, a subsidiary of the 
Royal Bank of Scotland, has 
become the country's largest 
motor insurance company in less 
than 10 years. 

Deregulation of the European 
market will give farther Impetus 
to the development of direct 
writing. Next month EU mem- 
bers must abolish rules which 
require minimum prices to be set 
for some lines of home and 
motor insurance, and local regu- 
lators to approve policies. 

Zurich's Swiss rival Winter- 
thur has been quicker off the 
mark in direct writing: its Chur- 
chill subsidiary is the second 
biggest direct writer in the UK. 

Yet Mr Rolf Hflppi, Zurich’s 
president and chief executive, is 
now a fervent advocate of the 
technique. Zurich Municipal, a 
UK subsidiary which specialises 
in local authority insurance, has 


achieved an expense ratio 
(expenses as a percentage of pre- 
miums) of 12 per cent, way 
below the industry average, by 
selling policies direct rather 
than through a broker. 

Telephone links will allow Zur- 
ich greater contact with custom- 
ers, which Mr Httppi is prepared 
to underline brutally. “Anybody 
who says that our customer is 
the broker gets shot where he 
stands.” Above all, direct sales 
methods reduce costs. “The new 

This sales method 
is firmly established 
in the UK 

ways or distributing our product 
are more effective than tradi- 
tional ways. The opening up of 
the market will mean an enor- 
mous pressure on costs,” adds 
Mr HfippL 

Zurich is signalling its confi- 
dence by launching Znritel in the 
Swiss market, which is highly 
traditional even by the standards 
of Germany and Italy - probably 
the most conservative in the EU. 
Swiss motor and home policies 
are typically five or 10-year con- 
tracts. Only seven of the 26 can- 
tons - mainly French-speaking 
ones - allow private insurers to 
offer buildings insurance. 

Even so the company believes 
Znritel will establish a foothold 
in Switzerland and mrpanri rap- 
idly. The key tests will come in 
Germany, toe continent’s most 
lucrative market, where hitherto 
direct writers such as Tefiit and 
Kosmos have made only limited 
headway; and in France, where a 
number of low-cost mutuals con- 
trol large swathes of the per- 
sonal lines market 




I rTHs weeks Company news 




wiSMM 


% Worries surface 
j^as;Swatch sales 
J, mark time 

j j; SMB, the trig Swiss wat chmaking group 


m 




ft * 




1 '■&; ^shdcessful Swatch, will receive 

idn^nalista aadfovestment analysts 
. annual results presentations 
irpw.lh Barae. 

i'. :q hi^arparntrastto the festive mood 
J. : i~’>- . ot the. last twojaresentations - 
I follCfWtog’ preflfrises of 32 and 64 per 
' r cent andk rocketing share, price - 

wnomrwjs affhiris likely to be sober, 

? -j^V-po8sIbly^ 

. The" SMS beam* share Ms lost a 
3- ’ -^tofrd oCfts vahxe in the past year in 
i asuccessioa of . 

unfavmirBbfe.rtunours and •• 

' dgMqpawftg that have not yet been , ' 

I . M '^Mfly^kqilahtod.by the group’s usually 
,i ,'^v amlutfte chairman. Mr Nicolas Hayek. 

' A’.'Ffcar’s in October that Swatch sales 
‘ • Ikrjyitxe stagnating appeared to be 
.. corifirsaijd inFebruary when toe group 
■ ; announced fiat sales for 1993 of 

(S2bn) and: net income op 
V • onty.7 per cent toSFrMGm. Although 
, ; SMH makes several other famous and 
highly profitable brands^ including 
- Omega* Btancoaln. Longines, Tissot 
- and Rado, Swatch provides the vital 

volume. . o'. :' J 

Meanwhile, SMH's strategy of 
applying toe Swatch brand name to 
othiff consumer products is looking 
a hit frayed' since the group’s testy 
admission* few weeks ago that 
productionef ASwatch telephone, set 
has Tjeen hatted. And plans for the . . 
king aiofted SwatriimobOe, an 
. aivtonamehtaBy friendly car, remain 
unclear."/ 

The withdrawal of kjr Stephan 
. SchntifflHflny. a prominent Swiss 
Inttostriafist, frwn^ toe cnntrofline 
shareho&rpoel last December 
sharpened siwpfcfdns toatlffl* Hayek 
prefers to Jam the group single-handed. 
Mmiy analysts are wondering if he 
is putting enough effort and resources 
Into securing the group’s place in the 
post-Swatch mass market 


lfn * 

VOumwW . 

Sham pdcs retathm to the 
FT-s&AAff-Sfwe Index 


iao — r"“ 





• 

Ljl 


■ «. 

unv 

too 4: r- 


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■Met-: 92 . ■ -S 3 94 

Scot* Dewwwn 

VODAFONE 

Better reception hope 
for the medium term 

By Andrew Adonis . 

The UK mobile communications group 
Vodafone has been pushed off its 
pedestal, its shares foiling from an 
all-time peak of 637p in February to 
517p at the end of last week. But 
analysts expect its 1993-94 pre-tax 
profits, due for release tomor row, to 
be In the range of £350m-£370m 
(S25m-$555m) and its medium-term 
prospects are still seen as healthy. 

At £360m, Robert Fleming’s mid-way 
projection, Vodafone would be 12 per 
cent ahead of last year's £ 3 3 2m. with 
earning s per share of 24iip up 9 per 
cent “The UK cellular market is 
becoming more competitive, but 
Vodafone is holding its own,” says 
Mr Kevin Langford, Fleming’s mobile 
communications analyst “The main 
concern Is about prospects for its new 
digital networks and the ex pans i on 
of its overseas business." 

Vodafone’s shares have been 
depressed by the recent malaise in 
the telecoms sector. But it enjoyed 
record numbers of new connections 
in December and March, and now 
boasts 12m UK subscribers. 

Vodafone is well on the way to 
realising its goal of acquiring overseas 
franchises with an aggregate 
population equal to the UK, adjusting 
for income and toe company’s share 
of consortia. But it has yet to make 
much return cm overseas investments. 


OTHER COMPANIES 

Euro Disney rescue 
with added attraction 

The EuroDisneyiand theme park will 
on Wednesday have an added attraction 
when Euro Disney, its beleaguered 
operator, stages an extraordinary 
general meeting for shareholders to 
approve proposals for its FFrl3bn 
(&3bu) rescue package. However, Euro 
Disney, which will also announce the 
terms of a FFrtJbn rights issue, will 
for once have some good news to 
discuss following last week’s surprise 
announcement that an Arab prince 
plans to buy a stake of up to 24 per 
cent 

■ KansaBis-Qsake-Pankki: Finland’s 
leading commercial bank is expected 
to have remained heavily in the red, 
when it reports figures for the first 
four months today. Continuing high 
credit losses and the impact of rising 
long-term interest rates have led 
analysts to predict a loss of 
FM4QGm-FM500m (S93m) for the period, 
compared with a FM626m deficit a 
year ago. KOP, which has reported 
three consecutive years of losses, has 
already predicted another deficit for 
1994 before an expected return to profit 
next year. 

■ KPN: Th e pric e of shares in 
Knrrmklij ke PIT Neder land, the 
state-owned Dutch postal and 
bjigmmwMTnipgfi nng company, will 

be announced today, ahead of toe start 
of a three-day subscription period. 
Analysts expect the price to be fixed 


Finland 

Sham price and Indcss rebesed 

350 KOP pannes) 

300 



Source: Oataatraam 

In the bottom half of the F146-F152 
range established by the underwriting 
syndicate last month. The Dutch state 
is selling a 30 per cent stake. 

■ ENL The Italian state oil concern 
is expected on Wednesday to unveil 
losses for the second consecutive year. 
The 1992 losses of Ll.lOSbn ($700m) 
reflected both the poor state of the 
chemicals sector and write-downs 
because ctf the corruption scandals. 
The latest accounts will be affected 
by restructuring costs and ongoing 
chemicals losses. 

■ PflMngton: The UK glass group, 

Is expected to announce on Thursday 
that pre-tax profits more than doubled 
in the year to March to around £105m 
<Sl58m) compared with Wim. The 
figures will be buoyed by exceptional 
gains, primarily proceeds from the 
sale of spectacle lens business Sola. 
Profits before exceptional should 
amount to around £65m. 


Co mp a ni es bi this Issue 


Affianz 

23 

Gold Mines of AustJ 

25 

RadstoneTedi 

24 





Royal Otricft/Shef 

23 

Bertatemonn 

23 

Kirch 

23 

SES 

23 





Saarcts 

25 

Blocure Holdings 

24 

Mercedes-Benz 

25 

Smith New Court 

24 


23 

Montodson 

23 

Thames television 

23 

DBT 

US Steel 

25 

Direct Una 

23 

NKK 

25 

Union des Assurances 

23 




VideoLogic 

24 

Dorrinlon Mning 

25 

Pearson 

23 

WH Smith 

24 




Welcome 

24 

Beco 

24 

Quadrant 

24 

Zurich Insurance 

23 


NETWORK 

GROUP LIMITED 


£14,500,000 

Management Buy-Out / Buy-In 
from 

ACT Group PLC 

Structured, led and arranged by 

NatWest Ventures 

Equity provided by 

NatWest Ventures Phildrew Ventures Third Fund 

Senior debt and working capital provided by 
Midland Bank pic 

Advisers to equity providers and the acquisition 

Edge & Ellison 

Advisers to management 

Price Waterhouse Corporate Finance 

Advisers to Midland Bank pic 

Wragge & Co 


/nr IWJ E 


ezzrjm 


NatWest Ventures 


Nr Hoi femuro limiicJ 4 nroArr ff IMHO H pan .Varllfaj Atartas, corporate am] imesmcra booking. 










FINANCIAL TIMES MONDAY JUNE 6 1994 


COMPANIES AND FINANCE 


WH Smith in US airport deal 


By NeS Buckley 


WH Smith, the retailing and 
distribution group, has signed 
its biggest US airport deal so 
far, expected to add $25m to its 
current annual turnover of 
$65m (£43 .3m) from its 93 US 
airport shops. 

The company has been 
awarded a contract to operate 
e ig h t news and gift shops at 
Los Angeles International, the 
worid's fourth largest airport 

The contract is the largest 
news and gift concession in a 
US airport, representing about 
40 per cent of all concessionary 
business at Los Angeles Inter 
national, 

Smith beat competition from 


the existing incumbent. Duty 
Free Shoppers, and Allders 

International, the duty and tax 
free retailer. 

The Los Angeles contract 
follows recent awards of 
concessions at Denver, Atlanta 
and Louisville airports. 

It takes the number of US 
airports where Smith has out- 
lets to 15. including Chicago, 
Orlando and Las Vegas. 

The biggest airport where it 
is not yet represented is Dallas- 
Fort Worth, but Smith says 
it will pitch for a contract 
there as soon as there is an 
opportunity. 

“We have broken through 
the sound barrier in terms of 
getting ourselves established 


as a name in US airport retail- 
ing” the company said. "We 
now have critical mass.” 

Smith has been expanding in 
the US since 1985. In addition 
to airport shops, it has 270 
hotel outlets as well as the 170- 
store music chain The Wall, 
and Waterstone’s bookshops in 
Boston and Chicago. Other 
openings are planned. 

While most of its airport out- 
lets are news stands and gift 
shops under the WH Smith 
name; it is keen to expand Hie 
Wall and Waterstone's formats 
into airports, .nU haq already 
done so at Pittsburgh airport 

With 60 more large US air- 
ports where it is not repre- 
sented, and passenger volumes 


expected to double In the next 
15 years, the company sees sig- 
nificant expansion opportuni- 
ties. The business is lucrative, 
with sales densities of more 
than $1,000 (£660) a square foot 
last year. 

Tbs company’s ambitions are 
in line with forecasts by 
experts such as Professor Cary 
Davies of Manchester's Inter- 
national Centre for Retail 
Studies. He predicts that large 
travel termini, with their high 
customer densities, will 
become Increasingly popular 
sites for retailers. 

Smith is aisn monitoring air- 
port developments in east Asia 
with a view to opening retail 
outlets there. 


Biocure raising £0.8m in USM float 


By James Buxton, 
Scottish Correspondent 


Biocure Holdings, the pharmaceut- 
ical research company which produces 
diabetic healthcare products, is coming to 
the Unlisted Securities Market next 
month. 

It is raising £810,000 net through a plac- 
ing of shares at 40p and is offering share- 
holders the chance to subscribe for extra 
shares under an open offer. The proceeds 
will be used for working capital. 


Having initially raised money through a 
BBS, Biocure joined the third market in 
1989. After this was wound up in 1991 its 
shares were traded under Rule 535 (2). 
Ahead of the USM Dotation this facility 
has been withdrawn at the company's 
request. 

Biocure was formed in 1984 in Aberdeen 
to research anti-cancer and healing com- 
pounds discovered by Mr Neil Hendry, its 
main shareholder. In its early stages It 
was funded by Barratt Developments, the 
housebuilder whose former deputy chair- 


man, Mr Bill Bruce, chairs the company. 

In 1992 Biocure acquired Hypoguard, a 
Suffolk-based company which makes blood 
glucose monitoring meters and test strips 
for diabetics. It exports to 30 countries. 
Hypoguard plans to double production 
capacity over the next year. 

Biocure Holdings incurred a pre-tax loss 
of £l£m on sales of £L9m in the year to 
June 30 1993 but is now forecasting profits. 

The placing and open offer is being 
sponsored by Allied Provincial Sec- 
urities. 


Finance director 
leaves Wellcome 


By Daniel Green and 
Paul Taylor 


The surprise announcement by 
Wellcome that Mr John Pre- 
cious. its 5l-year-old finance 
director, is leaving "to pursue 
other opportunities” has again 
focused market attention on 
the pharmaceuticals group. 

WeHcome's shares fell L3p to 
543p on Friday after the 
announcement which added 
that Mr Precious would, "con- 
tinue with his current respon- 
sibilities for the time being 
while a successor is sought" 

The company said his depar- 
ture was amicable, but ana- 
lysts noted that this was the 
latest in a string of manage- 
ment and boardroom changes 
and it comes at a critical 
time for the group whose 
fortunes have ebbed over the 


last few years. 

Wellcome has gone through 
a series of senior management 
changes since the company 
sold 270m shares at 800p in 
1992. 

Mr John Robb, chief execu- 
tive since 1990, took over the 
chairman’s post last August 
from the unwell Sir Alastair 
Frame and was confirmed in 
this additional role this 
year. 

In April, the director of 
research and development out- 
side the US, Mr Trevor Jones, 
moved "to become an adviser 
to John Robb.” His job was 
absorbed by the US director of 
research development, Mr 
David Berry. 

Now the departure of Mr 
Precious adds another discon- 
tinuity to Wellcome’s manage- 
ment strategy. 


Eleco warns on full year 


By Joan Gray 


Eleco Holdings, the building 
products and construction 
group which returned to the 
black at its December interim 
after restructuring, has 
announced further disposals 
and warned that its full year 
results will be adversely 
affected by a poor performance 
at Davis Group, its cable man- 
agement subsidiary. 

Davis’ second half results 
were hit by difficult market 


conditions In Germany and the 
UK, and are expected to have a 
significant impact on group 
results as a whole tor the year 
ended June 30. 

The company is now up for 
sale and preliminary negotia- 
tions are in progress. 

Eleco’s subsidiary Webster 
Homes has completed the sa l e 
of parts of its Orsett site, val- 
ued at £2.35m in the group 
accounts at June 30 1993, tor 
£772,500 and £1.67m respec- 
tively. both for cash. 


Smith New 
Court 
research 
is ‘best 
overall’ 


Smith New Court is providing 
the best overall research 
service in the City of London, 
according to an 3nwna 1 survey 
carried out by Greenwich 
Associates, a CS-based 
consultancy. 

The report shows that Smith 
New Court has managed to 
nudge ahead of James Capel 
and Warburg Securities. 

The three investment houses 
tied in first place last year. 

The report Is compiled by 
Greenwich Associates staff. 

One of the key tables shows 
how 53 institutions paying 
more than £Im of commission 
view the research service 
provided by the firms. 

Hie institutions are asked 
which brokers they rank as 
a “top 15 firm”. 

This year it shows that UBS 
has slipped from joint fourth 
to joint seventh with Hoare 
Govett 

Behind the top three of 
Smith New Court, James Capel 
and Warburg comes Nat West 
Securities which has moved 
up three places after finishing 
seventh last year. 

BZW ranks joint fifth with 
Kleinwort Benson, Cazenove 
comes in ninth and Cridit 
Lyonnais tenth. The five 
others malting op the top 15 
firms are: Charterhouse 
Tilney, Goldman Sachs, 
Morgan Stanley, Panmure 
Gordon and Henderson 
Crosthwaite. 

Another key table shows 
bow all 135 investment 

institutions rank broking 
research. 

Here both James Capel and 
Wartrarg are seen as providing 
the joint best service 
followed closely by Smith New 
Court 


Quadrant in black 


Quadrant Group, the 
photographic and video con- 
cern, moved from losses of 
£15.9m to profits of £786,000 
pre-tax for the year to Febru- 
ary 28- 

Turnover of continuing 
activities fell from £47.9m to 
£4Sm. Earnings per share of 
against tosses of 59233p. 


Radstone beats forecast with £1.45m 


In its first set of results since 
flotation In February, Rad- 
stone Technology, the supplier 
of open architecture computer 
subsystems to the defence and 
industrial sectors, beat a fore- 
cast of £l.35m for the year 
ended March 31 with pre-tax 
profits of £L45m. 

This compared with £L87m 


for the previous year and was 
achieved from turnover up 
from 225.9m to £28-3m. 

Basic earnings per share 
amounted to 5.7p, against 
lL75p. As stated in the pro- 
spectus, the first dividend 
payment will be an interim 
distribution for the current 

year. 


Seeking funds to open 
window of opportunity 

Alan Cane considers the flotation of VideoLogic 


T he demerger and flota- 
tion of VideoLogic, the 
electronics company 
developing some key compo- 
nents of the coming multime- 
dia revolution, is expected to 
be announced this week. 

Analysts believe the com- 
pany could be capitalised at up 
to £70m. 

The company la a subsidiary 
of Avesco, a broadcast equip- 
ment and services group whose 
trading performance has been 
adversely affected by VMeoLo- 
gic's voracious appetite for 
research and development 
funds. It bought the company 
in 1989 tor about £10m on the 
rationale that the companies’ 
activities were complementary. 

For the six months to Sep- 
tember 30 Avesco incurred a 
pre-tax loss of £2.32m and at 
the time of reporting the fig- 
ures announced a placement to 
raise about £5m, chiefly to 
fund Vi deo ! ^ogle 's multimedia 
research. VideoLogic incurred 
a loss of £L34m on sales of 
£4^6m in the same period. 

This week’s Dotation, ana- 
lysts estimate, should raise up 
to of new money, much 
of which will go to repay debt 
to Avesco. Up to £15m, how- 
ever, should be available as 
much needed working capital 
The Dotation, likely to take 
the form of a preference appli- 


cation to existing shareholders 
coupled with an open offer, is 
eagerly awaited both by 
Avesco shareholders and 
VideoLogic 's senior manage- 
ment 

Mr Derek Maclaren, VideaLo- 
gic*s chairman, said: “We have 
been Investing heavily for the 
past two years to exploit a win- 
dow of opportunity in multime- 
dia which is just beginning to 
open. 

“Now we need public money 
to take advantage of the oppor- 
tunity. Avesco cannot afford it 
It bought a Formula One sta- 
ble; very racy and very expert 
sive.” 

Industry analysts believe a 
properly funded VideoLogic 
would be in pole position to 
maiw an impact in multimedia, 
the delivery of media services 
of all kinds through a single 
interactive channel to home or 
office. 

Other forces in the industry 
agree. VideoLogic has either 
Joint ventures or alliances with 
International Business 
Machines, British Telecommu- 
nications, Motorola and 
Matrox. 

The company's strategy is 
based on the proposition that 
the receiver for multimedia 
services, essentially the screen 
on which information will be 
displayed, will be the personal 


computer rather than the tele- 
vision. 

An essential part of multi- 
media, however, is the abQity 
to handle full motion video and 
here personal computers are 
deficient. Video clips in a 
typical multimedia programme 
play in a window the size of a 
postage stamp. VideoLogic’s 
microchips and printed circuit 
boards can give the computer 
the ability to display full 
screen, frill motion video. 

The potential market is very 
large. Dataquest, the US mar- 
ket consultancy, estimates the 
global installed base of multi- 
media personal computers will 
grow from 7m last year to 19m 
in 1995. 


S uggestions that the com- 
pany has at least a six 
mouth lead over its com- 
petitors are given credibility 
by the feet that the company's 
earlier video product, the 
DVA400, led the world in com- 
bining flexibility with low cost 
VideoLogic's products are 
sold to other manufacturers to 
build into their systems, to cor- 
porate customers and. through 
retailers, to the public. 

Warburgs. VideoLogic’s 
adviser, is predicting operating 
profits of between £4m and 
£8m on sales of £50m to £90m 
in 199596. 


CROSS BORDER MSA DEALS 

BIOOBVMVESrOR 

TARGET 

SECTOR 

VALUE 

COMMENT 

Burning (US) 

Unit of Rant Hmuel 
(Germany) 

Food 

distribution 

£728m 

HanW selling 
for cash 

Owens-Coming (US) 

Units of PHdngton (UK) 

Insulation 

E80m 

Non-core 

rit^pWLlt* 

Deutsche Bundespost 
Telekom (Germany) 

Sts Europeenns des 

SataHtes (IntemaUonai) 

Broadcasttng 

est £S0m 

Buying 25% 
stake 

Mattel (US) 

JW Spear (Uiq 

Games 

E52m 

Rival to 

Hasbro bid 

Wotodey (UK) 

Calumet HokSngs (US) 

Photographic 

equipment 

C28m 

Expanding 

distribution 

business 

Portland (UK) 

Karl Reused Handschufabrik 
(Germany) 

Sports goods 

£20m 

Denting cash 
pile 

North American Ufa 
Asmrance (Canada) 

Urrtt of Sun AIRance (UK) 

Insurance 

El 0.6m 

Sun sefilng 

Canadian arm 

Racal Bactronlca (UK) 

Techno-Traisfer Industries 
(Singapore) 

Ships and boats 

£9.7m 

Cash for 80% 
stake 

Micro Focus (UK) 

Burl Software Laboratories 
(US) 

Computer 

services 

saam 

Pooling of 
interests 

Prince AWMsad On 
Total (Saudi Arabia) 

Euro Disney (US/France) 

Recreational 

facilities 

n/a 

Could taka 

242596 


MERCURY OFFSHORE STERLING TRUST 
(SICAV) 

Registered Office 14 rue Lion Thyes, 

L-2636 Luxembourg, 

Grand -Duchy of Luxembourg. R.C. Luxembourg; 824.990 


NOTICE OF EXTRAORDINARY 
GENERAL MEETING OF SHAREHOLDERS 


Tbc lixuaontinary General Meeting uf Shareholders of Mercury Offshore 
Seeding Tm« h ekl on 2ml June. I9W not having narfuxl the quorum of pretax? 
required by lew, a second Extraordinary General Meeting of Shareholders will be 
hcUi at its registered office at 14 rue I xon Thyes, Luxembourg, at 1 1.00 n.m. on 
Sth July, 1994. fur the purpmc of cunrfdcring and voting upon the proposal (a) to 
amend Article 8(2), 8181. 9f I L 9(3), 15(4), I5U2L 15(14) and ! 6(1), and delete 
Article* SI3) and 8(4) miiinu delete the references to “cetlirieatcs" and 
"con famai ions" in the Articles of Association, to abandon share certificates in 
rclteiua in Registered Shares and U> remove the provision fur the issue of 
coo Turn al ion advices and tb) to amend Article 31 and delete Article 32 of the 
Articles of AxsocidLiuii so as to ensure consistency with current Luxembourg Uw 
and practice. 


Voting 

The Rcsnliuiufl on the Agenda of the Extraordinary General Meeting of 
Shareholders will k passed by a majority of 75 percent, of the votes cat thereon 
at the Meeting. There will be no quorum requirement at the meeting. 


Voting Arran g e men ts 
In inter m vine ul the Meeting: 

the holders or Bearer Shares must deposit their Shoren. either atthe 
registered office uf the Company nut later Chun 48 hours before (he 
Meeting or with any bank or financial institution acceptable to the 
Com piny, and ihc relevant Deposit Receipts (forms of which nuiy be 
obtained then tbc registered office uf the Company) most be forwarded 
to the registered office uf the Company to arrive no later than 48 hours 
before ihc Meet rag. The Shares so deposited will remain blocked until 
the ifcry oner the Meeting nr any adjournment thereof: 
the holders of Registered Shares need not deposit their ccrtificucs but 
eon be present in rwnon or represented by a duly appointed proxy: 
Sharvhoidcn who curator attend the Meetings in person arc invited to 
tend a duly completed and signed puny form to the registered office of 
the Company to ante not later than 43 hours before the Meeting. 

Proxy (on ns have teen sent to registered Shareholders with this Notice 
and can aho be obtained from the registered office 


Information for Shareholders 

Shareholders are alviscd Hut a draft, subject to amendment, of the proposed 
amended Articles of Association is available fur inspection and copies of the 
Company's Letter hi Shareholders concerning tbc proposal referred to in the 
above Agenda or the Extraunliiury General Meeting are available of the 
registered office or tbc Company and at the following places: 

S.G.Waifaurg & Crs lad.. 

Credits Raying Agency. 

3 Rgsburv Avenue. 

London EC2M 2PA 
ENGLAND 


Banque Internationale 1 Luxembourg SA, 
2 bou Levant Royal. 

IdJXEMBOURG 


A i Iratl or ihc Ante Let uf Association tn amended will also be available far 
inspection at the Meeting. 


An Addendum to the Company's Prospectus will be available following the 
Meeting if the above proposal is adopted. The Addendum will describe the 
change Ui anccnifieatcd Registered Shares and wilt aksO include details of tbc 

qveui tf'rw (derations applicable to die smaller or emerging markets In which the 
European. Global. Overseas and Pacific Funds may invert. 


6th Jane, 1944 


The Board of Directors 


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LoMor, n 734 7174 (071 >n UK) n: 'aW! ’ 


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B8|-' r'i 


CITY OF COPENHAGEN 
Notice of a Meeting 
of the holders of the outstanding 
DKK 500,000,000 

8% per cent Notes due 1995-1998 (the “Notes') 


TO THE NOTEHOLDERS 


Notice is hereby given that the meeting of the hotdars at the Note* (he ‘Notehokfws’) 
convened by the Cay a » r - - - 


lay of Copenhagen (the TssuaO at 2.00 pm. (London Bme) on 3d June. 
1994 by the notice doted Tim Mm, ran published In aw manual runes end Ore UawntMper 
Wort (the "First Notice") was adjourned through lack ol a quorum and thru the amounted 
moating ol the Noteholders convened by the issuer wit be held at 2JXJ pm (London flow) on 
intijuna, 1994 atthaoffloaa ol UrtirfaHra & ranee. Barrington House. 69-67 Gresham Street 
London ECZV 7JA tor the p u r pos e ol consideri n g and, a lhougM IH. posing the tationmg 
resolution which wfU be proposed as an Bara o rt taai y Resolution in accordance wflh me 
previsions o» the Fiscal Agency Agreement rotating tb the Notes (mo "Fiscal Agency 
Agreement - ) rated 23d M*y. 1966 made between me issuer. KredkKbai* SA 
Luxambourgerwa as facet agent (the "Fiscal Agenr) mo Kredetbank N.v, Orion Royal Bank 
Umned (now known es Royat Bar* ol Canada) and Prtvamanfcen A/S (nm> tuwwi ss Unmank 
A/S) as paying agents (the -Paying Agents'). 

QCTRAORDM ARY RESOLUTION 

That the meeting ot the holders of the o uw amting PKK 500.000.00068 per cent Noise duo 
•995-1998 (the Tiotea") ol the CUyol Copenhagen (the issuer) tseued pursuant to the Fiscal 
Agency Agreement rotating a me Notes (the "Fiscal Agency A^eemere") dated 23rd May, 
•966 mad e b a r ma n ihe Issuer. KreJatbankS A Luvembrnageotseestiscal agent Ohe^acJ 
Agent"), and Kredtstbank N.V.. Orem Royal Bank Limited (now known as Royal Barti ol 
Canada) and Rrtvatbanfcen A/S (now known as Untbenk A/S) os paying agents (the "Paying 
Agents") hereby •- 

(1) assents to the modMcation of Coreitian 2 ot the Terms and Conditions of the Notes (ae 
prtntod on the reverse ot them and In EahtbB A to the Fiscal Agency A g reement) by the Insertion 
ot the words tot a loan granted to the City through D ani s h m ortgage inetituttons til the couiaeot 
ordinary business acovMsr otter the arerds "assets acquired by me Off so mat Contftion 2 Is 
modilMloream- 

~2. Status of the Notes Bnd Negative Pledge 

The Notes and me Coupons are direct uneoreWonst and general obligations ol the City 


and rank at least squatty with afl other outstandng loan Indebt e dness, mdutlng 

s. ol the City, areata Insofar as and to 


rot a amHar nature, 

the eoert mat such omerloan mdobtsdness is mured by a mortgage on assets ol die 
C4y. The City undertakes that M It step « the future seewe any loan, debt, guarantee or 
other obtigahon. existing on or after tire dote ol lews of die Notes, by any Sen, pledge or 

other charge upon any olltspresent or future assets or mertues (other than a Van, pledge 
or other charge emoted m secure in whole or In part Urn purchase price ot oseas acquired 
Oy the City oraioan granted to tra City through Danish mortgage mstUutions in Die course 
ol ORtnary business acdvtiles). the Notes and the Coupons shati be equatiy and raleaety 
secured by sue* Ben. pledge or other chome " 

(2) sanctions every abrogaaon. tnodiflcaOon. oa w pron tio e or arrangement m respect ot me 

rttpits o( the hokfere of the Notes and tho hoMere tti the coupons relating to the Notes agstnm 

the Issuer mvatvod in or rearming from the m ortiBc a tmn retorrad to in paragraph (1) ol mis 
Resolution; 

(3) sutnortsee the esecuoonot a Suppteorertai Fiscal Agency Agreement tn me tormoUhe 
drati produced to das meeting and lor the purposes of identification signed by the chairman r> 
ttere effect to tho morWeations iohsie d to in paragraph P) a» mb Resrtiution; and 

(4) wares any potsraW breach by me Issuer of Its obligations under tho negative pledge 
provision tn CondMon 2 Ol the Nows which may have occurred prior to Ihe modifications 
referred to in paragraph (t) oi tins Resolution oomteg Into ehecL" 


Further dstatis ol die proposal are s« out in "Badigreund to the Proposal" in Ihe Rut Notica 
The attention ol me NoMbaMmm particularly *awn to the quorum required tor the aejourned 
meeting which is ser out oelow. 

QUORUM 

The quorum reqUred ai tie odfouroed meeting shefi be iwo or mare persons present tn person 
holding ouistaiiraig Notes or voting c ertificates or being ponies (Whatever the principal 
amount ol Ihe Notes so held or represented). 


AVAILABILITY OP DOCUMENTS 

Copies otthe Ratal Agency Agreement and ihe tftaft S u pple me ntal Ftecal Agency Agreement 
may be inspected and copies otv w m u instruction farms and votin g certificat e s are avaflada at 
me spedfled offices ol Die Paying Agents set out betow. 

Raest Agent end Paying Agent 
Krerfletbank S A Luxembourgsotse 
43 Boulevard RoyaL L-2855 Luxembourg 
Paying Agents 

Royal Bank ol Canada UrftwnkA/S KredtetbankRV. 

71 Oueen Vtaorta Street 2 Tbnregede Aranhergstresl 7 

London EC4V40C OKTTBSCopartiwgsnv B-wco Brunets 

Chyot Copenhagen 
60i June. 1994 




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INDEX 




The klssa Leaden hi reread tallh^ . Hreodal osd Sports Lor i 
brodacml m atwunl <p)Xkalkie tnat 0?I JaJ io 61 


: nornwBy n|H i u l mIm T! bom 
lw».^i l Mtfc|TOl.« la ip tn on tckfexl bO¥ 



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INOEXIA Reseeich. 121 Hhdi Sr. BerittiamMod. HF41DJ 


7fcr node* d noted m compliance with tie n gokm «eO of The fnimand Stock 
Exchange of At United Kingdom and tie Republic of Mood l noted (At ’London 
Stock Exchange"). It don not eoatdtate an qflirormummmmvpmm to tabtoibe 
far or ptothate any tf ike OnEnaiy Shorn. 

AppUcatmt hat been mode to At London Stock Exchange far all of the Ordinary 
Shorn of Sporgt Getattiatg PLC take admitted to the Offiehd Lot Ah expected that 
admitden to ike Official Lift will became effacase and tkat dednff toBl commence on 
9th Jane 1994. 


SPARGO CONSULTING PLC 

wOa IWeti Ate— < Ate WTtV) 

Placing 


of 3476,000 Ordinary Shares 
at 95p per Ordinary Share 

by 

Peel, Hunt & Company Limited 


Spargo Cemaldne PLC a a pnmder of infant 


: technology coetvlra n cy 


majtw Vat chip' companies, financial bmnmom and leading contnldng companm 
bated in ike UK, USA and Western Europe. 


£ Neter 

HM66 lbM6jm 


itml bmmmStar tj J u Ho ainc ita Placing 

lemtdmtifiHypoid 
£ Nwmbcr 

OnBnmySkamtflpttdl 10090 * 12000090 


ladnt pemadea m mmUk far eeOetoon hong emaadtffict hurt, tedefand m AeTkand 
StMJnnt ITMfamiktCwetmnjAmo nnamina Office, ter Lmim Sadi aakanm.U^n Sank 
Httkta o r Tnw, Crete Ohi Bnoanct, eff B mO ie hm tm late, tarin !X2ertm any weekday 
ISmndep end pabBcbaUeyie*cepHd)mpeiaedmehditet2Mi}nnr 1994 kom: 


Spew Ceewdnnt PLC, 
Jl BemfatCem, 
AdmeekVen 
WwnddnSwekQeey, 
Ladm,BH 9 XL 


Ml 


HC2XSHP. 


MMDCmpem 

BeeehmHaoe, 
ITempkAwmt. 
leedm, 

BCtYOHA. 


elm lea eppoeeifa Prd, Hem erCempag Lmeed, * ma+eefdn Scania mi 
Petmet/UekemfLeeadetdefkeLwdeeSiKkEicimtL 


(A Jem mt 



1993 DIVIDEND 


Foffowing the decision taken by the Meeting ofShare- 
holders held on June I, 1994, the dividend for the 

1993 fiscal year is payable, free of charge, as or June 6, 

1994 by BANQUE PARIBAS (SUISSE) S.A., 
UNION BANK OF SWITZERLAND and SWISS 
CREDIT BANK, as follows : 


Per bearer share of SF 1,000 par value, against remit- 
tance of coupon No 18 : 


Gross amount SF 68.00 

(-35% Federal withholding tax) 

Value number: 217375 


FT/LES ECHOS 


The FT can help you reach additional business readers in 
France. Our link with the French business newspaper, Lcs 
Echos, gives you a unique recruitment advertising 
opportunity to capitalise on the FTs European readership 
and to further target the French business worltLFor 
information on rates and further details please telephone: 


Philip Wrigley 
on 

071 873 3351 


Notice to Bondholders 



Ltd. 


Daechang Industrial Co., 

(/ne re p u tateJin the Repubik of Korea tuch luniml Uabihry) 
(diu “Company") 

US. $15,000,000 


0.125 per cent. Convertible Bonds 2008 
(the “Bond*") 

Pursuant to provision 6(11) uf die Trust Deed dated January 25, 1994 
OKwdruringdu: Quid*, tuicfac is hereby given .is fiilfuws: 

A Stock Dividend to increase ihc Company's peid-in capir.il urns 
authorised by a ru»ilucion of the Brain! uf Dtrectoitiof the Company pussed 
on December 15, 199T m follows; 

L Record date: December 31, 1993 

2. The Stock Dividend wri« wiis 5.0% *4 piid-in cnpltnl 

3- Nomlvr uf shares tube UmnJ 

: Number ctf o mum hi shuns to he increased by 134,353 
The schedule of die Stock Dividend was subtnined ru the general mcering 
of slurdioUen, which w.« held « m March 18, 1994, and it wire prabed during 
the meeting .is die Gxiipany's oriftinnl inrenrinn wiihtMir murcrinl 
cdijcctions from Jrarcholders. 

Hxvarhsranduu: the afurosiid, the Stock Dlvldund will not curwtttute un 
Adjustment of rite Conversion Price because the effective date (bcinK the 
day after die rocoal/cx -dividend date for dcterroimcion of shareholders 
entitled to die Stuck Dividend) fell prior to the launch date of the Borah 
and the ex-dlvulctul be tor w.ts already incoipurared in the shim: pneeahu 
prior to rhe bunch dare. 


Daechang Industrial Ctte, Ltd. 


«Srh Junr. 1994 


THERE'S A 
HANGING 
EVERY 
MONTH 


Great Art demands the 
greatest space; that's 
why on the first 
Saturday of each 
month the FT 
publishes a hill colour 
Art section devoted to 
art and antiques. 
The weekend FT Is 
read by an estimated 1 
million people In 160 
countries, reaching 
affluent international 
Investors and 
collectors; providing 
the Art world with 
exceptional and 
effective advertising 
opportunities. 

37% of Saturday FT 
readers have bought 
paintings or antiques 
in the last two years 

f*99Z) 


(FT Reader Survey T99IZ) 


For more infonntmon about 
advertising pteaee contact 


Genevieve Maienghl 
(071)8733188 
James Burton 
(071) 873 4677 
The Financial Tomes - 
Putting the colour 
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samicK 


SAMICK MUSICAL 
INSTRUMENTS 
MFG. CO., LTD. 

(hKiqjHwnlud with luniird liability 
UI ilw RcpuNk. of KiKri) 


NOTICE 

to the holders of the 
outstanding 
US. $30,000,000 
I percent. Convertible 
Bonds due 2004 
of 

SAMICK MUSICAL 
INSTRUMENTS 
MFG. CO-, LTD. 

(die "Burak* mvl rite 
“Omjfwoy" iwpcctlvcLyi 

NOTICE IS HEREBY GIVEN m 
(Ik fuJdcri vi the Rtmik thur, -a 
“ w»ilr .* ,i rcMilutlun. uf die 
IVkini uf Direct . its uf SAMICK 
MUSICAL INSTRUMENTS MRS 
CCl, lift dual l\si fvfmairy. 
1 W 4 , (he Ciwqtiny hit uuthiuHcJ 
ireuc ru dmcxic Invert, ta 
«rf WKtoXWJOOjaOO S# pet ceiu- 
CunvcrtiHe Buraia due 1997 . The 
Gmvcniin Price uf the ftirah hre, 
ruoowu III. lire imivteHira id lire 
Trim lAwl cunxiiuilnt: the fimb. 
heen teljuttoJ fnmi W 49 .) 1 )) to 
W48.2W wuh ciXni from ?ib 
M.ireh. 1994 . 


SAMICK MUSICAL 
INSTRUMENTS 
MFG. CO, LTD. 

<nh junc. W>4 


1 


ocr.'.rnw.T:- 



25 


FINAMCIAX/.TXMES MONDAY JUNE 6 1994 


COMPANIES AND FINANCE 


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By Kevin ton*, 

Motor fndustfy Comspondent 

Mercedes-Benz of Germany, 
the worid’fc Jearifcig heavy com- 
mercial vehicle maker, . has 
started production in Indonesia 
of a mw range of light-duty 
tracks and . buses aimed at 


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gjebdd 'on Asian commercial 
vehicle markets. 

7710 launch 7of t$e MB 700 
marks a change in Mercedes* 
Benz's approach, to developing 
new vehicles, for the global 
commercial vehicle market, as 
it seeks to overcome toe disad- 
vantage of its high ast base in 
Germany. 

The MB 700 range of light- 
duty trucks (75 tonnes gross 
vehicle weQfrQ has been devel- 
oped to meet Asian owt levels 
with a system of global sourc- 
ing of components. 

The vehicles win be assem- 
bled in Indonesia by PT Ger- 
man Motors Marri i fa c to rin g ; a 
joint " venture ' ' company In 
which Mercedes-Benz holds a 
state of 9JUI per cent It will he 


fqr the local domes tic m^rlcpt 
mid for export to other coun- 
tries in southeast Asia and the 
Middle East 

Output is planned to rise to 
about 5,000 trucks and midi- 
buses a year with sales of 
about 2JJ0Q a year in Indonesia. 

Engines for the vehicles win 
be assembled in Indonesia 
from components produced by 
Mercedes-Benz's commercial 
vehicle subsidiary in Brazil. 

- Transmissions and front 
axles are to be supplied by 
Tala Engineering and Locomo- 
tive (Telco) in India, while the 
rear axles wiB come from India 
from AAL, a licensee of Rock- 
well, the US automotive com- 
ponents supplier. 

. . Brakes and shock absorbers 
wQl be supplied from India, 
propeller shafts win be made 
by Spicer in the US, Mercedes- 
Benz Argentina will supply the 
mechanical steering system, 
optional power steering win 
come 'from Koyo in Japan, 
while, cab parts will be sup- 
plied by Mercedes-Benz's Span- 
ish subsidiary. 


The rfiaioriK frames and rahs 
will be assembled in Indonesia, 
and local components produc- 
ers will supply wheel rims and 
tyres, the exhaust system, 
springs and track and bus bod- 
ies. 

“The supply of major compo- 
nents from a country with high 
wage levels such as Germany 
could not satisfy the cost tar- 
get. New ways had to be 
found," said Mr Klaus- Dieter 
VOhringer, Mercedes-Benz com- 
ponents production director. 

As part of its expansion in 
Asia the German group is a fen 
investing DM85m ($49.4m) to 
establish a central parts dikri- 
bution centre in Singapore, 
which eventually win have rfr* 
capacity for supplying more 
than 15,000 different replace- 
ment parts components to 
marfrgt-g in Asia. 

Mercedes-Benz is to 

use the MB 700 range to 
expand its presence in several 
regions of the world with pro- 
duction of similar vehicles 
planned for Saudi Arabia, Tur- 
key and South Africa. It is 


seeking a general manufactur- 
ing licence to begin assembly 
in Vietnam, and is targeting 
emerging markets in China 
and in the Commonwealth of 
Independent States. 

While Mercedes-Benz, the 
world’s leading producer of 
trucks over six tonnes (gross 
vehicle weight), has a share of 
of 30 per cent of the west Euro- 
pean market, 40 per cent in 
Latin American countries and 
25 per cent of the US heavy 
truck marke t, it has an overall 
market share of only 1 per cent 
in south-east Asia. 

In addition to the MB 700 
range of trucks and midi-buses 
from Indonesia, Mercedes-Benz 
Is planning to supply a range 
Of ti ght commercial vehicles to 
Asian markets from South 

A version of its MB200 panel 
van, currently produced in 
Spain for safe in Europe, is to 
be manufactured by Ssan- 
gyong, the Korean vehicle 
maker in which Mercedes- 
Benz bolds a E mail minority 
stake. 


Saatchi 
releases 
managers in 
NY shuffle 


By Richard Tomkins . . ’ 

In New York ~ 

fiflatrM & Santr-fo Aft trer jfg frn fy . 

the US arm of Britain’s Saat- 
chi ft. Saatchi advertising 
group, is .parting company 
with its most senior managers 
as part of a shake-up to bring 
the struggling New York 
operations back to life. ' 

The company said Mr Har- 
vey Hoffitoberg, who became 
chairman of Saatchi ft Saatchi 
Advertising only last year, 
would be leaving at the mid of 
June. Mr Hoffman has -been 
the New* York office's .chief 
creativeofficerfor the past 
five yettrs.’ ^,.-, . ‘ 

Tte otherrdepsrtnre is' that 
of M* IBeb/Bomider, the US 
company’* ytee-chainnan. 'He 
had been Ttlfe the company for 
. ‘•' : ' 

A mhuffforf the New York 
office bad' seemed ‘likely fol- 
lowing the detisfod b? Saatchi 

ft ^n^riil -in^TiWifea in 

over Mr BiUMuirhead, previ- 
ously bead of the ronrpany’fe 
Charlotte Street offices,, to 
become rfmiraia'n and chief 
exec nti ve of Saatchi ft Saatchi 
North America. . 

.... .While the- British parent 
company has been engulfed by 
.a power struggle ‘between Mr 
■ Maurice Saatchi. its chairman, 
and Mr Cfaades Scott, its chief" 
ezecntive, many iff- its ffnan- 
rial difficulties are due to the 
poor performance of its US 
operations. •!, 

. Several big accounts have 
been lost, including mu from 
Chrysler’^ Jeep/Eagle division 
ted for Brown ft Wllliamson’s 
Kool rig aret t es. Wore impor- 
tant It has been alow to 
attract new hillings. Accord- 
ing to Adweek magazine, it 
won only ttOl-Sm worth of 
business last year,- Maying it 
12th lii the rankings. - ■ 
The US wwhpany-annopncgd 
Its reshuffle late on Friday 
after the markets had dosed, 
and could not be contacted for 
comment. But. according to its 
statement, Mr jfic&aeZ Jeary, 
chief executive officer of Saat- 
chi ft Saatchi’s San Francisco 
office, wfll become chief execu- 
tive in New Yoiifc Mr Mnh> 
herut tad previously been 
loridi^r after the'Job. 7. 

(hi the creative side, Mr 
Stanley Becker vice-chairman 
and chief creative officer of 
Saatchi ft Saatchi BFS Pacific 
Los Angeles, .will be given 
responsibility -lor . “the 
restructuring -and regenera- 
tion of the Saatchi New York 
creative department*. . . 


German banks prepare to 
launch money-market funds 


By David Waller * 
la Frankfurt 

German banks are preparing to 
lflirnnh money-market funds in 
Germany this summer follow- 
ing the Bundesbank's surprise 
decision last month to drop its 
opposition to the funds. . 

The German government 
plans to implement fegfanriirm 
allowing the funds as part of 
the second Financial Markets 
Promotion Act due to become 
law at the beginning of August 
this year. 

“There are plenty of details 
to be worked, out but we plan 
to introduce new funds as soon 
as is practicable,'* said Mr 
Christian Stronger, chief exec- 
utive of DWS, the Deutsche 
Bank affiliate which is Ger- 
many's largest fund manager. 

Money-market funds are 
short-term investment vehicles 
which are very popular as a 
highly liquid alternative to 
fixed-term deposits in conn- 
tries such as the US and 


France.' Units in the funds ran 
be bought and sold on a daily 
basis and investors can enjoy a 
better return than for straight- 
forwarddeposits. 

. " The Bundesbank has long 
argued that the funds, which 
invest in short-term govern- 
ment bonds, certificates and 
bank debt of less • than one 
year, would itiirrinkh the effec- 
tivedess of its monetary policy. 
Tins was chiefly because they 
would have circumvented its 
minimum reserve policy, 
which requires to lodge 
a proportion of their deposits 
with the central bank on an 
interasMtoa basis. 

The central bank's opposi- 
tion to the fiTrtffc has w aned in 
the past 18 months, during 
which *TTTig it cut its 
minimum reserve require- 
ments from per cent to 2 
per cent 

Over the long-term, the 
introduction cf fiinrig is likely 
to put pressure cm banks’ fund- 
ing structure as customers 


Shift their savings from depos- 
its - a source of cheap financ- 
ing for hanks - to the new 
funds. But bankers said that 
current low short-term interest 
rates would ensure only a lim- 
ited interest in the products 
when they are introduced. 

A study from DB Research, 
the Deutsche Bank research 
arm, said last week there is 
considerable investment poten- 
tial for the funds. They will be 
able to invest in DMSOObn 
($174bn) worth of Short-dated 
bonds with a residual life id 
<me year or less, as well as 
other short-dated instruments 
such as floating-rate notes and 
commercial paper. 

In other countries, short- 
dated government securities 
are the chief investment 
vehicles for money-market 
foods. The Bundesbank objects 
to the government borrowing 
on a short-term basis bat DB 
ftMMwih argues that the funds 
Will remove resistance to such 
short-term borrowing. 


Papua New Guinea 
reviews mining policy 


By Nfldd Taft in Sydney 

Mr John Kaputin, Papua New 
Guinea’s mining and petro- 
leum minister, cast a new 
shadow over the fixture of min- 
ing projects in the country 
when he announced at the 
weekend that he intended to 
review national mining and 
petroleum policy and would 
need the next six to 12 months 
to do so. 

Speaking to mining execu- 
tives at PNG’s annual geology, 
exploration and mining confer- 
ence in Lae, Mr Kaputin indi- 
cated that after the large 
ASUbn (DS$857m) Lihir gold 
mine project was finalised, 
there would be a moratorium 
op farther mining project deri- 
sions. 

“Let me advise you that after 
this project [Lihir}. we wfll 
hold everything and I have 
been instructed to use fee next 
six to 12 months to come up 
with a new policy," Mr Kapu- 
tin said. 

"J am not, at this stage, in a 
position to let you know what 
my terms of reference are 
going to be, but we will be vis- 
iting a number of countries to 
p xamtae their respective min- 
ing and petroleum policies in 
order to reexamine our own 
national policies." 

Already, the PNG govern- 
ment has kept the interna- 
tional investment community 


on tenterhooks over Lihir. 
Originally, there were hopes 
that the necessary special min- 
ing lease for fee project - a 
joint venture between Britain's 
RTZ group and Niugim Min- 
ing, which is controlled by 
Canada's Battle Mountain - 
would be granted by the gov- 
ernment at the be gin ning of 
1994. 

However, the matter has sub- 
sequently been bogged down in 
fee PNG cabinet for months, 
wife fee dispute apparently 
centred on whether fee state- 
owned Malaysian Mining Cor- 
poration should be brought 
into fee project at an early 
stage, and what share of the 
equity should be given to local 
landowners. 

Mr Paias Wingti, PNG’s 
prime minister, recently told 
parliament that the deal would 
be concluded “properly 
and ... at fee right time". He 
added that “we will not be 
pressured by lobby groups." 

The derision by Mr Kaputin, 
who took over the mining port- 
folio in a ministerial reshuffle 
at the beginning of this year, 
to put future projects on hold 
while he reviews PNG’s mining 
policy seems likely to jeopard- 
ise further PNG’s already- 
strained relations wife parts of 
fee international investment 
community. 

RTZ in London could not be 
contacted for comment 


GMA launches 
A$182m bid 
for Dominion 

By NHckiTaft 

An A$182m (US$130m) bid for 
Dominion Mfaftig , fee Austra- 
lian gold producer, has been 
launched by Gold Mines of 
Australia, another Western 
Australia-based miner . 

GMA, which said if had 
picked up a 5-4 per cent state 
through recent stock market 
purchases, plans to offer three 
of its own shares for every 
four Dominion shares. If the 
deal goes ahead, it would 
roughly double the size of 
GMA, which is currently capi- 
talised at about A$ 150m. 

GMA said this was one of 
fee reasons for fee bid. The 
greater size of the group 
would mate it more attractive 
to investors. 

GMA was formed by the 
merger of three mining compa- 
nies, Eastmet, Metana and 
Paragon Resources, and esti- 
mates that production will 
stand at about 100,000 ounces 
of gold in fee year to June. 

Most of its c urr e nt projects 
are in either Western Austra- 
lia or New South Wales, and a 
new underground mine at fee 
Yonanmi project in Western 
Australia is due to come on 
stream in October. 

Dominion has been beset by 
concerns over its reserves and 
operating costs, and has suf- 
fered a bumpy earnings record 
in recent years. 


US Steel accuses NKK of poaching 


A legal wrangle has broken oat 
between US Steel and NKK, 
the' Japanese steel group, over 
NEK’S success In poaching a 
group- of top managers to run 
its TS per fcenbowned US sub- 
sidiary, National Steel, writes 
KfehuiLWates in New Toft. 

Amtinir - Qtfapf tbto ajg. US 
Steel has snight an injunction 
to prevent ,Q» five managers - 
who detected to National Steel 
M week from divulging trade 
Secrets Or other -commen&Uy 
sensitive information. 

Tl» ByOrWere all poached 
from US Sfori’s plant at Gary, 
Indiana? thfrihugast steel mill 
f m fee iffi. Ttejrroup is ted by 
Mr Jo&a Goodwin, who is 
iff fee indtffi- 
tty iottur^ngfee Gary works 
hfto.ona cCihe-tErs most effi- 
dffiji pteBts; Mr Goodwin was 


COMPANY NEWS DIGEST 


chiaf operating officer of 

Natteud^stML 

■ Cri Priday, US Steel said it 
filed * ^ eompWut in Lake 
Ownty Superior Court in Ham- 
mdnd* fod fo n ?, «akfag the 

injunction tyifarf fee five *"4 


damages from - NKK and 
National. .It said ft had asked 
for a temporary re strai ning 
, order to prevent NKK and 
National from approaching any 
of its employees. 

Litigation costs 
accountants $hlbn 

Litigation last year cost fee big 
US accounting firms over $lbn 
for fee-first time, according to 
figures. published by the six 
biggest firms. The amount, just 
short of fl.lhn, compares wife 
$ 78 &n fee year before and is 
made up of judgments, out-of- 
court settlements and legal 
defence costs, writes Richard 
Waters. - 

Publication of fee figures, for 
which no detailed breakdown 
was given, is part a campaign 
by accountants In the US ibr 
legislative reform to limit their 
exposure to malpractice suits. 

Most of the increased costs 


last year were met by insur- 
ance. Payments from insur- 
ance companies (after deduct- 
ing premiums) came to $41 6m, 
up tom $18Sm in 1992 and only 
$8m in 1992. After insurance 
recoveries, litigation costs 
amounted to 12 per cent of 
thnir accounting and audit 
fees, according to the firms - 
Arthur Andersen, Coopers & 
Lybrand7 Deloltte Se Touchfi, 
Ernst ft Young, KPMG Feat 
Marwick and Price • Water- 
house. 

Institutions back 
ASX reform plans 

Australia's institutional inves- 
tors have thrown their support 
behind fee suggestion that the 
Australian Stock Exchange 
should introduce a new listing 
rule for “best practice" in fee 
asperate governance of listed 
ram panics, writes Nikki Tait 
The Australian Investment 


Managers Group, which repre- 
sents most of fee country's 
institutional fund managers, 
said yesterday that it “strongly 
supported” such an initiative 
by the ASX, which would be 
modeDed on fee London Stock 
Exchange. 

This would require listed 
companies to disclose if they 
woe not complying with fee 
best practices guidelines incor- 
porated into the fisting role. 

Optus signs 
satellite TV deal 

Australis Media and Continen- 
tal Century, holders of Austra- 
lia's two freely-available satel- 
lite broadcasting licences, 
yesterday announced a 10-year 
agreement with Optus, the 
triecamnumications group, for 
the satellite delivery of their 
broadcast services, writes 
Nikki Tait. 

The deal marks a further 
step towards the introduction 
of pay-television in Aus- 
tralia. 


The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its 
accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole 
or any part of the contents of this announcement. 




CATHAY CLEMENTE (HOLDINGS) LIMITED 

( ) 

(an ex e m p te d co mp a n y incorporated with lirruted liability in the Cayman Islands) 

announcement 

CONNECTED TRANSACTION RELATING TO THE 
CHANGE OF INVESTMENT MANAGER 

INTRODUCTION 

The directors of Cathay Clemente (Holdings) Limited (the "Company”) announce feat, pursuant to a conditional 
agreement dated 4th June, 1994 (the “Agreement") between Clemente Capital, Inc. (“CCI"), Clemente Capital (Asia) 
Limited ("CCA”) and New China Management Corp- N.V. ("New China”), CCI and CCA have conditionally agreed 
to assign their respective rights as investment manager and investment sub-manager of fee Company respectively 
under the following contracts to New China: 

(i) the investment management agreement dated 8th October, 1992 between fee Company and CCI (the 
"Investment Management Agreement"); 

(ii) the investment sub-management agreement dated 8th October, 1992 between CCI and CCA (the 
"Investment Sub-Management Agreement"); and 

(iii) the investment adviser agreement dated 8th October, 1992 between CCA, fee Slock Exchange Executive 
Council of Beijing, China ("SEEC”) and fee Company (fee "Investment Adviser Agreement"). 

THE COMPANY 

The Company is a closed-euded investment company incorporated in the Cayman Islands with limited liability, 
and is listed on The Stock Exchange of Hong Kong Limited (the "Stock Exchange”). The principal investment 
objective of fee Company is to achieve long-term capital appreciation primarily through Investment of development 
capital in a diversified portfolio of unlisted operating Chinese companies or enterprises, which investment shall be 
subsequently realised through public offerings or private sales. The Company has also invested (less than 5% of its 
portfolio) in listed companies in China and Hong Kong. 

CCI was appointed as fee investment manager to fee Company in accordance wife fee terms of the Investment 
Management Agreement CCI delegated certain investment management functions to CCA pursuant to the Investment 
Sub-Management Agreement CCA contracted with SEEC for the provision of certain investment advisory services 
pursuant to fee Investment Adviser Agreement 

NEW CHINA 

New China was incorporated in fee Netherlands Antilles in February 1994 for the intended purpose of assuming 
fee role of fee investment manager of fee Company. New China is wholly owned by Mr Donald Sussman. a director 
of the Company. The directors of New China are Mr Sussman, Mr Paul Wolansky and their corporate agent Curacao 
Corporation N.V. Mr. Sussman is also the general partner of Paloma Partners, L.P. (“Paloma"). Paloma was founded 
in 1981 by Mr. Sussman as a private investment fund organised and managed in the United States. It is headquartered 
in Greenwich, Connecticut and maintains operations in New York, London, Zurich, Hong Kong and Tokyo. 

It is New China’s intention to continue the Company’s original investment objectives as stated in its placing 
memorandum dated 8fe October, 1992 and would have the Company continue to rely on SEEC for fee origination of 
the bulk of fee Company’s investment opportunities. 

CONDITIONS 

The Agreement is conditional upon, inter alia, fee following: 

(a) the passing by the members of fee Company in general meeting of resolutions approving fee Agreement 
and the transactions contemplated thereby: 

(b) the passing by the board of directors of the Company of a resolution approving the Agreement and fee 
transactions contemplated thereby; 

(c) the approval of fee Stock Exchange of the Agreement and fee transactions contemplated thereby, and fee 
satisfaction by the Company and/or the parties to the Agreement of any further obligations imposed on 
them by fee Stock Exchange; 

(d) all necessary licences, authorisations and/or consents being granted by any third parties; 

(e) SEEC having consented to fee assignment and novation of the Investment Adviser Agreement in favour 
• ■ of New China; and 

(f) New C hina notifying CCA in writing that it is satisfied upon inspection and investigation as to fee quality 
of investments made by the Company (other than its investments in Guangxi Ynchai Machinery Company 
Limited and Shenzhen 999 Pharmaceutical Company Limi ted, which have both been approved.) 

Subject to the fulfilment of fee above conditions, including the satisfaction of fee Stock Exchange wife fee experience 
of New China pnrnianr to Rule 21.04(1) of fee Rules Governing the Listing of Securities on fee Stock Exchange (fee 
"Listing Rules"), it is proposed that fee Company will be a signatory to (i) a deed of assignment and novation of fee 
Investment Management Agreement, and (ii) a deed of assignment and novation of the Investment Adviser Agreement 
(collectively fee "Deeds of Assignment”). 

INDEPENDENT BOARD COMMITTEE 

At fee semi-annual board meeting of the Company held in Shenzhen, the People's Republic of China on 2nd 
March, 1994 an independent committee of the board of directors of fee Company comprised of Mr Anthony Watson, 
Mr Mark Dalton and Dr Ernest Lai (the "Committee”) was constituted in order to consider fee terms of the Agreement 
and, if thought appropriate, to liaise wife the Stock Exchange in relation to fee approval of fee Agreement by the Stock 
Exchange. Each of fee directors of the Committee has an interest in fee Company either through funds under his 
management or a direct shareholding. The Committee has appointed Morgan Grenfell Asia (Hong Kong) Limited 
("Morgan Grenfell") as the independent financial adviser to advise fee Committee in relation to fee Agreement. 

CIRCULAR TO SHAREHOLDERS 

A circular to shareholders containing further information on the Agreement, and fee transactions contemplated 
thereby including fee Deeds of Assignment, together with a letter of advice from Morgan Grenfell and a notice of the 
proposed extraordinary general meeting of the Company, will be despatched to all shareholders of fee Company, and 
for information only, all warran [holders of fee Company, as soon as practicable after fee date of this announcement 

CONNECTED PERSONS 

Several of the directors of fee Company, notably Mrs Lilia Clemente, Mr Leopoldo Clemente and Mr Sussman, 
in their capacity as directors and/or shareholders of CCI, CCA and New China respectively are deemed to be 
"connected persons” for fee purposes of the Listing Rules in respect of the Agreeraent and the Deeds of Assignment 
The Agreement fee Deeds of Assignment and the transactions contemplated therein therefore constitute a connected 
transaction under the Listing Rules. 

In view of their interests in tbe Agreement and the Deeds of Assignment, shareholders associated with CCI, 
CCA and New China and their respective associates will be required to abstain from voting at the proposed 
extraordinary general meeting of the Company. 

GENERAL 

It is the intention of the Company to maintain the listing of tbe Company on tbe Stock Exchange. Upon 
completion of the Agreement, Mrs Lilia Clemente and Mr Leopoldo Clemente will resign from the board of 
directors of the Company, and representives of New Chios will be appointed in their place. In addition, the name 
of the Company will be changed in order that its name does not contain the word "Clemente”. 

By order of the Board of 
Cathay Clemente (Holdings) Limited 
Anthony Watson 
Director 

Hong Kong, 4th June, 1994 


THE THAI-EURO FUND LTD. 

International Depositary Receipts 
Issued by 

Morgan Guaranty Trust Company of New York 
Evidencing Beneficial Certificates Representing 1,000 units 

Notice is hereby given a the nn ilho h fc ra that the Tlai-Emo Fuad dedired a flgrfl«aoo 
of USD 0225 per stare. Tbe Record Date tor this dividend is May2fi, 1994. 

As o( Jose 10, 1994 payment at coupon number 3 of the Inte l nnimu l Depositary Roc 
eipn «in be made in US dnSaa *t the me of USD 22S,- per 1DR. 

Tbe dmdcod a at* subject to nay tax. No commissi on win be dodocted from the grog 
UDOmo. Payment will be made u one of (he following offices of Morgan Guaranty 
Tnst Company of New York. 

Bxase& 35, Avenue desAns 

London, 60, Victoria Embankment 

Frankfurt. 44*4*, Mainzer Laodsuasse 

7>ntrit 38. Swbga » 

DEPOSITARY 

Morgan Gaaamv Trust Company of How YmL 
Bmssds Office 



Republic National Bank 
of New York (Suisse) S.A- 


has the pleasure of announcing that 

Mr. Karim Chakroun 

will be joining our 
Asset Management Department 
effective September I, 1994. 



ASafra Bank 





26 


FINANCIAL TIMES MONDAY JUNK 6 1994 


FINANCIAL TIMES 


MARKETS 


THIS WEEK 



A 20-25 per 

cent return for 
Investing In a 
stable utility 
such as a 
power station, 
or a toll road? 
A way into the 
emerging mar- 
kets of Asia without pumping 
more cash into what have 
proved highly volatile stock 
markets? 

These are the sort of carrots 
being dangled in front of pen- 
sion funds and other long-term 
investors In the US and other 
developed nations. Sooner or 
Later, no doubt, many members 
of pension schemes or holders 
of mutual funds will indirectly 
own part or a toll road in 
Guangdong, a power plant in 
Malaysia or a telephone com- 
pany in Indonesia, But when 
and how will those invest- 
ments be made - and at what 
sort of return? 

Private investment in infra- 
structure in the developing 
world - mainly Asia - is run- 
ning at about flSbn a year, 
according to one international 
development agency. That is a 
drop In the ocean compared 
with the $200bn being spent 
.-mnnaiiy on power, water, tele- 
communications, transport 
infrastructure and drainage. 

A large part of the $200bn is 
going on projects, such as sani- 
tation, which, will never attract 
private money; but there is 


Global Investor / Richard Waters in New York 


Weevils in the infrastructure carrots 


stm a huge demand for capital 
which even the fabled savings 
rates of Asia's populations can- 
not satisfy. Much of it will sim- 
ply have to come from interna- 
tional Investors and western 
commercial banks. This is 
likely to be one of the conclu- 
sions drawn by the World 
Bank, which is publishing a 
study on infrastructure needs 

Ihia rannth- 

That suggests one possible 
answer to a nagging question: 
if utility projects are so safe, 
why promise such big returns? 
In pact, because capital from 
the developed world has not 
yet been mobilised on a signifi- 
cant scale. That places an 
immediate pr emium on those 
investments that are being 

made. 

There are signs that the 
money is starting to flow. Last 
week, the biggest fund of its 
Mud - a Jl.ihn Asian Infra- 
structure fund backed by 
American International Group, 
the US Insurer - was finalised. 
Peregrine Investments, a Hong 
Kong-based firm, is close to 
completing the first half of its 
Jlbn frmd. 


.Beef aggregatonet resource 
flaw* fx> si dbvelop£ri 0 Counfries 
Sfen - . ' 

zoo 7*r 


Ftesbarbes flowratn china 



Oi 

. .lew , ieea ' mb* , ; i sea ' V .iseav teeo is&t ,i*tt . teas ' 

Source? Worid Bork'Debtorlfe{ntfcis$yatont 


Portfolio Investment may 
have been the most visible 
aspect of the renewed capital 
flows to developing nations 
this decade, but it has not been 
the most significant. Direct 
investment makes up the lion's 
share (see charts.) Bypassing 
the markets has obvious 
attractions: fewer valuation 
problems and less volatility. 
For long-term investors, there 
is also an attraction in 


COMMODITY MARKET RE PORT 


Deborah Hargreaves ana Kenneth Gooding 


Little pressure to trim cocoa output 


Most of the world’s cocoa 
producers meeting in Loudon 
this week will throw the focus 
on a market which has been 
overshadowed this year by the 
dramatic increase in coffee 
prices. 

Producing countries will be 
discussing their efforts to man- 
age output as part of a new 
5-year pact which came into 
force in Febniary. However, 
with cocoa prices at their high- 
est levels for 6 years, producers 
are under little pressure to 
trim output 

Cocoa prices at the London 
Commodity Exchange have 


risen since the beginning of 
the year by £50 to £1,040 a 
tonne. While this increase has 
been dwarfed by coffee’s 21,000 
a tonne upswing, traders 
report that hedge funds are 
increasingly turning their 
attention towards cocoa. 

World demand for cocoa is 
expected to outstrip supply by 
at least 160,000 tonnes this year 
and many commentators are 
predicting a shortfall oF 300,000 
tonnes for next year. Tight 
supplies should underpin 
prices for some time since it 
takes several years for newly- 
planted bushes to mature. 


Fears In the gold market 
about central banks dumping 
some of their huge holdings of 
the precious metal have been 
subsiding. Nevertheless, the 
market will be studying care- 
fully some of the papers to be 
presented by bankers at the FT 
Gold Conference today and 
tomorrow In London. 

According to the latest mar- 
ket review from the Gold 
Fields Minerals Services con- 
sultancy, central bank sales 
added a net 475 tonnes of gold 
to supply In 1993. This was 
down from a net 626 tomes in 
1992 - but that was the year 


KfW's Performance in 1993 
to the Point 


stsrsr vjf+n- 


ES 


New commitmen ts in 1993 totalled DM 
35.7 billion, of which DM 16.7 billion was 
granted to the new Lender. 


Total Commitments DM 35.7 bn 

(Loans, Guarantees, Grams) 


DM 21.0 bn 

bwsmwnUaans 


DM 104 bn 

Export Finance 


Since 1990 KfW has promoted industrial enter- 
prises in the new Lander . Long-term loans 
amounting to DM 32 billion have been gran- 
ted to 50.000 companies - helping to secure 
or create two million jobs. 


During 1993 DM 7.7 billion was committed 
for housin g modernisation . Since 1990 a 
good DM 25 billion has been provided for 
modernising 1.5 million housing units in East 
Germany, which is about one fifth of all 
residential units in the region. 



In 1993 DM 10.0 billion was granted under 
export .fin ancin g - DM 1.4 billion of which 
for exports from the new Lander. 


Investment 
Loan 5 by Area of 
Promotion 


Developing countries received DM 3 billion. 
Of this, 53 % alone was committed to deve- 
loping countries in Asia, 31 % to Africa. More 
than one third accounted for social infra- 
structure, agriculture and the protection of 
tropical forests. 


Loans for Environmental 


Protection Protects I 

flUbn I 


□Ml 



Programmes 


Small and 

Medium-Sized 

Enterprises 

DM 11.2 bn 


Environmental 

Protection 

DM 0.9 fan 


Other 
Structural 
Measures 
DM a* bn 


On behalf of the Federal Government we 
support the reform efforts of Centra! and 
Eastern European countries through advisor y 
servic es and financial aid. In 1993 such activi- 
ties increased substantially. KfW has offices 
integrated into the German embassies in 
eight countries. 




Major Balance Sheet Items 


DM 91.0 bn 
Claims 
On Banks 


DM 1238 bn 

Liabilities 


In 1994 a strong growth in investment loan 
demand from industrial enterprises has already 
been experienced. 


Further information and copies of our annual 
report are available. 



DM iO bn Other Asm* DM 2.1 bn Other Liabilities 


KfW, office Berlin 
Charlottenstrasse 33/33a 
D-10117 Berlin 
Phone 30/23 26 43 15 
Pax 30/2 29 92 09 




Kreditanstalt 
fur Wiederaufbau 


Palmengartenstrasse 5-9 • D- 60325 Frankfurt am Main 
Phone 69/743 10 • Fax 69/7431 29 44 


Total return in locafcwrancyto 2 / 6 / 94 . 

, % change aNr-partmf . 



_ l»_ 

Jam 

Oiuiur 

' tarn. 

.... WtL. 

— at 

Cash 

Week ' 

008 . 

. .004 

0.10 

Oil 

.. OUV 

009. 

. Month ‘ 

004 

0.19 

044 

-049- 

0*7 

. 043. 

Year " ' . 

349 

034 

- 6.75 

* 094 

10.13- : 

, r ,W» 

Bonb’M year 


. 



-IAS 


Week 

0.15- 

-087 

-038 

-133 - ■ 

■ ^1.16 

Month 

0.68 

/ 030 

-0.67 - 

• -t.38 ■ 

■■-1.4$ . • 

■ -1.08..- 

. Yw sc : 

0.74 

7.26 

052 

. OQ1- . 

IfcW; - 

3,7ft. 

Bands 7-10 year 




'■ ■ 


. t*i i- 

0.25 , 

• -1,89 

-1.27 

■008 • 

-2.88 

-ij33.. 

‘Month • 

0.88 

-005 

-236 

..-083.' 

=rCl* 

■ r*54 


-032 

- 029 

4 m 

*19 

-18.04' . 

:3.15 

Equities 

OI 

2j3 

-OA 

-3,8 " 

" -i a 

•• -SK2 

' Month . ' ■ 

1.3. 

&5 

■ ‘-8.7 ‘ 

■' -7J5 ■ • 

• -8.7 - 

'■•4.7"" 

.:Yew ■ 

3.4- 

sst 

2tt8 

■ .142 

37.6 -■ 

■••00- 


8avc«rCaan& Bends -LatnwBroVwn, Bp«n*CN»IWM»3pa 

ThW FT-ActuariM htarid Endecs me JcWy -mnod by Dm rtaocWUmt 
tfeidmdn-SMvr S Co, and NaHKMt SkuHh Undid. . 


tiie annuity-type returns of 
a utility. 

But these projects cany then- 
own risks, aside from the obvi- 
ous problems such as political 
upheaval or a balance of pay- 
ments crisis, or the difficulties 
of completing the technically 
advanced projects. 

First, the high rates of 
return envisaged at present 
may simply not be available. 
They amount to an extra tax 


an local consumers - a con- 
cern that the Chinese are 
beginning to raise. One power 
project is reported to have 
been put on ic8 this year after 
the authorities refused to coun- 
tenance an annual ra tnm for 
the equity investors of more 
than 15 per emit. 

A typical independent power 
station in the US earns a 
return of some 12-13 per cent a 
year. China (with a 13 per cent 


gpowtii rate and commensurate 
growth in the demand for 
power) can be forgiven tor ask- 
ing why its consumers should 
reward foreign capital at twice 
the US rate. 

The projected equity returns 
are also dependent on the sort 
of gearing levels seen in devel- 
oped-world projects, where 
dgbt usually makes up some 75 
pa cent af the Wrumna, will 
debt be available on that scale 


in the developing countries? 

One day, perhaps, bonds 
backed by a toll road in Guang- 
dong will he as readily avail- 
able in the US as ones secured 
on a toll road in Orange 
County. Rating agencies such 
as Standard & Poor’s point out 
that- the model already exists: 
more than half of all municipal 
bonds issued in the US each 
year (or more than SI 00b n) ore 
backed by specific projects. 
Right now, though, such 
vehicles are a long way off. 

That Leads to the second risk. 
In most developing countries, 
the public policy debate over 
the rights and duties of pri- 
vately owned and operated 
roads or telephone companies 
Is in its infancy. It’s all very 
well to run a power station: 
but on what terms will it be 
connected to the national grid 
system? Haw are the tariffs set, 
or the regulations which gov- 
can access to electricity? Until 
there are clear answers to 
questions like these, many 
Investors wOl stay away. 

Third, there is the question 
of picking the right Investment 
partners. Much of the private 


when the Belgian and Dutch 
central banks between, them 
sold 600 tonnes. 

Meanwhile, officials from the 
TnfeprnaHni’ifll Pr imar y Alumin- 
ium Institute (JPAI) will be In 
Moscow an Thursday and Fri- 
day to continue negotiations 
about Russia supplying alu- 
minium production statistics 
to add to those provided by 
western producers to the Insti- 
tute. 

The International Zinc Asso- 
ciation has organised an 
“international zinc day” in 
Paris tomorrow and Wednes- 
day. .. 



"It will rain on 
Southwark 
Bridge at 
11.05am on 
July 13 1995, 
for precisely 9 
minutes and 5 
seconds” . 
Imagine that 
perfectly accurate forecasts of 
this kind could be provided 
for any place and time- Living 
would become unbearable. 
Fortunately, it is not merely 
difficult to achieve such accu- 
racy, it is inconceivable. 

As David Parker and Ralph 
Stacey note in their brave 
attempt to explain the impli- 
cations of chaos theory to the 
mathematically Illiterate: 
“Non-linear feedback systems 
are highly sensitive to initial 
conditions, which means that 
some imperceptible noise in 
the system can escalate into 
major qualitative changes in 
the behaviour of that system 
In such systems we cannot 
safely assume that small 
errors are unimportant ... In 
feet, the links between cause 
and effect disappear in the 
complexity of interactions. In 
consequence, the long-term 
future of the system Is inher- 
ently unpredictable".* 

Even though weather is cha- 
otic, it is not random. We will 
never know when precisely it 
will rain (until it has hap- 
pened), but we do know that 
London’s temperature in July 
will be neither minus 20 
degrees centigrade, nor plus 
50. “Non-linear systems gener- 
ate toms of behaviour that 
are neither stable nor unsta- 
ble. They are continuously 
new and creative.” They oper- 
ate in a state of “hounded 
instability”, which is qualita- 
tively different from either 
stability or instability. 

The chart, which conies 
from a book by the mathemat- 
ical physicist Professor Roger 
Penrose, illustrates what this 
means for a simple, non-linear 
mathematical relationship. 
The patterns are recognisable, 
but irregular. Tiny differences 
in initial sets of numbers lead 
to different, “yet recognisably 
similar patterns to the origi- 
nal shape”. Such patterns are 
no mere mariiemntiffai curios- 


Economic Eye / Martin Wolf 

Chaos in 


economics 



;Soy u» F|Wio M -:;j v 


ity. They can be seen in many 
natural systems: not just in 
the weather, but also to turbu- 
lent liquids and gases. 

What does this mean for 
human affairs, particularly for 
economics? A great deal, 
argue the authors, who note 
that “all human systems are 
feedback systems. Further- 
more, these systems always 
involve non-linear relation- 
ships'’. Consider the way 
proud businesses like IBM and 
General Motors seem sud- 
denly unable to control their 
fate. Consider the apparent 
failures of Keynesian demand 
management in the 1970s and 
technical monetarism in the 
1980s. Consider, more astound- 
ingfy, the collapse of Soviet 
Communism after seven 
decades of expansion. 

These all seem excellent 
wrampUgi of what chaos theo- 
rists call a “phase transition” 
- a sudden qualitative change 
In a system’s behaviour. But 
the last is the most symbolic. 
This is not just because this 
empire collapsed, hut also 
because of what it stood for. It 
was grounded on the convic- 


tion that societies could be 
planned. The goal was a rich 
society to which happy com- 
rades would lose their capac- 
ity for self-interested behav- 
iour. The result, millions of 
corpses later, Is impoverished 
countries in which dispirited 
people act quite as selfishly as 
anywhere else. So much for 
the construction of socialism, 
ignis fcttuus of our century. 

The failure of socialist plan- 
ning was most clearly fore- 
told, to the 1920s and 1930s, by 
economists of the Austrian 
school, notably Ludwig von 
Mises and Friedrich von 
Hayek. This is not an acci- 
dent. For the authors of the 
DSA pamphlet suggest that the 
Austrian vision of the eco- 
nomic process is both more in 
accord with reality and more 
justifiably critical of planning 
than standard neoclassical 
orthodoxy. 

Both schools agree on the 
value of markets. But neoclas- 
sical theorists tend to see a 
market economy as a sort of 
giant calculator, with equilib- 
rium outcomes predetermined 
by maximising behaviour. 


subject to given resources, 
knowledge and tastes. Eco- 
nomics, for them, is just the 
logic of choice. 

Austrians, by contrast, see 
the economy os an evolution- 
ary system, propelled onwards 
by creative entrepreneurship. 
To work, such an economy 
must be based on private 
property, they would argue. 
Moreover, It cannot be 
planned, even to principle. 

The difference between 
these visions is profound. Neo- 
classical general equilibrium 
theorists argue that the mar- 
ket outcome is optimal only if 
all spot and future markets 
clear simultaneously. But the 
vast majority of such markets 
do not even exist, an “imper- 
fection” used to justify gov- 
ernment interventions. 

To Austrians, this so-called 
imperfection is not merely 
unavoidable, but precisely 
what justifies reliance on the 
market For them, markets 
are the only way to secure 
adaptation to the inherently 
unforeseeable future. 

Fortunately, orthodox eco- 
nomics does need to be 
thrown overboard, argue Mr 
Parker and Mr Stacey. It 
remains invaluable in think- 
ing about the effects of partic- 
ular economic processes, such 
as exchange rate over-valua- 
tion or monetisation of budget 
deficits. But in a chaotic sys- 
tem, accurate quantitative 
prediction is impossible. 

If chaos theory does provide 
a mathematically sophisti- 
cated justification for the Aus- 
trian vision, that is good 
news, largely because profes- 
sional economists can be per- 
suaded only by arguments of 
that kind. But that vision has 
long seemed compelling. As 
with the rain, we will never 
know precisely what the econ- 
omy will look like 10 years 
hence. But we do know what 
kind of economic system will 
adapt best to the changes we 
cannot predict. 

* David Parker and Ralph 
Stacey, Chaos, Management 
and Economics: the Implica- 
tions of Non-Linear Thinking, 
Hobart Paper 12 $ (London: 
Institute of Economic Affairs. 
1934). 


FT-ACTUARIES WORLD INDICES 


JoMfy compiled by The Rnanctaf Thnei Ltd, Goldman, Sachs 1 Ca snd NotWwt SecuUes Ud. In conjunction with the Institute of Actuates end (ha feaHn, n a 
NATIONAL. AND rjcwqr or waunim 

~ Jsr* TjUKE2i,i “ — — 

OoBar dnea Stating Yen DM Currency cijg tram Otv. Qatar Start k» Yen nu n^ZrL, ■» .. ..... M ... T” 

hd * 31/12/83 W« W «« 37*2*1 VWd Wes *2? SL “lE* 


REGIONAL MARKETS 
Figures in parentheses 
show number of Ones 
of slack 






money has been channelled 
through contractors or equip- 
ment makers. Should portfoUo 
investors stand shoulder to 
shoulder with them as co-in- 
vestors? The commercial inter- 
ests of a contractor-investor 
are broader than those of a 
pension fund: they Include sell- 
ing, say, power generating 
equipment, not just making an 
investment return. 

One of the most ambitious 
plans to date has been the ven- 
ture between GE Capital, part 
of General Electric (a big sup- 
plier of power systems), finan- 
cier Mr George Soros and the 
International Finance Corpora- 
tion These people make curi- 
ous bedfellows. To date, says 
GE Capital, they have made no 
efforts to raise the $2.5bn they 
talked of back in January: the 
projects must come first, the 
finance later. How eager wOl 
investors be to back a fund 
which seems at least in part to 
be acting as a vehicle for sup- 
porting GE sales? 

And fourth., where is the 
exit? It all comes back to those 
stock markets. Sooner or later, 
many private utilities will find 
their way on to local bournes, 
as their shareholder-developers 
seek a way out. It all adds up 
to a huge demand for new 
investors somewhere down the 
line. But at least by then the 
emerging stock markets will 
have had a chance to grow up 
a little. 


prt' 


lull'" 









;ir St A 


, ........ 


N " 


EUROPE (720) 
UoKlO (IIS) 


Pacific Botin (7S(g 


Euo-PacMc (1470) - 
North America <Q2$ . 
Europe Ex. UK (515) 


Wddd Ex. UK (1867) 

VtoME*. So. >0(2113) 
WoriO Ex. Japan (1703} . 


183-68 

-28 

16128 

1088B 

14182 

15448 

-0.7 

343 

.20551 

84 

20249 

138-72 

17886 

20025 

3.1 

144 

107.88 

188 

16882 

111.70 

14584 

11586 

98 

144 

10004 

7.1 

16380 

11046 

14386. 

13187 

03 

186 

184.04 

-12 

18144 

12244 

16846 

18388 

-1.1 

285 

148.82 

0.7 

14644 

9087 

128.78 

13648 

-38 

J .atf 

-247.31 

-13.8 

24389 

16483 

21428 

22187 

-174 

281 

16728 

84 

16483 

11129 

14483 

134,72 

22 

187 

17138 

48 

16948 

11445 

14881 

148.10 

24 

2.03 

17244 

38 

10981 

114.72 

148.40- 

lSO.20 

08 

Jgg 

182.08 

-38 

17941 

121.13 

157.76 

17681 

-44 

288 


no -im 


Th» world Index glTg 173 M a* 170.4a 115.10 14980 151-2? 

Court**, lb* RrendU Ham Umtsa Gattnan/sadh* & Co, md Mta SoooM— LWWL 1087 

BbsomNm: Dk 91, 1M6 - 100; Ftanl: OtoSl. 1B87 ■ USAS? (US SkataL 80.781 fowl 3Mn0 Ml 0AB4 (Locafc 

CWMtam* ctwo9* tout iniMc Gum taction change Safas* (Spot* ozm to i A ft—**—* ■*■*■<» 

Ptoft-PrinKirpeLi ftotiouw fnmw* 



Nante Dec 30 , Wa 

■NkMbigMM 







27 


FlNANC&tJL TXMES KtO NDAY JUNE 6 1994 


EMERGING MARKETS: This Week 


The Emerging Investor / Stephen Fidler 

Privatisation is a big issue for Colombia 


IH • 




If the active investors in 
Colombia’s stock market had 
their way, Mr Andres Pastrana 
would probably be the coon-, 
try's next president 

Mr Parana, the Conserva- 
tive candidate, polled about 
20,000 votes less than his rival 
Cram the. governing Liberal 
Party, Mr Ernesto Samper, in 
the first round of the presiden- 
tial election cm May 29. 

Because- neither managed to 
gamer more than. half the vote 
the two face a run-off on June 
W. 

Although President Cesar 
Geviria is a liberal and bis 

government was responsible 
for the ecoromin modernisa- 
tion programme- which has 
opened the ^coontiy to foreign 
trade and investment, many 
investors suspect Mr Samper 
would backtrack an some of 
Mr Gavirfa's policies, or at 
least not push ahead with 

thorn 

“Basically, the market, 
thinks that Samper would stop 


privatisation and Pastrana 
would go ahead with it," said 
one financier in Bogota. 

ffis pledges to raise the mini- 
mum wage and to try to ensure 
that benefits spread to the poor 
"may be commendable but 
may not send the right signals 
to foreign investors," said Mr 
GeoEETey Dennis, cfrfof emerg- 
ing market economist at Bear 
Steams in New York. 

“My guess is that the market 
would probably prefer Pas- 
trana to win, bot were really 
talking about shades of grey 
here, not black and white.” 

Prom tbe stock maziest per- 
spective, privatisation is 
important, although the Col- 
ombian government was never 
as big a stakeholder In indus- 
try as other Latin American 
governments. 

There is a large unfulfilled 

potential demand miyipg inter , 
national investors for Colom- 
bian shares, and privatisation 
offers the possibility d expand- 
ing the traded float. 


Tew beat performing atoefcs 

3 K/9* Weak; 


- i 

r : . 4 

Stock 

Cranky 

Sctan 

$ 

% 


Light Servicos De Barricade 

Brazil 

02472 

0.0466 

2022 

y- . 

United Microelectronics 

Taiwan 

4.1732 

07001 

2016 


• Tatung 

Tehran 

2.5221 

0.3498 

1030 

Li*.? 

• • . • Teco 

Tahmri ’■ 

2.7688 

03497 

14.45 


Aygsz 

Turkey - 

0.2283 

00275 

13 A 5 

\ • . 1 

Eg* EHracBc 

Turkey 

20489 

02447 

13£6 


Bagtes 

Ttefcey 

' 0.1804 

00214 

1046 

<sT •• 

. Alarko Holding ‘ " 

Turkey 

•* 06881 ' 

00766 

1050 

»1 - ■ 

MictranBd ‘ 

. . Greece 

408863 

42082 

11-48 


. Koc holding . 

Turkey 

05046 

00456 

1000 


A majority of the $18bn mar- 
ket capitalisation never trades, 
because the families and other 
groups which run the compa- 
nies keep a tight grip on their 
shares so as not to lose control 
of their companies. Of the 176 
companies listed on the 
exchanges of Bogota, Cab and 
Medellin, only about 20 trade 
many volume. 

T he u nw flHngpes B by family 
groups to cede control Is a 
phenomeno n impeding stock 
market development in many 
Latin American economies. 
But it is especially important 
in Colombia because of a rale 
that gives holders or 30 per 
cent of a company veto power 
over decisions. , . 

These groups are, if any- 
thing, attempting to tighten 
their control on their compa- 
nies, said Mr Mauritio Botero, 
a partner m Corredores Asoda- 
dos, the biggest stock broker in 
Colombia. 

The overhang In ftemanH 
may, however, help to explain 
the relatively modest declines 
of Colombian market com- 
pared to the rout in emerging 
mar-irate (far j ia r fhin year. Tjist 
week the market was only 
about 4~per cent off its March 
all-time high. 

As a furth er fa rti ration nf t h e 

demand, “out of the $25bn of 
approved foreign investment in 
shares, only about $350m has 
been invested.” said Mr 
Roberto Santa Maria of the 
Bogota Stock Exchange, which 
ritrimn about iwtf of the coun- 
try!s equity trading. 


Cementos Lima is Peru’s first OTC offer 


Peru's first ever overthecounter primary offering Is scheduled 
for June 15, when the state's 39 per cent stake in Cementos 
Lima, the commit producer, wiB be offered simultaneously in 
New York mid Urns, writes Sally Bowen in l-ims. 

The allocation will be by Dutch auction and the reference price 
is expected to be about $200 for each of the 308543 voting shares 
cm offer. Lead managing the issue is Bankers Trust/Peruval, 
with Bankers, Baring, Bear Stearns and JF Morgan Securities 
handling the New York mid, where the offer will be restricted to 
qualified in stituti onal buyers. Lima brokers may register to 
participate on auction day, but will be required to deposit letters 
of guarantee for 97 per emit of their bid. Amounts are likely to 
be much higher than they usually handle. 

Cementos Lima is Peru's leading cement producer with more 
than 40 per cent of the domestic market 


Foreign investore must regis- 
ter with the government, a 
measure intended to prevent 
drugs traffickers using front 
companies to bring back 
money into the country’s stock 
market. 

When Cementos Diamante 
decided to take advantage of 
this foreign demand a few 
weeks ago, it issued not com- 
mon stock but the p re s um ably 
less attractive non-voting pre- 
ferred st ock in the form of 
Americ an Depo si t ar y Receipts. 

Even so, such is the rarity of 
Colombian paper - it was only 
the third ADR issue by a Col- 
ombian company the first 
ft mrt a aon-fixtanciai enterprise 
- it was still heavily oversub- 
scribed. 

More ADR issues are likely. 
Carulla, the supermarket 
gro u p, is could mata an issue 
of perhaps SSOm. Banco de Col- 
ombia and TtaTim Ganadero are 


expected to launch issues and 
the latter may be the first Col- 
ombian <-fip^ pnpy listed on the 
New York Stock Exchange. 
Banco de Bogota is also said to 
be considering an ADR offer- 
ing. 

Privatisation could further 
add to the float With its popu- 
larity high, the government is 
no lame duck and it is widely 
expected to move ahead on 
some privatisations. These 
could -include Banco Popular 
and other government share- 
holdings such as Pramigas, tha 
gas transportation company, 
now part of the Ecopetrol state 
energy company. 

Mr Paul Weiss of Corredores 
said that all s hould be priva- 
tised through the stock 
exchange and listed, and 
“should mate a nmahlp differ , 
ence to the market”. Yet even 
these may be taken over by big 
private groups. 


CURRENCY MARKETS 


Philip Gawith 


Dollar stays focus of market attention 


The initial concern for foreign 
exchanges this- week will be 
whether tbe dollar n»»n eon- , 
trnne the ratty prompted last 
Friday by- the release of the 
May US labour market report 

^Inflationary implications 
of falling unemployment and 
rising-average hourly earnings, 
a ssisted by "-comm ents from 
seiior US- officials suggesting 
the 'doilat' might ' he underval- 
ued, belpedra&TJS currency to 
its highest levd for a number 
of weds. It dosed in' London 
at DM 2 . 6 && and Y$5245. 

Chxdhsing the picture. how- 
ever, was a fen ininanufoctur- 
ing jobs and hours worked 
which led some analysts to 
conclude that the report 
showed a moderation in the 


rate of US economic growth. 

Much wfll depend on the per- 
formance of OS bonds. A con- 
tinued ratty would be helpful 
but a slide in prices would 
weaken the currency. The 
April consumer credit num- 
bers. to be released tomorrow, 
and the May producer price 
inflafim figure, which emerges 
cm Friday , win help the market 
mate up its minri 

■ Also coming out on that day 
Is the Bank of Japan's quar- 
terly Tankan survey. Confir- 
mation oS continued economic 
.weakness could presage a tow- 
ering of interest rates, which 
would help the dollar. But 
some obseroers think the sur- 
vey wiH show that the econ- 
omy is past the worst 


Trade . framework talks 
between the US and Japan will 
continue this week. The focus 


and mptieai equipment sec- 
tors. Progress in these talks 
would support the dollar. 

In Europe, meanwhile, mar- 
kets will be keeping a watchful 
eye on the outcome of the 

Bnmipgan ' ihcHBB, With coun- 
tries voting on Thursday and 
Sunday, in Germany, Chancel- 
lor Kohl also faces municipal 
elections in seven states. A. 
severe rebuff would probably 
weaken the D-MdriCimt recent 
polls show his suppdrf rising 
so markets win be less canr 
ceraed about the prospect of a 
change in government 

Another politician anxiously 


facing the electorate Is Mr 
John Major, the British prime 
minister. A very poor result for 
the ruling Tory party is widely 
discounted, but a third place 
finish would certainly reignite 
discussion of a leadership chal- 
lenge In tlifl spring. 

The political uncertainly this 
would provoke needs to be set 
against the view that any 
change in pr emier would be 
market positive. Results will 
only emerge on Sunday and 
Monday, but markets will 
doubtless have earlier exit poll 
information to chew on. 

The market is expecting poor 
March trade figures when they 
are released on Friday, and 
this will undermine sterling. 
UK output data, however, 


i«ei*wst.toe D-*te*k jOM per $? 


1.72 ^— yr-r- *-" ■ - - - 1 



Apr I 994 «ay * Jun 

'Tiiiiii n~n itiilimiii 


should confirm that another 
fall in interest rates is 
unlikely. 


FT GUIDE TO WORLD CURRENCIES 


The table bdawgtvu the. latest i 


i rate* of exchange (raunded) agohwt tour key currencies on Friday, June 3, 1994. In hi 
: ihay m shown to be « hw* >. h some cases martoot mss haw bean nirtn to te d • 


i esses the rata Is nomhaL Market rates are the average at buying and soilng rates i 
m those of foreign currencies to wtidi they ire twd. 


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^acW (fetg Mgta *M» a. taw UWM noum auaaat urn* Sa* Sf^tsse Omtmr CM MM Jman &**»■» Oaiwcy ima (Mm Im X IBM used Hn&xn m77iaSB UnSed aw* BI.rtW Oamwv DMIJOjaa Jtp* 1 yiswii 


Bbg, Juw 3, 19M 


IWIWM Beytag Mta; Q Luarr pBOd* (*J Mpfet life W Pobfic tmacdon rew H OncW 
&• ta ma RDUGto Zm (I) Y«catar On* WM nta n taondw raw I* UaMi StcL n V*nenl 
Capetown. London ifefeg caram. Bncfetas: on S94 assofi. 


Free flights to Japan. 


join JAL Mileage Bank Europe and new members who 
hook and complete an Executive Class return journey to Japan 
: h: I ore 30th June 1994 can get an Economy Class return free. 
Of ter ends 30th June 1994. Call for details 





Japan Airlines 

JAL MILEAGE BANK eUrOpe 


Stockbrokers would like the 
government to force companies 
to consolidate their balance 
sheets, although some compa- 
nies, such as Cementos Dia- 
mante, already do. 

To the chagrin of interna- 
tional investors, this is not 
done at the moment resulting 
is higher p/e ratios than would 
otherwise be the case. The 
market is about 24 compared to 
an estimated 16 if accounts 
were consolidated. 

Foreign investore have been 
allowed into the market since 
late 1991. but they are not the 
only new force. There is sub- 
stantial competition among the 
managers of the newly-allowed 
private pension funds. 

The system is voluntary but 

in two months, 160,000 people 

have op. an estimated 5 

per cent of the market domi- 
nated by the state-run Institute 
of Social Security. “In the 
long-term the pension funds 
are going to be very important 
institutions in this market.” 
said Mr Weiss. 

Nonetheless, this will merely 
accentuate the lack of a large 
float of Colombian equities 
which can be traded. Mr Santa 
Maria believes that over ttma 
Colombian companies will 
begin to see advantages in | 
“sharing some of the risks of , 
ownership with others”. 

In the n-inan time, he is 
clearly frustrated that when 
companies do raise new equity, 
many of them prefer to do it in 
the US or tntemaHnnwi mar- 
kets. 




News round-up 


South Africa 


South Africa is to be included 
in the IFCs global index of 
emerging markets in the next 
few months, with a weighting 
of 13 percent 

Justine Roberts of SG 
Warburg said that a 13 per cent 
weighting implied considerable 
Inflows of foreign money. With 
estimates of holdings by 
foreign investore in emerging 
markets globally put between 
$SQbn to $160 bn, the potential 
inflows to South Africa could 
be anything from $64>bn to 
$21 bn, he added. 

Even including last year's 
$650m of purchases, the 
implication is that most 
emerging markets funds are 
seriously underweight [in 
South Africa] wt id many have 
no exposure at all”. 

• The IFC said that the Czech 
Republic will be added to 
the list by the end of the 
year. 


Mr Charles Lunsford, will be 
the ability to switch assets 
quickly from country to 
country. The initial launch 
values the fond at some $30m. 

Mr Lunsford, in London last 
week, said that the countries 
Included all had increasing 
political stability, had begun 
to make the shift from state 
to private enterprise and 
companies there had some of 
the cheapest p/e’s with the 
Asian region, together with 
forecasts of good earnings 
growth. 


Seoul 


Fund launch 


A new open-ended fund for 
investment in TnrHa, Pakistan. 
Bangladesh and Sri lanka is 
being launched by Regent 
Pacific, the Hong Kong-based 
financial services group. One 
of the features of the fund, said 


Foreign investment in South 
Korea during the first five 
months of the year rose by 60 
per cent to $64Sm, the 
country’s finqn w* ministry 
said. 

New foreign investment 
amounted to $436m, up from 
£L25m. while fresh injection 
of investment into existing 
projects was down from 
$282m. 

A ministry official said 
relaxing investment 
restrictions and a recovering 
economy were big reasons for 
the increase. 

• Em e rgi n g markets coverage 
appears daily on the World 
Stock Markets page. 


Baring Securities emerging markets indices 


Index 

World (264) 

Latin America 
Argentina (19) 
Brad (21) 

CKIe (12) 
Mexico (24) 


Eirope 
Greece (14) 
Portugal (14) 

Turkey (22) 
Europe (50) 

Asia 

Indonesia (20) 
Korea (23) 
Malaysia (22) 

Pakistan (IQ 

Philippines (11) 
Thailand (22) 
Taiwan (30) 



Weak on week movement 

Month on month movement 

Year to date movement 

3 /B /94 

Actual 

Percent 

Actual 

Percent 

Actual 

Percent 

157.36 

114.87 

-a 54 

- 1^9 

-034 

- 1.62 

6.13 

10-51 

4.06 

10.07 

- 11.05 

-051 

- 6.56 

- 0.44 

147.40 

0.60 

0.41 

2.10 

1.45 

7.75 

5.55 

186.76 

3.19 

1.74 

19.77 

11.84 

39-22 

26.59 

144.73 

- 0^9 

- 0^0 

11.25 

8.43 

-1654 

-1058 

-.. 146.80 

- 0.08 

- 0.06 

9.74 

7,11 

- 2.45 

- 1.64 

81.48 

1.76 

2^0 

-1152 

- 12.66 

- 1.60 

- 1.92 

109-56 

- 2.45 

-Z 19 

-1451 

- 11.77 

-257 

-259 

60.92 

- 0.12 

-020 

1254 

25.92 

- 100.79 

-6253 

88.76 

- 0.46 

-051 

- 8-21 

-858 

- 22.48 

- 20.03 

149.44 

- 6.44 

- 4.13 

950 

6.58 

- 21.60 

- 12.63 

128.68 

- 1.56 

-120 

1.94 

153 

1858 

1750 

205^3 

- 5.73 

- 2.72 

- 7.08 

-353 

- 47.72 

- 18.86 

105.24 

1.43 

158 

-855 

-755 

- 6.45 

- 5.78 

295.13 

5.18 

1.79 

13.07 

453 

-2755 

- 8.46 

226.77 

- 5.64 

- 2.43 

1857 

9.08 

- 36.79 

- 13.96 

149.08 

5.52 

355 

1.75 

1.19 

- 4.62 

- 3.01 

196.46 

- 1^2 

- 0.92 

2.92 

151 

- 24.95 

-1157 


Ttft 1002*100. Source: fivtig I 


Telecom Markets is the essential source of regular 
information about the global telecommunications industry. It 
provides both hard-to-obtain news and specialist analysis 
for the professional 23 times each year, and is available only 
on subscription from the Financial Times. 





m mtf 


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INTERNATIONAL COVERAGE 

TM is designed so that information is readily accessible 
and quickly absorbed, providing the latest on: 


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• Product developments 


finan c e news 


Take a dear view of the test-moving world of 
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NEWSLETTERS 


EUROF1MA 


U.S. $50,000,000 

IBM Credit 
Corporation 

Floating Rate Yen Linked 
Notes due 1985 


European Company Nr At fiww 
oTRseoatf/Mfrig Snfr 


U.S. $250,000,000 

Deutsche Mark LIBOR Based 
Floating Rate Notes due 2002 


Bank of Greece 
US $60,000,000 
Floating Rate Notes due 1996 


In accordance wtft the provision? or 
the Notes, notice is hereby given, 
that tor the six months interest 
Period from June 6, 1984 to Decem- 
ber S, *994 the notes wlii cany 
an interest rate of 5 . 125 % per 
annum. The amount payable on 
December 5, 1694 against Coupon 
No. 18 wID be U.S. $ 259.10 perils. 
510.000 principal amount 


Brnsarauemi ihii.it n 
trades. Ao«* tat 


For the Interest Period 3rd 
June, 1994 to 6th September. 
1894 the Notes wfll carry 
an Interest Rate of 5.375% 
per annum w ah Coupon 
Amounts of U.S. $14.16, U.S. 
$141.84 and U.S. S14.184.03 
per U.S $1,000, U S. $10,000 
and U.S. 51,000.000 Notes 
respectively. The relevant 
Interest Payment Date win be 
8th September. 1994. 


Notice is hereby given that m 
accordance with the provisions 
of the above mentioned Boating 
Rate Notes, the rate of interest 
for the six months period from 
June 6, 1994 to December 6. 
1894 has been toed at 5 &5% 
per annum. 

The interest payable on 
December 6, 1984 win be 
US $2,872.08 in respect of each 
US $100,000 Note. 


&ANQUE INTERNATIONALE J 
A LUXEMBOURG I 


Swiss Bank Corporation 


FIscbA. PrmcxBi Pny«»g end Agerq 3anJ 












28 


F1NANC1ALT1MES MONDAY JUNE 6 l»4 


WORLD BOND MARKETS: This Week 


NEW YORK 


US bond prices proved more 
resilient than the European 
capital markets which were 
battered by fears of rising 
inflation last week Hie 
Treasury's benchmark 30-year 
bond ended the week a point 
Higher than it began it after 
the market took an optimistic 

view Of miYprf si gnals from 
Friday’s employment data. 

If US bond prices are more 
stable than European ones, 

it is because they have suffered 
months of downward pressure. 
This was caused by fears that 
the US economy was growing 
too quickly, culminating in 
last month's half-point 
increase in interest rates. Now, 
they are looking for a fresh 
direction. 

This may not be the week 
in which they get it Although 
data for instalment credit and 
capital spending are due out 
tomorrow and Thursday 
respectively, the figures that 
will be most closely watched 
are those for the May producer 
price Index, due out on Friday. 
But economists predict that. 


Richard Tcmkiru 


.US' ; 

Benchmark yield cunra . 



after the OJ. per cent decline 
in April, the index wQl be 
barely changed. 

If so, that would be taken 
as a si gn that inflationary 
pressures further back in the 
supply chain remain absent 
Even so, stripping out the 
more volatile prices of food 
and energy, the index for 
finished goods may have risen 
by OS per cent 

If the figure is higher than 
that. It could be a cause for 

Alarm 


LONDON 


The gilt market remains 
nervous and volatile and there 
is little in the economic diary 
this week to suggest scope for 
a sudden rally. 

Inflation fears were not 

helped by last week’s MO 
numbers, although the market 
bounced back on Thursday 

and Fri da y. that 

there are band buyers when 
long yields start approaching 
9 per cent According to Mr 
Peter Fellner, gDt strategist 
at NatWest Markets, “the 
markets need a period of 
relative calm and stability so 
people can regain their 
composure". 

Wednesday’s meeting of the 
chancellor of the exchequer, 
Mr Kenneth Clarke and the 
governor of the Bank of 

En gland, Mr F-ddiA George, 
is not expected to result in any 
change in. the level 
of interest rates. However, Mr 
David Walton, UK economist 
St Goldman thrnlra that 
the governor may use the 
meeting to try to steer the 
chancellor away from the 


Philip Coaqar; 


Benchmark yfefcf cune (%f 
3fOB4 — . - Month MO <= 



previous “bias towards easing” 
and towards a more neutral 
stance. 

With only industrial 
production and consumer 
credit figures out this week, 
politics may be a key factor. 
Results of the European 
elections will not be revealed 
until Sunday, but exit polls 
should be available. 

“If the political news Is bad 
for the Cons erv ativ e s, that 
might be an excuse for a sell 
off," said Mr FeDnsr. 


FRANKFURT 


Gross domestic product figures 
for western Germany (due 
tomorrow) areunKkely to 
cheer the bund market The 
consensus is that GDP will 
grow by 0.5 per cent on the 
fourth quarter of last year, 
suggesting the economy is weU 
and truly on the recovery 
track. The year-on-year growth 
would be U> per cent 

The stronger the economy, 
the greater the fear that the 
Bundesbank will respond to 
the inflationary threat with 
a tightening of monetary 
policy. 

This scenario may seem 
unlikely to domestic observers 
who believe short-term interest 
rates will fell further. But 
foreign investors, who have 
been disconcerted by 
Germany's ballooning money 
supply and whose selling has 
inspired the sharp rise in bund 
yields in recent months, may 
seize upon the GDP figures 
as another excuse for selling. 

April's retail figures, an the 
other hand, may encourage 
the market they are expected 


David Waller 


Germany 

Bectchmstfc vald cunra 06J* 
30)84 Month ago «= 



"Ml jfMd* m martiet cormntan 
Source MarrB Lynch 


to be sharply down from 
March- This may be due to 
seasonal factors but will 
underscore that the German 
recovery is export-led and not 
driven by domestic growth. 

The Bundesbank - 
policy-making co^mcil meets 
cm Thursday. No rate cut Is 
expected but the market will 
study statements by council 
members before or after the 
meeting for evidence of 
riieaff r* ym<mtq on hOW to deal 
with money supply growth. 


TOKYO 


A strong stock market 
performance and 
betier-than-espected economic 
data has drawn same investors 
from bonds and caused a 
sen-off. Late Friday sales 
dragged government bond 
futures down for the sixth day 
in a row and cash government 

bonds also remained under 

pressure. 

There is some indication the 
Japanese economy is on the 
iflimri , hut bond market 
sen time nt remains bearish. 
Traders and analysts are 
looking for direction from the 
Bank of Japan’s June 10 
announcement of the Tankan 
foriPT of business sentiment, 
a quarterly survey of 7,400 
companies. 

The biggest news last week 
was Mitsubishi Corporation’s 
blow-out sale of Y200bn in 
5-year maturity AA-rated 
bonds in less than two hours. 
According to a spokesman at 
Morgan Stanley, one of 16 
dealers that handled the 
offering, the Mitsubishi 
offering was more than just 


Emike Tera; 


Japan 

Benchmark yield curve (W 
3/0*4 Month IQO » . 

4.8 



1.81- 

0 


m . 20 


•AO ytakte ora naiMI contMrtlan 
Scuc*' MflrrtS LyncT< 


a big bond sale. Mitsubishi’s - 
plan was to create a secondary 
market for the bonds issued. 

In the past, the 5-year market 
was the exclusive domain of 
long-term credit banks. So well 
established was the market 
that the long-term prime rate 
was set simply by adding so 
basis points to bank debenture 
coupons. 

Mitsubishi hopes it has 
created an equally liquid 
vehicle to meet its own fixture 
financing needs. 


Capital & Credit / Peter John 


Canada suffers in spite of itself 


Investing in a country with 
almost no inflat ion, a healthy 
trade surplus and one of the 
highest returns in the world 
should be a one-way bet But if 
the country is Canada, you bail 
out as fast as you can. 

Canada has suffered in spite 
of itself - to the dismay of 
Treasury managers in the 
Canadian provinces, which, are 
among the biggest borrowers 
in the Eurobond market and 
to the bemusement of (Sty 
economists. As one investment 
banker puts it Investors in 
the Canadian market have lost 
on the currency, lost on the 
spread and been killed in the 
bond market" 

At end-1991, the Canadian 
dollar was C$1.12 against the 
US currency. By last January 
it had fallen to C$L31 and late 
last week was SL3850, a near 
eight-year low. 

At the long end of the Cana- 
dian government bond yield 
curve, spreads against US 
Treasury bonds have widened 
dramatically in recent months. 
Wild volatility in the markets 
has pushed the yield on Cana- 
dian 10-year gove rnment bands 
as for as 168 basis points above 


Treasuries compared to a low 
of 63 basis points in February. 
Spreads on debt issued by the 
provinces are even wider. 

Also, the yield on the Cana- 
dian benchmark government 
bond maturing in 2004 has 
risen by IBS basis paints to 8A 
per cent compared to a rise of 
140 basis points for the equiva- 
lent UK government bond yield 
over the same period. 

All this turmoil comes at a 
time when, in some respects, 
Canada has never had it so 
good. According to Mr Randall 
Powley, senior economist at 
ScotiaMcLeod, brokers, the 
purchasing power parity of the 
Canadian dollar is IS per cent 
better than the current 
exchange rate would suggest 
Headline inflation was 0J2 per 
cent in April, and real rates of 
investment return are the 
highest in the Group of Seven 
industrialised countries. He 
cites 8 per cent bonds matur- 
ing in 2023 as offering a real 
return of 8.79 per cent “Clearly 
the spreads have widened but 
it has nothing to do with fun- 
damentals,” he says. 

The nanariiAn gove rnment is 
sufficiently concerned by the 


negative attitude towards the 
currency that on Friday it is 
expected to publish its own 
estimate of the Canadian dol- 
lar's purchasing power parity 
for the first time. 

To understand the market's 
worries, one has to go back to 
the national budget in Febru- 
ary. The newly-elected Liberal 
party upset International 
investors by estimating the 
deficit for fiscal 1993 at 
C$45.7bn against the previous 
government's forecast of a 

C$32. 6hn deficit. 

Disappointment turned to 
concern as the drive for sepa- 
ratism in Quebec snowballed. 
A recent visit to France by 
Lucian Bouchard, the leader of 
the federal Bloc Quebecols, 
focused the Attention of Euro- 
pean investors on the possibil- 
ity of a split. Opinion polls 
show the regional Parti Quebe- 
cols (PQ) as most likely to win 
the provincial elections later 
this year And then can a refer- 
endum on secession in May 
next year. 

Many international econo- 
mists believe a win for the PQ 
will be merely a reaction 
against the governing liberals 


and that secession is improba- 
ble. But the uncertainty has 
caused the spread on Quebec’s 
bonds to widen recently. 

If Quebec has to borrow in 
the markets it will cost a lot 
more money,” says one syndi- 
cate manager. “Spreads have 
widened by 10 to 15 basis 
points in the past week. When 
yon translate that into dollars 
and cents, for an extra 10 basis 
points each $100m borrowed 
costs $100,000. The BflflttinnaT 
animal interest payment on 
$50Qm is between $500,000 and 
$750,000." 

The fact that 40 per cent of 
Canada’s debt is held by for- 
eign investors has exposed it to 
sudden changes in investment 
strategies. Late last year, inter- 
national investors had bought 
Canadian bonds in the hope 
that the yield spread with US 
Treasuries would narrow. 
“However, in bear markets, 
credit spreads always widen 
oat," says Mr Powley. 

In spite of the assault on 
their bonds, the provinces’ 
Treasury managers are keep- 
ing their cooL Mr John Mad- 
den, deputy finance minister 
for Canada’s biggest province. 


Ontario, says he has no fund- 
ing worries. “It has been a vol- 
atile market but we issue in 
various markets around the 
world,” he says, noting that 
the yen market has been the 
most attractive lately. “We 
have a borrowing requirement 
of C$7.7bn and expect to pre- 
borrow a further C$2bn to 
C$3bn for next year." 

The Quebec Treasury is con- 
fident It has raised C$L5bn of 
its C$L2bn programme for the 
year and says a further 
C$2.7bn will came from sources 
other than public band issues. 
“Of course funding is more 
expensive than three months 
ago but we are not concerned,'’ 
says a senior Treasury nfftefal. 

Many economists argue that 
Canada has been treated too 
harshly by the markets and by 
the credit rating agencies 
which have downgraded the 
foreign-currency ratings of the 
sovereign and some of the 
provinces. Recent research an 
the Canadian provinces by 
Salomon Brothers says; “Pro- 
vincial credit is stabilising: in 
some cases it is improving 
from the fiscal deterioration of 
the past three years.” 


lOyear benchmark; bond yields 



S' 




■' * 

4L-- 



S J 

Jan 


Feb 

Mar Apr 


May 

Jun 

Sower Dotertmti 



1904 




BnMBST RATES AT A OlANCC . 






• USA 

. Japan 

Germany 

France 

Italy 

UK 

Discount 

3.50 

.-1.75 

450 

B.75 1 

7.00 

&25» 

OvBtfdflhr 

’ *4.13 

:*■ ■. . £oo 

5.13 

5/43 

750 

4.75 

Three month - 

-4JB. 

' 2.09. 

&QQ ’ • - 

550 ’ 

7:82 

5.00 

One you- 

&24 

■ 2.46 

'5.-18 • 

5.75 

8.10 

5.87 

Rvo year. 

6.60’ 

• 3.42 

R22 . \ ’ 

6.74 

9.86 

7.94 

Ten Sear. ■ 

• 65B 

• V4.12. 

: -&aa. . .■ 

•7.34 

iai? 

858 






US HUUSUPpr BO*mPUT«»W {Cffn $100,000 32ndaoM«m/ . 





■. Open • 

..Sett price . 

.Ctarige" . High- 

Low 

Est vaL 

Open in*. 

Jun 

■ 10£W!3 . 

. 105-24 

+1-02 ’ 105-30 

104-00 

25,629 

18&378 

Sep 

103-26 

’• 104-26 

.-.+1-02 .-.105-00 

103-01 

279,318 

240.520 

* Dod‘ 

108-04 

;io4-QS- 

+1^02 VlOWM 

102-13 

1,644 ' 

35,408 


I 


CONTRACTS & TENDERS 


MUNIC3QPAUTY OF ANCHORAGE 
PURCHASING DEPARTMENT 
REQUEST FOR PROPOSAL 40-94 

The Municipality of Anchorage is requesting proposals for Bulk Water Export 
Sates for the Mayor's Office. 

Proposals will be received prior to &00 p-m* AXL5.T U August 2, 1994 at the 
Purchasing Office. 632 W, 6th Avenue. Suite 520, Anchorage, AK (mailing 
address: P.O. Box 196650, 99519-6650). A site visitation will be heki at 9-J0 
un, AJDJ5.T.. July 7, 1994. Meet at the Security Center, 2000 Anchorage Port 
Road, Anchorage, Alaska. A discussion of foe proposal vrfU be held at 300 
P-bl, A.D.S.T., July 8, 1994 at 632 W, 6th Avenue, Anchorage, Alaska. A copy 
of the proposal may be obtained st the above address, or by calling such 
request to Chris Wright at (907) 343-4691. 

ThcoM. Chanter 
Purchasing Officer. 



FINANCIAL TIMES 


PITMAN PUBLISHING 


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International / Tracy Corrigan 

ISMA conference settles on three days 



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TRIP 


While the mood at last week's 
annual meeting in New Orle- 
ans of the International Securi- 
ties Market Association (ESMA) 
was sli ghtl y dampened by th«* 
continued turmoil in the 
world's bond markets, this 
year’s difficult conditions had 
little impact cm the turnout for 
the conference. Delegates num- 
bered about 950, down from 
just over 1,000 at last year’s 
gathering in Copenhagen. 

More cynical Eurobond trad- 
ers commented that they had 
not felt it necessary to stay at 
their desks and nurse their 
books because dealing In the 
Eurobond market had dried up 
as a result of the extreme vola- 
tility in tin government bond 
market 

A new rule that delegates 
who fail to turn up to vote at 
the conference of international 
bond market participants will 
be reported to their firms also 
appeared to have a salutary 
effect on attendance in the con- 
ference hall. 

The conference centred 
around the ISMA board’s deci- 
sion to change from the cur- 
rent standard of seven-day set- 
tlement to three-day settlement 
for international bonds, in 
spite of concerns voiced by rep- 
resentatives from the Belgian 
region about the impact of this 
change on retail investors. 

Belgian retail investors have 
a strong p refe rence for physi- 
cal delivery of Eurobonds, 
largely for tax reasons. How- 
ever, under the new standard, 
which will came into force in 
June 1995, a longer settlement 
period can still be agreed 
between counter-parties. 

Although estimates about 
the sirb of the retail market 
are ap pr oximate, it is believed 
that as much as 10 per cent to 


15 per cent of primary offerings 
may be placed with retail 
investors. However, the retail 
component of secondary mar- 
ket turnover is much lower - 
certainly less than 1 per cent, 
according to CedeL the Euro- 
pean clearing house which 
clears the bulk at retail trading 
business. 

The debate raised an impor- 
tant disclosure issue. 

Mr Alain Servais, of Belgian 
broking firm Dewaay, Servais 
& Cie complained that the doc- 
umentation of some new issues 
did not clearly state that bonds 
would not be available in phys- 
ical form, and suggested that 
ISMA should publicise prob- 
lems with individual issues. 

Mr John Langton, ISMA's 
chief executive, said the associ- 
ation was looking at the legal 
Implications of such a step. 
Guidance from the Interna- 
tional Primary Market Associa- 
tion (TPMA) - which sets out 
rules for new issues, but has 
no regulatory authority - is 
expected in the next few 
weeks, it said. 

ISMA continues to monitor 
the dispute over whether hold- 
ers of a News Ccrp subsidiary’s 
issue of preference shares, con- 
vertible into Pearson shares, 
would also receive Royal Doul- 
ton shares, according to Mr 
Willy Watt, who heads ISMA's 
market practices committee. 

The conference was also 
enlivened by a strong panel of 
speakers, including veteran 
Wall Street trader Mr Alan 
“Ace" Greenberg, president of 
Bear Steams, the Wall Street 
securities firm. 

According to Mr Greenberg, 
the firm has found a novel way 
of tackling the problem of 
losses on derivatives as a 
result of traders failing to 


report positions accurately: 
rewarding staff for shopping 
their colleagues. 

Mr Greenberg dispatched one 
of bis famous mtypos last Sep- 
tember. “Investment banking 
firms have been plagued over 
the years by traders mls-mark- 
ing positions and we have not 
been spared." 

The memo set out a new pol- 
icy for dealing with the prob- 
lem: “We will give 5 per cent 
[of its value] to anyone alerting 
us to. a mis-mark. All suspi- 
cions will be treated confiden- 
tially." 

The memo added: “We would 
frown upon the tatipr sharing 
the reward with the mis-mar- 
ker.” 

la April, a second memo, fur- 
ther refining the process, 
appeared. It specified that “in 
no case will the reward exceed 
81m”. The limit is designed, 
according to Mr Greenberg, to 
discourage any delay in report- 
ing by a trader hoping that the 
size of the mis-mark - and 
thus of the reward - will 
increase further. 

According to Mr Greenberg, 
in the last two months. Bear 
Steams has paid two cheques 
to traders who reported lapses, 
the largest for $65,000. 

In both cases, traders 
shopped their bosses, whose 
jobs they have since been 
appointed to. Mr Greenberg 
described such promotions as 
an “added incentive. This may 
seem brutal [but] we are 
engaged in a war”. 

Mr Greenberg told the con- 
ference that the new system 
was working, and recom- 
mended its introduction at 
other firms. 

He suggested that existing 
difficulties in ensuring that 
traders report losses have been 


exacerbated by the growth of 
the derivatives market, where 
the value of positions is much 
more difficult to calculate. 
Bear Stearns is well known for 
Its aggressive stance on this 
issue: it has spies on every 
trading floor. 

Mr Jose Angel Gurria, head 
of international affairs for 
Mexico's Partido Revoluciona- 
rio Institutions (Pip and well 
known to international bank- 
ers for leading Mexico’s suc- 
cessful foreign debt restructur- 
ing, sought to reassure traders 
that, in spite of the turmoil 
earlier this year, Mexico is still 
an attractive investment 

He expressed confidence that 
a "squeaky dean and transpar- 
ent" election was the only 
remaining barrier to an 
upgrade for Mexico's debt to 
investment grade. “The funda- 
mentals for an investment 
grade rating are there. Our 
fixed-rate bond issues now 
reflect interest rates lower 
than for a non-investment 
grade country - but higher 
than if we already had the 
Investment grade rating.” he 
said. 

However, he added that the 
main incentive for gaining an 
investment grade rating was 
access to a broader investment 
base, including fund managers 
who are not allowed to buy 
sub-investment grade debt. 
"Access is the prime consider- 
ation, not cost, although access 
will be translated into cost 
savings," said Mr Gurria. 

Finally, former US president 
George Bush met an enthusias- 
tic reception from an audience 
only slightly less welcoming 
than for former UK prime min- 
ister Margaret Thatcher, who 
spoke at ISMA's Munich con- 
ference two years ago. 


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29 



FINANCIAL TIMES MONDAY. JUNE 6 1994 


EQUITY MARKETS: This Week 


NEW YORK 


Frank McGurt 


DoW-doiwa In dt rrf ria l Average 


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to remain on 
commodities 

Last Friday’s employment report, 
the most dosefyscrutiirised economic 
data of the month, was supposed . 
to clear the air and establish afresh 
direction for equities In the event, 
the numbers had the opposite effect, 
exacerbating the sense of confusion 
mi Wall Street ^ibont the economy's - 
strength and the tmpHcafcioDs for 
interest rates ahd corporate profits. 

S uncertainty was a force driving 
down share prices for most of the ■. 
spring, it.bas held stocks in a state 
ofraar-paralysisTnore recently. Last 
week,- the bellwether Dow Joses 
Industrial average opened at 3,75837 
and dosed at 3,772^2, for a net gain ' 
of only 14 points. 

No sharp movements are expected - 
this weeds, though a negative bias 
Is likely to settle.over stocks until 
the next important economic data 
- industrial production and capacity 
utilisation figures - are released in 
a fortnight 

Friday was a topsy-turvy day on 
Wall Street Initially, the May jobs 
report appeared to be hi g hl y 
favourable for stocks. The headline 
figure - an increase in non-farm 
payrolls of 181,000 - was much 
weaker than analysts had thought 
Bond prices jumped and share prices 
seemed sure to follow when trading - 
began, because the weak number 
could delay for months the next move 
by the Federal Reserve to tighter 
money . 

However, investors gulped when 
they read past the;first line. The 
Labor Department had, madea big 
upward revision in its initial 
estimates of April and March payrolls. 
"If anything, when you include the 
revisions, Job creation was somewhat 
stronger than wehad thought-" says 
Mr Hugh Johnson, chief investment 
officer at First Albany in New York. 



■3756 


27 ; May .1894 Jun 3- 
Source; FT QrspWlA “ 

" A surprising drop in the monthly 
unemployment rate, from 6.4 to 6 A 
per cent, was even more disturbing; 
6.0 per cent is considered by many 
economists to be in effect “full 
employment", at which point upward 
pressure on wages would intensify. 
Indeed, the May report showed a 

slight gain in hourly earnings, which 
. suggested wage inflation had started 
Last month. 

- "To put it into simple terms, it 
looks as if conditions in the labour 
markets are starting to tighten up,” 
says Mr Johnson. “That means the 
Fed may need to raise rates again 
to cool the economy." 

' What, then, is the explanation for 
the mood swing that swept the 
markets as Friday’s aesaon. 
progressed, lifting share prices amid 
a brad rally? Commodity prices, to 
cite one of several onconvinring 
explanations, showed further 
declines, in keeping with a pattern 
that helped support share prices last 
week. 

Wall Street will continue to focus 
on commodities this week, but their 
recent volatility leaves in doubt the 
likely impact oh stocks. 

Meanwhile, investors are looking 
ahead to this Friday’s producer price 
data and the ooiwnmw numbers, 
due next Monday. The data are 
expected to reveal that inflation 
remains subdued, but such 

ranfirmatinn is rmtiicpl y to impress 

investors. 


LONDON 


A whiff of 

short-term 

optimism 

About the only people smiling in 
the London stock market last week 
were the equity chartists who looked 
■with quiet satisfaction as Share prices 
collapsed and then with bored disdain 
when they rallied. But the chartists' 
are not the only players in the 
market 'there are now clear signs 
that some equity market participants 
are at least willing to take a more 
optimistic view on the prospects for 
a market recovery, albeit for the short 
term. 

The optimists may need to rein 
in their confidence a little. There 
cannot be too much reason for 
celebration while the June future 
contract on the Footsie, which did 
so much to drive the stock market 
ahead In its glory days, prefers to 
remain at a discount to the 
underlying equities. And it was the 
futures market that saw the business 
when the market rallied; trading 
volume in equities proper remained 
as unimpressive on the uptick as 
it had been on the way down. Any 
upset in Frankfurt or New York bond 
marfewfcg found a swift reaction in 
UK stock futures and then in share 
prices. 

ft has become clear that the hike 
in key interest rates by the Federal 
Reserve has not resulted in the 
calmer global bond markets regarded 
as the platform for a genuine recovery 
in UK equities. Both S. G. Warburg 
and Strauss Turnbull draw attention 
to the hnparf on valuations of the 
equities in the wake of the latest 
selLoff, Warburg commenting that 
the failure of equities to yield any 
premium over index-linked gilts 
"must be the cause of some concern". 
The yield relative on conventional 
gflts has risen to Z 28 , around the 
highest level since 1992. 

Until gilts settle down - and that 


Terry By land 


FT-SE-A All-Share 

1,510 


1.500 


1.460 



• 1-460 ^ — ‘ * 1 

" 27 May 1984 Jurt 3 ” 

Source FT&aphtte 

requires similar moves in German 
and US bonds - UK equities must 
r emain hi ghly volatile gnd cfaa pcas 
of a genuine recovery in jeopardy. 

Last week's bounce has sent 
investors searching for stocks Likely 
to outperform in any recovery. The 
leisure sector in general has 
underperformed but traditionally 
responds to earnings momentum. 
Smith New Court, using a technique 
of seeking out shares on which 
market expectations and analysts’ 
views are changing, has put the tape 
over leisure and hotel shares. 

Smith has rated the FT-SE 100 
stocks foam l to 100 in terms of 
changes in market share gaming s 
estimates over the past three months 
- loo being top of the list. Rank 
Organisation rates well at No 79 and 
Smith strengthens the case by 
predicting that there are further 
earnings upgrades ahead. Smith is 
prepared to overlook the recently 
strong outperibrmance in the stock. 

When the game technique is 
applied, shares in Forte come off less 
favourably with a rating of 50, 
although Smith says that analysts’ 
share earning s es timates are trending 
slightly upwards. The shares have 
mildly (3 per cent) underperformed 
over three months so there is room 
for conjecture as to whether the 
estimates rating justifies the present 
share price or indicates that some 
recovery is due. Smith takes the more 
positive line. 


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10/5/94- 5fJ8LOt. 16/6/93 817.17 10/5/94 -• 533.85 ■' 10/1/94 




Soutw Ft Gkaptolw 


OTHER MARKETS 


FRANKFURT 

Results are due from two defensive 
stocks, Henkel in household goods 
on Monday and Gehe in 
pharmaceuticals on Wednesday. The 
Estimate Directory registers 
consensus forecasts of a fall of 3 per 
cent each in 

earnings per share for 1993 but looks 
for much bigger things from the 
building and construction group, 
Bfifinger & Berger, from which an 
earnings lift of 66 per cent is expected 
- although analysts are more 
circumspect about 1994. The average 
prediction is an earnings rise of only 
2 per cent 

AMSTERDAM 

First-quarter figures come from 
Amev, the insurance company, and 
Fortis. the financial services group, 
on Thursday. Hoare Govett estimates 
Antov's net income will rise 9 per 
cent to FI U8m, and earnings per 
share 8 per cent to FI 1.66. The 
brokers say the consolidation of the 
Belgian braking and insurance group. 
ASLK, for the first time will have 
a large impact on Fortis's net Income. 

MILAN 

Today begins the last full week of 
the June account and investors will 
probably be holding back liquidity 
for the cash calls over the July and 
August accounts from Mediobanca 
and IfiL and the privatisation of INA. 
Brokers expect volume to remain 
low and tile Comit index to trade 
between 700 and 750 over the summer. 

HELSINKI 

Finnish equities were lifted last week 
by a 136 per cent jump in operating 
profits at Nokia, the electronics and 
industrial conglomerate. Traders 
are hoping that progress reports this 
week will extend the process: on 
Monday, from KOP, Finland's leading 
commercial bank; on Tuesday from 
Huhtamaki, the consumer products 
combing and on Friday from 
Instrumentarium, which divides into 
health care, optical retailing, catering 
equipment and electronics 
distribution. 


TOKYO 

Enthusiasm for last week's 
breakthrough, with the Nikkei 225 
index clearing the 21,000 mark in 
high volume, receded slightly on 
Thursday and Friday and left 
sentiment nicely balanced. Most 
traders were optimistic by the 
weekend, but there was general 
agreement that domestic institutions 
and individual investors were for 
from ready to return to the market 
as net buyers. 


RISK AND REWARD 

Money managers 
see new asset class 
in raw materials 



Any way you 
look at it, com- 
modities are 
hot. Key indi- 
ces of commod- 
ity prices have 
risen 3 per cent 
to 13 per cent 
this year, and 
price apprecia- 
tion in some markets, such as 
coffee, cotton or copper, has 
outstripped lagging valuations 
in most government bond mar- 
kets and many stock markets. 

Although commodities are 
far less important to the econ- 
omy than they used to be. they 
are suddenly the focus of world 
financial markets. They are 
important as raw materials, 
the stuff that economic expan- 
sions are built upon. 

Since many commodities are 
traded in public futures mar- 
kets. price increases show up 
more quickly, and more dra- 
matically. than in other eco- 
nomic sectors. Statistics on 
employment gains or manufac- 
turing orders tend to be 
reported with a lag, and are 
slow to exhibit convincing 
trends. 

The US Federal Reserve was 
clearly watching commodity 
prices as it lifted interest rates 
this spring, seeking price sta- 
bility in its efforts to head off 
inflation. However, commodi- 
ties, economists say, are not 
reliable barometers of the mag- 
nitude of an inflationary cycle, 
and historically have been only 
a semi -reliable indicator of 
inflation's direction. 

In the first quarters of 1992 
and of 1993, for example, prices 
of some physical commodities 
rose, but levelled a quarter 
later, and the US economy did 
not overheat, as some observ- 
ers bad feared. However, with 
prices for soft commodities and 
grains near benchmark highs 
and base metals turning higher 
after bumping along in a 
decade-long, supply-burdened 
trough, the signals are much 
stronger. 

Several important inflation 
indices have begun a rare con- 
vergence. The Knight-Ridder 
Commodity Research Bureau 
Index of 21 commodities, which 
tends . to reflect its heavy 


weighting of grain and soya- 
bean prices, has begun to track 
the Journal of Commerce index 
of Industrial commodities, a 
basket of raw materials that 
includes hemp, cardboard car- 
tons, and plywood. 

The Goldman Sachs Com- 
modity index, which has a bias 
toward oil and other energy 
products, has been trending 
higher. 

Whether rising commodity 
prices translate into inflation 
is another matter, says Mr. 
Samuel Kahan, chief economist 
for Fuji Securities. He argues 
that global competition could 
act to keep inflation in check. 

Because commodities prices 
have been moving conversely 
to bonds, money managers 
have begun to view the whole 
sector as an attractive new 
asset class that offers an infla- 
tion hedge and portfolio diver- 
sification. 

These money managers com- 
prise a new class of deep-pock- 
eted speculators in what have 
historically been relatively 
small and tightly held markets. 
Bankers and derivatives bro- 
kers are generating a plethora 
of new commodity-linked prod- 
ucts, and exchange-traded com- 
modify markets are experienc- 
ing unprecedented volume 
rises. 

The new commodify specula- 
tors tend not have or need a 
deep understanding of the fun- 
damental supply and demand 
features of the commodify, and 
their bent toward technical 
trading is changing the rules 
for traditional traders. “What 
we are seeing are large and 
unusually active speculators." 
says Mr Donald Mitchell, a 
senior economist in the Inter- 
national Trade division of the 
World Bank and a commodities 
specialist 

“This is a new demand class 
for futures, a group of people 
who have no use for the com- 
modify. It could increase the 
prices of commodities over 
time, but it does not mean 
there will be a corresponding 
increase in final demand. Wbat 
it does add is price volatility 
Mr Mitchell says. 

Laurie Morse 


Tee da 


• 

r •*. 
•Jf ' 

iw • 

% ■ 

ft * . 

Mr 





Contributions Agency 


Expressions of interest for tender of 
Postal, Messengerial and Transport Services 

The Contributions Agency is the executive agency of the 
Department of Social Security responsible for operating the 
National Insurance scheme. 

The Agency is inviting companies to express an interest in 
running its Postal Messengerial and Transport Services at its 
headquarters in Newcastle upon Tyne. 

The service handles receipt and despatch of all Royal Mail, 
internal mail and parcel items on the Agency's 65 acre site, 
plus 15 satellite offices within a 12 mile radius of Newcastle. 

Companies interested in the work will be expected to complete 
a company profile questionnaire. 

Those companies invited to tender for the work will receive 
copies of the job specification in mid-September 1994. 







'\.v.W. .'.hi 


, '- .v ; ■ "" ' 



The contract is expected to be awarded in early 
January 1995 with effect from April 1995. 

For more information or copies of the questionnaire contact 

Mr R Tfernent 
Rooml38F 
Contributions Agency 
Longbenton 
Newcastle upon Tyne 
NE981YX 

Telephone (091) 225 9371 
Quote Ref FT/94 

Deadline for expressions of interest 4pm, 

13th June 1994 

This advcrtisenieiiL has also appealed in the Supjtonent of die official Joomal of flie 
EuropeaaConununjiies (Rcf:<M£) S8-28042/EN) 



GengoJd 


WEST RAND 
CONSOLIDATED 
MINES LIMITED 

ItapMMktitaMbriiMlMM 

rwwi 



THE AURORA 
CONSORTIUM 

qlUi 


Hjimni ii'WMW) 

HkMUn 


Change in shareholding in West Rand Consolidated Mines Limited and voluntary 

offer to shareholders - Salient Dates 


ShflrehokiRTB are referred to the announcement published on 
30 March 1994 in winch it was announced that toe Aurora 
Consortium would acquire Gsogdld limited’s effective 
interest of approximately 34.4% in WRC, subject to the 
conversion of the deferred share capital of^ WRC into ordinary 
share capital (the conversion'), at a price of 565 cents per 
WRC ordinary share, alter foe convers i on (‘the acquisition'). 
Furthermore, it was announced that the Aurora Consortium 
would extend a voluntary, irrevocable offer to all other 
shareholders of WRC to acquire any or all of their WRC 
ordinary shares for a consideration of 565 emits per WRC 
ordinary share (the oflierO- Shareholders may accept the offer 
in whole or in part or may dedtne the offer by taking no 
further action. 

FfcstCorp Merchant Bank limited is a uthori sed to announce 
the salient dales in respect of foe above-mentioned acquisi- 
tion and offer 


Event 

Offer opens (09:30) 

Last day to lodge 
forms of proxy (lOtiO) 

General meeting of 
shareholders (IChOO) 

Results of general 
meeting published 

Offer declared 

unconditional 

listing of new ordinary 
shares commences 

Offer doses (14:30) 
Results of offer published 

In Sooth Africa 
Registered office of WRC 
74-78 Marshall Street 
Johannesburg 2001 


Date 

Monday, 6 June 1994 

Friday. 24 June 1994 

Tuesday, 28 June 1994 

Wednesda y , 29 June 1994 

Wednesday. 29 June 1994 

Monday, 4 July 1994 
Wednesda y . 13 July 1994 
Friday, 15 July 1994 


The offer consideration wOl be mailed to accepting 
shareholders within 7 days of foe offer becoming uncondi- 
tional or acceptance thereof whichever is foe later. 

Thaos stated atom are Sonth African times ami sharehold- 
ers on the United Kingdom section of the WRC share register 
should bear this in mod when r e spo n ding to the notice of 
general meeting and to the ottar. 

On 2 June 1994, foe quoted share price of WRC ordinary 
shares on the Johannesburg Stock Exchange was R5.45, whilst 
cm the Ton don Stock E xch a nge it was £0.80 and on the Paris 
Bourse it was FF8.00. The financial rand exchange rate was 
£0.14/R1 and FF1.38/R1 on the same date. 

The Johannesburg Stock Exchange has agreed, subject 
to shareholder approval of foe conversion, to grant a listing 
with effect from Monday. 4 July 1994, far foe 1,416,667 new 
WRCazdinary shares to be issued to the deterred shareholder 
in terms of foe conversion and applications have been 
made to the London Stock Exchange and the Paris Bourse 
for foe listings on such stock exchanges to commence on 
the same date. 

A copy of the circular to shareholders of WRC, containing, 
inter alia, foe terms, conditions and fall particulars of the 
offer and incorporating a notice of general meeting 
.will be available for inspection at the following addresses, 
during normal business hours from today until Wednesday, 
13 July 1994. 


Johannesburg 
6 June 1994 


In the Untied Kingdom 
Offices of Genoar flJX) Limited 
30 Ely Place 
London, EC1N 6UA 


In France 

Offices of Credit du Nord 
6 et 8 Boulevard Haussmann 
75009 Paris 


Notice to holders of WRC Share Warrants to Bearer - Reconversion 


{folders of Stare Warrants to Bearer wishing to irreversibly 
reconvert and consolidate their holdings into WRC registered 
shares in rater to participate in an irrevocable offer by foe 
Aurora Consortium must make preriskm to lodge their recon- 
version application, bearer warrants and coupon sheets with 
coupons 2 18 and upwards attach ed, at Genoar (UX.) Limited, 
30 Ely Race, London EC1N 5UA on or before 28 June 1994. 
Such persons are advised to seek approbate professional 
advice before taking any action. 


The following documents: - 

- Copies of foe circular to share h o l ders of WRC 
co n taining, inter aha, the terms, conditions and full 
particulars of foe oilier and incorporating a notice of 


-Voting certificates (issued against deposit of bearer 
warrants and coupon sheets with coupons 1 18 aud 
upwards attached): 

• and Reconversion application forms; 
are available from: - 


Gencor (UJL) Limited 
30 Ely Place 
London. EC1N 6UA 


per pro Gencor (U-K.) limited 
London Secretaries, M Taylor 


Credit da Nord 
Services aux 
Emetteurs de Titres, 
34 rue des Mafaurins, 
75008 Paris 


CtodftAjzne, 
Paradeplatz 8, 
(Postfach 590), 
8021 Zurich 


Swiss Bank 
Corporation, 

1 ABschenvoTstadt. 
4004 Basle 


8 June 1994 



FINANCIAL TI MES MONDAY JUNE 6 1994 


TT 





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l«faw«ftT^r) — ' 


? ConacWen. * CB to iatad at KM OMT, • Eacfadkig bond* t fadHMW, pba UWOaa, ItancM and Tranaponaifari 
8 Iha HI IndL lodM Mandeal d^» high* wid lowo are dw boodm of ma Hgneat aod kxtan prieda nadwd rkakig Ufa rtaybv aart 
stodc rdwoa Dm eerud (faj/t Ngha and tow* (wffaBad br Tglafaafa ranwt ma Ntfraat add taanra Mkaa dial 8fa Max haa irasM 
during tha day- (Ufa flgw«i ki McUU raa predeui clay'd- ? afafect n aflald reddodaflon. 


Addren W aOkhl wwtd Iteray Fmhw ■! Tjno^dmgot 


Read tomorrow's newspaper today. Check your Pulse. 

The City news stories that will make tomorrow's front ► p {J LSE BHSm'’ 
page are already on Pulse financial pager. — • ▼ “ T " C 

CALL NOW FOR YOUR FREE TRIAL ON 0800 28 28 26 EXTENSION 1157 ' O VOW m 'OV'V'Ut ikm- .m**. tSfcTaic 



Ito aitoaUft i /i i ifaw dww. 


Financial Times. Europe’s Business New° r - prr 


£& essesfisjSKfia «i scssssa ecssissescst «t eKEgfiKc t » 

1 1 1 m f :m ii mmi in liimimi ilium imiiii 3 mrssf&m ttefffi&itZffimftef&rtss&Alr 










































FINANCIAL TIMES MONDAY JUNE 6 1994 















































































































































































































































































































35 





FMW<^. , n»>itES MONDAY JUNE 6 1994 


AND MONEY 


MONEY MARKET FUNDS 


POUND SPOT fORvVAriO AGAJfvST THH POUND' 


DOLLAR SPOT FOPvVARS AGAINST THE.DOLLAR 


i Gkaeing • -Chang* . BMfofler ■ 
mJO-potri on day .'spread 


Day’s Ifid 
high kw 


m 


(3Cfil 

pm 

m: 

vf* 

w 

w 

«' 

w- 
- «! 
mt 
m 


■man 

fcwir 

8*87 

£3533 

2*74 

STSim 

1.0239 

243&1B 

610619 

2.8083 

703588 

2S&820 

200366 

113553 

2.1283 


m 

©Fii 
« 

- • 1*94 
-0334354 


+41.T175 -1386 
'+4L16BJ '204 
+00163. W9 
+00227 790 
+00246478 
+0.0087 080 
+2.138 -38S 

-00006 229 
+2028 425 
■•01381.264 
+00088 .063 
+00825 542. 
+0105 825 
. +0178' 15t 
-00214 465 
+00057 269 


OSS 170278 174346 
974 5 1 .6530 51*10 
93425 07925 

aaoso 02480 
05607 05149 
25080' 2.4832 
370136 373.062 
1.0287 1.0218 
244037 241088 
510530 612810 
2,8115 2.7868 
108679-107966 
260300 250324 
200885 200916 
113140 TOME 
2.1300 2.1173 


•m 

-984 
-589 
- 088 
-949 
-249 
-810 
-874 
-088 
-629 
-215 
- 581 
-641 
■ 296 


+0009* 987 -i 


i— ■» v! ’^‘a 

*.rr.r- . Vr+ 


Off... 


1808 


***** a-*- 1 

~ ; . 
—*. ■ , 
l- 4.%-TT ?a 


U ’ 4* • 

ii 


••• 

04— _ ‘ 

***'•!"« ' 


AiganOtt (Pew) 15017 -00078 912 - 021 15068 10OQ9 

6n9 PO 292123 +304 043 - 202 *27.00 237000 

Canada PSJ.' - 2*08 -00135 789 - 81 7 . 20025 2.0789 

Maxto flJOW pi»« . 4JJBS3 -00334 864 - «1 40100 <9865 

USA (* ' 15048 -0.0078 042 -080 10103 10035 

PttMeMkMa BmMrlea ■ • ' 

AUtraOa (AS) £0373 -00136 380-385 £0+99 £0864 £0388 £4 qrere 05 £034 02 

HonjKoflQ (HKS) 110278 -4X058 237-314 11*88 115235 110185 08 11.6156 04 110426 -Ol 

M# (HS) -'47.1974 -4X2488 792 -168 47.374047.1710 ■ ■ - 

J*P« (V). 160362 -4X344. 272 -.481 158.400 158.100 157.932 02 157.142 01 152977 04 

Malayato : •. IMS) J30962 -00134 844 - 980 £9068 £89+0 '. - - - - - - 

(few Zealand (NZ5) £6311. -00161 298 - 328 £6443 £5290 2*04 03 £034 -05 £5408 -0.4 

PMWW* <06481 -04724 474 - 608 . 41.1215 402348 

8*udAnbta - {SR) £8427 -00293 408-445 50638 58405 - - - 

m mw. «ss} £3141 -00082 127-164 £3181-28118 . . . 

SAH* (GomJ ffO ■ ' 54553 - -00313 527 -579 ' 04887 5^451 7 

S Africa [RnJ 0=0 7.1686 -0X801 825 - 864 74343 7.1475 - . - - 

South Korea (Moq) 1212X4 -059 254 - 333 121T.7S 1Z12A9 ■ - - - 

Taiwan (TS) 407408 -01396 282- 564 409000 407100 - - - 

Ihafcnd (W '379611 ^1818 369 - 862 300770 37X340 - - - - 

tfORi y y tfw hound SpwMila show only tha are ftwad»c>relpiaca«.ffowMrtirere are not riaactlirquBMri to aw wreiwt 

hut watoW M M gagM+w * 0 — ra we Qi 1085 - mad. OWw id iteHara a « bote tab erat 

jwjgg r ^o<J^jp» _ dy*wd%ogi^g WM TO UTg^C L QS^Q flPOi RATES. aom> vkm* m icmdid by ** F.T. 


CROSS RATES AND DERIVATIVES 


EXCHANGE CROSS RATES ; 

Jwi 3 - BFr ■ DKr FFr DM 


Ona month 
Rat* MPA 

Threa months 
Ram MPA 

One year Bank of 

Rs» MPA Eng. Index 

Jui 3 

Cteetag 

nrid-poku 

Change 
an day 

BdMfer 

vresd 

Dev's mid 
high low 

One month 
Rote *PA 

Three munlhs 
Ram MPA 

One yes J.P Morgan 
Rate MPA Index 

17.6833 

03 

17.5877 

02 

... 


1142 

Europe 

Aiabla 

fSch) 

712965 

+0138 

930 - BSD 

11.7030 11.6400 

11.703 

-08 

11.70® 

-04 

11.0313 

05 

1003 

-51^789 

-03 

5138® 

-02 

61.4269 

03 

1152 

Bahdkan 

®Fr) 

342895 

+028 

560-840 

S 

i 

342B9S 

-1.1 

343445 

-09 

343095 

-Ol 

1047 

9X2QS 

-1X1 

&842S 

-06 

08433 

-02 

11£« 

Denmok 

(DK() 

82278 

*00438 

250 - 305 

62334 6.4890 

62386 

-1.7 

62508 

-1.4 

62676 

-06 

104.0 

- 

' " 

“ 

- 

- 

- 

807 

FWend 

(FM) 

520® 

+00434 

039- 1M 

52145 5.4888 

5.5129 

-02 

52214 

-09 

62374 

-05 

75.7 

05578 

-06 

05619 

-04 

8.5298 

03 

1062 

Fravsa 

(FFr} 

62648 

+00455 

825-870 

52895 £8439 

£881 

-1.3 

529® 

-1.1 

5273 

02 

1042 

05078 

-02 

22S078 

-0.1 

2.4886 

02 

1232 

Gemany 

<D) 

1.6685 

+0016 

590 - 670 

1.6680 1.5635 

12677 

-02 

1.86® 

-06 

1261 

03 

1052 

- 

- 

« 

- 

- 

- 

-a 

Greece 

(Dri 

249250 

+2.7 

900 - 800 

£48200 247.300 

2607 

-6.5 

35125 

-32 

253® 

-13 

604 

1.0244 

-OB 

1J22S6 

-07 

1.0274 

-03 

10*2 

ItNWb 

(S) 

1.4665 

-0.0069 

685-705 

1.4757 1.482S 

14679 

12 

1.4® 

12 

1.4584 

08 

_ 

2441.78 


2451+3 

-2£ 

248328 

-12 

772 

Ittey 

W 

1619-75 

+31.75 

830 - 000 

162020 1BD320 

16232 

-32 

163126 

-3.1 

1657.6S 

-23 

782 

61X7® 

-03 

51.58® 

-02 

51.42® 

03 

1152 

Luxembourg 

CLft) 

342895 

+028 

550 - 840 

342850 3401® 

342995 

-T.1 

3H_3*ai} 

-02 

34.3095 

-01 

104.7 

2X03 

ai 

n strata 

-0.1 

27884 

02 

1182 

Nethoriands 

(FB 

12866 

+00155 

660 -870 

1.8673 12538 

12678 

-09 

12681 

-06 

12818 

02 

104-4 

103S2S 

06 

108655 

-03 

102588 

OO 

807 

Norway 

(M<i) 

721® 

+00587 

1®- 179 

721® 71575 

72224 

-02 

72294 

-07 

7.18® 

03 

®.a 

260695 

-44 

262^4 

-£5 

- 

- 

- 

Portugal 

£9) 

172.750 

+1 

600 - 900 

172250 172.000 

174.1® 

-8.8 

176.15 

-72 

1B1.1 

-43 

922 

200X61 

-22 

207.741 

-2.7 

210248 

-12 

aoo 

Spate 


187.1® 

+0825 

050 - 250 

137250 130480 

137285 

-3.8 

138265 

-32 

140275 

-22 

802 

11X7BS 

-23 

11^133 

-20 

12.0113 

-12 

752 

Sweden 

(SKI) 

72794 

+0.0265 

7S6 - 831 

72090 72520 

72694 

-32 

7.9294 

-25 

82144 

-1.7 

802 

2.1268 

08 

2.1231 

12 

22B42 

12 

118.1 

Swtaertartl 

{SFrJ 

1^4145 

40.011 

UO - 150 

1.41® 1.4033 

1.4146 

-Ol 

1.4132 

0.4 

12874 

12 

1043 

- 

- 

- 

■ 

- 

• 

60A 

(JN 

a 

T2046 

-020 78 

042- 060 

12103 1.5035 

1 2037 

07 

1 2024 

06 

1.497 

03 

082 

1X01 

-1.5 

12968 

02 

12958 

02 

- 

Ecu 


1.1680 

-0.009 

577 - 582 

1.1662 1.1S7B 

1.1566 

JL2 

1.1S38 

1.5 

1.1 Ml 

—0.4 

- 

- 

- 

- 

- 

- 

- 

- 

SORT 

_ 

1.41592 

- 

- 

. 

- 

. 

- 

- 

- 

. 

_ 

■ . 


_ 

_ 

_ 

_ 

_ 

Americas 

ArgentlnB 

Peso) 

09981 

+00001 

880 - 981 

02981 09977 

. 

. 



. 



- 

- - 

- 

- 

- 

- 

- 

Brsd 


194123 

+3142 

152-154 

184125 184120 

- 

- 

- 

- 

- 

- 

- 

2JB2S 

-IO 

20998 

-1.1 

2.1048 

-12 

882 

Canada 

tes 

12830 

-0.0018 

827 - 832 

1.3861 12820 

12® 

-1.7 

1.3687 

-1.6 

1.408 

-1.7 

332 

- 


- 

- 

- 

• 

- 

Mexico [New Paso) 

^3?nn 

-0206 

150 - 250 

3.3275 32150 

3221 

-0.4 

92228 

-02 

33302 

-03 

_ 

1X037 

07 

1.5024 

02 

1.497 

05 

652 

USA 

5) 

- 

- 

- 

- 

- 

- 

• 

- 

- 

• 

100.4 


PacdOcMcUe East/Mrica 

(A$ 1*40 -00021 

(HK$) 7.7280 +00015 

Pa) 312888 -0X912 
<Y) 105X46 +0315 

{MS) £5895 +00045 
(NZS) 1X822 -0002 

(PM 209500 +4X025 

(SR) £7503 

(SS) 15380 
£8258 
4.7660 

South Korea (Won) 805.150 
Taiwan (TS) 27JJ778 

IhaBand (Bt) 25.2300 

ism iata lor Jun 2 BUMbr apnwta I 

buMhWWbramsl 


Hong Kong 
Inda 
Japan 
Malaysia 
New Zealand 

wappsws 
Sail Arabia 
Sngapore 
S Africa (Com) (R) 
SAW«(Rn.) (R) 


535-545 10585 1X631 1X543 

275 - 285 7.7287 7.7288 7.7275 

650 - 725 31.3726 31X660 31.4488 
220 - 270 100400 104X10 105X6 

890 - 900 2X810 2X835 

816 - 829 1X861 1.6809 

500 - 500 27.1500 26.7500 
600 - 505 £7508 £7800 3.7609 

375 - 385 1.5394 1X339 1XS73 

250 - 286 3X335 £8155 £6413 

550 - 780 4.7900 4.7550 *7987 

100 - 200 606.600 806.100 809.15 

750 - 800 27.1020 27.0730 27.0675 
200 - 400 25X400 25X200 25X025 
Spot table Mow ct+y me Htw dacbiwl 
A ECU era quetad h US curency: £P. Kagan 


2X82 

1X84 


-4X3 1X544 -4X1 

ai 7.73 -0.1 
-£1 31X838 -20 
£2 104X 2X 

£5 2X785 1.7 

-IX 1.6888 -IX 

-OX £7529 -OX 
08 1X37 OX 

-5.1 3X898 -4X 

-8X *8575 -7X 
-40 812X5 -02 

-OX 27.1375 -OX 
-30 25-43 -3X 


1X6 81 -03 

7.7442 -OX 

102X2 £1 

2X095 -OB 
1.7103 -1.7 

£7656 -04 
1X39 -0.1 
£7483 -3£ 

631.16 -3.1 

25X1 -2.7 


89X 


piece*. Fbranrd nee» ere not dkactly Quoted to the marten 
ncnM tatooee Jui e. Ban Mage 1680*100 


NKr 


Pta 


SKr 84V 


C$ 8 Y Ecu 


PelBfc ww 

Dareiwfc 

Fcanoa. 


IM)r 

Natftartanda 

Norway 

Portugal 

Spate 


UK 


US. 


A+BI-.Tflj Lfc ’ 

S+’-exdj inti *' 
S*mtt < iU+ tc 


fte+e-eu 

SITU.- • , 

tea*'*! .a 
tl'rtw.Tni.' 


KsXm+r*' >-■»>■ TSTf In 

• f¥— tv 

•r " 

i 

M «vl , 

*-v - - , 


Ecu 


(BftJ- 100 
(DKi) 5£49 
FFi) 80X8 
~(DU) 20X7 
(S) 50J3S 

W £117 
18X6 
(WO) 47.48 
(E^.19X4 
ptht Sffle. 
pm 43X7 
(S Ft) 2*23 
(S) S1XG : 
^ 24.78 
-9) 34X8 
(V) 325X 
-< - 39.69- 


18. OS 

io 

TUB 

3X18 

£692 

0.403 

£496. 

8.044 

£779 

4.758 

8X82 

*616 

£822 

4X20 

8X28 

62X1 

7X61 


1&69 
£708 
10 : 
£412 


0X61 
£ 0«8 
7X78. 
£291 
4.144 
-7X12 
*.01 B 
8X53 
4.110 
£683 
5400. 
8584 


4X62 
2X82 
2X31 
- T . ' 
£448 
0.103 
0X93 
2X06 
0X05 
1X16 
£114 
1.17ft 
2-507 
1X05 
1.686 
16X3 
1X30 


YM per IjDCX^DenWl Kionar, French ftvn. Norwegian Kkoner. end 


.1X66 4728 

1.043 2480 

1.197 2848 

8408 971.7 

■ 1 2378 

0042 108 

0X65 687 X 

0943 2243 

8394 S37X 
-8498 1180 

' 8883 2054* 

0481 1145 

- 1X24 2438 

8492 1171 

0X80 1619 

8468 16379 

8788 1875 

fUeedWi Kkonor per 


£448 

2X69 

3X83 

1.120 

£742 

aiis 

i 

£696 
1.080 
1X80 
2X88 
1X20 
£808 
1X49 
1X68 
17.73 
£182 
ids 1 


£1.08 

11.08 

12.70 

4X32 

1061 

0.448 

£868 

10 

£179 

5X82 

8157 

£103 

1888 

6X19 

7X16 

68X6 

8360 


Jin 

8ep 

DM 


pMM)PMt2£000p<rDM: . . " • 

, .Opart Senprics; Chsnga . Hgh Low .. Estvol Opai teL 
0X04/. 05991 -00064 ! 86047 0X981 54X36 114,477 

0X030- 0X983 . -80065 0X030 0X872. 16X49 22,794 

... 05986 -0X067 80009 0X980 31 360 


SR 125X00 pw SfV 


2300 

12X7 

13X7 

4.731 

11X8 

0487 

4X24 

1892 

4X63 

5.748 

10 

5X73 

11X8 

5X99 

7X80 

74X7 

9.180 

periQO. 


UK INTEREST RATES 


LONDON MONEY RATES 

Jtn 3 Oran- 7 days 

night node* 


504.1 

264.6 
303X 
1007 
253 X 
1067 
92X6 
239X 
108 
12&9 
2101 

122.1 
2689 
124X 
17£7 
1641 
2081 


4083 

2101 

241X 

82X3 

201.8 

£473 

73X0 

1901 

7042 

100 . 

174X 

9629 

206 j 4 

9818 

137.1 

1303 

1609 


4.127 1X39 4X36 2X19 9072 2J1B 


FIXED INTEREST RATES 


MONEY RATES 

June 3 Over Ona Three 

lOght monffi mthe 


Six 


One Lontj. 
year Inter. 


Ola. 


Repo 

rate 


2.187 

1218 

2.119 

1232 

1812 

1223 

Belgium 

64 

5ft 

5ft 

68 

5% 

7.40 

420 

2A88 

1.1® 

2.433 

1.7® 

1852 

1219 

week ego 

54 

5ft 

5M 

5ft 

5M 

7.40 

420 

0249 

0289 

OffSQ 

0200 

63.18 

0216 

Ranee 

5% 

6ft 

Sft 

5M 

58 

£30 

— 

2278 

0877 

2.032 

1470 

154.7 

1269 

week ego 

64 

6ft 

5M 

5% 

5% 

£40 

- 

0087 

0041 

H nre 

0062 

B2Q2 

Off?? 

Germany 

5.1 B 

5.15 

£® 

5.10 

£13 

£00 

420 

07® 

02® 

0741 

05® 

56.41 

04® 

week ago 

520 

5.15 

S28 

528 

£13 

820 

4.® 

1.950 

0221 

121H 

12® 

1452 

1.1® 

tratrawl 

64 

5ft 

Sft 

5M 

Sft 

• 

- 

0219 

0385 

0201 

0279 

ROA5 

0600 

week ago 

5ft 

6ft 

6ft 

5% 

6ft 

_ 

- 

1.031 

0484 

1.006 

0729 

78.74 

n *30 

. ha* 

7M 

78 

78 

7tt 

Sft 

- 

7.00 

1294 

0843 

1.7® 

12® 

1332 

1295 

week ago 

7% 

78 

78 

7% 

8 

- 

720 

7 

0470 

0978 

0707 

7444 

0210 

Metfiarlande 

£15 

5.13 

5.13 

£18 

528 

• 

525 

£1® 

1 

2281 

1205 

1®4 

1299 

week ago 

5.15 

5.13 

6.18 

£10 

522 

* 

S2S 

1223 

0481 

1 

0723 

76.12 

0224 

Srattzariand 

414 

4ft 

4ft 

4h> 

4ft 

£625 

320 

1.414 

0884 

12® 

1 

1062 

02® 

week ago 

4% 

4ft 

4% 

4% 

4ft 

6.S2S 

320 

1043 

8213 

13.14 

9201 

1000. 

8201 

US 

4ft 

4ft 

4ft 

48 

51+ 

- 

S, 50 

1.838 

0770 

1.B02 

1.1® 

1212 

1 

week ago 

4H 

4ft 

4ft 

4M 

5ft 

- 

320 







Japan 

2ft 

2U 

2ft 

2H 

21+ 

- 

1.75 







week ago 

2 

' 2H 

2M 

2ft 

24+ 

- 

1.75 


876 

875 

run 

5X0 

825 

825 

7X0 

7X5 


■ SUBOfl FT London 


One 

month 


Three 

months 


Six 


One 

N* 


? JUB 

.-..■.'■ 07184-. 

07049 -02075 

071® 

07081 

17215 

39277 

Sep- 

■'friiazm. 

107051 -02076 

07127 

07031 

4,459 

£143 

DOG 


07085 -00075 

07107 

07085. 

65 

3® 

■ JAHUteOtoY—P 

DflMM 8MM) Yen lis par Yen IN 




■Open - Settprioo Change . Hgh 


Low 


Jtft 

Sap 

Dec. 


: ' QS636; ^_89500 -80037 89646 09465 

' O83S0 0X562 • -80039 89663 0LS546 

' . XXBBS. -' "0)9830 -0X044 89663 89610 

‘ WnteMJMM) £82X00 per £ 


EeLvai 

24X76 

6X16 

47 


Open InL 
67,123 
16X89 
1,161 


interimnk Gtedteg 

7%-45| 

5 - 48i 

st, -4a 

si-si 

Sb-Bb 

6J*-6 

SJrrSng CDs 


- 

5-4tf 

S&-5& 

BA‘5A 

6-Sil 

Tiseeray 88e 

. 

. 

4B-4B 

4^-«a 



Bank Bite 

. 

. 

4j! - 4i| 

s-m 

Bb-SA 

. 

Lacto autfnrty dope. 

4S-48 

4H-4H 

5^4-45 

5A-BA 

BA -5A 

BU-5fi 

Dtocouit Mariiat dope 

5»a-44, 

4it-4» 

- 

- 

- 

- 

UK Owing bank faaae landing rate 5b per cant torn February £ 1994 

up to 1 1-3 3-6 e-e 

month month monlfto month* 

9-12 

Hu din 

Carta of Tex dap. £100200) 

ib 

4 

ib 

3% 

3 b 


Interbank Fixing 

4te 

4H 

4ft 

Sft 

week ago 

4M 

4M 

5 

5te 

U8 Data- 008 

- 4.16 

<40 

<78 

£33 

weak ago 

- <16 

4.42 

<79 

£35 

SDR Linked De 

- 3% 

Sft 

3% 

4 

week ago 

3M 

3ft 

3% 

4 


ecu LkdMl Ob rate raaeee 1 mtc 3 irate H* 6 irthas SK 1 year 5ft. 3 LBOR krtatw* OxUp 
rata* we eltarad rate* tar tiQm quoted to the nrarirat by tour lelwence bad* « 11am eadi wertang 
dra. The banka anc Bantma TmW. Bar* ot Tokyo. Baretaye and NtfcnW Waetmnttar. 

MU rate* era Wnem tor the demeedt Money Mae, US S CO* and SOR Udrad Onntt (to). 

EURO CURRENCY INTEREST RATES 

Jur>3 Short 7 deye One Three 


notice 


/ nm dl ie 


SU 

months 


One 


Cwt» of T*k dqx wider P1QOQOO if ItoflMato eH a ai brreWlipc 
Are. tender ra» of dkcrae* 4.7W1pc. BCQD read rat* Sag. Expon Ftaenoe. Mda im day iky 31, 
1994. Apaad rale tor period Jim 2& 1S84 to Jul 25. IBM, Bcfteme* R 5 in (WTpc. Retwence ntokir 
period Apr 30,1964 to May 31, 1994, Schwnra ti & V 8222pc. Ftanee Hraae Beae Raw 6>2pc kom 
Jura 1.1SM 


• . 

wrv 

1P I- ’ 

?■ ■ ' 

awnew «• - 

*r” 

• ■ • •■ ■ 

M »+*•«■ 

teas* V 


L'- 

0P*E+— .*-.»+ 

u 

K r-nre 1 w raf 


Jun 1XW»:^S«058 -00044 1X1&6 .1X016 

Sep - -^X044T. : IS®« -80044 1X060 1X990 - 

a,c 1-5010 1X010' 

*pmjumMVLSdknamoima\2SBfrrtB par pound) 


15,772 

£342 

47 


41X46 

£412 


BANK OP ENGLAND TREASURY BILL TENDER 


Jm 3 


Jin 3 htoy Z7 


SMW 

W» 

Jun 

— CALLS — 
. Jul •• 

' tetg 

Jin a ■ 

- PUTS ~ 
JUI 

Aug 

1AM 

721 

'. 7.71 

- 728 - 


- 

OlO 

1.430 

- a 26 

£37 

B«1 

■ .. . • 

007 

036 

1278 

2.87 

321 

325 

. 

- 040 

090 

1200 

075 

128 - 

2.16 

■ non 

121 

124 

1826 

. . . . 

0® . 

1.13 

2 22 

226 

323 

im 

- 

016 

- 021 

. <43 . 

<70. 

£10 


Da h dtor .. . . 
Tctt d apfteattor* ■ 
Total Rfendad 
Mn. areapM W 
AODUanl « Ida lard 


cqita SUB 

£l555m ' £17350 
fSDOm ESDQn 
998786 E9879S 
100% 6% 


ntetoae dratovoL Cde 9JS4 Pda 1£14S . Mr. opwi Mb Cde SI7XS1 POM 400X09 


PT GU»e to WORLD CVmBtC OS 


The FT Quids to World Cwrandes 
table can be.ftxeid on the Emanjlng 
MoiHate pooe <n todayhi edUon. 


Top accepted m . 4X734% 4X332% 

Mi. nto ditecart ' 48633% 47991% 

Mange yldd 4X230% 48572% 

Okr d netf tealr eSDOm S500m 

Mo. accept bU 182 days 


■ Poond bi Maw York 


Belgian Franc 
□enldi Krone 
D-Mark 
Dutch QuUtr 
Ranch Franc 
PortuspiBM Esc. 
Sprateh Pesete 
Stoftig 
Swiss Franc 
Can. Dator 
US Doaer 
ItMrai Lira • 
Yen 

Aden SSfng 
Shun tetm m ■ 


5^1 ■ 
6 - 
BA- 
SH- 
BA- 


Sl|-5>4 
6-5V 
5ft - 5ft 
5ft - 5ft 

5ft - 6ft 
14*2 - 13^2 14*2 
7ft -7ft 7*| 

4 b -*k 
Sh-sb 
4b 

8i a-r 


5- 

*b 
5U 
4ft 
7H 
2b 
3V 

cal tor the US Dc 




■«*» 53, 
5»z 6- 

5ft 5ft 
5ft 5lf ■ 
5ft 5ft < 
134 151* . 
7b 7ft 
4% 5ft 
4b 4b 
5ft 5ft ’ 
4ft 4b- 
7b 7ft- 

2ft 21* ■ 

3ft 4ft. 

Bar and Yen. 


5ft 6ft 
5ft 6ft 
5ft 5ft 
5ft 5ft 
5ft 5ft 
14ft 14ft 
7ft 7ft 
-5 5ft 
4ft 4ft 
5H 6ft 
4ft 4ft 
7ft 7ft 

2ft 2ft 

4ft 4ft 


Sft 

5U 


6ft -5ft 
.. 6ft -8ft 
5ft 5ft ■ Sft 
Sft 5ft - 5ft 
Sft -5ft 
13ft 13 - 12 
7ft 7« -7ft 
5ft - Sft 
4ft -4ft 
Sb - 6ft 
6 -4ft 
7B-7H 
2ft 2ft -2* 
4ft 6ft - 5ft 


-5ft 


5ft 

4ft 

6ft 

4ft 

7ft 


5ft - 5ft 
8ft - 6ft 
5ft - Sft 
5ft - Sft 
5H-5U 
lift - 10ft 
B-7H 
eft-B 
4ft -4,1 
7ft - 7ft 
BA -5ft 
8 ft - 8,1 
2H-2S 


MONTH BUWOPOmui (I MM) 81m pdnte ot 100% 


tel 

— Ctasa — 

-Rw. ckaa 

eapm 

12055 

1210S 

1 mb 

12048 

12DBB 

3 rate 

12033 

120® 

tr 

10891 

12031 


UK GILTS PRICES 



Open 

Sett price 

Change 

High 

Low 

Eat vo) 

Open hL 

Jun 

fl£3g 

9636 

+004 

9537 

85.30 

4&®fi 

338,426 

Sep 

9428 

94.79 

♦012 

9421 

94.58 

88,429 

398,858 

Dec 

9429 

9<19 

+0.11 

9421 

9322 

173205 

403,478 

■ IIS TMUURy HU. nniJMB OMM) Sim per 1D0M 



Jun 

85.75 

85.75 

+024 

*.76 

*70 

2280 

12321 

Sep 

85.18 

9523 

+0.11 

*24 

*04 

370 

15274 

Dec 

9<® 

9<74 

+012 

94.74 

94 <8 

1® 

7.1® 



tad da- 
te* at ms 


\rk% 

fetor Prime +A 


tmr can 

due a, toe 


l«% tent 
Hoim PriraE +A- £m 


US or 
to toe 


m -Jtr** ■ J . 


H* Hftpc'Mtt 

Bton3»T8aa_; — u. 
TMaSfttc toast* 


Hie to W e re Tm n . 

MlttLpctSU 11CR -2 

.itaioftpeim- — tom, — 

:■ TtomfipCTflBB** 91 ft -2 

OwwatoilM«ciS89«. -US)} 81. 

*m>R«toto.- 9 B 100 A ■ — 

. 9 k 2008 ** 101 ft 

Trim 13 k 2 DOO iaft.. 81 

r ttwatoi ai 

TpCOT** 02 Ji 03 

■ 7peW A 0*ft 83 

3 VPE 20 BL- 106*1 02 

. Ope 2803 ** 98 Bd 61 


L900 JMOaB 
1JM0 MBNA 
• 1X00 NytT MT7 
£360 MBJiflS 
2M %inrl 
£508 J£1 Jy2l 
MU6WM5 
770 M2J/B 
1,150 Hy3Nto 
80Q Myi5»n8 
MflSHrlS 
.MB FOB 
JC2J»» 
__ Pen Adi 
£650 Mitel, 
an Apzroca? 
ax3o-jsi9jf» 
7X50 *8303*36 
1X00 W Ml 
970 MyZ2M22 
'935 mDSaan 
3X08 ttfiO 800 
1XM onajyrt . 


£51264 
17T1 1253 
114 13*6 
2812 1204 
25X1271 
15.121234 
041298 
18121905 
26X1203 
1841268 
8.41240 

18121302 
17.11282 
24.1 1341 

71X1289 
11121273 
21X - 

26X1391 
1541906 
21.31306 
1941290 
6121317 


1 Ope 2003 

"Real l Iftpc 2001-4 — 
Anka sftec*M. — 
flimtoiBi daPL- 

DmtSftKOOO*** 

Can* Sft pc 2000 

Tnai12ftK200»-S — 


tocarextf- 


TtoMltftK 2D0W — 
Ttoae«ftte«J7**_ 

13ftpcD4-8 

Tree* toe 200B*t 


OrarFMaa Tears 

1Mm6pc2D09 — — _ 
TnatB INK 2010 

eHrtocLfl20l(*t — 

Tnrnflpcxnm 

Ttora 5ftK 2009-12**-. 

Trara tec 2013** 

7Vpc 2012-1SJ* 

ItaaSftpcXHT** 

&Cii3»ei3-T7 


108ft OX 
113ft 61 
72ft -IX 
tOBB OX 
88ft -4 
106ft 04 

122B 61 
94B 84 
*» -4 

nan ox 
10* 08 
12>ft 81 
104ft 89 


2X09 Mr8Sa0 
1X20 1*198*19 
5*3 Ja14 Jy14 
£412 AiOS OCSS 
8250 1*261*28 
4X42 AplBOelB 
2X91 My21N«21 
£900 MrS Sto 
2X00 Ap50c5 
£160 Ja22Jy22 
£487 JalGJjiS 
1X50 U26S*28 
5X21 M130C13 


31.1 1201 
1821290 
8121274 
22X1248 
194 - 

14X1317 
1441295 
31.1 - 

1X1334 
16121291 
10121339 
17X1301 
7X1343 


spem* 


457.9 


196a 61 1X00 unBSaii 

4ftpc ‘98** — (T3SJ) mi OX 800 Ap270c27 

2ftKW POXI 165ft 03 1X00 MOtSaM 

2ftKlH (7&A 182* OX 1XSDMZ0HQ0 

4ftKTK** — 0354) 109ft 03 1000*2100] 


7X1313 
71 X - 
15X 1*16 
1341317 
224 - 


AI Open Manra 9ga. era tar predM day 


BANK RETURN 


2K *00. 


40051 109 


aftpeno (784 152Q 

IftpcTI. — gCE) 157U 

2ftpcTS X9J) 



«fr* J ‘” 
»T> ,r ^ " 


• ’top 1 rack. IT Tto+toa w ram im toa ra * an rep U mten. E Mmten bade, rto te tovidwto. Ooetoa i 


Htoc 


61 1X5D JflSJyia 11121314 

86 1X50 My2QM(20 1341318 

81 1X50 AZ3Au23 17.1 1319 

130 OB £900 FelEAu16 181 1320 

2ftKT6 (91 JO T38A OX £SD Ja26Jy» 20121921 

tftKXO- ... d*a 132ft OX £400 Ap160C16 1831322 

85 2X00 JBl7Jy17 11121329 


2ftpc'M# (97.7) 108ft 

Aftpc-aot* — 0381) 109ft 86 1X00 JM6Jy22 1612 - 

(94 Hguret to pnmnffieeaa show RPt barn tor mdmdng 0* B 
month* prior to toaua) end have berai atfuatad to reflect ratnsing 
or RPI to 100 to Jaramy 1967. Conyanton tadnr £9*& FVt tor 
September 1SS3: 1410 and tor Aprt 1BB4: K££ 


Othtor Fixed Interest 

Akkan 0*v lift 2010 

fetaa Oar 10ft pc 2009— 

Siam llftK3772— 

MMC^paftKTO 

toe Op 1986 

i rp n +jr_y 

Hyde Iknbac 16 k 2011. 

Laada tlftpc 2006 

iAwpeajftKtoad — 

LaSK^An. 

4iMdmtoriift{)c2007. 

mbl dr. 3pc s' 

HtoUaMd*3ftK2021. 

4ftK«.M2* 

HdikistdKiBftKain 


r Ihown to pneuto. VMM peraanrage dwopia ara okaimad on a Rkley to Fddey bed*. 


Wft 

05 

0,100 IfKBBdS 

1501338 

821*01 

12 

1730 - 

184 - 

rasa 

13 

<273 JH2Jfl£ 

<12 1249 

106SJ 

12 

5.150 FafiteB 

31.121701 

731, 

03 

1000 ItotOSalO 

101330 

MU 

10 

4050 1*278027 

1&2 - 

95H 

1.1 

800 Jaajya 

20.121332 

1040 

12 

£K0 FaZ5teS 

111 1982 

Utt 

12 

1200 Je120e12 

851280 


119ft 

OS 

so Ja4J* 

1.12 - 

118ft 

— 

100 MS4S04 

391 - 

ns 3 * 

00 

<3 Myi5Hrt5 

4® 1837 

97>* 

-30 

303 AplOCI 

-1468 

10m 

-a 

725 J*30Jy30 

— — 

110 

H.l 

315 tel Obi 

2801423 

143*. 

02 

40Uy31IM0 

27.10 - 

IS 

-4 

40 Apl Ocl 

3033148 

3 7b 

1J 

5 UrtpJWf 

803 - 

92b 

09 

S 1 JeJeSaOe 

10 - 

nsL 

07 

6 0025035 

3033275 

87 

-A 

S KlSel 

103381 

133 

-2 

EO JB30JX3D 

10334® 

126L 

-0 

SO 

207 - 

141 

04 

so wnsei 

270 - 


BANKING 0EPARTMB4T 

Wedteeedey 
June 1. 1994 

Increase or 
decrease far waek 

1 tell— 08 

£ 

£ 

Gap— 

14,553,000 


P*dc deposits 

255,759^58 

-659,199*4 

Barkers deports 

10701 <£894 

+144*8*1 

Reserve end other accoune 

2322371200 

+108,847,605 


<872337*2 

-406*3.428 

Daeeta 


Government aaculttoa 

1020982^29 

+17.760*0 

Advance and other oceounta 

2,6®,fl®.Rfi9 

+643*3*9 

Premke. equipment and other secs 

1*1,962,713 

-*£316,1® 

Notes 

£068*9 

-1*2318 

Coin 

162,892 

-73® 

ISSUE DS'AHTMOJT 

<872037.952 

-4®, 453,428 

LteMHae 

Notes in dreutarion 

18*8*0841 

+201*2,618 

Notes te Banking Department 

£068*9 

-1,422318 

Assets 

18*0000000 

+290300300 

Government defat 

11,015,100 


Other Gotranwnoni eecurMee 

1< 74091 £790 

-1,180990*3 

Oteer Securities 

3008*6,110 

+1.4733903® 


16X68000000 


LONDON RECENT ISSUES: EQUITIES 


+290.000000 


issue Amt McL 


Ctose 


STOCK INDICES 

'■.'•■•• —1994— 

' rJM 3 Jun'2 Jua 1 Nto 3t My 27 Wtfr tmr 


Wgb L"» 




i 


fT- 86 100 . - - 2 B 97 X X 9 B 0 X 2931 X 29085 28684 3620 X 2831 X 38283 W&S 

PM 8 MT 2 SB . 9 SBJ& 3 S 96 X 35 S 7 X 36645 367 Z 3 ’ 4 I 82 X 3 SS 7.7 41 S 2 J 73784 
FT-SE HU 250 « m .'S 5 B 2 X ' 386 SX 35440 3 S 71 J 3582.1 *1087 35+40 47687 13783 
F 1 -S&A 35 D “iStflJ 19089 ~ * 4881 . 16087 15050 17783 14881 177 U 6640 

Ft-SSUtoCto ' IBnJO 1872 X 4 187 £W 1877 X 4 1883 X 2 20 M 9 B 1671 X 0 20 B 4 X 813617 B 
RXESmeapteito -imub ibiss iobixo iteaxa istgx* 2000x2 19 25 2 92 068 7 2 imh 

FM&A BD itt - 1309X9 1809X9 1+84X3 1801X2 1500X8 1784J1 1494X3 1764.11 61X2 


Jun3Jun2JuPlMto31My27HQb law Hgfi low 
FT-SE Baotnck 100 1403001390X61388X71308731404191548191368X7181810 90846 

FTSE anpKfc 200 1477.131408071398531408701414X31607.101398531607.10 93862 

FT OrtatT 23709 23B4X 2321 X 2354.4 2347.1 27I3X 2321X ZTCLB 484 

FT Gcrt SacwUaa 8892 3206 9104 91.73 9396 10704 910* 1Z7X0 4818 

FT Fttod IntaraK 10845 10812 109X3 110X0 111.15 13U7 10812 133X7 50X3 

FT Goto Utoes 1018X2 192873 193709 1954.46 192893 Z387X 178202 2387X0 92216 

RedacatoarteUMhea 217X 2129 217.4 2127 2089 277X 1850 7347 43X 


BASE LENDING RATES 


" 

IK 

• i 

a ' 


-i S* 


*£■ 




Adm & coonptoto 'ii^sas 

MMihM9onk„^j50S - 

Mi—vaaftr 

•HmyAfla^ocher^ 6JS 

■ »*«wwii.^. sas 
Brno Msaavuctoiiu 630 

SwkdQfprta .—.7„£25 
- Z 9K*Dllrato«J„.„^_5XB 

" # ' NrUotMto uuiUS 

** ScrAc/XcoSand..— -£2S ' 

BardayaBv*.. — —5X5 

8ritBki5(B« Emt ., _ £25 

•8ro*mSHp4ey4C»4J£L5XS 
CLBkffcMktortBxL.. 825 
"" CHbOBK^ . ..= .,^ - v . A » 

■^ . oyteotoMtohj^-aas 
JtoC&flpaaA9Bto*.£26 
-•f. «»; - OBUtoachLi— .j — ass 
:J vOtofBim*. ^ US 

Qpaanpdkf 8** ,535 


CXnqirlwte.^.. S2S 

BraterSenkUnded ... 6X5 
FkiNvU&QaRBaefc. 6 
•FtotrartHemkig 8 Co - £25 

CMerft — . 6X5 

•Qutoraea Mtoon , — £25 
HettoBankAQAidch.BXS 
•HtonbmBank— , — £25 
FM9Ml£GontevBk.6XB 

•rilSraet — 5X5 

C. Hoars A Co -5X5 

Honghone&Shangtni. 5X5. 
JutaHadgtBoflk..^ 6X6 
■Unpdd Jcaepft&Sono 6X5 

LlOjSaw* —526 

Ho(M|6rtU0, — £29 

Mtten d Buk— £25 

• ttu* EtenMng —.^5 
——■8X5 
-,..£25 


ftabutfw Guaranto* 
Onporiio n United tone 
ktoQerairihodndBi 
a banking bnduton. 8 
BkofSCotend-. B26 
iVWmmSece.SXS 

TS8. — 5X5 

•UnWBkdKMR— 5X5 
LtoOy Truer Bank Pto... 3X8 

WWamDusi.- 

Whteawy Ufetor .— 525 
YWreWmBortr -.125 

• Member* cl BrtUsir 

. Merchant Banking £ 
-SKurWes Hotaea 

• 9i adnttsssflDn 



FIXED INTEREST STOCKS 

toBue Amount Ubbs 
price paid Retma 1994 
E up dat a hflgh Low 8teck 


Closing +or- 

price 

C 


FA 

FP. 

FP. 

- - FP. 
p Pence 

- 98 M Creaton Lind ax Cvl la 

- 1® IK Rack Propa. 7*2 pc La 2020 

IVbD &hp MM 53p Cv. PL 

1® 100 Ptaoirigen 3 > »pc Cv. Bds. 

64 

1® 

e^p 

101 

IFT GOLD MINES INDEX J 


% ckg KM 

Jba staoe Jua tectQp Said 

3 31/12* 2 tea (fines 


32 rank 
tfigfa Law 

BeUl6neetedB(35) 

191822 -WO H2£73 4307 WOM 

20B 

236700 W2206 

■ Restart teritoae 

AMcafiQ 

tanlltoiMe S 

Uarth America (11) 

2653.75 -I&7 2BT320 IS* 3031 

26ZM9 -1.7 • 2807® 731 1542 

1002.18 -130 162857 3401 6<57 

408 

1® 

070 

344000 19CE02 
301189 1693.18 
2039® 1363.® 


price paid 

P K> 

cap 

gmj 

1994 

ttgh Low Stock 

price 

P 

+A- 

Net 

dv. 

Die. 

cm. 

Gra 

y« 

WE 

net 

100 

FP. 

44.1 

1® 

100 Automothre Precs 

1® 


LN4J3 

00 

<6 

350 

- 

FP. 

244.1 

80 

73 CAMAS 

80 

+1 

UN3.76 

07 

60 

370 

— 

FP. 

107 

112 

1® CLS 

1® 


- 

- 

— 

- 

- 

FP. 

120 

148 

1® Capitol 

139 


LN38 

10 

33 

230 

H43 

FP. 

11.1 

151 

143 Casa* 

151 


WM 

- 

30 

IOI 

k250 

FP. 

1700 

249 

228 DCC 

228 


LQ34M 

30 

30 

110 

110 

FP. 

413 

120 

110 DRS Data ft Res 

115 


U420 

1.1 

33 

270 

1® 

FP. 

450 

137 

1® Danby 

138 

-1 

W3.1 

20 

20 

132 

- 

FP. 

770 

S3 

SO Reming kxten 

92 


- 

- 

- 

- 

- 

FP. 

700 

BO 

42 Do Wwrenta 

47 


— 

- 

- 

- 

— 

FP. 

- 

374 

» Gomq GW a WI 

35 

-1 

— 

- 

_ 

_ 

105 

FP, 

520 

1® 

95 HaoKhote 

95 

-1 

WN43 

10 

50 

135 

225 

FP. 

1053 

227 

021 tewrmeJtea 

227 


LNB0 

2.1 

£5 

£0 

- 

FP. 


75 

55 JF R Japan wna 

72 

+4 

- 

- 

. 

- 

S 

FP. 

4* 

64 

5 Kays Food 

S 

-b 

- 

- 

- 

- 

IM 

FP. 

653 

188 

117 Keter 

117 

-1 

WNO<7 

20 

<0 

130 

160 

FP. 

570 

1® 

1® lonteard tea. 

161 


WN7.7 

22 

63 

80 

- 

FP. 

330 

15 

13b Uy Kteds Town 

13b 


- 

- 

- 

- 

1® 

FP. 

473 

113 

1® NtahUratett 

1® 


R308 

20 

<0 

130 

120 

FP. 

34,7 

129 125*2 Nortw 

129 

♦i 

W436 

20 

40 

110 

- 

FP. 

2710 

131 

118 Redraw 

123 


WN2.7 

20 

2.7 

150 


12X - 23 


14X4 22 £4 15.7 


CepyiW8 The FtomoWItora* Ltoitad net. 

RgSwte twtorate towel rambto cl commtoa. Bate US Pelme. Bm* 1W8QQ 3i/tM£ 
M— MJNUfcitoUM wadfli ctene*: -8+ CfltoK Yf ■»£ 1B2X. T PtetoL 


- F.P. £16 44 43 Oo Wrta 44 

- FJP. 29 2 133 128 SpecWty Shop* 132 

- FJ>. 560 100 9B TO &ro G«rth C 98 

100 FA 584 100 92ft TR Prop tov C 02ft 

IB) FA 41.7 162 164 Vymua 182 


RIGHTS OFFERS 


^ We ire orgenHy seeking cfloimuTdal 

WANTED 

■ ’ « H «Vb ip BwestmeatpK^ertesiqjwaidsa# 

URGENTLY 

LAUKIL £DJm for in-house funds and overseas 

UK 

_ . _ -.TT dlenls. Please Earwirri details ta 

Commercial 

temM® Richard von Gutzcn 

Property 


bsue 

pda 

P 

Amount 

paid 

up 

Lteeet 

Renin. 

date 

1994 

High Low 

Stock 

Ctosteg 

price 

D 

4CT- 

1® 


V7 

21pm 

16pm 

Btegdan teds 

21pm 

+1 

237 

Ni 

1W 

28pm 

5pm 

Oyda Bkiwi 

6pm 

-3 

120 

Ml 

e n 

26pm 

19wn 

DnreoMnt) 

ltdjpm 

-1 

11312 

f* 

ZBffi 

3pm 

I 1 * pm 

Eaglet 

1*2pm 


2® 

W 

- 

60pm 

38pm 

EuohreieS 

60pm 

*17 

IBS 

m 

11/7 

2Spm 

18pm 

Headam 

IBpm 


105 

(6 

2W7 

iVpm 

ipm 

Ht&hm 

l>2pm 


230 

fa 

- 

34pm 

29pm 

Jarvtt Porter 

29pm 

-2 

205 

rfi 

ia<7 

28pm 

16pm 

M6Wptee(A) 

16pm 


80 

M 

4 n 

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FINANCIAL TIMES MONDAY JUNE 6 1994 


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FINANCIAL times MONDAY JUNE- 6 1994 




4pmcfosa Junes 


NEW YORK STOCK EXCHANGE COMPOSITE PRICES 


« nn > Osh 

Iti* Lev Stock Hi « E lots met law IMi 

17% 14%Affl (MB 3L3479 238 14% 14% 14% 

10% 13% ALLflfisA aiB 1J 33 242 14% 144* 14% 


66 57 %MI> IS 26 22 1085 64% 54 64 

72% 52% AMI 29 2244 57% 56% S 

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31 1* teS»flb«iL 176 24 16 8877 u31% 30% 31 

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10% 8% ACM MSP* 096 lift 184 0% 

12 9% ACMOrtSsi 1419107 848 10% 

11% B^AOIMIX 1416 11.4 571 0% 

9% BACH find l 172 18 172 to 

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to toABWBsa 6 116 8% 

20% 23Ma0ttX 086 21 14 16 28% 

§ 5% Aetna 036 4.1 2 958 8% 
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84 46% Ad Men x 100 12 149 59% 

31% ito AMflC 3AM HB 12 8344 20% 

8% BAdaut&p 016 08 8 12 to 

20 ltoMnkK 016 08113 616 17% 


64 64% to 
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34% 25% ASac 048 1-4 14 789 34 33% 34 -% 

20% 16% final 086 4.8 12 4380 19% 19% 19% +% 

4 1% Mam he 1 181 2 2 2 

48% 38% AkPlC 092 21 24 Z749 43% 42% 43% +% 
39% 31%AktauFrt 0300822 9538% 38 38-% 

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070 13 1947 15% 

0L2B 14 14 288 20% 
028 12 14 177 16% 
044 1.1 22 1123 Z7$ 
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GamtaPb 4 448 13 12* 12% ^4 

Gatos CP 400 46 504 27* 29% 27* +* 

Genus Inc 129 315 4 3% 3% -% 

Gmzyme 69 n® 29% 29 29% +*2 

EtannGtx 140 11 791 19*017* 17% -% 
GbMngta. 112 171637 23* 22* 23* +* 
ObatA 0® 18 ® 16* Ifi 19% +% 

SfeBJan 11 ® 5A 5 5% 

Good GUff 162510 13* 12% 12% -% 
GataWmp 0® 19 442 22* 21% 21% -% 
BrodcoSys X 20 2% 2% 2* +% 
Granto are 74 173 H* 21* 22* +1 

Green APx 024 11 20 19* 18 18* -* 

felMChFb 02184 % A % 

Bussaam 1 4873 3* 02% 3 -* 

DndWb 662 78 13* 13 13* -* 

cm cop 7 re 10* io* 10* -* 

GbNVSvg 51536 9% 9* 9% +* 


- H - 

tailing A BO 10 6% 6% 6% +* 

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HoperGp ore 13 522 15 14* 14% <* 

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Hetohmr 19 876 20% 20* 20% +* 

U aaS tai a 1® 20 1571 12* 12% 12* +* 

ItaaMyn 9 ® 9% dB* 6* -* 

HraHl W 14 3790 8% 7% 8% +>4 

HBcMnger 116 28 1823 15% 1ft* 15% +% 

Ksktani 6 10% 10% 10% 

MfenTray 8 8 15 14% 14% +* 

HOW 172 18 39® 27* 25* 26% +1* 
HopnSff 115 28 213 S>2 9* 0* 
Kttogic 57 592 13* 12* 12% -* 
Home Bed 0® 8 10 20* 20* 20% +% 
HroneOfca 172 a 251 u21 20 20% 

Hot kids 044 21 217 30* 28% 30* +1* 
Mxflbeck 172939 15% 15* 15% -% 

Horsahte 044375 20 3% 3* 3% +* 

Hunt JB 120 18 845 18%018* 18% +* 
HDUflntto 0® 11 1072 027 26* 27 +% 

Karoo Co 008 0 2® 2* d2* 2* -* 

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HynrBto 17 53 4% 4% 4% 


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tatmsc on 34 473ms* 17% is* +% 
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MRbs 18 1043 15 14* 15 +* 

Manta 19 38® 16* 15* 16 +% 

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tatBgrDa* 3713187 31* 30% 31 +,* 

HtfriSys » 193 12* 11% 11% 

Mount 9 28 3* 3* 3% -* 

tatm 0» 1221315 84% 62% B3 -1* 
MSB 10 339 2% 2% 2% +* 

Mgms 032 375B78 23* 21* 2T* -1* 
War Tel 22 31 10 9* 10 +% 

UMtaA 024 17 41 13% 13% 13% -* 

Up 31704 9% 9 9* +* 

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UttStae 232 4® 11% 11* 11% •% 

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MT®8 456 238 9* 9 9*-* 

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KsHqOR 7 2716 7% 7* 7% -* 
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nmtaB 084 14 135 24% 24 24% +% 

Kkactan 14 fi 7 7 7 

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Lattices 164985U19* 18% 18* 

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LAtton Ifi 438 13% 12% 12% -* 

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UMi 0® 4 2 31% ®* 31* 


MCICn 105 2114MB 24% 23% Z4% +* 

MS Car's 172154 20 19 19% +% 

Mac MB 0® 42 78 13% 13* 13% 

MadtaonGE xT0S 14 110 32% 3? 32% +1? 

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Magna GRi 076 12 245 18% 18% 1B% -A 

Mai Ben 12 34 8,% 8 8 -* 

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Mohs Dr 1318® 5* 4% 5% +% 
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ManbG 024 21 4151 11 10% lOtf +A 

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HdiMMB 200346 521 70% 75* 7B* +* 

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Mogmh 17 378 7 9% 7 +% 

Maputo 32692 8* B% BA -A 

Malt 1528560 S3* 52* 52% +% 

MdABM «40M48% 47* 48 -% 

MOMiflc 140 12 877101% 31* 31* 
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MobSoTei 4729® 1918% 19 +% 

Modem Co are 18 8 7* 7% 7% +% 

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MTSSff 15811 12 27 27 27 

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Mycopm 5 215 11* 10* 11* +* 


- N - 

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MUlFncftxareil 32 17% 17* 17* -% 
Nd Pizza 14 259 8* 5% 6* -* 

Hatcanpr ore 71 zn 12 ti* n* ^ 

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NEC 048® 0 57% 57% 57% -% 

MaScor 17 719 27* 77 27* +* 

NetMkCan 26 2427 18* 17% 18* <-% 

MdwkS M 458 6% 6% 6% -* 

Nanrogoi 25 3 7% 7% 7% 

Mrga 027 21 5® 2D* 19* 20* +% 

NanEAs IMS 22 Z77 18* T9* 10* +* 

Mew Image 91873 11% 11% llii +A 

HbrdgefM 3021746 40% 38% 40* +% 

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lUtoU 221571 7* 7 7* 

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Radars ZM 15 68® 44* 43* 44^ *A 

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HoaeMS 1® 2328® 70% 70 70* 

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RPUht 052 20 1010 IS* 17* IB +* 
PS Fit a« 12 471U21* 35* 21 +* 
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StnMc 115115 21*21*21% +* 

SwtaTra 30 1MU2912 29 29^2 + J 2 

Sybase Inc 626248 to* 53* 54* * 

Symantec 3822® 14* 13% 14* +* 

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Synogen 2 481 9* 9 9* +A 

SyneUc 85 336 18* 15* 15% +* 

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SyskmSco 31 IK 19* 18% 19 

Sfftaned 241138 6* 5% 5ji -A 


- T - 

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TjunaPr OK 192251 31* 29* 30% +% 
TBCCp 17 K1 13* 12% 13* +% 

TCACaUa OM 28 353 23* 23 23% +% 

TeeMMa 10 3514 17* 1G* 18* -% 

Tecummh 080 14 24 54* 52* 54* -* 

Tatafec 2 55 9% 9* 9* +* 

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TctoCOimA 328343® 23 22* 22% -»8 

TeW* 83391 5* 5* 5* +A 

Tetabs 253848 36* 34% 35* -1* 

Tehran Cp 001 95 DT 17* 16% 17* 

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TnaPINM 027 25 7641 35 23 24* 4-1* 

Rita Con 3116482 4£%d44* 44% -% 
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Tokos MM 2 115 4* 3% 4* *A 

Tokyo ta*r 133 38 24 63* 63% 63% -% 

TomBrom 79 157 15 15 15 

TcppaCO CLZ8356 5510 7* B* 7* +■% 

TPIEJtor 3 830 7* 6% 7 -* 

Tonattd 10 2 11* 11* it* -% 

TranwiCk IK 12 141 u43 42* 42% 4% 

Trim a 98 2H 2% 2}1 -A 

Trimble 53 849 1 0% 10* 10* -* 

TitdcoBkCxIK 10 12 1B% 19% 19% 

Tseng Lapx 020 12 402 7* 6% 7* 4-* 

TysMAx 0® 171229 21% 21% 21% 4* 


- u - 

USItahcr 008 1421608 ®% 38% 40* 4* 
IHab 22730 5% 5% 5% 4* 

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USTXt 200 12 74 52 51* 52 

UailBdSI QAO 9 870 11 10* 10% -* 

IMtogx 124 20 119 26* 26 X -% 

Uokrta 100 22 470 41 40* 40% -hA 

USBancp OK 1115X9028% 27% 28% 4-% 
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USTCorp 1.12 9 171 13% 13* 13* -% 

U»HM 12 3® 7% 7* 7* 

UM ratal 10 T6 45^2 45* 45* -% 

Ub 16 4 5> 4 5* 5* -* 


- V - 

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Verta* 191315 17% 17* 17* 4* 

Hot 40 300 25% 25* 25% 4% 

VtarpRat 9 390 15 14* 14* -* 

IflMtoOta 25 2380 21* 19 19% -1* 

VL3 Tech M7I75 15% 14% 15% *% 
Voho B 184 17 IM 92% 91% 92% -* 


- w - 

Warner Ea 110 22 953 30 * 29 XA -* 
Warotodi 75 281 4 * 4 * 

UtasMUSBOK 78670 21 * 21 * 21 * -* 
WsshFodSL 1 ® 9 1059 29 % 22 * 23 A -A 
VWUntAX(L 22 10 526 25 * 24 25 *+% 

tomssunil 24 18 1 ® 26 * 20 26 * 4 * 

MHO 200 15 232 3 B*(QS* 39 -* 

UMBk 24 522 4 % 4 % 4 % J 4 

W 8 St One 072 12 777 31 % 31 % 31 % +A 

UW® 5 1050 11 % 1 |* 17 * -% 

WSB 9 A 1 105 15 * 014 % 15 -% 

WbISbbIA 12 M 3 % 3 3 -% 

MAI 096 23 3838 46 * 44 % 48 * + 1 * 

WmsSonona 78 497 33 % 32 % 33 % +% 

wroalan L z 028 12 290 14 *dl 3 % 14 -* 

mngtx 040 24 526 I 9 % 18 % 19 +* 

WW Group 003 23 191 3 JL 3 A 3}1 

WyuwMSwa* 4 135 6 * 5 % 6 


-X-Y-Z- 

XJ»m 285855 4fi% 44 44% . 1 % 

XonsCoro 2 231 3% 3% 3% -,V 

YetoH 094 27 1871 18% 18% 18% +* 
toklW 48 407 4% 4% 4% 4* 
ZtonSUMi 1.12 10 IK 41 40* 40% 4% 





’ANCIAL times MONDAY JUNE 6 1994 


FT GUIDE TO THE WEEK 



MONDAY 


TUESDAY 


WEDNESDAY 


THURSDAY 


UN considers North Korea I OECD ponders joblessness Youth celebrates amity 


European elections begin 


UN Security Council members in New 
York this week continue consultations 
on a response, including possible eco- 
nomic sanctio ns, to the nuclear dispute 
with North Korea. The council may 
give Pyongyang a deadline to open 
its nuclear facilities to full interna- 
tional inspection or face sanctions. 


German-Spanish consultations 
take place in the north German town 
of Schwerin. Germany’s chancellor 
Helm ut Kohl will no doubt be seeking 
support from Spanish prune minis ter 
Felipe Gonzalez for the candidacy of 
Jean Luc Dehaene as president of the 
European Commission. The Spanish 
premier may urge more caution from 
Germany on opening the EU to the 
states of eastern Europe. 


Latvia’s foreign minister Mr Georgs 
Andrejevs is expected to step down 
after admitting collaboration with 
the Soviet KGB before the republic 
gained Independence. Another four 
cabinet ministers, plus Latvia's presi- 
dent, have been accused of such links. 


OAU meeting: A ministerial meeting 
takes place in Tunis this week ahead 
of a summit there attended by South 
Africa's President Nelson Mandela. 
South Africa recently became the 53rd 
memb er of the organisation. 


I n t erna tional bankers gather in 
London for the three-day International 
Monetary Conference. The heads of 
103 of the largest banks In the world 
today disruas banking in the world 
economy and the growth of financial 
derivatives. Wednesday sees a discus- 
sion among senior central bankers 
including Alan Greenspan, fhairman 
of the Federal Reserve. 


UK acco un tan ts: Britain's largest 
six accountancy firms publish their 
latest fee income figures and staff num- 
bers. The information will give an 
indication of whether they are recover- 
ing after the recession - they persis- 
tently refuse to give details of profits. 


D-Day anniversary: Celebrations 
of the Allied invasion of occupied 
Europe in 1944 reach their climax with 
a ceremony on Omaha Beach in Nor- 
mandy. 


Chess: 


The Intel world 
I i y championship 

quarterfinals 
open at New 

vCnW York's Trump 

W m ^ Tower (to June 

18). Britain’s 
/n SIRS' Nigel Short 

- and Michael 

, Adams are 

f pi favourites to 

defeat Boris 
Gulko (US) 

and Sergei Tiviakov (Russia). 


FT Survey: Canada. 


Holidays: Ireland, New Zealand, 
Poland, South Korea, Venezuela. 


Other economic news 


As OECD ministers gather in 
Paris for thetr annual meeting, 
Japan is set to be a key market 
focus, with the Tankan survey 
due to be released at the end of 
the week and the Japanese par- 
liament expected finally to 
approve the 1994 fiscal budget. 

Tuesday: US consumer credit 
figures should show that US 
consumer confidence remains 
high. 

Thursday: The Bundesbank 
council meets, with the mar- 
kets pessimistic about the like- 
lihood of further German rate 
cuts. Although the gross 
domestic product figures, 
released on Tuesday, are 
expected to show that the Ger- 
man recession has bottomed 
out, this week's retail sales fig- 
ures may indicate that the 
recent pick-up in consumption 
remains fragile. 

Meanwhile, French output 
figures are expected to show a 
small rise in industrial produc- 
tion. 

Friday: The Bank of Japan’s 
quarterly Tankan survey will 
be scrutinised for signs that 
the worst of the Japanese 
recession Is over. The previous 
survey in February showed 
low business confidence and 
tough financial conditions. 
This one, however, is expected 
to be more upbeat. 


Hie an wilMl ministerial meeting of 
the Organisation for Economic 

Co-operation and Development, the 
rich countries’ dub, takes place in 
Paris today and tomorrow. With 35m 
unemployed in the industrial world, 
jobs will be topping the agenda. 

The OECD secretariat has spent 
two years producing a study containing 
57 detailed recommendations intended 
to form the basis of tailor-made pro- 
grammes for tackling unemployment 
in the 25 member states. 


An American In Paris: US President 
Bill Clinton, fresh from the D-Day cele- 
brations, holds talks with French lead- 
ers and addresses the French National 
Assembly. 


German economy: first-quarter 
figures for gross domestic product 
should confirm the gradual revival 
of the German economy. The markets 
expect to see that GDP rose by 05 per 
cant, after foiling by 0.7 per cent in 
the last quarter of 1993. However, May’s 
unemployment figures, also released 
today, are expected to show little drop 
hi nwomp Tn ymant levels, hi g hli ghting 
the poor economic background for 
German consumers. 


ILO meeting: The International 
Labour Organisation starts its celebrat- 
ory 75 th annual conference in Geneva. 
It will debate an agenda drawn up 
by Michel Hanaenne, its director-gen- 
eral, calling for “social justice in a 
global economy”. The ILO is under 
pressure to become a more focused 
and high-profile body now the Cold 
War is over and its activities are not 
dominated by the US-Soviet struggle. 


Lloyd’s of London: Derek Walker, 
leading underwriter for loss-making 
syndicates formerly managed by the 
Gooda Walker group, is scheduled 
to give evidence today when proceed- 
ings in a case brought by 3,095 Lloyd's 
Names resume in the high court 
The Names, individuals whose assets 
support the insurance market are 
claiming some £600m in compensation 
from their agents, alleging negligence. 
The losses were incurred between 1987 
and 1990 and the case began in April. 


Italian corruption: The former 
health minister Francesco De Lorenzo, 
who is already serving a prison sen- 
tence for his part in the country’s cor- 
ruption scandal, fg due to stand trial 
for alleged corruption in connection 
with the building of car parks. 


Fomizzl fire sale: A three-day sale 
begins at Sotheby's Milan of the art- 
works, furniture and ohjets held in 
the corporate collection of the Ferruzzi- 
Montedison group, Italy’s second larg- 
est private empire which collapsed 
last June. The 650 items are bring sold 
to raise money to pay off Ferruzzi- 
Mcmtedison debts. 


FT Survey: Danish Food Industry. 
Holidays: Malta. 


E cono mic 

Statistic 


Germany 

Germany 

Germany 

Germany 

Germany 


Apr co ns umer crwflt 

May ANZ job arte 

Apr wholesale trade 
Apr consumer credit 
Johnson Redboqk, June 4 
1st qtr GDP (Westem)T“ 
May unemployment, Westf 
Apr employment, Wastf 
May vacancies. West 
May unemployment, East 
Apr manufacturing output* 
Apr manufacturing output** 
Apr industrial production* 
Apr housing starts 
May housing starts, units 


initial claims, w/e. June 4 


State benefits, w/e May 28 
1994 real capital spondtag 
Ml, atte May 30 

M2, w/c May 30 

M3 w/e Mey 30 

Mar hduatfal production^ 

Mar manufacturing production*!’ 
Apr motor vehicle sates' 

May help wanted Index! - 


Germany’s 
Chancellor 
Helmut Kohl, 

64 (top in pic- 
ture), will wel- 
come France’s 
President Fran- 
cois Mitterrand, 
77, to Heidel- 
berg for a Euro- 
pean youth 
festiv al, 

I intended to 
counteract any impression of lingering 
national aDtagrmigTn generated by 

the D-Day celebrations. 

The avowed aim is to encourage 
greater contacts among Europe’s youth. 
There wDl be French and German pop 
music in the open air, and lots of photo- 
opportunities for TV cameras. 


Russia’s government signs a 
cooperation agreement with the Paris- 
based Organisation for Economic 
Cooperation and Development that 
should promote the flow of western 
economic exper tise. 

Also parliament is expected to exam- 
ine the 1994 budget for final approval 
pftwr nfl wft 1 delay pud strident demands 
from many deputies for big Increases 
in defence spending. 


Elections to the 
European parliament 
in Strasbourg open 
with voting in Den- 
mark, the Netherlands, 

yy elanri ayiri Hia TJ K 

The results will he 
declared from Sunday night, when 
counting starts after polling closes 
in the other eight countries, and will 
decide the make-up of the 567-seat 
body that now plays a signtflwmt role 
in European Union decision-making. 

The election will also give important 
pointers to the outcome of political 
leadership contests and forthcoming 
elections in a number of member 
states, led by Germany, UK, F»nce 
and Spain. Additionally, the some 
polled by anti-Maastricht protest pais 
ties - particularly in Germany and 
France - win be closely watched. 




UK by-elections: Five by-election s 
are timed to coincide with voting for 
the European parliament. Four are 
in safe Labour seats in East London 
and Bradford, but the liberal Demo- 
crats are expected to win Eastleigh, 
Hampshire, from the Conservative 
government 


Nato and Russia 


UK economy: The release of UK 
industrial production figures today 
are expected to show that UK output 
bounced back in April, after weakening 
slightly In March. Analysts predict 
that output will have risen by 0J5 per 
cent in April, month on month. This 
would tally with other recent business 
surveys which have all reported rising 
business confidence and output. 


US President Bill Clinton receives 
an honorary doctorate of law at Oxford 
University. 


I Nato foreign ministers 

begin a two-day meet- 
/Vl\ ing in Istanbul to con- 
(MB') — sider Moscow’s request 
Xj/y for a formal statement 

that would acknowl- 
■ edge Russia's political 

and militar y importance. Russia is 
also asking far a high-level dialogue 
with Nato on nuclear and other secu- 
rity issues, prompting fears in central 
Europe that Moscow will acquire a 
virtual veto on alliance policy. 



j!ip M° rrlS 

,w‘ *"**’'. 


,1 dvc 


BaStot-boxfrtg: John Major faces the next round in Thursday’s elections to the European Putament 




FRIDAY 


WEEKEND 


Loader of UK Labour parly 


Polls dose In Europe 


Euro Disney! operator of the 
struggling theme park outside Paris, 
holds an extraordinary general meeting 
for shareholders to approve its pro- 
posed FFrl3bn (£L27bn) rescue pack- 
age. It will also announce the terms 
of a FFrGbn rights issue. There will 
be good news to discuss following last 
week's surprise announcement that 
a Saudi Arabian prince plans to buy 
a stake in the company of up to 24 
percent 


A southern African summit, 

sponsored by the Geneva-based World 
Economic Forum, takes place in Cape 
Town today and tomorrow. It brings 
together 280 international businessmen, 
and prominent African and South Afri- 
can leaders to discuss the future econ- 
omy of southern Africa after momen- 
tous political riiang B in the largest 
re gional economy, South Africa. 



Pakistan budget Benazir Bhutto’s 
government is due to present the first 
budget of the prime minister's second 
term in office. Interest will focus on 
how well the government Is controlling 
spending, given the competing 
demands of high military expenditure, 
debt re payments and measures to 
improve education and welfare. 


Formal nominations open for an 
election to succeed the late John Smith 
as leader of Britain’s opposition Labour 
party. 

Tony Blair, 41-year-old leader of the 
party's social democratic “moderni- 
sing” faction, is runaway favourite 
hut may he challenged by John Pres- 
cott, a more traditional socialist, 
Margaret Beckett, acting leader, or 
Robin Cook, shadow trade and 
industry secretary. The result is due 
on July 21. 


On Sunday, the eight European Union 
members who did not vote on Thursday 
hold their elections for the European 
Parliament 

Germany is also holding local 
elections on Sunday in Baden-Wfirttem- 
berg, Mecklenburg-Vorpommern. 
Rhinaland-Palatmate, Saarland. Sax- 
ony, Saxony-Anhalt and Thuringia. 




fe::- :v •’ "■ 


Luxembourgers also vote in a 
general election an Sunday. 


Europe** air traffic control system 
is to be reviewed at a meeting of trans- 
port ministers of 32 European countries 
in Cop enhag en. 


Think-In: Kyoto hosts a two-day 
International Forum on the Wisdom 
of Humanity. It will be addressed by 
seven wise men including former UK 
prime minister Sir Edward Heath. 

FT Survey: New Zealand. 


Saleroom: Two 18th century carpets 
are the hi g hli g hts of a aeries of sales 
at Christie’s in London devoted to 
French art One was woven at the 
Royal Savonnerie factory and could 
sell for £500,000; the other, from Aubus- 
son. has a £300,000 forecast Napoleon’s 
travelling dental set, in a gilt box, is 
also on offer at up to £30,000. 


Japan's Emperor Akfhito and 
Em press Michik o start a two-week 
visit to tiie US at the invitation of Pres- 
ident B01 Clinto n, the first there by 
a Japanese emperor for 19 years. 


Alpine referendum: Austrians 
vote on European Union membership 
on Sunday. Opinion polls indicate a 
close call 

Swiss voters look set to snub interna- 
tional institutions once again, when 
a majority will probably frustrate the 
government’s wish to supply “blue 
helmet” troops for United Nations 
peacekeeping operations. 


MW-”*- 


feffijh. • 


The AMeburgh Festival, one of 

the UK’s leading music festivals, begins 
(to June 26). 


Hol ida y: Bolivia. 


Holidays: Algeria, Bahrain, Kuwait, 
Lebanon, Morocco, Portugal, Tunisia. 
United Arab Emirates. 


Rugby: Eng land play South Africa 
in the second test in Cape Town on 
Saturday. 

Motor racing: The Canadian Grand 
Prix is in Montreal an Sunday. 


ferrti-- 


Compiled by Patrick Stiles and Jane 
Crust Fax: (+44) ( 0)71 673 3194. 


fe*ijc;.v ... 


ECONOMIC DIAJRV 


Statistics to be released this week 


June 10 US 


S7.4bn 


May producer prices fodax '■ 02% 
Ditto, exdlood & anargy : tk3% 

May barfccrecflt . 

Mayc mnt nerelat & teetost toms y 

May Bank of Japan Tartan . '' 

May Bank ot Japan TadkaaOtjwanf, -54 
Ditto, non -manf. . ‘ • • -44 

1994 Tartar capital apandtog -AS* 

. Mayccneurnw prica^ tadx, pral*' 0JH6-; 
May consumer price? trtdx, preT* .1.8%': 




-56 - " \ 


Baik 

Station 


hst.,.,. 




.SR ARC 

V 20 


Mar ybfate trade, global' 
May unamptaymapt rate 
1st qtr real GDP . 


-£a.73bn. 


During ttw week... 

Japan • May Bark of Japm bssifc data rate ! 

Germany •' - Apr ftmufectu^ order** 1 . ! 0.7% ' - . 2J9%' 

Germany -- May ftal coat.gt Mnf . - ' , ' ' • • 0246 . 

- ‘ ■ Germany May ftnal coat of jMntf- ' 3.1% 

Germany Aprreta3sfaa; Wasfcy DAK 2% 

Germany . Apr ratal sates, Pari-Geman** • 2% 

France. Apr M3 - • _ ■ - - ‘ -QftM ' 

mantis • Apr rata gfctesvtfume* . - . • 2K - 

• Nlands ' May consumer prices lndaK" ' ■ 2J9% . • 2^96 - 

Swift’d , May .unemployment rate ;. ’ V 4.9 te • 

•month on month, ‘"‘year on yr, orregr, tawe at? Statistics, courtesy Mate intamaBonai. 


fTIHERE is really only one station for the 
X Ctr. Bankers and traders me k for 


X City. Bankas and tradm me it tor 
speed and Gonvenknce. 


It's (lie Son SPARCsfatico. And die Iw H t 
model, die SPABCslation 20, is faster and 
more porafri rimw ever before. Making it 
tbe ideal platform for Anntin^ stack, 

CUTUaiey. bonds or mnranritfv, urtanvl 


ACROSS 

1 Badly criticised, having per- 
formed over the music (6) 

4 Decoration Tor the brave per- 
haps (3-5) 

9 Cyril’s odd odes (8) 

10 Sulky demeanour (8) 

12 Rlght-o, darling! (4,4) 

13 Put right in the picture (6) 

15 Spot a weak type (4) 

16 It brings a lump to one’s 
throat (5£) . 

19 Appears to accept poetry of 
acceptable quality (10) 

20 Almost last to charity (4) 

23 Welcome break for a pris- 
oner? (6) 

25 Uniformed footmen (8) 

27 Took off (81 

28 Sailor returns with broken 
boom. It's hollow stemmed (6) 

29 Ehgaged on light duty off and 
on (8) 

30 Move fast after take-off (6) 


DOWN 

1 King in great spirits when 
fold (7) 

2 Piggy Is holding up another 
animal (9) 

3 Does well, getting about 
ninety fish (6) 

5 The first man to be a father - 
and a mother (4) 

6 It may be paternal - or not (8) 

7 Cross one river, accompanied 
by goddess (5) 

8 Lawrence has new heart 
implanted in surgery (7) 

11 Td Dll in the result - It's obvi- 
ous (7) 

14 An offence in a fool or comic 
(7) 

17 Friend with a restaurant res- 
ervation no doubt hopes the 
food will be (9) 

18 Careless example of hit and 
ran (8) 

19 Star role in Westerns (7) 

21 Bashful rugby player shows 
character (7) 

22 Empty one container into 
another (6) 

24 Country requiring careful 
handling (5) 

26 Near average (4) 



MONDAY PRIZE CROSSWORD 

No.8,472 Set by DANTE 


Spot the SPARCstatkn 20 al one of Horse 
Computers’ Techmfogy Events. 

For a free ticket, phone Robert Osbora. 


A prfta of a PeHkan New Classic 380 toantatn pan tor the first correct 
solatia a opened and five ranaaNip prises of £35 Pelikan voucher* will be 
awarded. Solutions by Tlmradanr June is, marked Monday Crossword 8.472 
on the envelope, to the Financial Times, 1 Southwark Bridge, London SEi 
9HL. Solution an Monday June 20. 


Name_. 


$Sm 


Winners 8,460 


Solution 8,460 


Mrs F. Sham Edinburgh 
Ms V. Law, Faringdon, Oxford- 
shire 

SJ. Meredith. Redditeh. Wares 
Mrs C. O'Keeffe. London NW3 
M. Wilson. London N1 
P.J.R. Wright. Wistastan, 
Cheshire 


Morse Compotes, 0SL-876OW. 




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Of broking and jobbing the Pelikan's fond. 

See how sweetly he puts your word onto bond. 

Oblikaa 0 






JOTTER PAD 


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